Phillips v. Malone

• Decision Date: 08 October 1931
• Docket Number: 8 Div. 268.
• Citation: 223 Ala. 381,136 So. 793
• Parties: PHILLIPS v. MALONE.
• Court: Alabama Supreme Court

136 So. 793

223 Ala. 381

PHILLIPS v. MALONE.

8 Div. 268.

Supreme Court of Alabama

October 8, 1931

Appeal from Circuit Court, Morgan County; James E. Horton, Judge.

Action on promissory note by P. Phillips against B. L. Malone. From a judgment over for defendant, plaintiff appeals.

Reversed and remanded.

J. G Rankin, of Athens, and O. Kyle, of Decatur, for appellant.

A. J Harris and Tennis Tidwell, both of Decatur, for appellee.

FOSTER J.

The evidence in this case tended to show that appellee, Malone and three others on April 8, 1925, entered into a contract to purchase from appellant two business houses in Kissimmee, Fla.; that appellant misrepresented the nature of the leases existing on them at the time, to the effect that they extended for periods of nine and twelve months, respectively, whereas they in fact extended three years. But the nature of such misrepresentation was discovered by the purchasers before the deed was made. When the contract was executed, $500 of a consideration of $40,000 was paid. The deed was made on May 25, 1925, to appellee, Malone, only, and the others executed to him a quitclaim deed dated May 27, 1925. Malone paid the cash then due under the contract, and executed some notes for the deferred payments. The suit is upon one of such notes. His associates did not execute the notes.

After the contract and before the deed, the purchasers had an opportunity to sell the property for $65,000, but the sale was not consummated, because the proposed purchaser discovered the long term of the leases. But, after making protest to plaintiff as to this circumstance, Malone accepted a deed, upon the statement of plaintiff that, if he had made a mistake as to the leases, it was a fact, and Malone could accept or reject as he saw fit. With such knowledge he accepted the deed and completed the transaction, and sold the property for $60,000; thereby he claims recoupment $5,000 loss resulting from the misrepresentation.

We will consider the questions argued in appellant's brief in the order in which it presents them. The first is that pleas A and C are subject to those grounds of demurrer directed to them on account of the character of damages claimed in them by way of recoupment, on account of the fraud and deceit. In plea A the claim is that defendant was damaged "to the extent of the difference between the rental value of said stores *** and the existing rental contract, ***" etc. In plea C the claim is that defendant was damaged "in the sum of $5,000 which was the difference between the reasonable rental value of said stores *** and the existing rental contract," etc. Whereas appellant insists that such claim is not the true measure of damages, but that it is the difference between the market value of the property with such long-term leases existing and its value with the short-term leases as represented.

Waiving for the time the question of whether demurrer is appropriate to present the claim, we will discuss its merits as argued by respective counsel.

It is certainly true that the rule is usually and accurately stated to be that the measure of damages is the difference between the actual value of the property at the time of the sale and its value if it were in the condition as misrepresented. Blackwood v. Standridge, 212 Ala. 156, 102 So. 108; Preston Motors Corp. v. Wood, 208 Ala. 172, 94 So. 70; Stewart v. Riley, 189 Ala. 519, 66 So. 488; Tillis v. Smith, 188 Ala. 122, 65 So. 1015.

But this result may be effectually stated in different language. In this connection the measure of damages is stated in 27 Corpus Juris, 101, as follows: "Where plaintiff induced to purchase property encumbered by a lease for a definite term by the seller's false representations that the tenant in possession is a tenant at will, the measure of damages is the difference between the rental market value of the property and the amount or rent paid by the tenant under his lease." This truly measures the damages under such circumstances, and is the equivalent in legal effect to the difference in market value of the property as affected by the existing lease. The difference in the rental values should truly represent the difference in the market values of the property. We think it is immaterial in what form it is expressed, provided the claim in substance is for the actual damages proximately sustained by reason of the fraud and deceit.

The only issue on which the jury could and did find of appellee on the evidence, under the charge of the court, was on his pleas of recoupment. On them there was a verdict in favor of appellee for an excess over the amount of the note sued on. The pleas of recoupment alleged a misrepresentation in the sale of the property to defendant. But the only misrepresentation proven was in the contract of sale of defendant and his three associates. If there was a cause of action for deceit on that account, it was in favor of all the purchasers. Such an action is personal, and does not run with the ownership of the property, and is not assignable so as to authorize the assignee to sue in his own name. Prouty v A. G....