Anderson v. Knapp, 320

• Decision Date: 06 December 1966
• Docket Number: No. 320,320
• Citation: 225 A.2d 72,126 Vt. 129
• Parties: Eleanor ANDERSON v. Myrtle E. KNAPP, Universal CIT Credit Corporation and Richard Small.
• Court: Vermont Supreme Court

Page 72

225 A.2d 72

126 Vt. 129

Eleanor ANDERSON v. Myrtle E. KNAPP, Universal CIT Credit Corporation and Richard Small.

No. 320.

Supreme Court of Vermont.

Dec. 6, 1966.

Waldo C. Holden, Bennington, for plaintiff.

John P. Morrissey, Bennington, for defendant, Myrtle Knapp.

Ryan, Smith & Carbine, Rutland, for Universal C. I. T. Credit Corporation and Richard Small.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

KEYSER, Justice.

The plaintiff brought this action in law to recover damages against the defendants on three counts in Bennington County Court. The first count alleges the defendants fraudulently induced plaintiff to execute a guaranty agreement with defendant Universal CIT Credit Corporation (CIT) for the extension of credit to Equinox Motors, Inc. The second count also claims fraud and further that CIT had not given proper credit on its account with Equinox Motors for certain automotive parts which were removed from the garage premises by CIT. The third count repeats the claim of fraud and alleges defendant Knapp, who handled the finances of Equinox Motors, improperly deposited receipts and made unauthorized withdrawals for her benefit.

Each defendant answered and CIT also filed a counterclaim against the plaintiff to recover under her guaranty agreement the unpaid balance of its account against Equinox Motors, Inc. Trial way by court.

The court on its findings dismissed the complaint as to all defendants. The court found a balance of $9321.97 was due to CIT on its Equinox Motor's account. CIT filed a motion for judgment to recover this amount from the plaintiff but the court failed to rule on the motion. The case is here on appeal by both plaintiff and defendant CIT.

Since fraud is alleged in each of the three counts by defendants persuading the plaintiff to sign the guaranty on behalf of Equinox Motors, we first consider that question. The plaintiff seeks to nullify the agreement because of fraud. If there was no inducement by fraudulent representations, which plaintiff claims were made, then the guaranty is a valid and enforceable contract.

Plaintiff challenges portions of Findings 7 and 9 on the ground that there is no credible evidence fairly and reasonably tending to support them. That part of Finding 7 excepted to is, in substance, that the guaranty of plaintiff was required for credit to be extended to Equinox Motors. As to Finding 9 the exception runs to that part which finds that 'defendant Small made no representations to her (plaintiff) aside from the fact that this was necessary in order for Equinox Motors, Inc. to receive credit.'

To support an action for fraud or deceit, the representations must be of existing facts relating to the subject matter of the contract, affecting its essence and substance, not matters of judgment or opinion, nor of facts that will exist, nor of promises. The representations must be made by the seller to induce the buyer to enter the contract; they must be false and at the time known by the seller to be false; or made by the seller as of his own knowledge without his in fact knowing them to be true; they must not be open to the knowledge of or known by the buyer and must be relied upon by him in entering the contract to his damage. Batchelder v. Birchard Motors, Inc., 120 Vt. 429, 433, 144 A.2d 298; Rice's Admr. v. Press, 177 Vt. 442, 446, 94 A.2d 397.

Equinox Motors, Inc. was a corporation formed by Paul Anderson, plaintiff's husband, and defendant Knapp as the principal incorporators, owners and officers to conduct a garage and auto dealership business. Defendant Small is the district manager of CIT. Defendant Knapp acting for Equinox Motors applied to CIT for credit in connection with the operation of the business. CIT required guaranties before it would extend the credit requested.

The plaintiff testified that she signed the guaranty agreement at her home in the presence of defendants Knapp and Small and her husband; that Mr. Small told her CIT kept a weekly watch on the cars of Equinox Motors and the most she would be responsible for was one car; and that Mrs. Knapp said her mother, a Mrs. Edgerton, 'was supposed to sign hers' (Mrs. Knapp's guaranty). Mr. Anderson corroborated this testimony of plaintiff that Mrs. Knapp was present.

Both defendants Knapp and Small denied that Mrs. Knapp was present at the time indicated. Small also denied that he told the plaintiff she would be liable for only one car. He testified he explained the document to the plaintiff at the request of her husband; what her obligation was under it; that the reason for the guaranty agreement was because plaintiff was the one who had the collateral; and that after this, Mr. Anderson asked his wife, the plaintiff, to sign the agreement, and she did.

The plaintiff says the evidence shows that three guaranties were required. There were two other guaranties executed, one dated February 21, 1962, and one dated March 9, 1962. Each pre-dated the agreement executed by plaintiff on March 13, 1962. Plaintiff urges that she did not knowingly assume the entire obligation of Equinox Motors thus implying that the existence of the other two guaranty agreements was an inducement for her to sign. This claim is contrary to plaintiff's testimony that she had not seen either one of the other two agreements at the time of signing her agreement. Defendant Small also testified he had no discussion with plaintiff about the three guaranties.

On the above controverted evidence, the court found defendant Small made no representations to plaintiff except that the guaranty 'was necessary in order for Equinox Motors, Inc. to receive credit in the operation of their business from Universal CIT Credit Corporation.' There is no finding of fraud or misrepresentation by either defendant Knapp or Small, or that representations were made by them which induced plaintiff to sign the guaranty.

A finding must stand if supported by any credible evidence, although there may be inconsistencies or even substantial evidence to the contrary. It is the trier of fact to whom is given the sole determination as to the weight of the evidence, the credibility of the witnesses and the persuasive effect of the testimony. Smith v. Lentini, Extr., 125 Vt. 526, 528, 220 A.2d 291. All conflicts in the testimony must be resolved against the excepting party. Savard v. George and Bolles, 125 Vt. 250, 254, 214 A.2d 76; Tower v. Tower, 120 Vt. 218-219, 138 A.2d 602; 12 V.S.A. § 2385.

Furthermore, the plaintiff, being a party, was an interested witness and the court 'didn't have to believe her.' Scott's Extr. v. Beland, 114 Vt. 383, 396, 45 A.2d 641.

Findings 7 and 9 are supported by the evidence and will not be upset even though there is evidence to the contrary. Taylor v. Henderson & Smith, 112 Vt. 107, 111-119, 22 A.2d 318. The failure of the court to make an affirmative finding on the issue of fraud is supported by the record. The court thus resolved the conflict in the evidence on the issue of fraud in favor of the defendants and we find no error in this determination of the factual issue.

Moreover, the court did find that the plaintiff executed the guaranty and that only defendant Small and the Andersons were present at that time. These findings are amply supported by the evidence.

By Count II and her answer to defendant CIT's counterclaim, the plaintiff claims that Equinox Motors did not receive proper credits for automotive parts which defendant CIT removed and returned to the manufacturer for credit. Plaintiff contends that these parts were taken and accepted by CIT in full satisfaction of the debt owed by Equinox Motors to CIT under the provisions of 9 V.S.A. § 1796. This statute provides 'Unless such sale (public sale) is made within sixty days after possession of the mortgaged property is taken by or in behalf of mortgagee or assignee, such property shall be deemed to have been taken and accepted in full satisfaction of the mortgage debt and no action shall be maintained to recover such debt or any part thereof * * *'

The court found that Equinox Motors was entitled to certain credits on its obligation to CIT which included credit for returned parts. There is no finding that CIT took the parts into its possession under the mortgage from Equinox Motors or to satisfy and extinguish the entire debt owed by Equinox Motors.

The testimony of defendant Small was that these parts were delivered to CIT for the purpose of extending a service to Equinox Motors. The witness testified that it was a tremendous job to catalogue the parts by serial numbers and repackage them properly for acceptance by the manufacturer; that the parts were transported from the premises of Equinox Motors to a garage in Rutland for the purpose of helping Equinox Motors return them to the manufacturer for credit; and that Mr. Anderson acquiesced in this procedure.

Mr. Anderson testified that Mr. Small said the taking of the parts by CIT and returning them to the factory for credit 'would clear the whole situation up' and 'that was supposed to take care-to straighten the rest of the things out.' Defendant Small denied making any statement that the parts and accessories would be in full satisfaction of the indebtedness of Equinox Motors. The burden was on the plaintiff to establish by clear or positive evidence that the returning of the parts by CIT was to cancel all of its claim against Equinox Motors or intended to do so. The evidence presented a factual question for the court to decide.

There is no affirmative finding on this issue raised by the plaintiff. The failure of the court to make such finding is supported by the evidence. Under these circumstances, the statute, 9 V.S.A. § 1796, does not apply.

Plaintiff filed Request for Admission by CIT on January 23, 1965. CIT's answer to this request...