Continental Jewelry Co. v. Kerhulas

• Decision Date: 21 September 1926
• Docket Number: 12071.
• Parties: CONTINENTAL JEWELRY CO. v. KERHULAS.
• Court: South Carolina Supreme Court

134 S.E. 505

136 S.C. 496

CONTINENTAL JEWELRY CO. v. KERHULAS.

No. 12071.

Supreme Court of South Carolina

September 21, 1926

Appeal from Common Pleas Circuit Court of Union County; J. M Nickles, Special Judge.

Action by the Continental Jewelry Company against A. Kerhulas. Verdict for plaintiff was directed, and defendant appeals. Reversed, and new trial ordered.

J. G Hughes, of Union, for appellant.

Edward B. Smith, of Union, for respondent.

BLEASE J.

The plaintiff, who is the respondent, brought suit against the defendant, the appellant, in the court of common pleas for Union county to recovery the purchase price of jewelry, alleged to have been purchased of plaintiff by defendant.

The action was based upon a contract, on a written form furnished by plaintiff, signed by defendant. The instrument provided inter alia, that plaintiff's agent had no authority to vary its terms; that no goods were sold on consignment; that goods not sold would be exchanged on certain conditions at purchaser's request; that upon delivery of the goods, notes were to be accepted for the purchase price.

In the answer, the defense of fraud was set up, the following facts being alleged: Defendant was uneducated, and, while he could sign his name, he could not intelligently read and write the English language, and other persons attended to his correspondence and the keeping of his books and accounts; that plaintiff's agent approached him with regard to the jewelry, and when defendant declined to purchase, the agent fraudulently represented to him that he was only signing a contract to sell the goods on commission, or consignment, and that at any time he could return the goods if he did not care to continue the business of selling on commission; that he would not have signed the instrument had he not been misled and deceived by the fraudulent conduct of the agent; and when he discovered that a fraud had been committed upon him, he refused to sign the notes, as requested by plaintiff, and offered to return the jewelry.

The evidence on behalf of the plaintiff went to show that the matter of the purchase of the jewelry was fully explained by plaintiff's agent to the defendant and was a fair transaction; that a daughter of the defendant and a friend of his were present when the contract was executed; and that the friend also signed a contract similar to the instrument executed by the defendant.

On the part of the defendant, there was testimony offered to the effect that he is a Greek, and, while he can sign his name in English, that he can read and write that language but little; that the agent (admitted by plaintiff to have been working on a commission basis) represented to defendant that the goods would be handled on commission, and defendant "would not have to put out one penny thereon"; that the contract was not read by defendant or to him, and that he accepted the agent's word as to its contents; that daughter of the defendant was not presen when the paper was signed; that the other person present, who also signed a like contract, did not read it or explain its contents to defendant; that upon discovery that the jewelry was sold outright, and not on consignment, the other purchaser canceled his contract, with plaintiff's consent, although this purchaser could read very well, and sometimes advised defendant about his affairs; that upon discovery of the alleged fraud committed upon him, defendant refused to execute the notes requested by plaintiff, and offered a return of the goods; that later another agent of plaintiff offered to accept a return of the jewelry. Much of the testimony offered by defendant was objected to by plaintiff on the ground that it tended to vary the terms of a written instrument and such objection was sustained.

After hearing all the testimony, the trial judge granted plaintiff's motion for a directed verdict for the full amount demanded in the complaint. The court gave as his reason for granting the motion that, in view of the testimony before him, he could not let the case go to the jury on the question of fraud. He stated that he based his legal conclusion upon the authority of two decisions of this court, namely, J. B. Colt Co. v. Freeman, 124 S.C. 211, 117 S.E. 351, and Harrison v. Southern Ry. Co., 131 S.C. 12, 127 S.E. 270.

From the directed verdict, the defendant has appealed on the ground that there was sufficient testimony to send the case to the jury upon the issue of fraud.

In the Freeman Case, cited by the trial judge, this court approved a verdict, directed for the plaintiff, in an action on a written contract, where the parol evidence of the purchaser (the defendant) as to his understanding as to the agreement was held inadmissible because there was a provision contained in the contract that the writing embraced all its terms, there being no proof of fraud. In that case, the ruling was sustained on the ground that the appellant had failed to show that the discretion of the circuit judge had been erroneously exercised. Even there, Mr. Justice Cothran, in a dissenting opinion, concurred in by the late Mr. Justice Fraser, thought "there was enough evidence of fraud and of the right to a reformation to render the evidence admissible and to require the circuit judge to pass upon the equitable defense of reformation." In the Freeman Case, the circuit judge made use of this language:

"Now, in the law, people must read their contracts. *** If he cannot read, he must try to find some one to read it for him."

It will be noted that in the opinion in that case, written by Mr. Chief Justice Gary, the words of the circuit judge which have been quoted were not particularly referred to, but the same were later approved in the Harrison Case, also relied upon by the trial judge as authority. In the Harrison Case the plaintiff claimed her signature to a release, executed by her, to a railway company, had been secured by fraudulent representations, and obtained judgment in her action. The refusal to grant a nonsuit was reversed by this court for the reason that "the allegations of fraud made in the complaint, *** were entirely insufficient to warrant any testimony pertaining thereto." To support that holding, the writer of that opinion, Hon. W. C. Cothran, Acting Associate Justice, cited two cases: Gem Chem. Co. v. Youngblood, 58 S.C. 56, 36 S.E. 437, and Colt v. Freeman, supra. He used the words, quoted hereinabove, from the Freeman Case. In connection with other holdings in the Harrison Case, is was decided that, since the plaintiff pleaded fraud in the procurement of the release, which she had given, but had made no offer to return the consideration received therefor, she was barred of any right to recover.

The main principle announced in Gem Chem. Co. v. Youngblood, supra, in which the opinion was written by the present Chief Justice, was this:

"In order to constitute a defense to the plaintiff's cause of action on the ground that the defendants were deceived by misrepresentation and fraud, it was necessary to allege a scienter on the part of the plaintiff. [Citing cases.] *** The answer fails to allege fraud and misrepresentations, and there was no error in rejecting the evidence offered to prove them."

Because of the view expressed by the court in that cause, the ruling of the circuit judge, refusing to admit testimony going to establish fraud was approved.

Another case touching the subject under investigation, citing the Freeman Case, supra, as authority, is that of J. B. Colt Co. v. Britt, 129 S.C. 226, 123 S.E. 845. In that case this court approved the rule laid down in Baldwin v. Postal Tel. Cable Co., 78 S.C. 419, 59 S.E. 67, as follows:

"The rule is, a person who is unable to read is bound to have the paper read to him before signing, just as a person who can read is bound to read it before signing."

But in the Britt Case it was also said:

"But as recognized in Baldwin v. Cable Co. [78 S.C. 419, 59 S.E. 67] supra, it is equally well settled that if the party who signs a written contract in ignorance of its contents without reading it or having it read is

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