Traub Co. v. Coffee Break Service, Inc.

[712]

BURKE, J.—

Plaintiff brought an action to set aside the purchase of a business on the ground of fraud. Defendants denied the fraud and cross-complained for the balance due on the purchase price which was represented by a promissory note. The trial court, sitting without a jury, gave judgment for defendants and cross-complainants, finding that the alleged misrepresentations of fact had not been shown to have been made by the preponderance of evidence. The court granted plaintiff’s motion for new trial and defendants appeal therefrom.

Defendants Nat Krupp and Morton W. Smith were owners of all the stock of Coffee Break Service, Inc., which operated a coffee distribution business. The Traub Company purchased the entire business for the sum of $58,300 with a down payment of $24,300 and the balance of $34,000 represented by a promissory note.

In support of their action to set aside the purchase and as a defense to a cross-complaint on the promissory note, plaintiff contended that defendants represented that the business as operated at the time of the sale was earning net profits of $40,000 per year; that it had never been offered to anyone for sale; that all its equipment complied with the codes and regulations promulgated by the City of Los Angeles; that it required no night work and that obtaining help would be no problem. Defendants denied that they had made any false representations and contended plaintiff made an independent investigation and relied thereon.

In its memorandum of decision following trial on the merits the court stated:

“Although at some points Mr. Traub testified positively as to the making of the representation [concerning the annual net profits of the business], when said portions are examined in the context of the testimony as a whole . . . and the admission in the deposition, the evidence does not preponderate that the representation was made. ’ ’

In arguing the motion for new trial, plaintiff contended there was no admission in Mr. Traub’s deposition, and it was pointed out that the trial court had apparently overlooked the uneontradicted testimony of two other witnesses concerning the making of the false representation. The trial court granted the motion for new trial on the express ground of “insufficiency of the evidence to justify the decision.”