Eck v. McMichael

MONROE, J. pro tem.

*

The plaintiff brought this action to rescind a contract for the purchase of a business, together with personal property employed in connection therewith, basing his cause of action upon alleged fraudulent misrepresentations. The defendant had a contract for the distribution of food products and had established connections which he served regularly. He had purchased and installed devices known as “Serv-All Kitchens,” which apparently consisted of a device for the heating, serving, and exhibiting for sale, soups and other food products which he sold.

The specific complaint of plaintiff was that defendant had represented he had been making a net profit of $75 to $100 per week in the operation of the business; that this representation was

false;

and that plaintiff relied thereon and was thereby induced to enter into the contract. The court found the facts to be that the alleged representation was made and that it was untrue, but found that such statement was not made for the purpose of inducing the plaintiff to enter into the agreement or to defraud plaintiff, and that plaintiff did not rely thereon. Judgment was entered against the plaintiff upon these findings, awarding to defendant, on his cross-complaint, judgment in the amount agreed to be paid for the business and inventory. The plaintiff appeals and assigns as grounds therefor the insufficiency of the evidence to sup

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port the findings of the trial court, and alleges errors in refusing to accept evidence offered by plaintiff.

At the trial there was no dispute as to the making of the .representations. Defendant admitted that he made the statements. The evidence showed further that contact between the parties was the result of a newspaper advertisement published by the defendant and that the sales agreement was consummated and the parties went into escrow three days later. During the negotiations inquiry was made as to the net profit which the business was making and had made, and the statement was made positively, and was reiterated on other occasions, that defendant was making from $75 to $100 per week net. During those conversations plaintiff and his wife informed defendant that they had a family of four children to support and that plaintiff contemplated purchasing the business as a means of livelihood. Plaintiff asked the defendant if he had any books of account to substantiate his statement as to the profits being made, and there is a conflict in the evidence as to what defendant answered to this inquiry. In any event, it is undisputed that defendant avoided exhibiting any accounts. Defendant stated that because of the condition of his accounts he was able to work only about two days per week, that it was hard work, and that if plaintiff worked hard and put in more time he should be able to make more profit. The agreed price for the business was $6,000, plus the inventory of food stocks on hand, which amounted to $779.21. There was evidence that the “Kitchens” had been purchased by defendant six months before, when he started the business, and that he had paid, with freight and taxes, something over $6,000, but that he would let plaintiff have the kitchens and the business for that amount.