Mesh v. Citrin

• Citation: 300 N.W. 870,299 Mich. 527
• Decision Date: 02 December 1941
• Docket Number: No. 6.,6.
• Parties: MESH v. CITRIN et al.
• Court: Supreme Court of Michigan

299 Mich. 527

300 N.W. 870

MESH

v.CITRIN et al.

No. 6.

Supreme Court of Michigan.

Dec. 2, 1941.

Action by Paul Mesh against Jacob Citrin and others, individually and as copartners, and doing business as the Citrin-Kolb Oil Company, for rescission of a contract and damages based on alleged fraudulent representations inducing execution of the contract. From an adverse judgment, defendants appeal.

Judgment affirmed on condition that plaintiff by remittitur reduce the amount of the judgment, and otherwise judgment reversed and new trial granted.Appeal from Circuit Court, Wayne County; John V. Brennan, Acting judge.

Argued before the Entire Bench.

Shapero & Shapero, of Detroit, for appellants.

Levin, Levin & Dill, of Detroit (Earlmont H. Dill, and Morris Garvett, both of Detroit, of counsel), for appellee.

STARR, Justice.

Defendants appeal from judgment of $2,077.94 entered on jury verdict for plaintiff.

Defendants were engaged in the wholesale gasoline business and in leasing and subleasing gasoline stations to which they sold gasoline and other merchandise. Defendants had leased the gasoline station at 2400 Brush street, Detroit, on September 30, 1938, and operated such station until the sale and sublease to plaintiff was concluded on December 30, 1938, as herein explained.

In the early part of December, 1938, plaintiff, a young man without experience in the gasoline station business, began negotiations with defendants for the subleasing of such station and equipment at 2400 Brush street and purchase of the good will and certain personal property connected with the station. Plaintiff's negotiations were conducted with Max Biber, an attorney employed in defendants' office, who handled their purchase, leasing, and sale of gasoline stations and who was described as their ‘office attorney.’ Defendants do not question Biber's authority to represent them in the transactions here involved. Such negotiations resulted in a deal being concluded on December 30, 1938, whereby defendants executed bill of sale of the ‘goodwill, tools, equipment (except gasoline pumps, underground tanks, oil hiboys, air compressor, safe), and all merchandise’ to plaintiff at a price of $1,500, to be paid $800 down and the balance of $700 by defendants' adding 1/2 cent per gallon to the price of gasoline sold plaintiff. Plaintiff executed chattel mortgage back to defendants, securing payment of such balance of $700. On the same date defendants executed sublease of the station, tanks, pumps, and other equipment to plaintiff for a period of 57 months at a monthly rental of $200. Plaintiff expressly agreed to purchase his full requirements of gasoline, oil, and other merchandise from defendants. Mr. Biber testified regarding the sale price as follows:

‘I think $1,500 was charged for the good will of this station. * * *

‘$1,500 was our good will price as we called it.’

The sublease of the station and equipment contained the following provision: ‘Said party of the second part (plaintiff) acknowledges that it has examined and knows the condition of said premises and the buildings, equipment, machinery and appliances situated thereon, and acknowledges that it has received the same in good order and repair, that no representation as to the condition or repair thereof have been made by the party of the first part.’

Prior to signing the sublease and other documents plaintiff had the same examined by an attorney who raised certain objections to the terms, and a supplemental rider or agreement was executed by the parties on the same date, December 30, 1938, providing in part as follows: ‘Anything in said paragraph to the contrary notwithstanding, the first party (defendant) agrees to replace without cost to the second party all worn out equipment and all worn out parts of any of the said equipment. ‘Equipment’ shall include all machines, pumps and appliances. Second party shall have the option to return any of the equipment at the station to the first party and to replace the same with equipment of his own, but upon termination of this lease all such replacements shall be and remain the property of the second party.'

Plaintiff went into possession of the station on January 2, 1939, and retained possession until May 27, 1939, when he rescinded the entire transaction on the ground of fraud and misrepresentations by defendants. On that date plaintiff sent defendants the keys to the station, bill of sale of personal property purchased, quitclaim deed assigning all his interest under sublease, and also written notice of rescission tendering possession of the station, demanding repayment of purchase price paid, and damages. Defendants admitted such tender but refused to accept rescission and returned the bill of sale and other papers to plaintiff or his attorney.

On July 13, 1939, plaintiff began this law action claiming rescission and damages on the ground that defendants falsely and fraudulently represented to him (1) that the station had sold 29,000 gallons of gasoline a month; (2) that plaintiff would make a profit of $50 a week operating the station; and (3) that the station and equipment were in excellent condition. Defendants filed answer denying all allegations of false and fraudulent representations except the allegation as to the station and equipment being in excellent condition.

The case was tried before a jury, and at the conclusion of plaintiff's proofs, defendants moved for directed verdict, which was taken under advisement. Such motion, being renewed at the conclusion of all proofs, was again taken under advisement, and the case was submitted to the jury which returned verdict of $2,077.94 for plaintiff. Such verdict represented $800 paid down on the purchase price of the station, $277.94 paid on the purchase price by defendants' adding 1/2 cent per gallon to the price of gasoline sold plaitiff, and $1,000 rental paid by plaintiff for the five-month period he retained possession of the station.

Defendants' motion for judgment non obstante and, in the alternative, for new trial was denied, the court filing written opinion stating, ‘the evidence amply supports the finding of the jury.’ Judgment was entered on the verdict for plaintiff, and defendants appeal contending, in substance, (1) that plaintiff has established no basis for rescission; (2) that plaintiff waived his right to rescission by laches; (3) that the court erred in submitting to the jury the question of plaintiff's right to recover rent paid as a part of his damages; (4) that the court erred in its charge to the jury and in refusing to give requested charges; (5) that the court erred in not granting motion for directed verdict, motion for judgment non obstante, and motion for new trial; (6) that the verdict was against the great weight of the evidence.

The record is largely a recital of statements and denials, and practically every factual issue seems to be in dispute.

Plaintiff alleges that he was induced to purchase the good will and certain personal property and lease the station by reason of defendant's false and fraudulent representations, and the burden is upon plaintiff to establish such fraud. In Goldberg v. Goldberg, 295 Mich. 380, 384, 295 N.W. 194, 196, we said: ‘The burden of showing fraud is upon the person alleging it. John Heidsik Co. v. Rechter, 291 Mich. 708, 289 N.W. 304. Fraud is never presumed, Rossman v. Hutchinson, 289 Mich. 577, 286 N.W. 835, nor is it to be lightly inferred. Richard v. Detroit Trust Co., supra [269 Mich. 411, 257 N.W. 725].’

See, also, Waldbauer v. Hoosier Casualty Co., 285 Mich. 405, 280 N.W. 807;Achenbach v. Mears, 272 Mich. 74, 261 N.W. 251; Richard v. Detroit Trust Co., supra; Robert v. Morrin's Estate, 27 Mich. 306.

Plaintiff testified defendants' representative, Biber, stated that the station sold 29,000 gallons of gasoline a month. ‘He just told me that station pumped 29,000 gallons a month.’ Plaintiff also testified that in his presence Biber figured out on paper how much profit would be made on sales of 29,000 gallons a month. Plaintiff's mother-in-law testified that Biber told her the station ‘sold 29,000 gallons a month and that Mr. Mesh (plaintiff) would make $50 or $60 a week.’ Biber denies making such statements to either plaintiff or his mother-in-law. The record indicates that such representation of sales of 29,000 gallons of gasoline per month, if made by Biber, was undoubtedly false. Defendants' answer admits the average sales from the station for October, November, and December, 1938, were only 16,188 gallons a month, and defendants' testimony indicates average monthly sales of less than 10,000 gallons for the year 1938. Plaintiff's sales were: January, 16,386 gallons; February, 12,393 gallons; March, 10,772 gallons; April, 10,837 gallons. Plaintiff testified he did not operate the station in May, 1938.

We have often held that false representations concerning the past volume of business are actionable. Poloms v. Peterson, 249 Mich. 306, 228 N.W. 711;May v. Otto, 236 Mich. 540, 211 N.W. 64;Schnepper v. Halleb, 227 Mich. 455,198 N.W. 493;Johnson v. Campbell, 199 Mich. 186, 165 N.W. 823;Martin v. Veana Food Co., 153 Mich. 282, 116 N.W. 978;Smith v. Werkheiser, 152 Mich. 177, 115 N.W. 964, 15 L.R.A.,N.S., 1092, 125 Am.St.Rep. 406.

Plaintiff and his mother-in-law both testified Biber stated that plaintiff would make $50 a week operating the station. Biber denies making such statement. Defendants contend that such alleged representation, if made, was prospective in nature-not an assertion of an existing fact-and, therefore, establishes no basis for rescission or claim for damages. Biber's statement, standing alone, would undoubtedly be a matter of opinion only. However, from the record it appears that such statement formed a part of, and was connected with, the alleged representation as to the volume of gasoline sales.

Plaintiff testified, in substance, that Biber represented the station and equipment were ‘in...