Hauck v. Crawford

75 S.D. 202, 62 N.W.2d 92 (1953)

 

RULE:

As between the original parties, when a person is fraudulently induced to sign a paper believing that it is something other than it really is, the contractual knot was never tied, and such paper or instrument is not only voidable but actually void. Neither reason nor policy justifies the reception of a showing of negligence on the part of him who is overreached, as a countervailent or neutralizer of fraud. In other words, the perpetrator of the fraud cannot avoid his acts by a showing that the person upon whom the fraud was committed was negligent.

FACTS:

Three men approached the property owner concerning an oil and gas lease. The property owner agreed to enter into a lease and he signed the purported lease forms that were prepared by the men. One of the documents was in fact a mineral deed that granted one-half of the minerals in the land to the grantee of the deed. Thereafter, the grantee conveyed his interest to the purported mineral rights owners. The property owner filed a quiet title action, and the trial court entered judgment in favor of the property owner, and found that the property owner signed the deed by fraud in the execution. Thus, the deed was void and did not transfer anything to the grantee. The mineral rights owners appealed.

ISSUE:

Should the action for quiet of title be granted in favor of the property owner?

ANSWER:

No

CONCLUSION:

The court reversed the trial court's judgment. The grantee could not avoid the fraud by asserting negligence on the property owner's part in signing the deed. However, the mineral rights owners were bona fide purchasers. Thus, if the property owner was negligent or committed acts sufficient to create an estoppel, he should bear the brunt of the negligence. Further, the mineral rights owners did not have the opportunity to plead estoppel because the action was a quiet title action.

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