Atlas Acceptance Corporation v. Weber

• Decision Date: 08 July 1933
• Docket Number: 31231.
• Citation: 23 P.2d 479,138 Kan. 89
• Parties: ATLAS ACCEPTANCE CORPORATION v. WEBER.
• Court: Kansas Supreme Court

23 P.2d 479

138 Kan. 89

ATLAS ACCEPTANCE CORPORATION v. WEBER.

No. 31231.

Supreme Court of Kansas

July 8, 1933

Syllabus by the Court.

That automobile dealer induced finance company to buy note secured by mortgage on automobile by representing that purchaser had paid $620 cash as first payment on automobile held actionable fraud, where purchaser had given diamond rings in lieu of cash and finance company was compelled to repossess automobile to its damage.

Where an automobile dealer represented to a finance company that a person buying a car from the dealer had paid $620 cash as the first payment on the car, and thereby induced the finance company to buy a note secured by a chattel mortgage on the car, and later the finance company was compelled to repossess the car to its damage, it was actionable fraud on the part of the dealer to represent that $620 cash had been paid when as a matter of fact two diamond rings had been given in lieu of cash.

Appeal from District Court, Johnson County; Garfield A. Roberds Judge.

Action by the Atlas Acceptance Corporation against J. O. Weber. Judgment for defendant, and plaintiff appeals.

Judgment reversed, with directions.

Edward M. Tracewell, of Kansas City, Mo., for appellant.

S. D Scott and Howard E. Payne, both or Olathe, for appellee.

SMITH Justice.

This action was to recover damages for fraud and misrepresentation in the sale of a note and mortgage by defendant to plaintiff. Judgment was for defendant. Plaintiff appeals.

The petition alleged that defendant was an automobile dealer that plaintiff was in the business of buying automobile paper; that defendant offered plaintiff a note in the amount of $1,444.68 secured by a chattel mortgage on an Auburn automobile; that at the time of making the offer defendant represented to plaintiff that the car was new; that it was being sold for $1,820, and that the buyer was paying $620 cash, and that the balance due on the automobile was $1,200. The petition further alleged that subsequently defendant represented in writing that car was new; that he was receiving $620 in cash, and that the car was selling for $1820. It was then alleged that plaintiff relied upon the truth of these statements and purchased the note, and that the statements were false and known by defendant to be false and made for the sole purpose of inducing plaintiff to buy the note.

The petition further alleged that in fact the car was sold for $1,400; that the purchaser did not pay $620 in cash, but gave his note for $200; that the car was not new, but was a demonstrator, and that plaintiff was induced by these false representations to buy the note, and by reason of these things plaintiff was damaged in the amount of $584.16.

The answer of defendant was a general denial. It alleged further that plaintiff had knowledge that the car in question was a demonstrator; that plaintiff solicited the purchase of the note; prepared all the papers and had knowledge of all the details of the sale of the car. The answer denied that plaintiff was damaged.

Among other things the evidence shows that the person to whom the car was sold made only two payments on the note and plaintiff repossessed the car and sold it for $700.

The jury found generally for the defendant, and judgment was entered accordingly. The appeal is from that judgment and from the order denying a new trial. The plaintiff complains first of the giving of instruction No. 3. In the brief of plaintiff that instruction is divided into two parts. The first part is as follows: "You are further advised that if the plaintiff had knowledge of all of the circumstances surrounding the condition of the said Auburn car, and of its sale and that with such knowledge it accepted said note endorsed 'Without Recourse' as to the payee, who is the defendant herein, then in that event it cannot charge the defendant for any loss it may have sustained by reason of the failure of the purchaser of said car to make the payments on said note in accordance with its terms, and loss sustained by the plaintiff after it has repossessed said car and sold the same under said chattel mortgage, for the endorsement of said...