Arnett v. Sanderson

• Decision Date: 15 October 1923
• Docket Number: Civil 1965
• Citation: 25 Ariz. 433,218 P. 986
• Parties: LEE ARNETT, Appellant, v. H. A. SANDERSON, Appellee
• Court: Arizona Supreme Court

218 P. 986

25 Ariz. 433

LEE ARNETT, Appellant, v. H. A. SANDERSON, Appellee

Civil No. 1965

Supreme Court of Arizona

October 15, 1923

APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Affirmed.

Mr Weldon J. Bailey and Mr. John W. Ray, for Appellant.

Messrs Ward & Griffith, for Appellee.

OPINION

WINDES, Superior Judge.

This is an action by the appellant, plaintiff below, designated the "plaintiff," against the appellee, defendant below, designated the "defendant," upon a promissory note dated January 31, 1918, payable to Ruby and Bowers, and executed by the defendant. On April 18, 1918 before maturity of the note, the same was indorsed by Ruby and Bowers to the plaintiff, Lee Arnett. The note was given as part of the purchase price for a certain breeding jack, which Ruby and Bowers sold to the defendant. The case was tried before a jury, and resulted in a verdict for the defendant.

The defendant in his answer admits the execution of the note, but alleges, among other things, that the plaintiff is not the holder thereof in due course, and did not take it in good faith and for value. As a separate defense the defendant sets forth, among other things, that on the thirty-first day of January, 1918, the defendant entered into a written contract with said Ruby and Bowers for the purchase of a jack for the sum of $1,500, for which the defendant gave his notes, one of which is the note sued on; that the contract contains certain warranties concerning the worth of the animal; that in selling the animal to the defendant Ruby and Bowers made certain false all of which the plaintiff had knowledge of; and that the plaintiff knew, or should have known, of these warranties, and knew, or should have known, that Ruby and Bowers obtained the note by fraud and misrepresentation.

After the plaintiff had submitted a prima facie case, H. E. Sanderson, brother of the defendant, testified, in substance, that, acting in behalf of the defendant, he assisted in purchasing the animal; that in order to induce the defendant to purchase, Bowers, of Ruby and Bowers, stated to him and to defendant that the animal was a sure foal-getter; that he had two or three colts and that they were certain of his foal-getting abilities; that he had been broken to stand mares, and that they would have no chance of losing a cent upon the jack; that he would back all of his statements with a written guaranty. This witness further testified that at the time of the purchase the animal was about four years old; that the first season he was bred to fifteen or twenty good mares and they got one colt, even though some of the mares were returned for several breedings; that the second season he bred him to a number of good mares, and got no colts. This witness also testified that the jack was not broken to stand mares, but he had a good deal of trouble with him in this respect.

There was introduced in evidence the written contract of sale, wherein appears the guaranty that if the animal did not get sixty per cent of producing mares that were properly bred and returned for trial at the end of the second week, another animal would be furnished of a similar price and quality upon the delivery of this animal at Davis, California. At the bottom of this contract there is written in what appears to be the following:

"If jack hast to be change at Phoenix, Arizona, or Davis, California."

The defendant, in explaining this written addition, stated that when he looked over the contract he found it did not contain the guaranty that animal was a sure foal-getter, and that Mr. Bowers said he would write this guaranty in, and said he would change the place of delivery of the animal to Phoenix, Arizona, instead of Davis, California, in case it should prove unsatisfactory.

Defendant's testimony corroborated his brother's, H. E. Sanderson. The defendant further testified that he relied upon the representations made, and that when he discovered the jack was not as represented, he wrote Ruby and Bowers asking for an adjustment, and offering to deliver the jack at Phoenix, Arizona; that Ruby and Bowers promised to come out and make the adjustment and never did so.

It also appears that the defendant made some payments of interest on the note, but he testified that he did so believing that the plaintiff was an innocent purchaser in good faith.

The plaintiff testified, by deposition, that he lived in Portland, Oregon; that he had known Mr. Ruby since 1913, who also lived at Portland; that he had purchased about $40,000 worth of Ruby and Bowers' notes. Over the objection of the plaintiff, witnesses W. R. Stevens and W. B. Stevens were permitted to testify substantially that, prior to 1918, W. B. Stevens purchased a stallion from Ruby and Bowers, which proved to be worthless for breeding purposes, and gave notes for the purchase price, and that the notes were assigned to the plaintiff Arnett. W. R. Stevens further testified that in 1917 he went to Oregon to see Ruby and Bowers, and that a man at Ruby's ranch sent him out to see the plaintiff; that he informed the plaintiff that the horse was no good, and that W. B. Stevens' father refused to pay the note, and that Arnett, the plaintiff in this case, advised him that he was acquainted with both Ruby and Bowers. Witness W. B. Stevens was permitted to testify that prior to 1918 he had written Arnett that Ruby and Bowers were crooks; that they had sold a horse to one Hartwick under the representation that he was a sure foal-getter, for which notes were given, and the notes went to plaintiff; that he wrote the plaintiff, and advised him that the Hartwick horse was not satisfactory; and that he knew that the plaintiff received his letters from replies he had received thereto; that he wrote the plaintiff he was going to sue Ruby and Bowers, and the plaintiff wrote back, "Don't bring suit against them; they are good men. We are bending every effort that we can to locate you a horse." It also appears from this witness' testimony that breeding animals had been sold by Ruby and Bowers to others prior to 1918, which proved unsatisfactory, for which notes were given and assigned to the plaintiff. At the conclusion of the testimony the plaintiff moved for a directed verdict, which motion was denied.

The plaintiff makes a number of assignments of error, but those which are really essential to the determination of this case are the following:

First. That the court erred in permitting defendant and his brother H. E. Sanderson, to testify concerning the representations of Bowers leading up to the sale of the animal and the execution of the contract.

Second. That the court erred in allowing W. R. Stevens and W. B. Stevens to testify concerning other and independent sales of unsatisfactory animals by Ruby and Bowers, and that the plaintiff knew of such sales prior to the purchase of the note sued on.

Third. That the court erred in not rendering a directed verdict for the plaintiff.

The written contract for the sale of the animal, which was executed by the parties and introduced into evidence, contains the following guaranty:

"Guaranty: If the above-named stallion does not get 60 per cent of the producing mares that are properly bred and returned for a second trial at the end of the third week, in foal, during the breeding season, commencing April 1st and ending August 1st, we agree to furnish another stallion of the same price and quality upon delivery of the above-named stallion in as good and sound condition at the end of the first year as he is at present, to our barns at Davis, California. If the stallion above named should not be a breeder, or should not be true to pedigree furnished, we agree to furnish another stallion at the same price and quality upon delivery of the above-named stallion in good and sound condition as at present, in our barns at Davis, California, and in consideration thereof, the undersigned, vendee, hereby waive any and all damages, or right of action for damages created by statute, or otherwise, that they, or either of them, might have, by reason of the failure of said stallion to be a breeder, or true to pedigree. Should the above-named stallion not fulfill this guaranty, we will gladly replace according to the terms of this contract, but will not be liable for any damages or offsets that may be claimed by the vendees, in verbal or written contract or changes made by agents. The undersigned purchasers hereby acknowledge that they have read this contract, and that no representations or guaranties were made to them as an inducement to purchase said stallion, or otherwise, except those contained in this instrument, and it is understood that Ruby and Bowers are not to be held liable upon any guarantee or representation, except those contained in this instrument."

That parol testimony, generally, cannot be admitted to vary the terms of a written contract is elementary. However, there are a few exceptions to this general rule, and one of them is that parol testimony of misrepresentations, which cause the execution of the contract, is admissible. This is true, even though the written contract contains written guaranties, or recitals to the effect that all agreements between the parties are contained therein, or a provision that no verbal agreements affecting the validity will be recognized. 22 Corpus Juris, pp. 1212, 1216; Hodgkins v. Dunham, 10 Cal.App. 690, 103 P. 351; Jones v. Grieve, 15 Cal.App. 561, 115 P. 333; Berrendo Irrigated Farms Co. v. Jacobs, 23 N.M. 290, 168 Pac.

Hodgkins v. Dunham and Jones v. Grieve are both very similar to the case at bar, and in both of these cases the court said that the fraudulent representations could be proven, "notwithstanding...