Betenson v. Call Auto and Equipment Sales, Inc., 17600

• Decision Date: 19 April 1982
• Docket Number: No. 17600,17600
• Citation: 645 P.2d 684
• Parties: Eddy BETENSON, et al., Plaintiffs and Appellants, v. CALL AUTO AND EQUIPMENT SALES, INC., a Utah corporation, et al., Defendants and Respondents. Eugene L. LOWIN and Geneva Lowin, Plaintiff and Appellants, v. CALL AUTO AND EQUIPMENT SALES, INC., a Utah corporation, et al., Defendants and Respondents.
• Court: Utah Supreme Court

Page 684

645 P.2d 684 Eddy BETENSON, et al., Plaintiffs and Appellants,
v.
CALL AUTO AND EQUIPMENT SALES, INC., a Utah corporation, et
al., Defendants and Respondents.
Eugene L. LOWIN and Geneva Lowin, Plaintiff and Appellants,
v.
CALL AUTO AND EQUIPMENT SALES, INC., a Utah corporation, et
al., Defendants and Respondents. No. 17600. Supreme Court of Utah. April 19, 1982.

Page 685

Stephen B. Mitchell, Salt Lake City, for plaintiffs and appellants.

Bruce H. Jensen/David G. Williams, Salt Lake City, for Fireman's Fund.

R. Dale Potter, Salt Lake City, for Campbell.

Gaylen S. Young, Jr., Salt Lake City, for Call Auto.

DURHAM, Justice:

The plaintiffs in this consolidated action sought recovery from the defendant Fireman's Fund Insurance Company on a Motor Vehicle Dealer's Bond issued in favor of the defendant, Call Auto and Equipment Sales, Inc. The lower court granted a motion to dismiss by the defendant Fireman's Fund Insurance Company. The plaintiffs appeal from the order of dismissal and from the court's refusal to allow the plaintiffs to amend their complaints.

The plaintiffs furnished sums of money to the defendant, Call Auto, pursuant to written agreements drawn up by the defendant. These agreements typically state that the defendant has approached the plaintiff for the purpose of "entering into an investment" in the defendant's business of buying and selling "all types of personal property and equipment" as "a type of joint venture." Each agreement states the amount paid to Call Auto and sets out a repayment schedule of at least three interest payments ranging from 21/2 to 10 percent per month, followed by a repayment of the original sum, all on specified dates.

The agreements refer to these payments as plaintiff's share of the "profits and investment." The agreements also state that the plaintiffs' "investment" will be secured by "various personal property and equipment in the business," but that Call Auto may deal at a profit with the property and equipment "if they deem it expedient and proper." The agreements are signed by "Elroy T. Barlow, President" for Call Auto.

The plaintiffs alleged in their complaints that defendant Barlow induced them to enter the agreements by representing to them that Call Auto was a profitable business and that their money would be used solely for the buying, refurbishing and selling of various personal property and equipment, apparently heavy construction equipment. The plaintiffs alleged breach of contract and fraudulent misrepresentation in that the amounts paid to Call Auto have not been repaid, the plaintiffs were never given a security interest, and the money was not used for the purpose stated but for the general operation of Call Auto.

The plaintiffs asserted a claim against the defendant/respondent Fireman's Fund Insurance Co. under § 41-3-18 Utah Code Ann. (1953). Section 41-3-16 U.C.A. (1953) provides that a motor vehicle dealer must procure a bond before obtaining a dealer's license. Section 41-3-18 gives to any person who suffers a loss by reason of fraud or fraudulent misrepresentation a cause of action against the dealer or the surety on the...