Brown v. Klein

LUCAS, J.,

pro tem.

Appeal is taken from a judgment in favor of plaintiff decreeing rescission of a contract of copartnership and requiring defendants to refund to plaintiff the money paid by him on account thereof.

The complaint alleges that plaintiff and defendants entered into a contract whereby plaintiff agreed to buy and the defendants agreed to sell an undivided one-third interest in and to a certain copartnership known as the Universal Specialty Company, subject to existing liabilities as of October 27, 1923. Plaintiff agreed to pay, and did pay, defendants the sum of $3,000 for such interest. It is also alleged that at the time plaintiff entered into said agreement, and for the purpose and with the intent of persuading and inducing plaintiff to purchase said undivided one-third interest, defendants represented that the liabilities of said copartnership on October 27, 1923, did not exceed the sum of $1,952.57; that plaintiff believed said representation, relied thereon and would not have entered into the agreement to purchase had he not believed said representation to be true; that said representation was false and fraudulent, and known to defendants to be false and fraudulent, and that as a matter of fact the liabilities of said co-partnership as of the date in question were not less than $4,890.55.

Defendants in their answer admit the payment of the $3,000, and admit that they represented to plaintiff that the liabilities of the copartnership did not exceed $1,952.57, but allege that at the time they made the statement they believed it was true; that said representation was the result of an error in addition and that the corrected addition of the whole liabilities should have shown an indebtedness of $2,952.57 or thereabout. They specifically deny that there was any intentional misrepresentation or fraudulent misstatement of facts.

They set up as a further and special defense that all books and accounts were freely placed at the disposal of plaintiff, and that every opportunity was afforded him to make a full and thorough investigation of the partnership

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business, and that after a full and thorough investigation plaintiff freely entered into said copartnership. The new matter in the answer was, of course, deemed denied (Code Civ. Proc., sec. 462), and the case went to trial on the issues framed by the pleadings.