LeClercq v. Michael

[701]

WILSON, J.

This is an appeal by defendants from a judgment in favor of plaintiffs decreeing the foreclosure of a chattel mortgage executed by defendants on the furniture and fixtures of a restaurant.

Plaintiffs, who are mother and son, were the owners and operators of a restaurant known as “Mother LaClair’s Chicken Pie Shop. ’’ They listed the business for sale with a broker and in June, 1945, defendants called at the restaurant as prospective purchasers and talked with plaintiff Armand LeClercq. During the conversation, in response to an inquiry as to why he wanted to sell the business, Armand stated it was because he was not a restaurant man, his mother was ill, and neither of them intended to go into the business again..

In July, 1945, defendants entered into a written contract to purchase the business for the sum of $7,500, paying $5,000 down and executing a promissory note in the amount of $2,500 secured by a chattel mortgage on the furniture and fixtures for the balance. Thereupon they went into possession of the restaurant and commenced operating it. In November, 1945, Armand LeClercq, in partnership with one Hayes, opened a restaurant about five blocks from that operated by appellants. The partnership with Hayes, according to the testimony of Armand, was formed about July 1, which was after his conversation with defendants but before the contract to purchase was signed. In January, 1946, defendants learned that Armand was again in business. However, they continued making monthly payments on their note, the last payment having been made in April, 1946. It was not until June 21, 1946, after plaintiffs had pressed them for the balance due on the note, that defendants served notice of rescission of the contract claiming fraud and misrepresentation. This action to foreclose the chattel mortgage was brought by respondents on July 1, 1946. Defendants filed an answer alleging that the note and mortgage had been rescinded upon the ground of fraud and at the same time filed a cross-complaint for rescission and damages upon the same ground. Prior to the time of trial, in March and again in June, 1947, defendants listed the business for sale for $12,000. They received an offer of $8,000 which they rejected.

Defendants contend (1) that the trial court erred in finding that the conduct of plaintiffs did not amount to concealment of a material fact and (2) that defendants are entitled to damages even if it be conceded they are not entitled to rescission.