Middlesex County Nat. Bank v. Redd Auto Sales, Inc.

• Decision Date: 05 February 1958
• Citation: 336 Mass. 727,147 N.E.2d 790
• Parties: MIDDLESEX COUNTY NATIONAL BANK v. REDD AUTO SALES, Inc.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 790

147 N.E.2d 790

336 Mass. 727

MIDDLESEX COUNTY NATIONAL BANK v. REDD AUTO SALES, Inc.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Dec. 5, 1957.

Decided Feb. 5, 1958.

Eli Taylor, Boston, for plaintiff.

Abraham Newman, Roslindale, for defendant.

Before WILKINS, C. J., and RONAN, SPALDING, WHITTEMORE and CUTTER, JJ.

SPALDING, Justice.

Although described in the writ as an action of contract or tort, this is in essence an action of tort for deceit to recover for false representations alleged to have been made by the defendant. The judge made findings of fact and found for the plaintiff. The Appellate Division, on report, vacated the finding and ordered judgment for the defendant. The plaintiff appealed.

Findings of the judge included the following. The plaintiff is a bank. The defendant was in the business of selling new and used automobiles. The plaintiff in the regular course of its business had financed customers of the defendant in the purchase of automobiles. On the occasion here involved, the date of which does not appear, the defendant called the plaintiff on the telephone and represented that one Rideout had purchased from it a 1951 Kaiser automobile; that the purchase price was $595; and that Rideout had made a down payment of $200, and desired to 'finance the balance of $395.' The defendant also gave the plaintiff a description of the automobile and supplied pertinent information as to Rideout's credit. The defendant knew that the plaintiff would not finance a customer unless he had made a down payment of one third of the purchase price. The plaintiff checked Rideout's credit and approved the loan. The defendant obtained the necessary papers from the plaintiff and, after having them executed by Rideout, returned them to the plaintiff and received from it the sum of $395 which represented 'the alleged balance due on the motor vehicle after an alleged down payment of $200.'

The defendant made certain repairs to the automobile in accordance with its agreement with Rideout, tagged it as sold, and stored it for Rideout. Rideout, due to financial difficulties, made only one payment of $30.65 on the note held by the plaintiff and never took delievery of the automobile; it is still in the possession of the defendant.

The purchase price of the automobile was in fact $495 and not $595, and the down payment was either $75 or $100 and not $200.

The judge found that the defendant 'falsely and wilfully misrepresented to the plaintiff the purchase price of the automobile * * * and the amount of the down payment so as to induce the plaintiff to grant the loan to Rideout for the payment to the defendant of the balance due * * *; that the plaintiff relied upon such representations which were wholly within the knowledge of the defendant'; and that because of them the plaintiff made the loan and paid to the defendant the sum of $395.

All of the representations on which the judge based his findings were oral. The defendant pleaded the statute of frauds. G.L.(Ter.Ed.) c. 259, § 4.

Requests for rulings presented by the defendant fall into two groups. In one, the defendant requested the judge to rule that the plaintiff could not recover as matter of law; in the other, rulings were sought that the plaintiff could not prevail because of § 4 of the statute of frauds. Since both groups of requests present the same question, they will be dealt with together. The judge ruled that the statute of frauds did not preclude recovery and denied the requests. The Appellate Division reversed on the grounds, (1) that there was no evidence in the report as to the authority of the person making the representations to bind the corporation and (2) that the statute of frauds was a bar.

1. We are of opinion that the agency question was not open. The report stated that by agreement 'no evidence is herewith reported upon which the court based its findings of facts.' The Appellate Division interpreted this to mean that there was evidence from which the judge could make the findings he did. With this interpretation we agree. Throughout his findings the trial judge stated that the defendant made this or that representation. Since the defendant was a corporation and could only act through its officers or agents this is tantamount to a findings that the representations were made in such circumstances as to bind the defendant. If the defendant had desired to challenge the finding on the ground of lack of authority it was incumbent upon it, as the party claiming the report, to put into the report the evidence material to that issue. Cucchiara v. Settino, 328 Mass. 116, 102 N.E.2d 430. This it did not do.

2. We think that the Appellate Division was right in holding that the statute of frauds precluded recovery.

Section 4 of G.L. (Ter.Ed.) c. 259 reads as follows: 'No action shall be brought to charge a person upon or by reason of a representation or assurance made concerning the character, conduct, credit, ability, trade or dealings of any other person, unless such representation or assurance is made in writing and signed by the party to be charged thereby, or by some person thereunto by him lawfully authorized.'

The history of this statute is reviewed by Loring, J., in Walker v. Russell, 186 Mass. 69, 71 N.E. 86. In referring to Lord Tenterden's act on which our statute was based it was said, 'The object of the enactment was to extend to a defendant, in case of an attempt to charge him with the debt of another person by parol evidence of a false representation as to the solvency of that third person [the protection of written evidence] * * *. The typical case which the Legislature had in mind in enacting St.1834, c. 182, § 5 [a predecessor of G.L. (Ter.Ed.) c. 259, § 4], was where the plaintiff is induced to extend a credit to the third person by representations made by the defendant as to his 'character, conduct, credit, ability trade or dealings.' The case where a plaintiff is selling his goods to a third person, and is induced to take the note of that third person on time in payment for them, relying on the defendant's representation as to his credit, is an example. * * * The case where the plaintiff is induced by representations of the defendant to indorse the note of a third person for his (third person's) accommodation is another example. * * * Whether a particular representation is or is not within the statute does not depend alone upon what is said, but depends also upon the purpose for which the representation is made. * * * [A] representation that the third person owned a specified piece of property, which is not in form a representation concerning his 'character, conduct, credit, ability, trade or dealings,' was held to be within the statute, when made to induce the plaintiff to accept the note of a third person in place of cash for goods sold to him, if it was 'made concerning the credit, ability, trade or dealings of' that other. Hunnewell v. Duxbury, 157 Mass. 1, 31 N.E. 700' (186 Mass. at pages 71-72, 71 N.E. at page 87). The court further said in 186 Mass. at page 73, 71 N.E. at page 88, that the statute applies 'to representations made to induce the plaintiff to enter into a transaction which will result in a debt due to the plaintiff from the third person.' See also Cauman v. Biggar, 251 Mass. 91, 93, 146 N.E. 230.

A representation otherwise within the statute is not taken out of the statute by the fact that the plaintiff's extension of credit to the third person also resulted in a benefit to the defendant. Kimball v. Comstock, 14 Gray...