Dodson v. McElreath

• Decision Date: 04 December 1950
• Docket Number: No. 37648,37648
• Citation: 210 Miss. 160,48 So.2d 861
• Parties: DODSON et al. v. McELREATH.
• Court: Mississippi Supreme Court

Page 861

48 So.2d 861

210 Miss. 160

DODSON et al. v. McELREATH.

No. 37648.

Supreme Court of Mississippi, Division B.

Dec. 4, 1950.

A. C. Muir, Memphis, Tenn., Jas. Stone & Sons, Oxford, for appellants.

J. W. T. Falkner, J. W. Price, Oxford, for appellee.

ROBERDS, Presiding Justice.

Appellants filed the bill in this cause to set aside, for fraud in its procurement, a contract under which they purchased from appellee a stock of groceries, the fixtures and a grocery and gasoline service station business located at Oakville, Tennessee, and to recover the purchase price and damages, actual and punitive. When complainants rested their case the Chancellor, on motion of defendant, excluded the evidence of complainants and dismissed the bill. Appellants assign that action as error.

It is the contention of complainants that, as an inducement to them to enter into the contract of purchase, McElreath represented to them that he had a lease upon the premises where the business was being conducted until July, 1947, with right of renewal for two more years; that this induced them to buy the property and the business, which they otherwise would not have done; that this representation was false; that in truth McElreath was a tenant at will of the premises, paying as rent therefor one cent a gallon for the gasoline sold at this station, with the right in either party to terminate the tenancy at pleasure; that they learned the true facts after closing the deal and moving upon the premises and taking charge of the business, and that they were ejected from the premises in November after the purchase May 2, 1946.

McElreath, while denying the asserted fact that he made such representations, concedes, as a legal proposition, that if he did make them they constituted fraud, provided he agreed to, or he did, assign, as a part of the purchase agreement, a lease upon the premises. He says he did neither; but further contends that even though such representations were made and they were false and he was only a tenant at will (which was the fact) no legal liability rests upon him because he did not assign or agree to assign a lease on the premises.

The first question is, does this record show that McElreath represented to the Dodsons, as an inducement to them to enter into this contract of purchase, that his present real estate lease ended July 1; that he had a new lease for a year beginning at that time with right to renew it for two years? The evidence bearing upon that question is this:

Mrs. Dodson and a representative of the Real Estate Agency went to the place of business on the afternoon of May 1, 1946. They looked over the stock of goods, fixtures, living quarters, etc., and discussed the matter with McElreath. That night Mr. and Mrs. Dodson went back out to Oakville and again looked over the situation and discussed the trade with McElreath. There was a tentative understanding they would purchase the business for five thousand dollars. They met at the office of Sadler Realty Company the next day for further discussion and the closing of the trade. However, before entering into a contract the Dodsons asked about the lease on the premises. They testified that McElreath then represented he had the leases above described, and, when asked for their production, McElreath said they were in his lock box at the Bank; that Clark, of the Real Estate Agency, as did also McElreath, urged that since the contract was prepared and they were all together, to go ahead and execute the contract and the lease could be delivered later, and that this was agreed upon, and the contract of purchase was then executed, and the purchase price paid. McElreath, called by complainants as an adverse witness, said a lease was mentioned but that the lease he had in mind and which was in his bank box was a lease with Shell Oil Company upon the gasoline tank, pumps, and equipment at the station used in selling Shell products. Mr. Muir, an attorney, testified that after the Dodsons were ejected he, with Mr. Dodson, went to see McElreath, who had then moved to Oxford, Mississippi, and he put the inquiry to McElreath as to whether he made the representations about the real estate lease and McElreath said he did not remember. McElreath said he denied to Muir and Dodson he had so represented the lease. In connection with McElreath's statement that his remarks about a lease had reference to his equipment lease, it is relevant to observe that this lease was for a period beginning November 26, 1945, and ending November 25, 1946, with the right in either party to terminate it upon giving ten days written notice. So if he said his present lease was until July, and that he had another for a year, with right of renewal for two more years, he could not have been referring to the equipment lease.

The great preponderance of the evidence supports the conclusion appellee did make the representations. But as bearing on that question of fact circumstances may also be considered. Those circumstances are that the Dodsons were then about to purchase a going business they knew was being operated upon leased premises, and upon which premises they expected to live. They knew, as ordinarily sensible people, that to be shortly ejected would be disastrous to them. It would have been utterly foolish for them to have paid out this money in purchase of the property without the assurance of continued occupancy of the gasoline station, living quarters and the lot upon which they were located. Indeed, the testimony of the Dodsons is to the effect that the value of the stock of goods and fixtures delivered to them was approximately $1300. McElreath himself placed a total value thereon of around $3800. In any...