Brown v. Karas, 5220

• Decision Date: 26 November 1951
• Docket Number: No. 5220,5220
• Parties: BROWN v. KARAS.
• Court: Arizona Supreme Court

Page 799

237 P.2d 799

73 Ariz. 62

BROWN v. KARAS.

No. 5220.

Supreme Court of Arizona.

Nov. 26, 1951.

Rehearing Denied Jan. 8, 1952.

H. Verlan Anderson, Milton L. Ollerton, of Phoenix, for appellant and cross-appellee.

Laney & Laney, of Phoenix, for appellee and cross-appellant.

PHELPS, Justice.

Wilburn Brown, hereinafter referred to as Brown, commenced an action in the superior court of Maricopa County to recover from James Karas, hereinafter called Karas, the sum of $10,000. Karas in his answer, denied the indebtedness and filed two separate counterclaims. In the first counterclaim he asked for judgment for $40,000 which he claimed Brown owed him under the terms of an agreement entered into by the parties on October 5, 1945. In the second counterclaim he asked for damages for a felonious assault he alleged to have been committed upon his person by Brown. The cause was tried to a jury and verdicts returned in favor of Karas and against Brown on the complaint; in favor of Karas and against Brown on the first counterclaim, and awarding Karas damages in the sum of $40,000; and in favor of Brown and against Karas on the second counterclaim, awarding Karas nothing thereon. Judgment was entered upon the verdicts accordingly.

The trial court thereafter denied Brown's motion for judgment notwithstanding the verdict and his motion to vacate the judgment against him and for a new trial on his complaint and granted his motion for a new trial on Karas' first counterclaim. The court also granted Karas' motion for a new trial on his second counterclaim.

Brown appeals from the order of the trial court denying his motion to vacate and set aside the judgment entered on his complaint, and from the order denying his motion for a new trial. Karas appeals from the order of the trial court granting Brown's motion for an order setting aside the judgment entered upon his first counterclaim and from the order granting Brown's motion for a new trial thereon.

In order to clarify the issues presented, we believe it necessary to set forth in considerable detail the facts leading up to this litigation which are as follows:

Brown and Karas first became acquainted in November, 1944. In April 1945 Karas sold Brown a tavern he was then operating on East Van Buren Street near Phoenix. Karas at that time owned a number of perlite claims located near Superior, Arizona. He was also the owner of considerable machinery located on East Van Burnen Street used by him for processing or 'popping' perlite and had been engaged on a small scale in processing the same. He had likewise become the owner of all rights to a pending patent on the 'popping' process of this material which as we understand it, is designed to expand the perlite originally extracted from the earth and to reduce its specific gravity. The whole property sold to Brown represented an investment by Karas of approximately $32,000.

Karas lived nearby and was a frequent visitor at the tavern. He first talked to Brown about selling him the property here involved as early as March, 1944. They subsequently talked it over on a number of occasions but Brown testified he did not become very much interested until shortly before October 5th, the date on which the first agreement to sell was reduced to writing and signed by Karas. At that time Karas had several prospects of sale, one of which was apparently ready for closing for the sum of $45,000 with a down payment of $20,000. Brown knew of this and persuaded Karas to not consummate the sale and thereupon entered into an agreement with him to purchase the perlite claims, the machinery and the pending patent rights for the 'popping' process for the sum of $50,000, $10,000 payable in cash and the balance of $40,000 to be paid in installments of $500 per month beginning three month after the date of the agreement; and in addition thereto Karas was to receive 20% of the capital stock of a corporation to be thereafter organized by Brown to take over the perlite operation. This agreement as above stated was evidenced by a written memorandum, written by Brown, bearing date October 5, 1945.

Subsequently, on October 19, 1945, Brown prepared another written agreement in which it is provided that 'This agreement expressly voids and cancels out that certain agreement executed by first party to second party, October 4, 1945.' (This date unquestionably is a typographical error and refers to the memorandum to which reference is hereinabove made bearing date October 5, 1945.) The latter agreement was signed by both Brown and Karas. The agreement of October 5, 1945, was only signed by Karas but the name of Brown was incorporated in the body of the memorandum and named therein as the purchaser of the property sold to him by Karas.

Brown claims the agreement of October 19th is controlling in determining the rights of the parties while Karas claims that his signature thereto was procured by fraud and deceit; that he cannot read and that the instrument read to him by Brown was entirely different from the actual contents of the instrument to which his name is subscribed; that such instrument is therefore invalid and of no effect and that the rights of the parties are to be determined by the agreement of October 5th.

Brown simply alleges in his complaint that Karas was indebted to him in the sum of $10,000 without indicating that it was the down payment on the agreement of October 5th. Karas answered, denying the indebtedness and filed two separate counterclaims, the first of which alleges the terms of the agreement between him and Brown bearing date October 5, the balance unpaid thereon, and that the agreement of October 19, 1945, was procured through trickery, fraud and deceit and by reason thereof is wholly invalid and of no force and effect; that Brown has wholly failed to pay the balance due under the terms of the original agreement and asks for damages in the sum of $55,000.

The second counterclaim is in nowise involved in this appeal and will therefore be disregarded.

We will first consider the assignments of error upon which Brown relies in support of his appeal. His first assignment is directed at the court's refusal to grant him a judgment on his complaint and judgment on the first counterclaim notwithstanding the verdict. An examination of the notice of appeal indicates that no appeal was taken from the ruling of the court denying his motion for judgment n. o. v. The matter is therefore not before us and will not be considered.

The second assignment is based upon the refusal of the trial court to grant Brown's motion for a new trial on his complaint. The motion for a new trial is based in part upon the ground that the agreement of October 5th had been induced...