
    Gleason v. Bell.
    
      False representations — Sale of real property — Purchaser entitled to recover, when — Pleading—Wife bound by husband’s representations and acts, when.
    
    1. Where a purchaser was induced to buy and pay for a city residence, by false representations made to him by the vendor as positive statements of fact clearly implying knowledge of the owner of the truth of the facts stated, and made under such circumstances that the vendor should have known of the falsity of the representations, and they were of such a nature as to affect the character, utility and value of said property, and the purchaser had a right to and did rely thereon, and suffered damage by reason thereof, he may recover. In such a case an averment that the vendor knew the representations to be false and made them with intent to deceive is not essential.
    2. If a woman permit her husband to manage and make contracts for sale of her property as his own and, in pursuance of her authority, he makes a sale of her property to one whom he induces to purchase by statements and representations relative to the character, utility and value of the property, upon which the purchaser would have a right to rely as coming from the owner, and she accepts the benefits of the contract and makes conveyances to the purchaser so procured, she is bound by the representations made.
    (No. 14162 —
    Decided February 23, 1915.)
    
      Error to the Court of Appeals of Cuyahoga county.
    On October 21, 1911, the defendant in error, Myrtle M. Bell, filed her petition in the court of common pleas of Cuyahoga county, as follows:
    “Myrtle M. Bell, the plaintiff, for her cause of action against the defendant, says that on and prior to the 18th day of August, 1907, the defendant, Mary A. Gleason, was the owner of a house and lot at No. 38 Taylor road in the village of East Cleveland, Cuyahoga county, Ohio, which said lot was located on the southwesterly side of Taylor road, beginning at a point 352 feet distant in a southeasterly direction from the southeasterly line of Euclid avenue. Said lot was 40 feet front on Taylor road, 120 feet deep, and 32.61 feet wide in the rear.
    “Second: She says that on and immediately before said 18th day of August, 1907, the defendant’s husband, Michael J. Gleason, represented to her that he was the owner of said house and lot; that the same was unencumbered except by mortgage for $3000.00, held by The Citizens Savings and Trust Company of Cleveland, Ohio; and he offered to sell the same to her and to pay the interest on said loan to October 15th, 1907, and to pay the taxes for the year 1907, and to make numerous additions and alterations thereto before the first day of October, 1907, if the plaintiff would assume the payment of said mortgage and would pay to him the sum of $2000.00 in monthly installments of at least $50.00 per month, and the further sum in cash of $1600.00. As an inducement to plaintiff to accept his offer aforesaid, he represented to her that the property in that neighborhood, fronting upon Taylor road, on both sides, between it and Euclid avenue and beyond it on Taylor road, and the property in the rear of it, fronting on Charles road, between it and Euclid avenue, was an exclusively residence district, and that he himself owned the greater part thereof; and that all of said property was subject to conditions and restrictions binding upon the owners thereof, to the effect that it could be used for residence purposes only; that no building could be erected thereon less than two and one-half stories in height, with the roofs of No. 1 black or green slate, or nearer than two feet to the southerly line of the lots, or more than two and one-half feet therefrom; that the front line of porches could not be nearer than twenty feet from the westerly line of Taylor road; that no foundation of any house could be less than 34 x 30 feet, nor more than 38 x 24 feet; that no fence or enclosure of any kind could be erected or placed within sixty feet from the street line; and that no double or two-family house, terrace, or apartment, could be erected or placed thereon. He represented to her that the lots fronting on Taylor road, immediately to the northwest of the premises in question, were then owned by one Barnes; that they were subject to the same restrictions and conditions hereinbefore recited; and that all the property between the Barnes lots and Euclid avenue was subject to existing and valid restrictions and conditions as aforesaid. The lot in question was then improved by a residence complying with the terms of said restrictions and conditions, and was located immediately beyond a bend in Taylor road, which with said restrictions and conditions would insure to the occupants of said lot and the house thereon an uninterrupted view towards Euclid avenue and the adjoining territory. She .says that at the time, the neighborhood of said lot was one highly desirable for residence purposes by reason of its proximity to Euclid avenue, a main highway of local and national reputation for its beauty and importance.
    “Third: She says that she relied entirely upon the truthfulness of the representations so made to her by said Michael J. Gleason, and entered into an agreement with him on the 18th day of August, 1907, by her husband, Herbert W. Bell, who acted for her as her agent and attorney, to purchase said property upon the terms and conditions hereinbefore recited and then paid to him the sum of $25 to apply upon the cash payment. She says that on or about the 20th day of September, 1907, the said Michael J. Gleason furnished her with a statement regarding the title to and incumbrances upon the premises, aforesaid, made by The Guarantee Title & Trust Company of Cleveland, Ohio, on the 20th day of September, 1907, which said statement contained a recital that the premises in question and other premises deeded to the said Mary A. Gleason on July 6th, 1907, by deed from one George Davies, did contain the restrictions and conditions aforesaid, to be binding upon the heirs and assigns of the grantees and to run with the land. She says that the premises in question had originally been represented to her by the said Michael J. Gleason to be forty feet in width throughout, and that on disclosure by said statement that they were of less width, it was agreed that the plaintiff could have a credit of $175.00 on the cash payment to be made by her in full satisfaction of the failure of said lot to accord with the representations of the defendant in that respect.
    “Fourth: She says that after the making of said agreement of August 18th, 1907, by the statement of title aforesaid and otherwise, she became aware that the legal title to said premises was vested in the defendant, Mary A. Gleason, and that Michael J. Gleason in making said agreement of August 18th, 1907, was acting for his said wife, Mary A. Gleason, as his undisclosed principal, and she says that relying solely upon the representations aforesaid and without further search, knowledge, or disclosure, she accepted, on September 23rd, 1907, the warranty deed of the defendant to her of the premises aforesaid, containing said restrictions and conditions and paid to her the consideration then agreed upon to be paid by this plaintiff and executed and delivered to the defendant her note and mortgage deed to secure the same for the unpaid portion of said purchase price, and assumed the payment of said mortgage to The Citizens Savings & Trust Company; that she did, on or before January 16th, 1908, comply, with all the requirements and conditions of her agreement with the defendant and did fully satisfy her indebtedness to her.
    “Fifth: She says that thereafter there was constructed upon the lots adjoining the premises so conveyed to her, upon the north, and represented to her to be owned by one Barnes, two two-story apartment houses, within less than fourteen and nine feet, respectively, from the street line of Taylor road; that one of said apartment houses was built within six inches of the southerly line of the lot adjoining this plaintiff’s property; that between said lots so owned by Barnes, and Euclid avenue there -has since been constructed a four-story flat apartment house within six feet from the street line of Taylor road; that there has since been constructed upon the property at the corner of Euclid avenue and Charles road, represented to her to be owned by said Gleason, and upon the property fronting on Charles road, in the rear of said corner property, three flat apartment houses, all of said four last-named flat apartment houses are constructed on property which the said Michael J. Gleason represented to her, as aforesaid, to be subject to the conditions and restrictions hereinbefore named.
    “Sixth: As soon as she became aware that the construction of such flat apartment houses was threatened on the premises aforesaid, she says that she caused an investigation to be made and then for the first time learned that the representation made to her by the said defendant, as aforesaid, concerning the conditions and restrictions upon said property, were false and fraudulent, as they were in fact, and that no such restrictions or conditions, binding upon the heirs and assigns of the then owners of the land, or running with the land, in fact, existed or had ever been created.
    “Seventh: She says that immediately upon.the purchase of said' premises she and her husband moved into the house thereon, and ever since, with their family, have occupied the same as their home; that by reason of the erection of said flat apartment houses the dwelling house so occupied by her, and the lot aforesaid, 'have been materially deprived of light, air and view; their utility to her has been seriously lessened and impaired and their value greatly diminished; to her damage in the sum of two thousand dollars ($2000).
    “Therefore she prays judgment against the defendant in the sum of two thousand dollars.”
    A demurrer to the petition was sustained by the court of common pleas on the ground that the petition did not state facts sufficient to constitute a cause of action. Defendant in error not desiring to further plead, judgment was entered in favor of plaintiff in error.
    The court of appeals reversed the judgment of the court of common pleas and remanded the cause for further proceedings. Thereupon a petition in error was filed in this court seeking to reverse the judgment of the court of appeals.
    
      Mr. Walter C. Ong and Mr. Howard A. Couse, for plaintiff in error.
    
      Mr. Norton T. Horr, for defendant in error.
   Matthias, J.

The questions presented arise from the contention that the petition fails to state a cause of action in that no fraudulent intent or scienter is alleged, the representations complained of were not material, were not within the authority of the agent making them and that the plaintiff had no right to rely thereon.

The claim made by the plaintiff in her petition is in substance that the husband of the defendant, having the management of her property and acting in regard thereto with her authority, representing himself as the owner thereof, induced the plaintiff to purchase said property, a residence in the village of East Cleveland, by means of certain false representations as to the building restrictions in the immediate vicinity of said property, which materially affected the character, utility and value of said premises; that such representations were made as positive statements of fact and were relied upon entirely by the plaintiff. Under the circumstances detailed in this petition it is not incumbent upon the plaintiff to aver and prove that the defendant knew the representations were false and made them with intent to deceive. The facts' set up in this petition show that the party making the representations should have known whether they were true or false, and further show that they were made not as an expression of opinion but as positive statements of fact, with the intention that they should operate as an inducement to the sale of said premises. The recital of the transaction in the petition sufficiently shows that the representations were so made as to imply that the maker knew them to be true and intended that his statements should be so understood, believed and relied upon and operate as an inducement to the purchase of the premises.

“A positive statement implies knowledge, and if the party who makes it has no knowledge on the subject, he has told scienter what is untrue; he has affirmed his knowledge.” 1 Bigelow on Fraud, 513.

In support of the contention that the petition is insufficient, counsel for the defendant cite the case of Taylor v. Leith, 26 Ohio St., 428, where, in passing upon instructions to the jury, the court held that if the representations were believed to be true, and the facts of the case were such as to justify the belief, there would be no fraud. The view that the petition in the case at bar states a cause of action is not out of harmony with the conclusion of the court in that case. They are entirely consistent. When it is shown, as it is in the petition before us, that positive statements of fact are made relative to the premises, which are material to the transaction, and under circumstances such that he who makes the representations should know the facts, and it is shown too that such statements were untrue, the view most favorable to the defendant is that he must at least assume the burden of showing that he believed his representations true and that the facts were such as to justify his belief.

When tested by the rule stated by this court in the case of Aetna Ins. Co. v. Reed, 33 Ohio St., 283, this petition is found to be sufficient. It meets every requirement there stated — false representations of a material fact, upon which plaintiff relied, and upon which, from the circumstances of the case, he had a right to rely, and, in doing so, was misled to his injury, whether the party making the representations knew them to be false or not, if he had no reason to believe them to be true, and they were made with the intention of inducing the person to whom made to act upon them and he did so, sustaining a damage in consequence. All these facts are shown in the petition, and surely nothing further should be required of the plaintiff.

In the case last cited and in Mulvey v. King, 39 Ohio St., 491, the court has somewhat modified the burden theretofore cast upon one who seeks to retrieve his losses sustained by reason of the misrepresentations of one with whom he deals. In the latter case it was held that against one who claims the benefit of, and seeks to enforce, a contract procured by means of misrepresentations, recoupment may be had if it only appear that the representation was “material and substantial, affecting the identity, value and character of the subject-matter of the contract, that it was false, and that the other party had a right to rely upon it, and that he was induced by it to make the contract.”

To the same effect is the holding of the court in. Baughman v. Gould, 45 Mich., 481, and Pierce v. Tiersch, 40 Ohio St., 168.

The representations complained of in the petition before us, while not affecting the identity, do affect the character, use and enjoyment, and, hence, the value of the premises, the subject-matter of the contract. Nor can defendant complain because the plaintiff accepted the positive statements of fact made by the defendant, and presumably within his knowledge, at their face value, and relied thereon. 20 Cyc., 33-35, and cases cited. The representations pleaded must be regarded as material; for they substantially affected the value of the property and were calculated to and did induce the sale. 1 Bigelow on Fraud, 497. These representations were made by the husband of the defendant, who permitted him to manage and make contracts relative to her property, as his own, and she ratified his acts and accepted the benefits of the contracts thus procured. Under the facts pleaded she is bound by the representations made.

Judgment affirmed; cause remanded to common pleas court.

Nichols, C. J., Johnson, Donahue, Wanamaker, Newman and Jones, JJ., concur.  