Metz v. Malley

BARNARD, P. J. This is an action for damages based on misrepresentations made by the defendant husband in pur[849]chasing a house from the plaintiff. On March 28, 1955, Mrs. Metz and Mr. Malley entered into an agreement under which she agreed to sell him her house in Palm Springs for $16,500, and he agreed to give her a $5,500 trust deed on the house and to assign to her a note with an unpaid balance of about $11,000 which was secured by a chattel mortgage on the equipment in a restaurant in Glendale. The parties opened an escrow at a bank on April 1, 1955. Various differences arose between them which were finally settled and the escrow was completed on May 24, 1955, at which time the plaintiff received an assignment of the chattel mortgage. Shortly thereafter there was a default in payments required under the chattel mortgage, and the plaintiff discovered that the restaurant was not being operated. The plaintiff thereupon gave notice of a sale of the mortgaged equipment at private sale, as permitted by the mortgage terms, which sale was set for July 1, 1955. No other bidders appeared and Mrs. Metz bought in the equipment for $500. On August 8 she sold it to a third party for $1,750.

The plaintiff then brought this action alleging, among other things, that the defendants had misrepresented the value of this chattel mortgage in that they had stated and represented to her (1) that the personal property secured by said chattel mortgage was worth in excess of the then unpaid balance of principal and interest of said note, and (2) that the maker of said note was successfully operating said restaurant and intended to continue to operate it. The prayer was for damages in the sum of $9,364, the difference between the amount that would have been due on the chattel mortgage and the $1,750 received by the plaintiff. After a trial, the court found that these false representations had been made, and found that the plaintiff had been damaged in the sum of $9,264 after allowing a credit for $100 which had been received by the plaintiff. The defendants have appealed from the judgment which followed.

It is first contended that the evidence does not sustain the finding that these statements and representations were false. While it is conceded that the second of these representations was actually made it is argued that both of them were true on March 28, 1955; that on that date the restaurant equipment was actually worth in excess of the then unpaid balance" of the note and chattel mortgage; and that the maker of said note (Sholder) was then successfully operating said restaurant and intended to continue to operate it. It is further argued that the uncontradicted evidence established