## Facts

- Federal Land Co. (Federal) entered into a contract to purchase a tract of land in Wyoming from another company.
- Federal then entered into a contract with Charles E. Byers (Byers) under which Byers agreed to buy the same tract from Federal by paying the price in installments.
- Under the contract, Federal agreed to convey the land to Byers when the purchase price had been paid; the contract did not state that Federal would deliver possession to Byers.
- As part of the same overall transaction, Byers executed a five-year lease of the land to Federal’s president, J. R. Carpenter, giving Carpenter the right to occupy and use the land during the lease term.
- Byers lived in Nebraska and did not inspect the land before contracting.
- Byers relied on statements from real estate brokers involved in the transaction, including statements that Federal owned the land and that the land was worth $35 per acre.
- The evidence showed the land’s value was about $15 per acre.
- There was no evidence the brokers had special knowledge about the land’s value (such as from inspection), and no evidence that Byers told the brokers he was placing special reliance on their valuation as a statement of fact.
- After Byers began making installment payments, the company holding title contacted Byers and told him it would send him a deed once the balance was paid.
- Byers sued to cancel the contract and recover the installments he had paid, alleging fraudulent inducement based on misrepresentations that (1) Federal actually owned the land, (2) Federal had actual possession of the land, and (3) the land was worth $35 per acre.
- At the close of Byers’s evidence, the trial court granted Federal’s motion to dismiss on the ground that Byers had not shown actionable misrepresentations, and Byers appealed.

## Issues

1. Whether a buyer may rescind a land-purchase contract for fraud based on a seller’s alleged misstatement of present ownership when the seller has contract rights to obtain title and promises to convey upon payment.
2. Whether alleged statements about the seller’s “actual possession” constitute actionable fraud when the written contract contains no promise regarding possession and the buyer contemporaneously leases the land to the seller’s principal.
3. Whether statements by brokers that land is worth a stated price per acre are actionable misrepresentations of fact, or nonactionable opinions, absent proof of special knowledge or announced special reliance.

## Decision

- The appellate court affirmed the trial court’s dismissal at the close of the plaintiff’s evidence.
- The court treated the asserted misstatement of present ownership as not furnishing a basis for rescission where the transaction contemplated conveyance upon full payment and the record did not show an inability or refusal to deliver title as promised.
- The court concluded the alleged “possession” representation did not establish actionable fraud under the circumstances, including the contract’s silence as to possession and the contemporaneous lease placing possession in Carpenter for a term of years.
- The court held that the brokers’ statements about value were not actionable on this record because they were opinion-type statements, and there was no showing of special knowledge, inspection, or other facts converting the statements into representations of fact on which reliance would be justified.

## Legal Principles

- Rescission for fraudulent inducement requires a material misrepresentation of fact, justifiable reliance, and resulting harm.
- A statement about present title or ownership does not support rescission where the seller’s obligation is to convey upon the buyer’s performance and the evidence does not show that good title cannot or will not be delivered as agreed.
- Where a written agreement does not promise possession, and the buyer simultaneously executes a lease placing possession in another for a fixed term, alleged statements about “actual possession” ordinarily do not prove a material misrepresentation inducing the contract.
- Statements of value are generally treated as opinions; they become actionable only with additional facts (such as special knowledge, inspection, or circumstances showing the buyer reasonably relied on the speaker’s valuation as a factual assurance).

## Conclusion

Byers sought to cancel a Wyoming land-purchase contract and recover payments by claiming he was induced by false statements about Federal’s ownership, possession, and the land’s value, but the court held the proof did not show actionable fraud: the deal called for conveyance upon payment, the contract did not promise possession and Byers had leased the property to Carpenter, and the per-acre valuation statements were nonactionable opinions on this record, so dismissal was affirmed.


Byers v. Federal Land Co., 3 F.2d 9 (1924)