Iler v. Jennings

• Decision Date: 03 October 1910
• Citation: 68 S.E. 1041,87 S.C. 87
• Parties: ILER v. JENNINGS.
• Court: South Carolina Supreme Court

68 S.E. 1041

87 S.C. 87

ILER v. JENNINGS.

Supreme Court of South Carolina

October 3, 1910

Appeal from Common Pleas Circuit Court of Greenwood County; C. C Featherstone, Judge.

Action by A. S. Iler against J. P. Jennings. Judgment for defendant and plaintiff appeals. Reversed and remanded.

Grier & Park, for appellant. T. P. Cothran and Tillman & Watson, for respondent.

JONES C.J.

This suit was brought to recover damages for breach of warranty in the sale by defendant to plaintiff of 35 shares of the capital stock of the Gambrell Hardware Company and was tried before Hon. C. C. Featherstone, special judge, and a jury, at Greenwood, S. C., resulting in a verdict for defendant.

The complaint alleged substantially: That on the 26th day of October, 1907, and prior thereto, the defendant Jennings was a director in the Gambrell Hardware Company, a corporation under the laws of this state, and doing business at Greenwood, S. C., and was actively employed in the business. That on October 26, 1907, plaintiff purchased of defendant 30 shares of the capital stock of the Gambrell Hardware Company of the par value of $100 per share, paying therefor $3,900. That, at the time of said purchase, defendant represented to plaintiff that the assets of the corporation on April 1, 1907, were as follows: Accounts due, $4,418.39, Farmers' warehouse stock, $100, cash on hand, $87.51, merchandise stock on hand, $24,850.09, total assets, $29,455.99. And that its liabilities on that day were as follows: Capital stock paid in, $15,700; Farmers' & Merchants' Bank overdraft, $752.30; bills payable, $5,416.41; due on merchandise, $4,490.05; gain, net, $3,097.23--$29,455.99. That defendant represented to the plaintiff that the condition of the corporation was better at the time of the negotiation than on April 1, 1907. The said representations were made for the purpose of effecting a sale of said stock to plaintiff, that plaintiff relied thereon, and was thereby induced to purchase and did purchase said stock. That, instead of said corporation having a surplus of over $3,000 at the time of the purchase as represented, there was a deficit of about $6,000, and that said representations were untrue and misleading. That said representations were an "express warranty" by defendant to plaintiff that the condition of the said corporation and its assets and liabilities were as represented. That, at the time of said representations, defendant was a director in said corporation, and actively engaged in the management of its business, and knew or ought to have known the condition of said corporation, and plaintiff, relying upon defendant's means of knowledge and said representations, was induced to purchase said stock. That, immediately before the purchase and sale of said stock pending the negotiations for the same, the defendant expressly warranted the value of the stock and the condition of the said corporation. That the conditions of said warranty have been broken, and plaintiff has suffered damage on account thereof in the sum of $2,000. That upon discovery that said representations were untrue plaintiff offered to return said stock and demanded a return of the purchase price, and that the sale be rescinded, and that defendant refused.

One of the questions raised by appellant is as to the nature of the action. We are satisfied with the ruling of the circuit court that it is an action upon an express warranty. This is manifest from the language of the complaint. Moreover, the record shows that, when the court inquired of counsel for plaintiff whether the suit was for breach of an express warranty, counsel answered, "Yes, sir; and the misrepresentations of a director in this concern as to the condition of the concern at the time the plaintiff bought the stock--that is, actual misrepresentations. We don't charge that Mr. Jennings did it intentionally or willfully, but we take the position that where a man is in that position--any man--and makes a statement as being true, he must know it is true." This was not an action based upon fraud or deceit, nor an action upon an implied warranty, and the court correctly restricted the issues on the trial and in his charge to the case as one upon an express warranty. Hence all exceptions based upon any other theory of the case are not well taken.

In Bryce v. Parker, 11 S.C. 337, the court quotes with approval from 1 Pars. on Contracts, § 580: "Any distinct assertion or affirmation of quality made by the owner during a negotiation for the sale of a chattel which it may be supposed was intended to cause the sale and was operative in causing it will be regarded either as implying or constituting a warranty." And again: "It is certain that the word 'warrant' need not be used, nor any other of precisely the same meaning. It is enough if the words actually used import an undertaking on the part of the owner that the chattel is what it is represented to be or an equivalent to such undertaking." In Shippen v. Bowen, 122 U.S. 581, 7 S.Ct. 1285, 30 L.Ed. 1172, the Supreme Court of the United States declared that "an affirmation of the quality or condition of the thing sold (not uttered as matter of opinion or belief) made by the seller at the time of sale for the purpose of assuring the buyer of the truth of the facts affirmed, and inducing him to make the purchase if so received and relied on by the purchaser, is an express warranty." It is a well-settled rule that, in actions upon an express warranty, it is not necessary to allege or prove a scienter. Hence in considering this case, if defendant made any direct affirmation as to the quality or condition of stock sold by him, which was untrue, it may be assumed that he was ignorant of the falsity, and honestly believed the statement to be...