Callahan v. Wolfe, 9399

• Decision Date: 31 March 1965
• Docket Number: No. 9399,9399
• Citation: 88 Idaho 444,400 P.2d 938
• Parties: Irvin J. CALLAHAN, Plaintiff-Appellant, v. Irvin F. WOLFE and Harry R. Minto, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 938

400 P.2d 938

88 Idaho 444

Irvin J. CALLAHAN, Plaintiff-Appellant, v. Irvin F. WOLFE and Harry R. Minto, Defendants-Respondents.

No. 9399.

Supreme Court of Idaho.

March 31, 1965.

Millar & Callister, Ronald G. Carter, Boise, for plaintiff-appellant.

James E. Schiller, Nampa, Gigray & Boyd, Caldwell, for defendants-respondents.

KNUDSON, Justice.

Early in August 1957 appellant learned through an advertisement of the Bake Young Realty Company, of Nampa, Idaho, that the Wolfe Implement Company, in Nampa, was being offered for sale. Appellant called the realty company, where he talked with one Donald Johnson. Thereafter appellant learned that respondent Irvin F. Wolfe was in the process of trading said implement business for motel property owned by respondent Harry R. Minto. Following a number of meetings and conversations between the parties during which certain representations were allegedly made by respondents relative to the value and financial condition of said implement company, appellant and wife executed a written contract dated September 23, 1957, under the terms of which appellants agreed to trade or exchange their farm property, consisting of 326 acres situate in Payette County, to respondent Minto and wife for the assets of said Wolfe Implement Company.

This action was commenced by appellant on January 17, 1961 seeking damages in the amount of $30,000 allegedly suffered by appellant because of fraud and misrepresentations on the part of respondents. Trial was had before a jury and after appellant had submitted oral and documentary evidence in support of his complaint and rested his case, the court granted respondents' motions for involuntary dismissal of appellant's action. Appellant thereafter filed a motion for new trial, which was denied. This appeal is from the order granting dismissal of the action and the order denying a new trial.

Prior to trial respondent Wolfe moved to strike a portion of appellant's amended complaint wherein it was alleged in substance that respondent Wolfe represented to appellant and respondent Minto that there were no obligations against the implement company other than the two accounts listed in the affidavit of Minto which was furnished to appellant in compliance with Idaho Code, ch. 7, tit. 64, known as the Bulk Sales Law of this state; that respondent Wolfe well knew that said implement company was in truth and fact indebted far in excess of the two items listed; that it was indebted to other creditors for freight and equipment in an amount exceeding $6,000. The court granted said motion to strike upon the ground that the allegations and language stricken were immaterial. This action of the trial court is assigned as error by appellant.

The portion of said amended complaint ordered stricken contained the only allegations in the complaint whereby respondent Wolfe was charged with having made false representations to appellant regarding the outstanding indebtedness of the implement company and the names of its creditors. It also contained the only alleged false representations contained in writing which were allegedly made by respondent Minto.

Respondents attempt to justify the court's action by the contention that the purpose of such affidavit under the Bulk Sales Law is merely to insure that creditors are given notice of the pending transaction and is in no way intended as a protection to the buyer from misrepresentations of the seller. It may be conceded that the Bulk Sales Law is primarily designed to prevent the vendor from putting his assets beyond the reach of bona fide creditors. However, it is also designed to protect a vendee who substantially complies with its requirements. Albano v. Motel Center of Pocatello, 75 Idaho 348, 271 P.2d 444.

It is generally recognized that allegations will not be stricken where the result will render the pleading ambiguous, devitalized or otherwise defective; or where the structure on which a cause of action is founded might be endangered; or where the effect would be to leave a party with no cause of action or with one different from that alleged. No matter should be stricken which, on any admissible theory, is, or might possibly become, material or relevant to the cause of action or defense, either in itself or in connection with other averments, and which, on the trial, the pleader would be entitled to prove. 71 C.J.S. Pleading §§ 463-465.

In Hixon v. Allphin, 76 Idaho 327, 281 P.2d 1042, this court said that an allegation relevant on any theory cannot be stricken from the complaint even though such allegation in and of itself falls short of stating a cause of action. A motion to strike should be granted only if the allegations have no possible relation to the controversy, and should be denied if the court is in doubt whether under any contingency the matter may raise an issue. Samuel Goldwyn, Inc. v. United Artists Corp., D.C., 35 F.Supp. 633. Even where irrelevant facts are intermingled with and are not separated from the relevant allegations in a complaint, the striking of both relevant and irrelevant matter is error. Parks v. Mathews, 58 Idaho 8, 69 P.2d 781. The transactions between respondents Wolfe and Minto relative to the subject property are so closely related to the contract here involved, and both having been made parties defendant to the alleged fraud, it was error to grant the motion to strike.

Early in the trial of this case appellant, as plaintiff, testified in substance that very shortly after learning through an advertisement of the Bake Young Realty Company that the Wolfe Implement Company was being offered for sale, he called at the office of the realty company and there talked with Donald Johnson. When appellant was asked to state the conversation he had with Johnson on that occasion, regarding the implement business, the court sustained respondents' objection on the ground that it would be hearsay. Appellant further testified that on August 12, 1957, he met with respondents and Donald Johnson at the implement company's office, at which time the company's business and assets were discussed. While being interrogated regarding what was said at said meeting relative to the implement company, the witness attempted to relate what Mr. Johnson, in the presence of both respondents, there told him and respondents thereupon interposed their objections. The objections were sustained upon the ground that appellant had not alleged that any false representations had been made by Johnson or any other agent of respondents. The court then announced that no evidence of claimed misrepresentations made by Johnson would be received. Appellant thereupon requested permission to amend the complaint to allege representations made by Johnson to appellant regarding values of certain assets of the implement company, which representations were false and made by him as agent of respondents for the purpose of inducing appellant to purchase the property. This request was denied. Appellant claims that 'the court erred in not allowing plaintiff to submit testimony and evidence through Donald Johnson, defendant's agent, who participated in the sale and contract alleged in the complaint for and on behalf of defendants Wolfe and Minto.'

The complaint alleges that the fraud and misrepresentations were acts of respondents and no reference is made therein to Johnson or his agency relationship to them. It is respondents' contention that in fraud cases I.R.C.P. Rule 9(b) requires that the claimed fraudulent acts must be alleged with particularity as to by whom and when they were made. Said rule provides:

'In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.'

This court has consistently held that the elements of actionable fraud, comprehensively stated are:

"(1) A representation. (2) Its falsity. (3) Its materiality. (4) The speaker's knowledge of its falsity or ignorance of its truth. (5) His intent that it should be acted on by the person and in the manner reasonably contemplated. (6) The hearer's ignorance of its falsity. (7) His reliance on its truth. (8) His right to rely thereon. (9) And his consequent and proximate injury. * * *" Walker v. Nunnenkamp, 84 Idaho 485, 373 P.2d 559.

One of the questions here presented is whether in a fraud case misrepresentations made by an agent within the scope of his employment are admissible under an allegation that defendant (his principal) made them. The trial court was of the opinion that since the complaint did not specifically allege that the agent made the misrepresentations sought to be introduced, they were not admissible. It must be acknowledged that there is not unanimity in the views of the courts which have considered this question. This is recognized in a statement of the general rule contained in 3 C.J.S. Agency §§ 312, 313, pp. 246, 250, as follows:

'Where the action is based on fraud or misrepresentation by the agent, it is proper in some jurisdictions to aver that the principal committed the fraud or made the misrepresentation; but in other jurisdictions it is necessary to allege, either expressly or by a statement of facts from which it may be fairly implied, that in committing the fraud or making the misrepresentation the agent was acting within the scope of his employment.

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'Likewise, as a general rule, under an allegation that an act was done by a party, it may be shown that the act was done by his authorized agent. Some, but not other, authorities consider the latter rule applicable to fraud or fraudulent representations.'

Appellant calls our attention to the early case of Barwick v. English Joint Stock Bank, 12 Eng.Rul.Cas. 298 (Ex.Ch.1867), wherein a like question is discussed at length and it is there stated that 'if a man is answerable for the wrong of another, whether it be...