Peterson v. Wood

BARNARD, P. J.

This is an action for the rescission and cancellation of an agreement to purchase an interest in a business and to recover the purchase price paid. The de

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fendants, as partners, were conducting a business for preserving and canning fruits under a “secret process” at a certain address in Santa Ana. Upon the solicitation of one of the defendants, the plaintiff agreed to, and did, put $3,000 cash into the business in return for a one-fourth' interest therein. He was taken to this defendant’s attorney, who drew an agreement dated August 3, 1928, which recited that in consideration of $3,000 there was assigned to the plaintiff “an undivided one-fourth interest in said business, fixtures and equipment”. This agreement further provided that in the event said business should later be incorporated, the plaintiff should have one-fourth of the stock issued. Early in December, 1928, the plaintiff discovered that certain representations made to him by the defendants were false and untrue, whereupon he served notice of rescission and tendered back what he had received. In the action which followed, the court found, among other things, that some ten false representations as to material facts had been knowingly and wilfully made with the intent that they should be relied upon; that they had been relied upon and acted upon by the plaintiff, to his injury; and that the plaintiff was induced by these false representations to enter into the agreement in question. Judgment was entered in favor of the plaintiff for the return of the $3,000 paid by him, from which judgment this appeal is taken.

The only point raised is that the evidence is not sufficient to support the findings and judgment. While appellants admit that there is some evidence to sustain the finding that the ten representations were actually made and that “at least” some of the ten were false, it is contended that as a matter of law, these representations do not justify a rescission. Most of the false representations found by the court to have been made, fall under two heads. The first consists of representations that the business and partnership assets included not only the stock of goods, equipment and fixtures, but also the building and real property in and on which the business was being conducted, together with an adjoining lot, and that this property had been conveyed to the partnership by the appellant Ketseher as his contribution to the capital of the business. While there is evidence that such representations were made to