Cherrington v. Woods, 17560

• Decision Date: 21 November 1955
• Docket Number: No. 17560,17560
• Citation: 290 P.2d 226,132 Colo. 500
• Parties: Pat CHERRINGTON, Ruth Cherrington and E. L. Brasier, Plaintiffs in Error, v. Carl E. WOODS, Defendant in Error.
• Court: Colorado Supreme Court

Page 226

290 P.2d 226

132 Colo. 500

Pat CHERRINGTON, Ruth Cherrington and E. L. Brasier Plaintiffs in Error, v. Carl E. WOODS, Defendant in Error.

No. 17560.

Supreme Court of Colorado, En Banc.

Nov. 21, 1955.

Rehearing Denied Dec. 12, 1955.

Karl R. Ahlborn, Greeley, Robert L. McDougal, Denver, for plaintiffs in error.

Houtchens & Houtchens, Paul E. Garrison, Greeley, for defendant in error.

HOLLAND, Justice.

On September 24, 1952, plaintiffs in error, the Cherringtons, were the owners of the fixtures and stock in trade they were using in connection with a business known as 'Pat's Liquor' in Evans, Colorado. Shortly before they had engaged one Brasier to sell the premises, which he advertised. It is claimed that it was represented to Woods, defendant in error, that the business was earning a net profit of $1,400 to $1,600 a month, and that the margin of profit in the business was 28 1/2%. Woods entered into an agreement to purchase the property and made a down payment of $12,500. The sales agreement provided that the purchaser pay $33,024.39 for the property, $12,500 in cash and $400 per month, and that the inventory of $13,024.29 would be maintained and in case of failure to make the payments contract would be forfeited upon the seller giving the buyer 60 days' notice. The buyer, after full opportunity, as provided in the contract, to inspect the premises and the books of the business for about one week, entered into possession and operated the business and admittedly had a net earning of $7,000 in a little over one year.

On November 9, 1953, Woods filed the complaint herein for damages against the Cherringtons and E. L. Brasier, alleging misrepresentation as to the amount of the net profit per month and that they believed the representations that had been made to them, but that the representations were false and known to be so at the time they were made; that if the representations had been true the business would have had a reasonable market value of $75,000, when in truth and in fact it had a value of approximately $15,000, and therefore claimed damages for the difference in the sum of $60,000.

Brasier answered admitting that the property had been listed with him; denied all other allegations of the complaint; and stated that the actual transaction was closed between the parties thereto not in his presence and that he took no part in the closing of the deal. The Cherringtons answered, denying that Ruth Cherrington was the owner of any interest in the property; admitted that Brasier was employed to find a buyer; denied any misrepresentation; and filed a counterclaim alleging that the buyer, Woods, gave them a promissory note on which there was a balance due of $18,638.07, with interest of $1,692.96 and ten per cent attorney's fees, or a total of $22,364.15; that Woods, the buyer, entered into a written agreement and failed to make the payments provided therein; failed to maintain a stock of inventory at the fixed figure of $13,024.29; also failed to insure the property; and that by reason thereof the property is deteriorating in value. They also asked for a receiver, which was denied. The contract of sale and copies of the note were before the court on a trial held June 8, 1954, at which time the court entered judgment for $22,364.15 in favor of the Cherrigntons and denied a receiver.

The trial court in entering the judgment stated that Woods, plaintiff, had a full and complete opportunity to make an investigation, and that he affirmed the agreement and thereby waived any fraud. The motion for new trial was filed and granted on June 28, 1954, and the court vacated the judgment.

The Cherringtons had moved for a restraining order alleging that the notice of forfeiture had been served on Woods, who had breached the terms of the agreement and failed to maintain the stock; and that Woods admitted that he had depleted the stock to $9,000, and had not insured the property. At the second trial, begun on August 19, 1954, the court permitted plaintiff to reopen the case only for the purpose of taking additional testimony. Woods moved to amend his complaint to conform to the proof by adding 'including inventory' after the figure of $15,000 in the complaint, which was granted. The court found the allegations of the complaint had been sustained and ordered the contract and note to be returned to the court for cancellation and plaintiff have judgment against defendants on defendants' counterclaim, and dispensed with a new trial.

Woods, after a brief inspection of the property on September 18, 1952, gave a check for $500 to the National Investment Company and received a receipt and contract therefor setting out the terms of the sale and containing the following provision, '* * * It is understood that the books and records of said business will...