Kellogg v. Smith

• Decision Date: 26 May 1914
• Citation: Kellogg v. Smith, 70 Or. 449, 142 P. 330 (Or. 1914)
• Parties: KELLOGG v. SMITH.
• Court: Oregon Supreme Court

142 P. 330

70 Or. 449

KELLOGG v. SMITH.

Supreme Court of Oregon

May 26, 1914

Department 2.

Appeal from Circuit Court, Multnomah County; Henry E. McGinn, Judge.

Suit by Eugene Kellogg against W. M. Smith. From a decree for plaintiff, defendant appeals. Dismissed.

This is a suit to cancel a deed of real property, a promissory note and a chattel mortgage. The facts are that on August 23 1912, the defendant W. M. Smith was the owner and in possession at No. 707 Vancouver avenue, Portland, Or., of certain machinery, consisting chiefly of one upright engine five washing machines, one extractor, three wagons, one auto truck, fixtures and equipments used in and designated as the Albina Wet Wash Laundry, which property he on that day, for the expressed consideration of $5,000, transferred by bill of sale to the plaintiff, Eugene Kellogg. The purchase price mentioned was paid in part by a conveyance of 14.80 acres of land in Yamhill county, Or., executed to the defendant August 23, 1912, for the stated consideration of $2,400, by Mrs Viola Tate, the plaintiff's sister, who then was the owner in fee of the premises. The remainder of the $5,000 was evidenced by the plaintiff's promissory note, executed to the defendant and payable in installments of $100 each, the first maturing October 1, 1912, and the other partial payments monthly thereafter. The negotiable instrument was secured by a chattel mortgage, executed by the plaintiff to the defendant, of the laundry, the fixtures therein, and the equipment thereof.

The complaint charges, in effect, that prior to August 23, 1912 in order to induce the making of the note and the chattel mortgage and the execution of the deed, the defendant falsely represented to the plaintiff that the net income of the laundry was not less than $50 a week; that the property mentioned was free from incumbrance and indebtedness; that the machinery, equipment, etc., were in good order; that the auto truck was in good condition and worth $1,000, and that the operating expenses of the laundry were fully paid; that the plaintiff was unacquainted with such business, but, relying on such representations, and not knowing anything to the contrary, he was induced to enter into the agreement with the defendant; that the net income of the laundry was not $50 a week, nor did the revenue derived from that business equal the expenses thereof; that many unpaid bills against the laundry were outstanding, and the personal property was not free from indebtedness when the transfers were made; that the auto truck was of obsolete make, broken, useless, and not worth the sum stated, and that the engine used in the laundry was not in good working order; that plaintiff took possession of the property and conducted the laundry business until September _______, 1912, when for the first time he learned that such representations were false and made to induce him to execute the instruments mentioned, whereupon he tendered to the defendant the possession of all the property and demanded a reconveyance of the real estate, a cancellation of the promissory note and mortgage, and the payment of $1,000 as damages, but that the defendant wrongfully refused to comply therewith; that by reason of such agreement the plaintiff has sustained losses as follows, to money expended in conducting the laundry $______, to time employed therein $250, to attorneys engaged to maintain this suit $300, and to other damages $250; and that plaintiff has no plain, speedy, or adequate remedy at law.

The answer denied the material averments of the complaint, and for a further defense alleged, in substance, that prior to, and at the time of, the sale of the laundry the plaintiff made a careful examination of all the machinery so employed, and also inspected the books used in the business, thoroughly informing himself as to the amount of money received therefrom and expended therein, which investigation extended over a period of more than two weeks; that in purchasing the property the plaintiff did not rely upon any representations made by the defendant, but depended upon his own independent examination of the machinery, equipment, and of all the business, etc.; that when the laundry was delivered to the plaintiff it was in good condition, all the machinery in adequate repair and running smoothly; and that the business was paying the defendant a profit--all of which the plaintiff knew. The reply put in issue the allegations of new matter in the answer, and, the cause having been tried, a decree was rendered denying any damages, but declaring the bill of sale, the promissory note, the chattel mortgage, and the deed to be void, setting them aside and directing the defendant to deliver them into court to be cancelled. From this decree, the defendant appeals.

H. H. Riddell, of Portland (H. Daniel, of Portland, on the brief), for appellant. Harry Yanckwich, of Portland (H. J. Parkinson, of Portland, on the brief), for respondent.

MOORE, J. (after stating the facts as above).

A motion has been interposed in limine to dismiss...