Honaker v. Ralph Pool's Albuquerque Auto Sales, Inc.

• Decision Date: 15 June 1964
• Docket Number: No. 7392,7392
• Parties: Clyde C. HONAKER and Veronica Honaker, Plaintiffs-Appellees, v. RALPH POOL'S ALBUQUERQUE AUTO SALES, INC., a corporation, and Robert Morton, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 978

394 P.2d 978

74 N.M. 458

Clyde C. HONAKER and Veronica Honaker, Plaintiffs-Appellees, v. RALPH POOL'S ALBUQUERQUE AUTO SALES, INC., a corporation, and Robert Morton, Defendants-Appellants.

No. 7392.

Supreme Court of New Mexico.

June 15, 1964.

Rehearing Denied Sept. 16, 1964.

Key, Cohen & May, Albuquerque, for appellants.

Nordhaus & Moses, Fred Trechel, Albuquerque, for appellees.

CHAVEZ, Justice.

This is an appeal from judgment against defendant-appellant, Ralph Pool's Albuquerque Auto Sales, Inc., a New Mexico corporation engaged in the automobile sales business. The judgment awarded plaintiffs-appellees, Clyde C. Honaker and Veronica Honaker, damages in the sum of $1,000.

The parties involved are the plaintiffs, residents of Bernalillo County, Clyde C. Honaker and Veronica Honaker, his wife, and the defendant corporation, acting through its president Ralph Pool, its Menaul Boulevard sales lot manager Jack Pearson, and a salesman Robert Morton. Plaintiffs alleged and the trial court found that defendant corporation, through its salesman Robert Morton, made material misrepresentations regarding a 1961 Oldsmobile automobile purchased by plaintiffs from defendant corporation. The alleged misrepresentations first occurred on a Sunday in October, 1961, when plaintiffs passed defendant's Menaul Boulevard sales lot and noticed a 1961 Oldsmobile parked on the lot. The plaintiffs drove in and were met by Robert Morton who showed them the automobile in question. At this time, the Honakers asked Morton if the car was a new car and Morton replied that it was. Plaintiffs took a trial drive in the car and, while driving, noticed that the car's speedometer had 1400 to 1500 miles on it. When asked about this, Morton stated that the mileage was put on the car because it had been driven from the dealer they got it from, either in Chicago or Detroit. Plaintiffs then offered their old car, a 1959 Oldsmobile, and $2,000 as payment for the new car. This offer was rejected and Morton offered to show plaintiffs other used cars in that price range. Both plaintiffs replied that they were only interested in a new car and not a used car. Reluctant to lose a possible sale, Morton suggested that plaintiffs look at some new Oldsmobiles at the East Central sales lot. Since Mrs. Honaker and the children were hot and tired, they drove the old 1959 car to Honaker's home while Mr. Honaker went to the other car lot with Morton. In a short while, Mr. Honaker and Morton arrived at Honaker's home in a blue and white 1961 Oldsmobile. Leaving Morton in the car, Mr. Honaker went inside and called a Mr. Eckert, whose name appeared on the brake and light sticker of the car. Upon finding out from Mr. Eckert that the blue and white car was not new, Mr. Honaker told the salesman that he was not interested and Morton drove away.

In November, 1961, Morton telephoned Honaker, stating that they had a revaluation in their inventory and that he could trade for $2,050 difference. That afternoon, Honaker stopped by the car lot and Morton told him that he could make the trade for the difference of $2,050 and plaintiffs' old car, plus the license tax which brought it to $2,085. Honaker accepted this offer and, on the evening of November 14, 1961, Honaker transferred title to his old car, gave Morton a check for $2,085.50, and signed a 'Retail Buyer's Order' which stated at the top:

'Purchaser Clyde C. Honaker

Address 2819 Claremont NE

Phone AL 59614

Enter my Order for one new

Yr. 61

Make Olds

Type Halcp

Color Bronze'

At this time Morton said that the new car warranty had to come from the dealer that they bought the car from; that they would notify the dealer and he would fill in the guarantee, and it would be available to pick up about the same time Honaker got his license.

Jack Pearson, the sales manager on the car lot, testified that he told Morton the car was not a new car and that he would not approve an order with the word 'new' on it. Morton then stated: 'I do not believe he will buy it if I tell him it is used.' Pearson told Morton to take another order and leave out the word 'new' and to explain to Honaker that it was not a new car. Two days later, Morton contacted Honaker again, requesting him to sign a new order, giving as a pretext that, by mistake, the license transfer and tax fees were improperly set out on the first order. Mr. Honaker signed the new order and, upon his wife's return, they both discovered that the word 'new' had been deleted.

On November 24, 1961, Mr. Honaker went to the Menaul Boulevard sales lot to inquire about his license plates and new car warranty, Morton told Honaker the new car warranty had not come in and that it looked like they would have to handle the warranty themselves. Honaker drove to the East Central lot for his license plates and, upon receiving them, noticed that the temporary registration certificate showed the car had a prior registration in Arizona. Brushing aside the protestations of the secretary, Mr. Honaker went into the office of the president, Ralph Pool, and complained of the deception. Pool told Honaker to go to the Menaul Boulevard lot 'and we will get this thing straightened out.' Honaker then said: 'Mr. Pool, the only thing that will satisfy me is to get a new car, which is what I bought.' Honaker then went to see Pearson, who offered Honaker a Buick in place of the car Honaker had purchased. Honaker rejected this proposal and requested the return of his old car and his money back. Honaker was told to return the next day and they would see if they could obtain his old car which had been sold. At that time, Honaker's offer to leave the 1961 Oldsmobile at the lot was rejected by Pearson. When Honaker returned to the lot the next day, he was offered $100 by way of settlement, which he rejected. Five days later, Honaker had a letter delivered to defendant corporation, in which he made tender of the 1961 Oldsmobile and requested the return of his old car and his money back. Plaintiffs then received in the mail a letter from defendant corporation, which they returned unopened, and from and after November 30, 1961, they had the 1961 Oldsmobile placed in storage.

The 1961 Oldsmobile was taken out of storage on December 5, 1961, since Pool again offered to satisfy Honaker, telling him that they had cars coming in all of the time and for Honaker to stop by every day to check. Finally, after numerous talks with Pool and Pearson, Honaker placed the 1961 Oldsmobile back in storage on December 27, 1961.

On December 28, 1961, plaintiffs filed a complaint against defendants, alleging in the first cause of action that:

'II. In the period between October 15, 1961 and November 16, 1961, and while acting in his capacity as such salesman for the defendant corporation, the defendant Morton, knowing such representations to be untrue, falsely represented to plaintiffs that a certain 1961 Oldsmobile 98, Motor No. 618C 01088 on defendant corporation's sales lot was a new automobile, which representation as said defendant Morton then and there well knew was false and untrue in that such automobile was a used automobile, and that such representation was a material representation with respect to the sale of said automobile and that being induced thereby and in reliance thereupon, the plaintiffs did agree to buy the said automobile and did pay the defendant corporation the sum of $2085.50 by delivery on November 14, 1961 of the personal check of plaintiff Clyde C. Honaker in such amount, and did transfer and deliver on said date a 1959 Oldsmobile Special, Serial No. 598K 03398, New Mexico 1961 License Number 260391, at a trade-in value of $2945.00.'

Plaintiffs prayed for the return of their old car, that the sale be rescinded, and for damages in the sum of $5,030.50. In the second cause of action, plaintiffs adopted the allegations of the first cause of action and prayed for the storage costs and reasonable rental value of the automobile, together with punitive damages.

Defendant Ralph Pool's Albuquerque Auto Sales, Inc. answered, denying all material allegations, including the allegations of fraud, and as affirmative defenses alleged that plaintiffs were estopped from claiming fraud, since they accepted delivery of the automobile with full knowledge that it had been driven at least 1500 miles, as shown on the speedometer; that the car did not have affixed to it a new car sticker; that plaintiffs agreed to accept $100 from defendant corporation in full accord and satisfaction; and that by continuing to drive and maintain control over the car, plaintiffs waived any right of rescission.

On March 19, 1962, a motion was made by plaintiffs for the appointment of a receiver, alleging that the value of the car was decreasing, the storage costs were increasing, and that the car should be sold and the proceeds placed in the hands of the court. At the hearing on the motion, the parties attempted to reach a solution by arranging a sale of the car at a price mutually agreeable to both. Such negotiations were not concluded, however, and on March 27, 1962, plaintiffs withdrew the car from storage and commenced to use it.

During the trial, at the conclusion of plaintiffs' case, defendants moved for judgment stating as grounds: (1) The plaintiffs' action is one for rescission of contract; (2) the plaintiff did not have the right to rely upon Morton's statements, because plaintiff had established in his mind that Morton had lied about the condition of another car; (3) the plaintiffs have failed to prove any pecuniary damages, a necessary element of fraud and deceit; (4) the plaintiffs are excluded by the doctrine of caveat emptor since (a) the car did not have a new car sticker, (b) there was mileage on the car, (c) the upholstery at the top of the car was torn, (d) and the contract was modified by the second order which did not have the word 'new' on it; and (5) the plaintiffs operated the car as their own and...