Ades v. Wash

• Decision Date: 12 June 1923
• Citation: 199 Ky. 687,251 S.W. 970
• Parties: ADES v. WASH ET AL.
• Court: Kentucky Court of Appeals

251 S.W. 970

199 Ky. 687

ADES v. WASH ET AL.

Court of Appeals of Kentucky.

June 12, 1923

Appeal from Circuit Court, Franklin County.

Action by David Ades against J. T. and Mary E. Wash, to recover on notes given for the purchase price of a stock of merchandise in which defendants pleaded breach of warranty and deceit as a counterclaim. Judgment for defendants on their counterclaim, and plaintiff appeals. Affirmed.

T. L Edelen, of Frankfort, and J. S. Botts, of Lexington, for appellant.

Leslie W. Morris, of Frankfort, for appellees.

McCANDLESS J.

David Ades is a wholesale merchant in the city of Lexington. A retail dealer in that city was owing him a debt, and to collect this he took over the latter's stock of goods and ran the business himself, doing this by agents and clerks and continuing to furnish goods to that store from the wholesale establishment, charging them as he would have done if it had constituted a separate firm.

In August, 1916, he sold this stock of goods and fixtures to Mrs. Wash, she agreeing to pay him therefor, $5,833. There was a cash payment on the merchandise and a number of deferred purchase-money notes secured by mortgage on land.

This suit was brought in August, 1918, to recover on three notes for $1,575 and, to enforce a lien on certain lands in Franklin county. The defendant filed an answer admitting the execution of the notes and pleading breach of warranty and deceit as a counterclaim. It being alleged that at the time of the execution of the contract and prior thereto the plaintiff had represented to them that he had taken an inventory of the stock and fixtures a short time previous and that there was at that time $5,833 worth of goods in the store; that they relied on such representations and were thereby induced to make the purchase contract, but that same were false and untrue and so known to be by plaintiff; that in fact and in truth there was only $3,255 worth of goods in the store at that time, and they sought damages for the difference, or $2,577.

The court dismissed plaintiff's petition and gave defendant judgment for the sum of $1,002.80, this being the full amount claimed, and plaintiff appeals.

The appellant says that he had not invoiced the goods prior to the sale and did not know their value. The store owed the wholesale house the sum of $5,833, and he wanted to realize from the sale the amount of his debt, and so told defendants, but did not state the value of the goods, or mention a prior invoice. He was perfectly willing for them to invoice, or take any steps they wished to ascertain the value of the stock, but was holding it for what the store owed him, and was unwilling to take less. This was fully understood by defendants who saw the goods, and went to his wholesale house and examined the books to see the amount of the indebtedness. He did not know that they were claiming a shortage of the goods until this suit was filed, nearly two years afterward. It is shown by his bookkeeper that he pointed out the amount of the indebtedness to Mr. Wash, and another witness states that Wash told him that he purchased the goods at the amount of the indebtedness.

On the other hand, the appellee states that appellant told her he had taken an invoice, and that he had about $6,000 worth of goods. On a second occasion he stated the amount as $5,833, and he was sure they were there. She had no previous experience in the business and relied on his statements. The husband of the appellee testified that he acted as his wife's agent at times when she was not present, and that appellant told him he had invoiced the goods some time in May. He did not tell him what the invoice was, and said that he would sell them at what his wholesale books were with the house, at what the store owed him for goods at the time he made the transfer.

Further, in answer to another question, he said:

"When we were about to close the trade the books showed the house owed him $5,833. Q. What else did he say? A. Well, he said the goods were there, and I said to him that this is a little unusual way to buy goods without invoicing, but he said he knew the goods were there. Q. How much goods did he tell you was in the store at the time the books showed $5,833 in debt? A. He said the amount of the debt corresponded with the goods."

He gives the reason for taking the goods without an invoice that the appellant proposed if he would take his invoice that he would accept back as much as $800 or $1,000 of unsalable goods the 1st of January, and that they believed the goods were there and took him at his word. He had had some experience in other lines, but knew nothing of dry goods.

It is further shown that shortly after taking possession of the stock the appellees became suspicious of the deal and took an invoice at wholesale cost, which, together with the amount of their total sales up to that period, amounted to $3,255, but they gave no notice of this to appellant and withheld all knowledge of it from him until, as they say, in the spring, and continued to pay on the installment notes until the spring of 1917.

One witness states that she clerked for appellant prior to the sale and that she knew the wholesale cost mark of the goods, that there was an invoice taken about the 1st of May, but she did not know the amount of it, although she gives the names of three or four employees who assisted in taking the invoice. Only one of these testified. He denied that this young lady knew the cost mark but did not deny that the invoice was taken. One of appellant's witnesses, Lingenfelter, who had testified as to negotiating for the purchase just a few weeks before Wash's purchase admitted that appellant told him that there was about $3,000 worth of goods on hand, but says that he wanted the amount of his debt for it, although he did not say how much that was. He states, however, that the stock was increased soon after that, but could not say how much. The appellant did not introduce his bookkeeper to show any new purchases by the store during that period.

Ordinarily where a written contract is obtained by fraud, the injured party has his option to tender back the property received and seek a rescission of the contract, or he may affirm the contract and seek damages for his injuries, either by an action for deceit, or by way of counterclaim in a suit brought to enforce the contract. 13 C.J. §§ 304-307 and 682-687; Long v. Douthitt, 142 Ky. 431, 134 S.W. 453; Ligon v. Minton (Ky.) 125 S.W. 304. With some exceptions, such as sale by sample, warranty of quantity, etc.,...