Hewitt v. Klages

FINCH, P. J.

March 12, 1924, the plaintiff conveyed real property in the city of Los Angeles to the defendant Minnie Klages in exchange for a leasehold interest in an

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apartment house and the furniture and household goods therein. The bill of sale of such personal property provides that it is “to be free and clear of all encumbrance except a mortgage of $1,875 which the party of the second part agrees to assume and pay.” It was stipulated at the trial that Mrs. Klages, prior to and at the time of the exchange, “represented that it was clear of all encumbrance except $1,875.” There was at the time another mortgage lien on the property for a large amount, of which the plaintiff had no knowledge. Early in May, 1924, the plaintiff discovered the existence of this other lien. She immediately informed Mrs. Klages thereof and the latter indignantly denied that there was such a lien. On the 20th of that month Mrs. Klages executed a deed of gift of the real property in question to her daughter, defendant Agnes Jarvis, and conveyed all other property owned by her to her sons. On the 28th of the month the plaintiff served notice of rescission on the ground of the false representation mentioned and offered to restore all that she had received under the contract of exchange. Mrs. Klages refused to rescind and this suit followed. The court found that the plaintiff was induced to convey the real property to Mrs. Klages by the latter’s false representation and that the deed from Mrs. Klages to her daughter was fraudulent and void. Judgment was entered accordingly in favor of the plaintiff, canceling the deed executed by her and restoring her to possession. Mrs. Klages has appealed from the judgment, but Agnes Jarvis has not appealed. Appellant’s contentions will be considered in the order stated in her opening brief, without expressly enumerating them.

The court found that the appellant knew that the alleged false representation was false at the time it was made. The proof of such knowledge on her part is not strong, but such proof was unnecessary. “The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true,” by a party to a contract, with intent to induce another party thereto to enter into the contract, is actual fraud. (Civ. Code, sec. 1572, subd. 2;