## Facts

- Felix L. Finley, Jr. (plaintiff) held equitable title to a 138-acre tract of land in Pickens County, South Carolina.
- Duke Power Company allegedly had a plan (unknown to Finley) to acquire land in the area for construction of a hydroelectric power project.
- Roy S. Dalton (defendant) approached Finley to purchase the tract and sought to complete the deal promptly.
- When Finley asked what Dalton intended to do with the property, Dalton stated that he would hold the property for its timber value (described by Finley as a long-range timber investment).
- Finley accepted Dalton’s offer and, on February 10, 1964, conveyed fee simple title to Dalton for $4,100.
- About a year later, Finley learned that Dalton had allegedly acted as an undisclosed acquisition agent for Duke Power, which intended to use the land for the hydroelectric project.
- Finley filed an equity action seeking rescission of the deed, alleging fraudulent misrepresentation and concealment, claiming Dalton’s nondisclosure deprived Finley of the chance to negotiate a higher price (Finley alleged the land had much greater value for hydroelectric purposes).
- Defendants demurred on the ground that the complaint failed to state a cause of action; the trial court sustained the demurrer and dismissed the complaint.
- Finley appealed to the Supreme Court of South Carolina.

## Issues

1. Whether a seller states a cause of action for rescission of a deed by alleging that the buyer misrepresented his intended use (timber holding) and failed to disclose that he was an agent for a principal planning a hydroelectric project that would have paid more for the land.

## Decision

- The Supreme Court of South Carolina affirmed the order sustaining the demurrer.
- Treating well-pleaded factual allegations as true for purposes of demurrer, the court concluded the complaint still did not allege actionable fraud sufficient to justify rescission.
- The deed remained in effect; rescission was denied.

## Legal Principles

- On demurrer, well-pleaded facts are taken as true, but legal conclusions and speculative assertions are not admitted.
- Rescission for fraud generally requires a misrepresentation (or concealment where there is a duty to speak) of a material, existing fact, made with intent that it be acted upon, with justifiable reliance and resulting injury.
- In an arm’s-length land transaction, absent a fiduciary, confidential, or other special relationship, a buyer ordinarily has no duty to disclose the buyer’s identity, an agency relationship, the buyer’s principal, or the buyer’s planned use of the property.
- Statements about a buyer’s motives, plans, or intended future use typically are not treated as misstatements of a material existing fact that support rescission.
- A seller generally cannot rescind merely because the buyer possessed superior knowledge that the property would be more valuable to the buyer or the buyer’s principal for a special project, where the buyer did not misstate material existing facts about the property and no duty to disclose existed.

## Conclusion

Because the alleged misrepresentation concerned Dalton’s intended use and the alleged concealment concerned his undisclosed agency and Duke Power’s planned project—matters the court treated as nonactionable absent a duty to disclose in an arm’s-length sale—the complaint did not state a claim for rescission, and dismissal on demurrer was affirmed.


Finley v. Dalton, 164 S.E.2d 763 (1968)