Kot v. Richard P. Rita Personnel System Intern., Inc.

• Decision Date: 18 March 1975
• Docket Number: No. 2,No. 49987,49987,2
• Citation: 214 S.E.2d 690,134 Ga.App. 438
• Parties: Mitchell R. KOT v. RICHARD P. RITA PERSONNEL SYSTEM INTERNATIONAL, INC
• Court: Georgia Court of Appeals

Page 690

214 S.E.2d 690

134 Ga.App. 438

Mitchell R. KOT v. RICHARD P. RITA PERSONNEL SYSTEM INTERNATIONAL, INC.

No. 49987.

Court of Appeals of Georgia, Division No. 2.

March 18, 1975.

Rehearing Denied April 4, 1975.

Skinner, Wilson, Beals & Strickland, Warner R. Wilson, Jr., John V. Skinner, Jr., Atlanta, for appellant.

Alston, Miller & Gaines, W. T. Walsh, Atlanta, for appellee.

Syllabus Opinion by the Court

CLARK, Judge.

This marks the second appearance of this case in our appellate courts. In a previous appear, ¹ the Supreme Court denied plaintiff, Richard P. Rita Personnel System International, Inc. (hereinafter referred to as 'Rita'), injunctive relief with respect to a covenant not to compete. In this appeal, defendant, M. R. Kot, seeks to reverse the trial court's judgment awarding Rita $16,431.47 for breach of contract. Kot had performed under this agreement for 15 months before the alleged breach.

The contract giving rise to this dispute is a franchise agreement whereby Rita was to provide Kot with a 'Richard P. Rita' personnel employment service operation. In doing so, Rita agreed that in addition to certain services, it would supply specific supplies and articles. Kot was to pay $25,000 plus a monthly royalty of 7% of his gross placement fees. Of this amount $14,000 was paid in cash, the balance being represented by a promissory note payable in monthly instalments. The agreement was executed on November 11, 1969. It contains a disclaimer provision which reads: 'This instrument constitutes the entire agreement between the parties and any representations, inducements, promises or agreements, oral or otherwise, not embodied herein, shall not be binding upon the parties hereto.'

In spite of the merger clause, Kot pleaded (as his basis for both a defense and counterclaim) that Rita induced him to enter the franchise agreement by means of false and fraudulent representations. However, upon the trial of the case, the court refused to permit Kot to introduce any evidence of the alleged antecedent fraud.

Following the rendition of an adverse verdict and judgment, Kot timely filed his notice of appeal. He assigns error upon the trial court's evidentiary ruling.

' Where the purchaser of personal property has been injured by the false and fraudulent representations of the seller as to the subject matter thereof, he ordinarily has an election whether to rescind the contract, return the article, and sue in tort for fraud and deceit, or whether to affirm the contract, retain the article, and seek damages resulting from the fraudulent misrepresentation.' Nichols v. Williams Pontiac, Inc., 95 Ga.App. 752, 98 S.E.2d 659. Thus, where a purchaser has been induced to enter a contract by the false and fraudulent representations of the seller, he can recover damages in tort if he rescinds the contract and returns (or offers to return) the goods purchased. City Dodge, Inc. v. Gardner, 130 Ga.App. 502, 203 S.E.2d 729, aff'd, 232 Ga. 766, 208 S.E.2d 794. On the other hand, where the purchaser affirms a contract which contains a merger or disclaimer provision and retains the purchased articles, he is estopped from asserting that he relied upon the seller's misrepresentation and his action for fraud must fail. Brown v. Ragsdale Motor Co., 65 Ga.App. 727, 16 S.E.2d 176; Holbrook v. Capital Automobile Company, 111 Ga.App. 601, 142 S.E.2d 288; Rogers-Farmer Metro Chrysler-Plymouth, Inc. v. Barnett, 125 Ga.App. 494, 188 S.E.2d 122.

Likewise, where the buyer demonstrates that he rescinded the contract on account of antecedent fraud and offered to return the...