Sears v. Myerson

California Court of Appeal Jun 5, 1930 No. Docket No. 5876.Published

Before: Thompson

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Holding. The court held that a trial court may properly determine that representations regarding the quality and salability of merchandise constitute actionable statements of fact rather than mere opinion, and that a waiver of representations in a contract with a third party does not preclude a defense of fraud in a separate agreement.

Issues

Whether representations that a stock of merchandise is 'good and salable' constitute actionable fraud or non-actionable opinion.
Whether a waiver of representations in a contract with a third party bars a defense of fraud in a separate agreement between the parties.

Disposition. affirmed

Quotations verified verbatim against the opinion

“What amounts to an expression of opinion as compared with a positive statement of fact depends upon all the circumstances of the case, and is a question for the trial court to determine.”

“That a single wilful misrepresentation of a material fact, if believed and relied upon, is as effective as a multitude.”

“It cannot be seriously contended that the waiver (if in law there is one) in favor of the Board of Trade can be broadened to cover the defense to the instant cause of action.”

[221]

THOMPSON (IRA F.), J.

Plaintiff’s assignor, Joseph Chain, operated, prior to some time in April, 1924, two retail stores in Bakersfield, known as Chain’s Emporium and Eddy’s Store. He became insolvent and made an assignment for the benefit of his creditors to the Los Angeles Wholesalers Board of Trade. During April of that year an inventory was taken by the Board of Trade aggregating $37,480.51, inclusive of fixtures in the sum of $4,742.71. The prices used in determining the values of the goods in stock were the cost marks checked against the invoices wherever that was possible. Mr. Chain interested the defendant in bidding $20,000 for the entire stock, which bid was accepted by the Board of Trade. ,In the notice to bidders the following language was employed: “All inventories of stocks of merchandise and fixtures and other personal property, are guaranteed as to quantity and extensions of figuring only. No representations of any kind are made as to quality or condition of merchandise and fixtures. Bidders must inspect same before submitting offer. ’ ’ At the same time Chain and the defendant agreed that the former was to have the right to purchase the stock for the sum of $23',500 (the $3,500 representing the services of defendant) plus additional sums laid out for expenses or merchandise, and minus the sums received for merchandise sold at any time before August 30, 1924, and if Chain was unable to purchase the business on this basis the defendant agreed to pay him $1600. It was to recover this last-named amount that the plaintiff as assignee of Chain brought the present action. The defendant admitted the execution of the agreement, but plead fraudulent representations on the part of plaintiff’s assignor, which the court found to have been made as follows:

‘ ‘ That he had a large stock of merchandise in said store all of which was good and salable;

“That his stock of merchandise and fixtures in said store inventoried at cost prices to him, the said Chain, of Thirty-Eight Thousand Dollars ($38,000.00).”

The court found that these statements were untrue, and that plaintiff’s assignor knew them to be untrue, and that the inventory was in fact padded with second-hand goods listed at new prices, and with cheap and inferior articles listed at prices greatly in excess of their value. From a

Sears v. Myerson

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THOMPSON (IRA F.), J.

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