Frederick v. Sherman

• Decision Date: 28 May 1918
• Citation: 89 Or. 187,173 P. 575
• Parties: FREDERICK ET AL. v. SHERMAN ET AL.
• Court: Oregon Supreme Court

173 P. 575

89 Or. 187

FREDERICK ET AL. v. SHERMAN ET AL.

Supreme Court of Oregon

May 28, 1918

Rehearing Denied June 25, 1918.

Department 1.

Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.

Action by Noah Frederick and another against F. H. Sherman and another. Judgment for plaintiffs, and defendants appeal. Reversed and remanded, with direction to enter a judgment of nonsuit.

This is an action to recover money. The complaint recites that on August 14, 1915, defendants induced plaintiffs to purchase from them the exclusive right to sell certain patented automobile tires in the state of Oregon, by falsely representing that the Davis-Fry Manufacturing Company was the owner of and had the exclusive right of manufacture and sale of such tires in all the territory of the United States. That defendants, through said company, had the exclusive right to sell such tires in the state of Oregon, except as to certain specified counties, and that for the sum of $1,000 defendants would assign to plaintiffs the rights and privileges granted to them by such manufacturing company; that relying upon such representations, they contracted with defendants therefor and paid them the thousand dollars; that these representations were false, in that the Davis-Fry Manufacturing Company was not the owner and did not have any right to manufacture or sell the tires, for the reason that the contract between the company and the owner of the patent right had been canceled on May 11, 1915, which fact was then known to defendants, but was unknown to plaintiffs. These allegations are followed by the following paragraphs:

"That defendants, at all times while soliciting and inducing plaintiffs to contract with and pay defendants said sum of $1,000 as hereinbefore alleged and set forth, well knew that said Davis-Fry Manufacturing Company was financially unable to manufacture 'Hercules tires' sufficient to supply a reasonable demand in the territory in which defendants were trying to induce plaintiffs to purchase the exclsive right of sale of said Hercules tire, even if allowed to continue such manufacture by the Hurley Hercules Pneumatic Tire Company and defendants further well knew that said Davis-Fry Manufacturing Company was and would be at all future times wholly unable to comply with the conditions of its contract with said Hurley Hercules Pneumatic Tire Company, which contract defendant F. H. Sherman had executed as president and on behalf of said Hurley Hercules Pneumatic Tire Company and which contract required said Davis-Fry Manufacturing Company to manufacture a sufficient number of Hercules tires to supply the demand therefor in the 'territory under the government of said United States of America,' and which contract further provided that a failure to do this would give the said tire company the right to cancel said contract that defendants further knew that said provisions in said contract between said Hurley Hercules Pneumatic Tire Company and said Davis-Fry Manufacturing Company were wholly unknown to plaintiffs, or either of them, and said defendants concealed said provisions of said contract from plaintiffs for the purpose of inducing plaintiffs to pay them said sum of $1,000 for the alleged right to sell said Hercules tire in the state of Oregon, which concealment was fraudulent on the part of defendants.

"That the said Davis-Fry Manufacturing Company had never at any time complied with the terms of its contract with said Hurley Hercules Pneumatic Tire Company after the same was entered into, which fact was well known to defendants, but was wholly unknown to plaintiffs, or either of them, which fact was fraudulently concealed from the plaintiffs by defendants for the purpose of inducing plaintiffs to pay defendants said sum of $1,000; that said Davis-Fry Manufacturing Company has become wholly insolvent and bankrupt, and has ceased to transact business of any kind, and its affairs...