Giomi v. Viotti

AGEE, J. pro tem.

*

Defendants, husband and wife, appeal from a judgment recovered against them by plaintiff in an action brought to rescind a contract of sale of a partnership interest in a bakery. The purported appeal from an order denying defendants’ motion for a new trial is dismissed, such order being nonappealable.

In April, 1945, defendants and one Picenti bought the bakery for $4,400. In November, 1945, defendants returned to Picenti the $2,200 which he had put up and they thereupon became the sole owners.

In November, 1946, plaintiff contacted defendants. He told them that he knew nothing about the bakery business but he was interested in investing in some type of business in

[716]

which he could be employed. Defendants told him that they had just sold a one-tenth interest to one Bortolazzo for $2,000 but that they would sell him one-half of the remaining nine-tenths interest for $9,000 and give him a job driving a delivery truck on one of the routes. The sale was closed on December 12, 1946, at which time the plaintiff paid $1,000. The balance of $8,000 was paid on December 19, 1946. Less than a year later the business was in bankruptcy.

Plaintiff alleged, and the trial court found, that for the purpose of inducing him to buy said partnership interest the defendants falsely and with fraudulent intent represented to him that the value of the business as a whole was $20,000, that the monthly net income therefrom was $1,500, and that all of the debts of the business had been paid.

Defendants contend that the representation of the value of the business- was a mere expression of opinion and not actionable. This is the general rule. (23 Cal.Jur.2d, p. 38.) However, an exception to this rule is well recognized where the representation of value is coupled with statements of extrinsic facts materially affecting the value. (23 Cal. Jur.2d, p. 40.) Here, defendants represented to plaintiff that the business was making net profits of $1,500 per month; in fact, the business was losing money. (Defendant Yiotti testified that the “profits” were eaten up by the payment of wages of $61.50 per week to himself and Bortolazzo.) Defendants represented that all indebtedness had been paid when, in fact, the business owed thousands of dollars. Defendants represented that-the business owned five trucks when, in fact, it owned only two trucks, one of which was not usable. (The other three trucks were leased.) Defendants told plaintiff that his $9,000 would be used for capital improvement but not one cent of it was put into the business. In