Freeman v. F. P. Harbaugh Co.

• Decision Date: 05 May 1911
• Citation: 114 Minn. 283,130 N.W. 1110
• Parties: FREEMAN v. F. P. HARBAUGH CO.
• Court: Minnesota Supreme Court

114 Minn. 283

130 N.W. 1110

FREEMAN

v.F. P. HARBAUGH CO.

Supreme Court of Minnesota.

May 5, 1911.

Appeal from District Court, Hennepin County; Wilbur F. Booth, Judge.

Action by Herbert G. Freeman against the F. P. Harbaugh Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Syllabus by the Court

One who accepts a sale of property negotiated through the medium of another is bound by the representations made to accomplish the sale.

It is immaterial that the part making the representations has no actual knowledge as to their accuracy, provided they are relied on by the party to whom they are made.

Where one investigates fully for himself, he cannot claim reliance on the representation of another; but partial investigation and reliance in part will not bar an action for deceit.

In an action for damages for fraudulently representing the financial standing of the makers of promissory notes, the measure of damages is the difference between the value of the notes and the amount paid for them; but where the makers of the notes are insolvent, and the value was measured by the value of the mortgage security, the amount realized at a public sale of the property may be shown, as bearing on the value of the notes at the time of their purchase. J. F. Hilscher and Arthur J. Stobbart, for appellant.

George S. Grimes, for respondent.

LEWIS, J.

Action to recover damages for falsely representing that the makers of certain promissory notes were solvent and that the chattel mortgage securing them was a first lien upon a threshing machine outfit. Plaintiff recovered a verdict.

Defendant company was located at St. Paul, and handled the Russell line of threashers. Isaac Lee represented the company at Wheaton, Minn., and sold its machines on commission. Plaintiff resided at St. Louis Park, near Minneapolis, and early in November, 1905, wrote to Lee, expressing a desire to purchase notes taken in settlement on the purchase of machines. The letter contained this statement: ‘I would be willing to furnish the cash to meet your settlements with the thresher company, you turning over to me the thresher notes, or, in other words, I would buy from you the thresher paper at your contract discount for cash as given by the thresher company.’ Lee replied that he had notes amounting to perhaps $5,000, and offered to send a list for plaintiff's investigation, inviting him to come to Wheaton and look them up. Plaintiff replied November 9th, stating that he could not go, and expressed the belief that the matter could be arranged by correspondence, and requested a full statement of the notes, security, address of makers, and whether Lee recommended the sales proposed. In reply to this letter Lee answered, the 18th of November, in part as follows: ‘In regard to the notes, I could sell you three notes, the balance due on engine sold to August and Ed Graf: One note dated July 20, 1905, due October 1, 1906, $475.00. One note dated July 20, 1905, due October 1, 1907, $475.00. One note dated July 20, 1905, due October 1, 1908, $475.00. He makes a similar payment on the engine this year. The notes are secured on a Russell engine, which I sold him this year. Mr. Gust Graf has 160 acres of well-improved land, and has as nice a farm as there is in this community. The land is worth from $40 to $45 an acre. Mr. Graf owes on this land, secured by mortgage on same, I think, about $1,400. His credit for anything he wishes to buy in this community is good. If you wish any bank reference, you may write the State Bank here at Wheaton. Ed Graf is Gust Graf's son. He stays at home with his father on the farm, and helps run the threshing machine in the fall. He is a good, hard-working young man. These parties live about 11 miles south of town here, and are on the rural delivery running out of Barry, Minnesota. * * *’ Plaintiff answered November 21st, stating that he would investigate the parties, and inquired if the notes had to be sent to the home office for indorsement. Lee answered November 23d that the Graf notes would have to be sent to the company to be transferred. Plaintiff wrote Lee December 1st as follows: ‘I am investigating your paper. I wrote your bank of Wheaton on the 25th ult., but have had no reply. I am touching them up to-day. I think I will take the Danielson and Graf notes. Will you make a draft on me for the amount, with notes properly indorsed to me, and subject to examination; or how would you suggest the transfer being made?’ On December 4th Lee wrote plaintiff that the Graf notes were payable to the company, and that he had instructed the company to transfer the notes to plaintiff. December 8th plaintiff wrote Lee that defendant...