Advance-Rumely Thresher Co., Inc. v. Jacobs

• Decision Date: 09 October 1931
• Docket Number: 5720
• Citation: 51 Idaho 160,4 P.2d 657
• Parties: ADVANCE-RUMELY THRESHER COMPANY, INC., a Corporation, Appellant, v. GLEN JACOBS and A. C. JACOBS, Respondents
• Court: Idaho Supreme Court

4 P.2d 657

51 Idaho 160

ADVANCE-RUMELY THRESHER COMPANY, INC., a Corporation, Appellant, v. GLEN JACOBS and A. C. JACOBS, Respondents

No. 5720

Supreme Court of Idaho

October 9, 1931

CONTRACTS-FRAUD-EVIDENCE-SALES-RETURN OF GOODS-TRIAL-INSTRUCTIONS.

1. Evidence of fraudulent representations inducing execution of contract held admissible, notwithstanding written contract signed by parties recited that all representations were contained therein and no others were binding.

2. Fraud vitiates any contract.

3. Evidence introduced for certain purpose should be restricted to that purpose.

4. Receipt for delivery of tractor was not objectionable as attempting to vary terms of written sale contract, if contract was unenforceable for fraud inducing its execution.

5. Where buyer's alleged fraud induced purchase of tractor service receipts, admitted for impeachment purposes only, did not preclude finding, in accordance with buyer's testimony that receipts were signed in blank and given to enable mechanic to receive his compensation from seller.

6. That buyer did not return tractor, as stipulated in sale contract did not constitute confirmation of sale contract allegedly induced by fraud, where evidence showed buyer retained tractor at seller's repeated requests.

7. Where son acted for father in negotiations leading to sale contract, son's testimony that he informed father of misrepresen- tations of seller's agent relied upon by father to avoid contract, held competent.

8. That proof of misrepresentations allegedly made to defendant showed they were made to defendant's representative, who informed defendant thereof, held not prejudicial variance.

9. Defendant, alleging misrepresentation inducing contract could testify regarding what his agent told him had been represented.

10. In action upon note given for tractor, defendant having made prima facie proof of fraud inducing purchase of tractor, refusing to direct verdict for plaintiff held proper.

11. Instructions must be read and considered as whole.

12. Failure to give instruction not requested is not error.

APPEAL from the District Court of the Ninth Judicial District, for Fremont County. Hon. C. J. Taylor, Judge.

Action on promissory note. Judgment for defendants. Affirmed.

Judgment affirmed. Costs awarded to respondents.

Merrill & Merrill, for Appellant.

Where a contract contains an express warranty, particularly if the contract also by its terms excludes other warranties, and contains a stipulation as to what shall be considered a breach thereof, no other warranty, express, implied or statutory, can be relied upon. (Gaar Scott & Co. v. Hodges, 22 Ky. Law Rep. 889, 90 S.W. 580; D' Arcy Spring Co. v. Austin, 196 Ind. 98, 146 N.E. 214; Brown v. Russell, 105 Ind. 46, 4 N.E. 428; Trapp v. New Birdsall Co., 99 Wis. 458, 75 N.W. 77.)

Where a contract of sale is reduced to writing and contains specific warranties, representations in the nature of warranties antecedent to the contract cannot be urged as fraud. (Bates Tractor Co. v. Gregory, 199 Mich. 8, 165 N.W. 612; J. B. Colt & Co. v. Reade, 221 Mich. 92, 190 N.W. 672.)

When a written contract contains a statement that it covers all the representations made and no other statements are binding upon either party, oral representations antedating the signing of the contract are inadmissible. (Toledo Computing Scale Co. v. Young, 16 Idaho 187, 101 P. 257; Kemmerer v. Pollard, 15 Idaho 34, 96 P. 206; L. D. Powell Co. v. Sturgeon, (Tex. Civ. App.) 299 S.W. 274; Balcom v. Michael, 68 Colo. 407, 191 P. 97; Stevens v. Stanley, 153 Miss. 801, 121 So. 814.)

A failure of a purchaser of a machine to return or offer to return it to the seller after discovering the alleged misrepresentations and its subsequent use constitutes a ratification of the contract and prevents rescission. (Troendly v. J. I. Case Co., 50 Idaho 506, 297 P. 1103; Advance-Rumely Thresher Co. v. Stohl, 75 Utah 124, 283 P. 731.)

Frank L. Soule and E. H. Hillman, for Respondents.

Appellant cites the minority rule. The great weight of authority and reason is that fraud vitiates everything, and it is not rendered inapplicable by the fact that the writing contains a recital to the effect that all representations and agreements between the parties, or similar provisions, are contained therein. Such defense does not seek to vary the terms of the contract, but merely to show fraud in its inception. We cite only a few of the great mass of such authority. (3 Jones on Ev., 2d ed., secs. 1517, 1519; Elliott Supply Co. v. Green, 35 N.D. 641, 160 N.W. 1002; Berrendo Irrigated Farms Co. v. Jacobs, 23 N.M. 290, 168 P. 483; Arnett v. Sanderson, 25 Ariz. 433, 218 P. 986; Mooney v. Cyriacks, 185 Cal. 70, 195 P. 922-926; National Cash Reg. Co. v. Midway City Creamery Co., 49 N.D. 441, 191 N.W. 762; Carty v. McMenamin, 108 Ore. 489, 216 P. 228; Whiting v. Squeglia, 70 Cal.App. 108, 232 P. 987.)

Regardless of the rule in other states, "this court has held that ordinary prudence and diligence do not require a person to test the truth of representations made to him by another as of his own knowledge, and with intention that they shall be acted upon, if the facts are peculiarly within the other party's knowledge or means of knowledge, tho they are not exclusively so, and tho the party to whom the representations are made may have an opportunity of ascertaining the truth for himself." (Detroit Fire & Marine Ins. Co. v. Sargent, 42 Idaho 369, 246 P. 311; Burger v. Calek, 37 Idaho 235, 215 P. 981, and cited cases; 13 C. J. 392; Outcault Advertising Co. v. Jones, 119 Ore. 214, 239 P. 1113.)

Where delay in returning personal property purchased by a defrauded party is occasioned by repeated requests of seller to continue to retain it and try to make it perform as represented, the redelivery is waived. (Harrison v. Russell & Co., 12 Idaho 624, 87 P. 784.)

BUDGE, J. Lee, C. J., and Givens, Varian and McNaughton, JJ., concur.

OPINION

BUDGE, J.

Appellant sold and delivered to respondents a tractor and one set of five and one-half inch spade cleats (such equipment being hereinafter referred to as a "tractor") and thereafter respondents executed and delivered to appellant two promissory notes in payment thereof and secured said notes by chattel mortgage upon said tractor. Upon respondents' failure to meet the payment as stipulated in said notes and mortgage, appellant declared the entire indebtedness due and proceeded by notice and sale to foreclose the chattel mortgage. Under such foreclosure the tractor was sold at public auction and purchased by appellant, who indorsed upon the notes the net amount for which said tractor was sold. Appellant brought this action to recover the balance due upon the notes, including attorneys' fees, etc. Respondents' answer in effect constitutes a general denial of the allegations of the complaint with an affirmative defense of fraud and misrepresentation inducing the purchase of the tractor and the execution of the notes and mortgage covering the same. The allegations of such affirmative defense are adopted by respondents as a cross-complaint, which appellant denied, wherein it is sought to recover freight charges paid by respondents in connection with the transportation of the tractor. Upon the issues thus framed the cause was tried to the court and a jury, resulting in verdict and judgment in favor of respondents, from which judgment, and from a motion for new trial, which was denied, this appeal is prosecuted.

Appellant makes twenty-six assignments of error, which are grouped in its brief under the following heads: That the court erred in the admission, over appellant's objection, of certain evidence and in refusing to strike certain evidence; that the court erred in refusing to direct a verdict in appellant's favor, due to the insufficiency of the evidence in support of the answer and cross-complaint; and that the court erred in giving certain instructions. We will discuss the questions in the order stated.

The contract or order for the purchase of the tractor contains the following provisions:

"Said machinery is warranted to be well made and of good material, and with proper use capable of doing as good work as any other machine of the same kind, size and rated capacity, working under like conditions, . . . .

"There are no representations, warranties or conditions, express or implied, statutory or otherwise except those herein contained and no agreement collateral hereto shall be binding upon either party unless in writing hereupon or attached hereto, signed by Purchaser and accepted by Vendor at its head office. . . .

"This contract shall not be obligatory upon Vendor until accepted by it at its head office, notice of which acceptance is waived. . . . "

Upon the trial of the cause appellant insisted throughout that evidence was not admissible to vary the terms of the written contract entered into between the parties, particularly where the written contract contained a provision that no representations or warranties of the parties other than those contained in the contract or attached thereto in writing should be binding upon the parties. On the other hand respondents contended that representations, if proven to be false, made prior to and which induced the execution of the contract, notes and mortgage were admissible upon the theory that fraud in its inception vitiated the contract and the result was as if no contract had been entered into. In particular respondents rely upon two alleged false and fraudulent representations alleged to have been made by the agent of appellant, namely: That the tractor was so constructed that it would develop sufficient power in high gear to pull four fourteen-inch beam bottom plows to a depth...