J. I. Case Co. v. Bird

• Decision Date: 01 April 1932
• Docket Number: 5785
• Citation: 51 Idaho 725,11 P.2d 966
• Parties: J. I. CASE COMPANY, a Corporation, Appellant, v. A. J. BIRD and T. O. BIRD, Respondents
• Court: Idaho Supreme Court

11 P.2d 966

51 Idaho 725

J. I. CASE COMPANY, a Corporation, Appellant, v. A. J. BIRD and T. O. BIRD, Respondents

No. 5785

Supreme Court of Idaho

April 1, 1932

SALES-PRINCIPAL AND AGENT - FRAUDULENT ACTS OF AGENT - RETURN OF GOODS.

1. Buyer held not precluded from asserting fraud of seller's agent, notwithstanding restrictions in sales contract against warranties and representations other than those specifically set forth.

2. Principal retaining benefits derived from fraudulent conduct of agent cannot disclaim responsibility for fraud.

3. Fraudulent representations of seller's agent held chargeable to principal, entitling buyers to rescission notwithstanding clause in sales contract limiting power of agents to make representations other than specified therein.

4. In suit on notes for price of threshing-machine in which defendants sought rescission for fraud, evidence sustained finding that defendants had returned or offered to return machine.

5. Return or tender of goods to seller's agent who negotiated sale is sufficient basis for claim of rescission.

6. Statements describing goods sold, within scope of implied warranty, may also constitute fraudulent representations which will authorize buyer's rescission (C. S., sec 5686).

APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. C. J. Taylor, Judge.

Action on two promissory notes and for the foreclosure of a chattel mortgage. Judgment for defendant. Affirmed.

Judgment affirmed. Costs to respondent. Petition for rehearing denied.

H. R Turner, for Appellant.

Where one entering into a written contract intends to rely on representations made during the negotiations, he must insert them in writing or he is deemed to waive them. (Nounnan v. Sutter County Land Co., 81 Cal. 1, 22 P. 515, 6 L. R. A. 219; Stevens v. Stanley, 153 Miss. 801, 121 So. 814; J. I. Case Threshing Machine Co. v. Manes, (Tex. Com. App.) 254 S.W. 929.)

Notice in the order that all representations made during negotiations are contained therein is binding on the buyer. ( International Harvester Co. of America v. Leifer, 42 Wyo. 283, 293 P. 381; Pacific States Automotive Finance Corp. v. Addison, 45 Idaho 270, 261 P. 683; Mechem on Sales, p. 1114, sec. 1288.)

W. A. Ricks, for Respondents.

Where an agent defrauds the person with whom he is dealing, the principal, so long as he retains the benefits of the dealing, cannot claim immunity on the ground that the fraud was committed by his agent and not by himself. (Bennett v. Judson, 21 N.Y. 238, 5 A. R. C. 1180; Davenport v. Burke, 30 Idaho 599, 167 P. 481; 2 C. J. 853; 5 A. R. C. 1204.)

LEEPER, J. Lee, C. J., and Budge, Givens and Varian, JJ., concur.

OPINION

LEEPER, J.

This is an action instituted by plaintiff to recover upon two promissory notes given in payment for a threshing-machine purchased by defendants from plaintiff, and to foreclose a chattel mortgage upon the machine. Defendants cross-complained upon the ground of fraud and prayed for a rescission. The case was tried to a jury in an advisory capacity, which found generally for the defendant and answered special interrogatories covering practically every disputed question of fact involved in the litigation. The court adopted the findings of the jury and entered a judgment in favor of the defendants, from which this appeal is taken.

The representations relied upon by defendants were, as found by the court and jury, made by two sales agents of the plaintiff and were to the effect that the machine purchased by defendants was "exactly like Orvill Jeppson's. " It appears that Orvill Jeppson was a neighbor in whose judgment these defendants had great confidence, and who had shortly before purchased a 1928 model of the machine sold by plaintiff. All disputed questions of fact were resolved against the plaintiff by the jury, which found specifically that the representation was made as charged; that defendants believed them and relied upon them; that they would not have made the purchase otherwise; that the representation was false and there was a material and substantial difference between the harvester purchased and that owned by Orvill Jeppson; that plaintiff's agents knew that their representation was false and made it for the purpose of deceiving defendants; that defendants did not discover the falsity of the representation until on or about August 25, 1928, some time after it was received and promptly after such discovery offered to return the machine to plaintiff; and that defendants did not know of the falsity of the representation when they signed the notes and mortgage and accepted delivery of the machine. The court made similar findings of fact. Thus every element of fraud was found to exist by both the court and jury. (Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 27 A. L. R. 337, 206 P. 175; Parker v. Herron, 30 Idaho 327, 164 P. 1013; Johnson v. Holderman, 30 Idaho 691, 167 P. 1030; 26 C. J. 1062, sec. 6.)

The first objection raised by the appellant, which is presented by assignments charging error as to the admission of evidence and entry of findings, is that defendant is precluded from urging fraud because of restrictions in the contract against warranties and representations other than as specifically set forth therein. We have carefully examined the record in this case and find nothing to distinguish it in principle on this point from Advance-Rumely Thresher Co., Inc., v. Jacobs, ante, p. 160, 4 P.2d 657, to which we refer for a full discussion of the law relative to this contention. Suffice it to quote here: "If a contract is induced by fraud, whether the fraud enters into the execution of the contract or is antecedent to it, the contract cannot stand regardless of any stipulation to the contrary contained in the contract. . . . " The case of Pacific States Automotive Finance Corp. v. Addison, 45 Idaho 270, 261 P. 683, adverted to by counsel for appellant, is sufficiently distinguished in the opinion on rehearing in the Advance-Rumely case, cited above.

Appellant also contends that defendants are bound by that clause in the contract which provides that "No salesman . . . . has any authority to waive, alter or enlarge this contract or to make any new or substituted or different contract, representations or warranty," and "Salesmen . . . . are not authorized to bind the company by any act, contract or statement." Appellant's position is that the plaintiff in the absence of actual knowledge cannot be charged with the misrepresentations of its salesmen, in view of the existence of this stipulation, and defendants having read and signed the contract as written. In the Advance-Rumely case, it appears that the misrepresentations were made by agents of the company, but the opinion does not disclose that this particular question arose or was considered in that action. There is no substantial difference in principle between the clause that no representations have been made other than those embodied in the contract, and the one to the effect that no salesman has the right to make such representations.

A principal who retains benefits derived from the fraudulent conduct of his agent is chargeable with the instrumentality employed by the latter in carrying out the fraudulent purpose, even though the principal did not know in fact of or authorize their commission or forbade or disapproved them, and will not be permitted to disclaim the responsibility and retain the fruits of the fraudulent transaction in an action brought by the aggrieved party to rescind the contract. ( Davenport v. Burke, 30 Idaho 599, 167 P. 481; Shake v. Payette Valley Produce Exch., 42 Idaho 403, 245 P. 683.)

Appellant asserts that it is relieved of this liability by the...