## Facts

- Nettie L. Seeger and her husband owned a small lot in Huntington Beach, California.
- In 1926, they executed a note and mortgage on the lot to William G. McAdoo and R. T. Colter to secure a loan of about $2,255.
- The note and mortgage were assigned to Mary Gibbs, who obtained a final foreclosure judgment in 1933.
- After the foreclosure judgment, plaintiffs attended a conference with Gibbs and A. J. Odell; McAdoo, Colter, Gibbs, and Odell appeared through their attorney, Ben H. Neblett.
- Plaintiffs alleged Neblett told them that, as an attorney with superior knowledge about the land, they could rely on what he said.
- Plaintiffs alleged Neblett falsely stated that an execution had been issued on the land for a prior judgment, the sheriff had levied and sold the land to McAdoo and Colter, and McAdoo and Colter thus owned whatever interest plaintiffs had previously held.
- Plaintiffs alleged Neblett also stated McAdoo and Colter would allow the foreclosure sale to proceed and would not exercise redemption rights, while presenting the proposal as a friendly effort to let plaintiffs receive some return.
- Plaintiffs alleged they relied on these statements, believed they no longer owned the land, joined Gibbs in executing an oil and gas lease to Odell, and did not attempt to pay the mortgage debt or redeem after foreclosure.
- Plaintiffs alleged that, during the relevant period, others offered to lease the land with advances sufficient to cover the mortgage indebtedness.
- Plaintiffs later discovered no execution sale had occurred and that Neblett’s statements were false.
- Plaintiffs sued in equity seeking cancellation of the lease and relief from the foreclosure-related consequences; the trial court entered judgment on the pleadings for defendants.

## Issues

1. Whether the complaint stated a cause of action for fraud sufficient to defeat judgment on the pleadings.
2. Whether reliance on alleged misrepresentations is barred as a matter of law because public records could have revealed the truth.

## Decision

- The California Supreme Court reversed the judgment on the pleadings and remanded.
- On judgment on the pleadings, well-pleaded factual allegations had to be accepted as true and construed favorably to plaintiffs.
- The availability of public records did not, by itself, defeat fraud where a defendant’s misrepresentations and surrounding circumstances could justify plaintiffs’ failure to investigate.
- Given allegations that an attorney asserted superior knowledge, invited reliance, and presented himself as acting in plaintiffs’ interest, whether plaintiffs’ reliance was justified was a factual question not resolvable on the pleadings.
- The complaint adequately alleged material misrepresentations, knowledge of falsity, intent to induce reliance, actual reliance, and resulting damage.

## Legal Principles

- On judgment on the pleadings, the court accepts all well-pleaded allegations as true and determines only whether they state a legally sufficient claim.
- A fraud claim is not defeated solely because the falsity of a representation could have been discovered from public records.
- Justifiable reliance may exist where the misrepresentation itself, the parties’ relationship, or transaction circumstances reasonably induce a party to forgo investigation.
- Misstatements concerning concrete property-related facts and the asserted legal effect on ownership and redemption rights can be actionable when used to induce detrimental action or inaction.

## Conclusion

The court held that plaintiffs’ fraud allegations, including reliance on an opposing attorney’s assertedly authoritative and reassuring statements about title and redemption, were sufficient to proceed; public-record accessibility did not bar reliance as a matter of law at the pleadings stage.


Seeger v. Odell, 18 Cal. 2d 409, 115 P.2d 977 (Cal. 1941)