Kinnear v. Prows

• Decision Date: 14 December 1932
• Docket Number: 5039
• Citation: 16 P.2d 1094,81 Utah 135
• Court: Utah Supreme Court
• Parties: KINNEAR et al. v. PROWS et al

16 P.2d 1094

81 Utah 135

KINNEAR et al. v. PROWS et al

No. 5039

Supreme Court of Utah

December 14, 1932

Appeal from District Court, Fourth District, Utah County; A. v Watkins, Judge.

Action by David Kinnear and another against J. W. Prows and others. From an adverse judgment, plaintiffs appeal.

AFFIRMED.

C. R Bradford, of Salt Lake City, for appellants.

Claude F. Baker, of Eureka, and J. C. Halbersleben, of Provo, for respondents.

FOLLAND J. CHERRY, C. J., and STRAUP, ELIAS HANSEN, and EPHRAIM HANSON, JJ., concur.

OPINION

FOLLAND, J.

This is an action for damages on account of alleged fraudulent representations which it is claimed induced plaintiffs to convey to defendants certain improved real estate in Provo, Utah, of the value of $ 4,800. The complaint alleges that plaintiffs agreed to sell and sold and transferred to defendants their real estate at the agreed price of $ 4,500 and received in consideration therefor $ 1,000 cash; 500 shares of stock in Provo Brick & Tile Company valued at $ 500, and 6,000 shares of Willow Bend Ranch Company stock valued at $ 3,000. It is alleged that certain representations made by the defendants, and relied on by plaintiffs, induced them to part with their property. The representations alleged to be false and fraudulent are: (a) That the ranch property of the Willow Bend Ranch Company was worth $ 55,000; (b) that this property was about to be sold for $ 30,000; (c) that the ranch was doing well and was a paying business; (d) that 5,000 shares of the ranch company stock was of the value of $ 3,000; (e) that on a sale for $ 30,000 the owner of the 5,000 shares would receive in cash $ 3,000; (f) that the stock was nonassessable; (g) that the capital stock of Provo Brick & Tile Company, 500 shares of which plaintiff took at a value of $ 500, was as good as gold; (h) that this stock had been sold for $ 1.25 a share; and (i) that the corporation paid annual dividends of 10 per cent on its stock.

The cause was tried to the court and a jury. At the close of plaintiffs' evidence defendants moved for a nonsuit specifying six grounds. The court granted the nonsuit and mentioned in his ruling that he did so upon the ground that "there is no evidence of damage sufficient to go to the jury." While numerous alleged errors have been assigned by appellants, the only assignments relied on go to the sustaining, by the court, of the motion for nonsuit and the entry of judgment of dismissal of plaintiffs' complaint. Two grounds only are relied upon and argued in the brief of respondent to sustain the judgment of the court: (1) That the cause is barred by the statute of limitations, Comp. Laws Utah 1917, § 6468, subd. 4; and (2) that "plaintiffs have not proven any damages or if any in what amount they have suffered" by the alleged false representations. It is necessary to discuss only the second ground.

The elements necessary to constitute actionable fraud are stated in the first headnote of Stuck v. Delta Land & W. Co., 63 Utah 495, 227 P. 791, as follows:

"Elements of 'actual fraud' consist of (1) a representation; (2) its falsity; (3) its materiality; (4) speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by person and in manner reasonably contemplated; (6) hearer's ignorance of its falsity; (7) his reliance upon its truth; (8) his right to rely thereon; and (9) his consequent and proximate injury."

For the purpose of this decision we need discuss only the question as to whether the evidence shows an injury or damage to plaintiffs by reason of the alleged false representations. This court in Guaranty Mortgage Co. v. Flint, 66 Utah 128, 240 P. 175, 179, quotes with approval from 2 Fletcher, Cyc. Corps. § 625, as follows:

"To constitute fraud, there must be some injury. In no case can a subscriber for shares avoid his subscription because of false representations, if he has not been injured or prejudiced thereby."

The measure of damages applicable to this situation is stated in 27 Cyc. p. 92, § 243, as follows:

"The measure of the damages sustained by the purchaser where a purchase has been induced by fraud, is, according to the weight of authority, the difference between the real value of the property purchased and the value which it would have had had the representations been true."

This rule has been adopted as the correct measure of damages in Hecht v. Metzler, 14 Utah 408, 48 P. 37, 60 Am. St. Rep. 906.

It is apparent from a reading of the alleged fraudulent representations relied on that many of them are mere expressions of opinion which do not constitute actionable fraud. Not all the representations were shown to be false. There are, however, sufficient allegations of false representations supported by the evidence to warrant a submission of the case to the jury provided there is proof of injury...