Miller-Cahoon Co. v. Wade

• Citation: 38 Idaho 484,221 P. 1102
• Parties: MILLER--CAHOON COMPANY, a Corporation, Appellant, v. C. B. WADE and MARION WADE, His Wife, Respondents
• Decision Date: 31 December 1923
• Court: United States State Supreme Court of Idaho

221 P. 1102

38 Idaho 484

MILLER--CAHOON COMPANY, a Corporation, Appellant, v. C. B. WADE and MARION WADE, His Wife, Respondents

Supreme Court of Idaho

December 31, 1923

FALSE PROMISES-CAUSE FOR RESCISSION-PROMISES AS A DEVICE TO ACCOMPLISH FRAUD-SALE AGREEMENT-WHEN A SINGLE TRANSACTION.

1. An action for the rescission of a contract may be based upon a false promise, where such promise is a device to accomplish a fraud.

2. Where the purchaser of second-hand farm machinery is induced to sign an order for its shipment, and upon its arrival to sign a receipt for its acceptance before it has been delivered to him, upon the representation of the vendor that it has been thoroughly overhauled and is in good condition, the sale agent agreeing that he will accompany the purchaser to his farm and demonstrate that the machinery is in good workable condition, and upon doing so it is found that the machinery is practically worthless for the purpose for which it was purchased, the entire transaction is a single one, and the purchaser is not precluded from rescinding the contract, he not having had an opportunity to know its worthless character when he signed the order for the shipment of such machinery.

APPEAL from the District Court of the Fifth Judicial District, for Power County. Hon. Robert M. Terrell, Judge.

Action to foreclose real estate and chattel mortgages. From a judgment for defendants, plaintiff appeals. Affirmed.

Judgment affirmed, with costs to respondents.

Bissell & Bird and W. C. Loofbourrow, for Appellant.

Where a foreign corporation enters the state of Idaho and after complying with the provisions of C. S., chap. 187, acquires certain contract interests in Idaho, and thereafter transfers said contract interests to the plaintiff foreign complying corporation, and a few years later said plaintiff foreign corporation files suit to enforce said contract interests, it is entitled to maintain such action in the courts of the state of Idaho, despite the fact that its corporation license lapsed for a few months beginning just previous to the filing of the suit and ending between the dates of the filing of the suit and the actual trial thereof. (C. S., sec. 4775; Tarr v. Western Loan & Sav. Co., 15 Idaho 741, 99 P 1049, 21 L. R. A., N. S., 707; Junction Placer Min. Co v. Reed, 28 Idaho 219, 153 P. 564; Deveny v. Success Co. (Tex. Civ.), 228 S.W. 295.)

If in making its findings of fact the trial court neglects to find whether or not the original contracting foreign corporation had complied with the laws of Idaho with relation to foreign corporations doing business in Idaho at the time of making the contract, the judgment must be reversed. (Wood v Broderson, 12 Idaho 190, 85 P. 490.)

Where a prospective purchaser, who has had thirty-two years' experience as a machinist, is given ample opportunity to examine the second-hand machinery offered for sale, and he signs an order therefor, which recites that the machinery is not warranted in any respect and that the whole contract is expressed in writing, and afterward when the machinery arrives signs a receipt containing similar provisions, and the machinery does not work satisfactorily, but purchaser retains the property and uses it for the purposes intended, upon the promises, however, of the agents of the seller that the machinery will be put in working condition, and seller attempts time and again to fulfil its promises, with only fair success, there is no fraud. (12 R. C. L. 361; Brown v. Bledsoe, 1 Idaho 746; Kemmerer v. Pollard, 15 Idaho 34, 96 P. 206; Ross v. Reynolds, 112 Me. 223, 91 A. 952; 12 R. C. L. 254; note, 59 Am. St. 129; note, 18 Am. St. 558; 26 C. J. 1090; Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 27 A. L. R. 337, 206 P. 175.)

Where there is no sufficient allegation of fraud in the inception of writings, oral evidence which tends to vary, add to, modify or take from said writings should not be admitted in evidence. (Hurt v. Mon. Mer. Min. Co., 35 Idaho 295, 206 P. 184; Rowe v. Emerson-Brant Imp. Co., 61 Mont. 73, 201 P. 316; Parker v. Herron, 30 Idaho 327, 164 P. 1013; Kemmerer v. Pollard, supra; Brown v. Bledsoe, supra.)

McDougall & Jones, for Respondents.

Where fraud is alleged and proved, parol evidence is admissible to alter, vary, contradict or modify the terms and conditions of a written instrument. (1 Page on Contracts, par. 286; 3 Jones on Evidence, par. 435, p. 155; Burroughs Adding Machine Co. v. Scandinavian-American Bank, 239 F. 179.)

Where the purchaser makes an attempt to investigate but is unsuccessful in discovering any defects, or where he is prevented by fraudulent concealment of the defects or where the purchaser is fraudulently induced to forbear investigation, the fact that he makes an unsuccessful attempt to investigate will not avail the seller to defeat the effect of its own fraudulent acts and misrepresentations. (Beecher v. Wilson, 63 Wash. 149, 114 P. 899; 26 C. J., par. 71, p. 1157; 1 Page on Contracts, pars. 328, 331, 332; Watson v. Brown, 113 Iowa 108, 85 N.W. 28; Tacoma v. Tacoma Light & Water Co., 17 Wash. 458, 50 P. 55; Stewart v. Wyoming Ranch Co., 128 U.S. 383, 9 S.Ct. 101, 32 L.Ed. 439; Morrow v. Bonebrake, 84 Kan. 724, 115 P. 585, 34 L. R. A., N. S., 1147; Hennesey v. Damourette, 15 Colo. App. 354, 62 P. 229; Hanscom v. Drullard, 79 Cal. 234, 21 P. 736; Wainscott v. Occidental Bldg. & Loan Assn., 90 Cal. 253, 33 P. 88.)

Where a manual transfer of a written instrument is made, before it has any legal effect, the surrender of the contract must be accompanied by the intention of both the parties that the instrument shall take effect thereby. (2 Page on Contracts, par. 1187; Lanphere v. Ackles, 220 Mich. 300, 189 N.W. 845; Laprade v. Fitchburg etc. R. Co., 205 Mass. 77, 90 N.E. 982; Sample v. Geathard, 281 Ill. 79, 117 N.E. 718; Carpenter v. Carpenter, 141 Wis. 544, 124 N.W. 488; Carlson v. Crescent, etc., 20 Idaho 794, 120 P. 460; Brown v. St. Charles, 66 Mich. 71, 32 N.W. 926.)

WILLIAM A. LEE, J. Budge, C. J., and McCarthy, Dunn and Wm. E. Lee, JJ., concur.

OPINION

WILLIAM A. LEE, J.

--This is an action by the Miller-Cahoon Company, a foreign corporation, to foreclose real estate and chattel mortgages upon property situate in Power county, Idaho. The indebtedness was evidenced by four notes secured by mortgages executed October 22, 1913, to the Emerson-Brantingham Implement Company, also a foreign corporation, these notes being later indorsed to plaintiff.

Both of these corporations had qualified to do business in this state. During the course of the trial, respondents sought to show that appellant Miller-Cahoon Company, at the time of the commencement of this action, had forfeited its right to do business in this state by a failure to pay the annual license fee prescribed by C. S., sec. 4782.

The notes aggregated $ 2000, and were given for the purchase price of a threshing outfit, including a tractor used for operating the separator. Respondents admit the execution of the notes and mortgages securing the same, but seek to avoid payment on the ground of fraud and misrepresentation, and also file a cross-complaint asking for judgment in the sum of $ 3,000 against appellant on account of labor performed and money expended upon this machinery in an effort to operate the same.

In addition to respondents Wade and his wife, who executed the original notes and mortgages, the complaint made a large number of other parties defendants in this action, and thereafter additional parties were permitted to intervene, so that the pleadings are very voluminous, covering approximately 170 pages of the record. However, this appeal presents for review only the decree against the appellant Miller-Cahoon Company in favor of respondents Wade, it being adjudged that the notes and mortgages sought to be foreclosed were null and void, on account of fraudulent representations used in procuring the execution of such notes and mortgages, and they were ordered canceled. Certain relief is granted to various other defendants and intervenors, but no appeal having been taken from any of such orders or judgments except the one presented here by the Miller-Cahoon Company against Wade and his wife, consideration of the remaining portions of the decree is not necessary.

Appellant assigns as error: (1) that the trial court erred in finding that plaintiff was not entitled to file and prosecute this action; (2) that plaintiff and its predecessor in the notes and mortgages, the Emerson-Brantingham Implement Company, obtained the same from the Wades through fraud; (3) that there was error in admitting oral evidence which tended to vary and modify the terms of the written instruction canceled and discharged of record; (5) and in finding that nothing was due plaintiff in this action.

The evidence is wholly insufficient to support the finding that appellant was not qualified to do business in this state at the time of the commencement of the action, and if the judgment did not rest upon any other foundation, it should be reversed. To the foreclosure complaint, respondents in effect pleaded want of consideration for the notes and mortgages given, and further that their execution was procured by fraud on the part of the seller and appellant, and asked for their cancelation.

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