Hockensmith v. Winton

• Decision Date: 24 November 1914
• Docket Number: 211
• Parties: HOCKENSMITH v. WINTON.
• Court: Alabama Court of Appeals

66 So. 954

11 Ala.App. 670

HOCKENSMITH v. WINTON.

No. 211

Court of Appeals of Alabama

November 24, 1914

Appeal from Circuit Court, Morgan County; D.W. Speake, Judge.

Action by Wm. H. Winton against J.H. Hockensmith for deceit. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Count 1, directed to be set out, is as follows:

Plaintiff claims of defendant $1,500 damages, with interest thereon, for that whereas, on or about October 22, 1910 plaintiff and defendant entered into a contract whereby defendant undertook to sell to plaintiff, and plaintiff undertook to buy from defendant, for a consideration of $1,800, an undivided one-half interest in a lot of personal property consisting of a stock of goods, wares, and merchandise, and choses in action, located in New Decatur Ala., known as the drug store of Hughes & Hockensmith. Plaintiff avers that defendant wrongfully and fraudulently represented and stated to plaintiff that the stock of goods then on hand in said drug store and owned by Hughes &amp Hockensmith, in which defendant owned an undivided half interest, at a valuation of 80 cents on the dollar, amounts to, and were worth, something over $4,100; that the book accounts owing to the firm of Hughes & Hockensmith by various debtors thereof, in which defendant owned a half interest, at that time amounted to $640, and that the entire amount of the indebtedness of the firm of Hughes & Hockensmith at the time was $325, and that Hughes & Hockensmith then had in bank cash with which to pay said indebtedness the sum of about $400, or at "least $50 more in the bank than the indebtedness amounted to." Plaintiff avers that said representations were material, and that he had a right to rely, and did rely upon the truth thereof, but that said representations were false, and made by defendant wrongfully and intentionally, and with intent to deceive and defraud plaintiff. Plaintiff avers that, instead of said stock of goods at a valuation of 80 cents on the dollar being worth over $4,100, they were worth at that valuation only, to wit, $2,500; that the accounts owing by various debtors to Hughes & Hockensmith at that time, instead of amounting in value to $640, were only in amount, to wit, $200; that, instead of the indebtedness of Hughes & Hockensmith at that time amounting to only $325, it amounted at that time, to wit, $967.74; that, instead of Hughes & Hockensmith having cash in bank at that time $400, or "at least $50 more than their indebtedness amounted to," they lacked having a sufficient amount in cash in bank, to wit, $22.14, of paying their then indebtedness, as shown by their checks then outstanding, besides other indebtedness not covered by outstanding checks. Plaintiff avers that at the time he made the contract as aforesaid with defendant he was ignorant of the falsity of the representations made to him by defendant as aforesaid, and that he believed said representations so made to him to be true, and that because he relied upon said false and fraudulent representations and acted thereon he was damaged in said sum of $1,500. Wherefore he brings this suit.

The following charges were given at plaintiff's request:

(4) If you find from the evidence that defendant merely expressed his opinion as to the value of the accounts due Hughes & Hockensmith and the amount of money said firm had in bank, still, if he expressed it with the intent to deceive plaintiff, and that plaintiff was deceived thereby without fault on the part of plaintiff, your verdict should be for plaintiff.

(5) If you find the representations made by defendant (if any) as to the indebtedness owing to any by the firm of Hughes & Hockensmith was the expression of an opinion by him as to the amount of those accounts, but was nevertheless made by him with intent to deceive, your verdict should be for plaintiff, provided said statement of opinion was false and recklessly made, not knowing whether it was true, and induced plaintiff to rely thereon, and plaintiff did rely thereon.

The following charges were refused defendant:

(1) I charge you that the representations of defendant as to the outstanding accounts due the firm of Hughes & Hockensmith were expressions of opinion.

(2) The representations by defendant as to the indebtedness of the firm of Hughes & Hockensmith were expressions of opinion.

(3) I charge you that if defendant made only such representations of fact as he had received from Dr. Hughes, and that he informed plaintiff that Dr. Hughes furnished him with such statement, then your verdict should be for defendant.

(4) If you believed that defendant based his representation in good faith reasonably on information furnished him by Dr. Hughes, then such representations would not be reckless, and defendant would not be liable in this case.

Callahan & Harris, of Decatur, for appellant.

O. Kyle and Samuel Blackmon, both of Decatur, for appellee.

THOMAS, J.

Sections 4298 and 4299 of the Code, found in the chapter thereof entitled "Frauds and Perjuries," read:

"(4298) Misrepresentation of a material fact, made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitutes legal fraud.

"(4299) Suppression of a fact material to be known, and which the party is under obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties, or from the particular circumstances of the case."

Section 2469 of the Code, which defines actionable "deceit," reads:

"Willful misrepresentation of a material fact, made to induce another to act, and upon which he does act to his injury, will give a right of action. Mere concealment of such a fact, unless done in such a manner as to deceive and mislead, will not support an action. In all cases of deceit, knowledge of a falsehood constitutes on essential element. A fraudulent or reckless representation of facts as true, which the party may not know to be false, if intended to deceive, is equivalent to a knowledge of the falsehood."

Upon a superficial view it would seem that sections 4298 and 2469 as quoted, are in conflict in those portions of each which we have placed in italics in the quotation; the former, in such portion, declaring, in effect, that a misrepresentation, even when made by mistake and innocently, if acted on by the opposite party, constitutes legal fraud; and the latter, in such portion of it as is so italicized, declaring, in effect, that knowledge (or its legal equivalent as there defined) of the falsity of the representations on the part of the party making them is essential to the maintenance of a right of action against him for deceit. In...