Paulsen v. Krumsick

• Decision Date: 22 June 1948
• Docket Number: 7446
• Citation: 68 Idaho 341,195 P.2d 363
• Parties: PAULSEN v. KRUMSICK et al
• Court: Idaho Supreme Court

195 P.2d 363

68 Idaho 341

PAULSEN v. KRUMSICK et al

No. 7446

Supreme Court of Idaho

June 22, 1948

Appeal from District Court, Second District, Clearwater County; A L. Morgan, Judge.

Reversed and cause remanded with directions.

J. H Felton and William J. Jones, both of Moscow, for appellant.

A cause of action for fraud, good against a general demurrer, is stated by a complaint alleging false representations of material matters made by defendant with intent to induce plaintiff to act in reliance thereon and that plaintiff believing such representations to be true, did act in reliance thereon to his damage. Fox v. Cosgriff, 64 Idaho 448, 133 P.2d 930; MacLeod v. Stelle, 43 Idaho 64, 249 P. 254; Watson v. Molden, 10 Idaho 570, 79 P. 503; Merchants Ice & Cold Storage Co. v. Globe Brewing Co., 73 Cal.App.2d 828, 167 P.2d 503; Laun v. Kipp, 155 Wis. 347, 145 N.W. 183, 5 A.L.R. 655; Hobart v. Hobart Estate Co., 26 Cal.2d 412, 159 P.2d 958; Burger v. Calek, 37 Idaho 235, 215 P. 981; Baird v. Gibberd, 32 Idaho 796, 189 P. 56; Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 206 P. 175, 27 A.L.R. 337; Fox v. Cosgriff, 66 Idaho 371, 159 P.2d 224; Klutts v. Rupley, 58 Cal.App.2d 560, 137 P.2d 496.

Samuel F. Swayne, of Orofino, for respondent.

To allege fraud, it must be alleged that the property received, was worth substantially less than the price paid for it. Smith v. Neely, 39 Idaho 812, 231 P. 105; Frank v. Davis, 34 Idaho 678, 203 P. 287; Gridley v. Ross, 37 Idaho 693, 217 P. 989; Smith v. Johnson, 47 Idaho 468, 276 P. 320.

In an action for fraud, the complaint must either affirm the contract and ask damage or resign the contract and be put in status quo but cannot do both. Breshears v. Callender, 23 Idaho 348, 131 P. 15.

Holden, Justice. Givens, C. J., Budge and Miller, JJ., and Featherstone, District Judge, concur. Hyatt, J., not participating.

OPINION

Holden, Justice.

It appears prior to April 20, 1945, respondent H. W. Krumsick and appellant Arthur Paulsen jointly operated a sawmill in Clearwater county; that during the operation of the mill plaintiff and appellant Paulsen advanced the sum of $ 18,480 to the joint venture; that, April 20th, appellant demanded an accounting and settlement and apparently, as a result of such demand, the following agreement was made and entered into:

"Memorandum of Agreement

"This memorandum of agreement made and entered into in duplicate this 20th day of April, 1945, by and between Arthur Paulsen, a single man, of Nezperce, Idaho, hereinafter referred to as first party, and H. W. Krumsick, of Orofino, Idaho, hereinafter referred to as second party,

"Witnesseth:

"That whereas, first party has heretofore contributed the sum of $ 18,480.00 to a sawmill and logging venture instituted by second party, and first party now desires to withdraw therefrom, and the parties hereto desire to make a full settlement of all matters between them in any way arising out of or connected with said contributions,

"Now, therefore, the parties hereto do hereby agree as follows:

"First, second party agrees to forthwith convey to first party the following described real and personal property which has been a part of the assets of said venture above mentioned, to-wit: [Then follows the description of certain real estate located in Clearwater county and certain personal property, that is to say, a Caterpillar tractor]

"Second: Second party agrees to as soon after date hereof as the same can possibly be done, repair or have repaired in good and workman-like manner, the motor head on the tractor above mentioned, at his own expense.

"Third: First party hereby gives and grants to second party the option and privilege to purchase such amount of the merchantable saw timber on the above described real property as the second party shall desire, so long as the first party has not sold such timber to other persons as hereinafter provided, at a rate of $ 4.00 per thousand, stumpage, to be paid on the 10th day of each and every calendar month for all logs from such timber scaled into the mill during the preceding calendar month. Second party shall have the option and privilege to select 1,000,000 feet or thereabouts on the lands above described to be purchased by him on the terms aforesaid; and first party reserves the right and privilege to sell any of the remaining timber other than that above selected by second party to any other purchasers, so long as second party has not exercised his option to take the same, at a price of $ 3.50 or better per thousand stumpage. First party also reserves the privilege of selling the land upon which said timber is situated at any time before the timber is removed therefrom, but agrees that in making any sale of such land he will reserve all timber rights thereon for a period of three (3) years or more after the date of such sale.

"Fourth: It is contemplated that first party will sell said caterpillar tractor for the best cash price obtainable under O. P. A. ceiling, and that he will also as soon as he can obtain an advantageous sale therefor sell the land on which the timber above mentioned is situated, and that when first party has received from sale of the tractor and the sale of the land, and the sale of the timber above mentioned, after deducting any necessary expense in making such sale and the amount paid Clearwater County, Idaho, as hereinafter set forth, and taxes, the sum of $ 20,000.00 and interest thereon and the decreasing amounts thereof at the rate of three per cent (3%) per annum from date hereof, that he will then reconvey to the second party by quit-claim deed any of the lands and timber above described then remaining and unsold by him. Second party agrees to lend his best efforts and aid and assist first party, without charge, in making the sales herein contemplated.

"Fifth: First party hereby relinquishes, remises and forever quit-claims unto the second party, any right, title, interest, claim or demand on his part, in, of or to the saw mill, saw mill machinery and any other and all property of every kind and nature, whether standing in the name of second party or both parties hereto, which has been or now is a part of or used in the saw mill and logging venture hereinbefore mentioned.

"Sixth: The parties hereto do hereby release each other from all claims and demands of every kind and nature on account of any transactions of every kind and nature heretofore carried on or existing between them, it being understood that this is a compromise agreement fully and fairly entered into for the purpose of finally settling, determining and adjusting all matters between them.

"Seventh: First party agrees that he will pay the balance due on part of the lands above described to Clearwater County, Idaho, and also that he will keep up the taxes on said lands or timber so long as he owns the same, and for which he shall have credit as above mentioned.

"In Witness Whereof, the parties have hereunto set their hands and seals, the day and year first above written.

"Arthur Paulsen (Seal)

"First Party.

"H. W. Krumsick (Seal)

"Second Party.

"The undersigned, Evelyn Krumsick, joins herein for the purpose of obligating whatever community interest she may have in the property above described.

"Dated this 20 day of April, 1946.

"Evelyn Krumsick

"Evelyn Krumsick"

It further appears, following the making and execution of the above quoted contract, respondents deeded the real property to appellant and later sold and disposed of the sawmill and the machinery used in the operation thereof.

It also appears respondents failed and refused to repair the tractor mentioned and described in and as provided by the contract, and, further, that appellant tried to but could not sell and dispose of the real property described in the contract.

It does not appear just when this suit was commenced, but it does appear that, February 19, 1948, an amended complaint was filed, alleging:

"I. That the defendants, H. W. Krumsick and Evelyn Krumsick, are husband and wife;

"II. That prior to April, 1945, and for some years theretofore the plaintiff had advanced to the defendants as a part of a mutual sawmill venture the sum of $ 18,480.00; that the business transactions of such venture were handled exclusively by the defendant, H. W. Krumsick, and that to the 20th day of April, 1945, no accounting had ever been made;

"III. That about the 20th day of April, 1945, the plaintiff contacted the defendant, H. W. Krumsick, and demanded of him some accounting of their joint ventures and some settlement as to their affairs; that the defendant, H. W. Krumsick represented to the plaintiff that the sawmill and sawmill properties were of little value, that no profits had been made, but that the defendants were possessed of certain timber properties worth well upwards of $ 20,000.00, and that he would return to the plaintiff...