Cox v. Westling

PEEK, J.

This is an action by plaintiff for rescission of a contract of sale of a strip and resaw mill, and to recover the amount expended by him to place the mill in working condition. The basis of the action is the alleged intentional fraud of the defendant sellers in representing the cost and market value of the mill and the machinery, the condition and capacity of the mill, and the availability of materials for processing.

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The defendant’s answer denied the allegations of fraud and by cross-complaint prayed for judgment in the amount of the balance due on the purchase price of the mill evidenced by a promissory note executed by plaintiff to defendants. The findings of fact were favorable to the plaintiff and judgment was entered in his favor from which defendants prosecute this appeal.

Defendants’ attack upon the judgment, which appears to be well founded, is essentially twofold, (1) that the evidence is insufficient to sustain the finding that plaintiff relied upon the alleged representations and (2) that said representations were not representations of fact but were nothing more than mere statements of opinion and therefore were not fraudulent.

The evidence shows that while plaintiff, who is a farmer with no experience in the lumber or milling business, was at a lumber mill in Tuolumne County he expressed an interest in. acquiring a mill and was introduced to defendant Silva who informed plaintiff he had one for sale. Thereafter plaintiff and Silva met at the latter’s mill at which time Silva quoted a price of $16,000 for the mill. Plaintiff stated that he had no personal experience in the operation of such a business but that he had talked to one Hodgson who would operate the mill for him, and that he was willing to take Hodgson’s word that he could do so. Plaintiff further told Silva that he desired first to discuss the purchase with Hodgson before making any decision. Shortly thereafter plaintiff and Silva again met, at which time defendant Westling was also in attendance. It was there represented to plaintiff, in regard to the question of available material for processing, that there were two mills in the vicinity which would furnish materials sufficient to pay the overhead; that orie or two new mills were to be built in that area and as soon as the weather permitted an additional mill would commence operations and that material would be available from that mill as well. On this occasion plaintiff was informed that seven men were required to operate the mill, that 7,000 laths per day would pay the operating expenses and that sufficient additional material to turn out 20,000 laths per day would be available if and when the other mills mentioned were able to operate. Also at this meeting plaintiff was told that the machinery was in good working order, that the mill would process 20,000 laths per day. A list was then given him which showed the price of the machines then in the mill, their cost of installation and the cost of setting up the entire mill, the total of which was in excess of $16,000. At the con