Hutchins v. Davis
| Decision Date | 09 March 1949 |
| Docket Number | 107. |
| Citation | 52 S.E.2d 210,230 N.C. 67 |
| Parties | HUTCHINS et ux. v. DAVIS. |
| Court | North Carolina Supreme Court |
On May 27, 1946, Garner Hutchins, who is hereafter called the male plaintiff, made an oral sale of the equipment and good will of a business in Mars Hill, North Carolina known as the Campus Corner Cafe to the defendant, Myrtle B Davis, for a consideration of $7,000. Defendant paid half of this sum in cash, and gave the male plaintiff her promissory note signed by her mother as surety for the other half. Sometime later the defendant's mother died, and thereupon the defendant took up the original note, giving the male plaintiff therefor another note for $3,500 executed by herself alone, and paying interest on the unpaid part of the sale price through May 26, 1947. The new note specified that it bore interest at the rate of six per cent per annum, and was to mature May 24, 1948. Its payment was secured by a chattel mortgage embracing all of the equipment originally sold to defendant by the male plaintiff.
When the note fell due, the defendant refused to pay it, or to relinquish to the male plaintiff the property covered by the chattel mortgage. The male plaintiff thereupon brought this action, praying judgment against defendant for the principal and interest mentioned in the note and asking a foreclosure of the chattel mortgage under decree for satisfaction of the judgment. He laid claim to the immediate possession of the mortgaged property by ancillary claim and delivery process but the defendant gave the required undertaking for replevy and retained the property.
Upon motion of defendant, the feme plaintiff, Cleota Hutchins, was made a party to the action. The defendant filed an answer admitting the matters set out above and pleading counterclaims for damages for fraud and conversion. Plaintiffs replied, denying the validity of the counterclaims. The parties offered testimony for the avowed purpose of sustaining their respective pleadings.
As made out by her answer and evidence, the defendant's counterclaims were as follows:
By his contract with her, the male plaintiff undertook to sell to defendant for the agreed price of $7,000 all of the equipment and supplies located in the building at Mars Hill occupied by the Campus Corner Cafe on the day of the sale, together with the good will of the business and a lease which he professed to own on the building. Between the date of the making of the sale and June 1, 1946, when defendant began to operate the cafe, the male plaintiff wrongfully removed from the Campus Corner Cafe and converted to his own use a portion of the supplies sold by him to defendant consisting of canned goods, flour, and sugar of the market value of $200. The monetary worth of the Campus Corner Cafe was derived largely from the advantageous location of the building in which it was housed. During the negotiations preceding and culminating in the sale, the male plaintiff made two positive representations to the defendant, one concerning a lease which he professed to hold on the building containing the cafe and the other relating to a freezing unit used in connection with a fountain in the building. The male plaintiff exhibited to defendant a copy of a lease dated February 6, 1946, whereby Charlie C. Bruce and W. L. Robinson had leased the building occupied by the Campus Corner Cafe from its owners, Mattie I. Huff and O. J. Burnett, for five years with the right to renew the agreement at the end of the term for another period of five years, and represented to defendant that he had subsequently rented the building 'for five years with the option for five more' under a written lease 'just like that' displayed by him, and that he would assign his written lease to defendant on demand in case she purchased the Campus Corner Cafe. This representation was false in that the male plaintiff had no written lease whatever, but occupied the premises as a mere tenant from month to month under an oral sublease from Bruce and Robinson. The male plaintiff also represented to defendant that a certain freezing unit then in use in connection with a soda fountain in the building was his absolute property, whereas, in fact, such unit belonged to the Southern Dairies and was simply loaned by it to him for use on the premises during such time as its products were retailed there. The male plaintiff knew both of the representations to be false in the particulars stated, and made them with intention to deceive the defendant and cause her to purchase the Campus Corner Cafe. Defendant believed the representations to be true, and was thereby induced to purchse the Campus Corner Cafe from the male plaintiff for $7,000. Defendant suffered damage as the proximate result of the fraud in that the value of the Campus Corner Cafe was substantially less than it would have been if the statements had been true. The defendant did not discover the falsity of the representations made to her by the male plaintiff until about June, 1947, when the Southern Dairies removed the freezing unit from the premises and when she lost an opportunity to sell the Campus Corner Cafe at a considerable profit because of the inability of the male plaintiff to assign to her the written lease which he falsely professed to own. Since that time defendant has continued to carry on the cafe at the same stand, but has been unable to acquire any right to occupy the premises other than as a tenant from month to month.
Although no allegation pertaining thereto appears in the answer, the court permitted the defendant to introduce evidence to the effect that after the sale she paid $18.48 in settlement of taxes levied on the poll, dogs, and personal furniture of the male plaintiff, and submitted such testimony to the jury upon the eleventh, twelfth, and thirteenth issues. This was done over the exceptions of plaintiffs. The court subsequently reversed its rulings in these respects by refusing to award judgment to defendant for the amount of these taxes.
The court submitted seventeen issues. These issues and the answers of the jury thereto were as follows:
1. Did the defendant execute and deliver to the plaintiff a chattel mortgage and note as alleged in the complaint? Answer: Yes.
2. What amount, if any, is the defendant indebted to the plaintiff on said note? Answer: No.
3. Is the plaintiff the owner and entitled to the possession of the property set forth and described in the Chattel Mortgage? Answer: No.
4. Was Garner Hutchins the sole owner of the Cafe business sold to the defendant? Answer: No.
5. Did the plaintiff Garner Hutchins represent to the defendant that he owned a lease covering the Campus Corner Cafe at Mars Hill, N. C. in accordance with the terms of a lease dated February 2, 1946, executed between Mattie I. Huff and O. J. Burnett to Charlie C. Bruce and W. L. Robinson, and would assign his said lease to the defendant? Answer: Yes.
6. Were the above representations of the plaintiff Garner Hutchins false and fraudulent and made for the purpose of deceiving the defendant? Answer: Yes.
7. Did the defendant rely upon said false and fraudulent statements and was she damaged thereby? Answer: Yes.
8. What amount, if any, is the defendant entitled to recover as damages by reason of the false and fraudulent representations made by the plaintiff? Answer: $3,500.
9. Did the plaintiff remove, after the sale, from said Cafe certain flour, canned goods and sugar? Answer: Yes.
10. If so, what was the value of said merchandise so removed? Answer: $200.
11. Did the plaintiff Garner Hutchins represent that the property sold to the defendant was free and clear of all encumbrances? Answer: Yes.
12. If so, was said statement false? Answer: Yes.
13. What amount, if any, is the defendant entitled to recover by reason of said representation? Answer: $18.48.
14. Did the plaintiff Garner Hutchins represent to the defendant that he was the owner of a freezing unit used in connection with the fountain in said cafe? Answer: Yes.
15. Was said statement false and fraudulently made for the purpose of deceiving the defendant? Answer: Yes.
16. Did the defendant rely on said statement, and was she damaged thereby? Answer: Yes.
17. What damage, if any, is the defendant entitled to recover as damages on account of such representations? Answer: $250.
The court adjudged that 'the plaintiff have and recover nothing from the defendant' and that 'the defendant have and recover from the plaintiffs both jointly and severally judgment in the amount of $3,950.00,' and that 'the plaintiffs pay the costs.'
Plaintiffs excepted to the judgment and appealed, assigning errors.
Carl R. Stuart, of Marshall, and James S. Howell, of Asheville, for plaintiffs, appellants.
Sandford W. Brown, of Asheville, for defendant, appellee.
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