Sanders v. Park Beverly Corp.

California Court of Appeal Mar 13, 1952 No. Civ. 18527Published

Before: Moore

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Holding. The court held that the evidence supported a finding of fraud based on the appellants' affirmative misrepresentations and concealments regarding the income of the properties, and that the purchasers were entitled to rely on these representations despite their own limited inspections.

Issues

Whether the evidence was sufficient to establish fraud in the sale of apartment buildings.
Whether the purchasers were precluded from relying on the vendor's representations due to their own independent investigation.
Whether the trial court erred in its evidentiary rulings regarding the valuation of the property.

Disposition. affirmed

Quotations verified verbatim against the opinion

“It discloses an affirmative course of conduct consisting of misstatements, half-truths and concealments of known material facts, all designed to deceive respondents and to prevent discovery of the true fact”

“One who deliberately makes positive assertions that are untrue will not avoid responsibility for his wrongful act by saying that his adversary was not compelled to rely upon them.”

“It follows that respondents were not precluded from relying upon appellants ’ statements where their falsity was not apparent from an inspection.”

MOORE, P. J.

Judgment was awarded respondents against appellant corporation and its president for damages arising out of fraudulent statements made in the course of negotiations for the sale of two apartment buildings in Los Angeles. Reversal is demanded on the grounds of (1) insufficiency of the evidence to establish fraud, (2) nonreliance by respondents “upon any representation,” (3) errors in rulings at the trial.

[700]

When the buildings were offered for sale in August, 1949, president Perry prepared a brochure

describing them. Among other factual recitals, the booklet declared that the premises grossed an average monthly income of $3,720. It was delivered to appellants’ agents, Newcomb and Taggart, on September 14, 1949. Respondents learned of the properties through their own broker, one Franklin, and with him first visited the premises on November 7, 1949. All subsequent negotiations were conducted by respondents and Franklin with appellants' brokers. They had no personal contact with Perry. After several inspections of the buildings, relying upon declarations in the brochure, respondents offered to purchase both buildings and their furniture and furnishings for $200,000. Appellants accepted, whereupon an escrow agreement was executed by the parties on November 30, 1949, and the transaction was duly closed. Within the succeeding month, however, respondents made a pertinent discovery, to wit: that the average monthly income from the buildings for the six months immediately preceding the date of sale had been substantially less than that published in the brochure. Immediately following such denouement respondents served a notice of rescission of the purchase on the ground of fraud and promptly filed this action in eight counts to enforce their demand, for restoration of all moneys paid to appellants and for a cancellation of notes executed in partial payment of the purchase price, and in the alternative for damages. Prior to the trial respondents elected to stand upon their claim for damages and dismissed all counts for equitable relief. The court made findings of fact in pursuance of respondents’ allegations: that appellants had fraudulently misrepresented the gross income of the buildings and the minimum rentals being received for the apartments at the time of their negotiations with respondents.

Sanders v. Park Beverly Corp.

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MOORE, P. J.

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