Peery v. Hansen
| Decision Date | 20 September 1978 |
| Docket Number | No. 2,CA-CIV,2 |
| Citation | 585 P.2d 574,120 Ariz. 266 |
| Parties | John W. PEERY, Plaintiff/Appellee, v. Neal HANSEN and Adda Lee Hansen, husband and wife, Defendants/Appellants. 2883. |
| Court | Arizona Court of Appeals |
Russo, Cox, Dickerson & Cartin, P. C. by Thomas G. Cox, Tucson, for plaintiff/appellee.
Law Offices of James A. Mather by Dean A. Sipe, Tucson, for defendants/appellants.
This is an appeal by Neal and Adda Lee Hansen, husband and wife, defendants in a contract action, from an order of the court commissioner denying their motion for a new trial. Plaintiff-appellee John Peery, seller of a retail business known as Fair Wheel Bikes, filed a complaint against appellants, buyers, for breach of a Deposit Receipt and Sales Agreement. Appellants answered and counterclaimed, seeking rescission of the contract and damages for fraud.
Trial was to the court sitting without a jury. Peery and Neal Hansen testified. Counsel stipulated that the deposition of Charles Spears, appellee's accountant, could be considered by the court as evidence. A transcript from the trial is not a part of the record on appeal. The evidence before us consists of Spears' deposition, the exhibits admitted at trial and certain pre-trial stipulations.
On February 2, 1976, Neal Hansen made a $1,000 down payment to Krones Realty Corporation, appellee's agent, and agreed to purchase appellee's business for $13,500. The purchase price included a merchandise inventory of $5,000. The buyer and seller were to jointly appraise this merchandise and if its worth exceeded $5,000, then the purchase price was to be adjusted upward for that amount. Counsel stipulated that the value of the inventory at the time of the transfer of the business was $5,906.23 and that pursuant to the terms of the agreement, appellants would owe appellee an additional $906.23.
The closing date was February 18, 1976. Counsel further stipulated that the contract was consummated, that appellants entered into possession of the bike shop, that two days after closing, appellants abandoned the premises and repudiated the contract, and that on February 26, 1976, appellee sold the property to a third party for $9,000. Appellee sought damages of $5,406.23, the difference between the agreed on sale price of $14,406.23 and the resale price of $9,000.
Appellants alleged that appellee caused a newspaper advertisement to be published in connection with the sale of his business and that it contained false representations. Appellants sought damages in Count One of their counterclaim for violation of the Consumer Fraud Act, A.R.S. § 44-1522, and in Count Two for common law misrepresentation.
The ad for appellee's bicycle shop contained this statement: "Owner claims $20,000 yr. gross over $70,000 p/yr." Spears' deposition testimony was that appellee contacted him in November 1975, told him that he was interested in purchasing Fair Wheel Bikes and wanted to know the amount of sales the business had done in the past. After an examination of the poorly kept record of the previous owner, Spears' best determination was that gross sales were approximately $86,500 for 1974 and $38,000 for the first ten months of 1975. He did not see any information indicating net on these sales. Appellee then purchased the business. Gross sales for the two months he owned the shop were approximately $1,200 for December 1975 and $4,600 for January 1976.
The judgment of the court was as follows:
IT IS ORDERED, on the Plaintiff's Complaint, that Judgment be entered in favor of the Defendants.
IT IS FURTHER ORDERED, on the Defendants' Counterclaim that Judgment be entered in favor of the Plaintiff."
Appellee, contending that resale price was evidence of market value at the time of the breach, thereafter made a motion for a new trial and/or an amended judgment. Appellants did not file a written opposition to the motion. After a hearing on the motion and argument by counsel, the court amended its judgment and ordered that appellee have judgment against appellants for $5,406.23, plus costs. Appellants then moved for a new trial, both on the issue of damages and on their counterclaim under the Consumer Fraud Act. The motion was denied.
On appeal, appellants argue that in regard to appellee's complaint, the court erred in failing to apply the proper measure of damages. The proper measure of the vendor's damages upon the purchaser's breach of contract is the difference between the purchase price and the fair market value at the time of the breach. While a subsequent sale is evidence of the market value at the time of the breach and is properly admitted as one of the factors in determining market value, it is not conclusive and the court must properly establish the market value at such time. Dehahn v. Innes, 356 A.2d 711 (Me.1976); Aboud v. Adams, 84 N.M. 683, 507 P.2d 430 (1973); Andreasen v. Hansen, 8 Utah 2d 370, 335 P.2d 404 (1959).
Appellants contend that the only evidence of market value of the bicycle shop was that of resale price.
Wing v. Jimenez, 114 Ariz. 346, 560 P.2d 1253 (App.1976) (Emphasis in original)
We are thus compelled to presume that the court had sufficient evidence before it to determine that resale price was equivalent to fair market value at the time of the breach of the sales agreement.
Appellants next contend that insofar as Count One of their counterclaim is concerned, the court erred in entering judgment for appellee. Appellants alleged in Count One that the published newspaper ad was " . . . a misrepresentation of material facts with intent that others rely thereon and an act which has been declared unlawful by A.R.S. § 44-1522." 1 In Count Two, appellants alleged:
"The advertisement placed by the plaintiff contains representations which are false, they are material, the plaintiff knew the representations to be false and he intended that they should be acted upon, defendants did not know the representations were false, the defendants relied on the representations to be true, the defendants had a right to rely thereon and defendants were injured."
Appellants advanced two theories of recovery. They alleged in Count Two the existence of the nine elements of common law fraud: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury. Nielson v. Flashberg, 101 Ariz. 335, 419 P.2d 514 (1966). To establish an actionable claim of fraud, there must be a concurrence of all nine elements thereof. Pace v. Sagebrush Sales Company, 114 Ariz. 271, 560 P.2d 789 (1977).
The court found that appellants knew, or should have known after the investigation made, that the statements of the agent were not true. For this reason, the court denied recovery to appellants on their counterclaim. This ruling was correct as to the second count. Under the common law, before one can have relief from a claimed fraud, he must show not only that he relied on the misrepresentation, but also that he had the right to rely on it. Lininger v. Sonenblick, 23 Ariz.App. 266, 532 P.2d 538 (1975).
Appellants alleged a claim for statutory fraud in Count One. In rendering judgment for appellee on appellants' counterclaim, however, the court did not distinguish between the two counts. The elements of a claim for relief under the Consumer Fraud Act are not necessarily identical to the elements of a common law fraud action. A violation of the Act is more easily shown. Cf. Wolverton v. Stanwood, 278 Or. 709, 565 P.2d 755 (1977).
The necessity for broadened private remedies in the consumer protection field was recognized in Sellinger v. Freeway Mobile Home Sales, Inc., 110 Ariz. 573, 521 P.2d 1119 (1974). Rice v. Snarlin, Inc., 131 Ill.App.2d 434, 266 N.E.2d 183 (1970). The enactment of the Consumer Fraud Act enlarged upon the rights of private parties in Arizona to file actions in Fraud.
In concluding that a private right of action was created by the Consumer Fraud Act, our Supreme Court reasoned:
"Although the Act does not specifically provide for a right of action against persons violating the provisions of the article, we believe inferentially such right of action is granted by § 44-1533. It provides:
'The provisions of this article shall not bar any claim against any person who has acquired any monies or property, real or personal, by means of any practice declared to be unlawful by the provisions of this article.'
Clearly the section quoted contemplates that a person Who has been damaged by the practices declared to be unlawful may exert a claim by reason of such acts. " (Emphasis ours) 110 Ariz. at 576, 521 P.2d at 1122.
It is clear that before a private par...
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