Rosenquist v. Baker
| Decision Date | 26 November 1948 |
| Docket Number | 34749. |
| Parties | ROSENQUIST v. BAKER et al. |
| Court | Minnesota Supreme Court |
Rehearing Denied Jan. 7, 1949.
Syllabus by the Court.
1. It is well settled that the parol evidence rule is not applicable to exclude evidence of fraudulent oral representations by which one party induces another to enter a written contract, provided the representations were such that the other party might reasonably rely upon them.
2. Where a party to a contract has partially performed it before discovering the falsity of the representation which induced him to enter into it, he is not obliged to retrace his steps, but may complete performance without waiving the fraud and then bring an action for damages for deceit.
3. Damages in an action for false representations and deceit are the natural and proximate loss sustained by the party because of reliance thereon. In cases where the fraud induced a purchase, the measure of damages is the difference in value between what was given and what was received. The burden of proving his loss is on plaintiff, and the amount of damages is a question of fact for the jury to determine from a consideration of all the facts of the case.
Appeal from District Court, Stearns County; E. J. Ruegemer Judge.
Theodore F. Neils, of St. Cloud, for appellants.
Harry E. Burns, of St. Cloud, for respondent.
Appeal from an order of the district court denying defendants' motion for judgment notwithstanding the verdict or for a new trial.
At the outset of their brief, defendants take the position on appeal that no cause of action was proved in the court below, and they are content to have the case tested on the sole testimony of plaintiff and his witnesses.
Defendants hereinafter referred to as Mr. and Mrs. Baker, operated a restaurant known as the Northland Cafe in St. Cloud, Minnesota. The owner of the building in which the restaurant was located was one Frank Graham, but defendants' rights in the premises until July 1, 1947, were under a sublease from Robert C. Coborn, who in turn was lessee of the owner. Plaintiff, a resident of Chicago, who was vacationing in Minnesota in 1947, heard that the restaurant business operated by defendants was for sale. He first talked about it with Mrs. Baker in the latter part of June or the first week in July 1947. Plaintiff testified that Mrs. Baker said the business would be for sale, but that 'the lease would be up the first of July (1947) and they would have to get a new lease before they could sell the business.' Shortly after this conversation, plaintiff also had a talk with Mr. Baker about the deal and made him a proposition of $2,500, plus inventory, for the business. At that time, Mr. Baker took plaintiff's name and address and told him that if he could get another lease he would let plaintiff know.
A daughter of Frank Graham, owner of the real estate, testified on behalf of plaintiff that on August 7, 1947, she was present at a meeting in her home with Mr. and Mrs. Baker and her father, at which time the Bakers asked for a renewal of the lease or a new lease, but that they were informed by Graham that he did not care to give a lease because he intended to use the property himself in the spring. She said that her father finally consented to give the Bakers a lease on the building until July 1, 1948. In any event, a lease of the premises, dated June 23, 1947, for a term of one year from July 1, 1947, was executed by Graham and his wife, as lessors, to Mr. Baker, lessee, on August 8, 1947.
Plaintiff testified that about the middle or latter part of August 1947, Mr. Baker, in accordance with previous plans, informed a sister-in-law of plaintiff residing in the vicinity of St. Cloud that he had obtained a new lease from the owner. She telephoned this information to plaintiff in Chicago. Plaintiff further testified that upon receiving this word he telephoned Mr. Baker from Chicago.
Defendants direct our attention to what they consider a variation in plaintiff's testimony on the first and second days of the trial with reference to this telephone conversation. On the first day, plaintiff testified that Mr. Baker had told him that the lease he secured from the owner 'was only for one year but it runs on from year to year because the owner was a civil service employee in Washington and had four years more to go on that before he would be retired.' Plaintiff said that he believed what Mr. Baker had told him and relied on it. When further asked what he did in reliance on these statements, he said that he had his father-in-law go over and give Mr. Baker a $200 down payment on the business, that he quit his job in Chicago, where he had worked for 14 years, and that he and his family moved in with his father-in-law at St. Cloud. On the second day of the trial, when asked to repeat what Mr. Baker had told him over the telephone, plaintiff said:
'Just as I told you now, he had a lease for a year and I would have no trouble in getting the lease renewed from year to year because the people lived in Washington and he was a civil service employee and he had four years to go before he would be retired.'
While there is a discrepancy in the testimony, it is evident that the jury believed that plaintiff was given to understand that the lease was renewable.
Sometime after this telephone conversation and toward the latter part of August 1947, after plaintiff reached St. Cloud, he went to see the Bakers. He said that they went through the inventory and went to see Mr. Baker's lawyer. On August 26, 1947, defendants and plaintiff visited a bank in East St. Cloud, where some of the papers involving the sale were prepared by a bank employe, who acted as a witness and also as a notary. Plaintiff said that Mr. Baker explained the conditions of the deal to the bank employe in connection with the preparation of the papers and that he just listened, as 'They seemed to be friendly people.' Plaintiff made out two checks, one for $2,300 covering the balance of $2,500 for the purchase price of the business, and one for $343.22 covering the inventory. He said that while he was handing defendants these checks in the bank Mr. Baker told him again that the lease was 'supposed to go on from year to year the same as what he said over the telephone.' When the checks were delivered to Mr. Baker, plaintiff received an assignment of the Graham lease to Mr. Baker, dated June 23, 1947, hereinbefore referred to. He also received a bill of sale for personal property, consisting of a gas stove, griddle, Coolerator, electric ice-cream cabinet, coffee maker, electric fan, beer cooler, steam table, electric toaster, pressure cooker, French fryer, potato cuber, clock, malted milk machine, two awnings, two fluorescent lights, two paper dispensers, two toilet paper dispensers, stool, two mirrors, miscellaneous dishes, glassware, silverware, and a furnace coil. These items were apparently figured in at $1,600 in the total $2,500 purchase price for the business. The execution date of the assignment of the lease and of the bill of sale was August 26, 1947.
Plaintiff testified that he was not represented by an attorney and that the first time he saw the lease in question was when he went to the bank with defendants to close the deal. He said that it never occurred to him during the interval between the time he came to St. Cloud and the date the deal was closed to look at the lease. He said that he did not look over the papers particularly. 'I did not go into anything, I just took his word for whatever was going on there.' He testified that he had never been in business before, as he had been an engineer and tool designer for 20 years.
On or about August 26, 1947, after the deal was closed at the bank, plaintiff moved into the restaurant and started operating it. He testified that about four days later Martha Graham, one of the lessors, came into the restaurant and told plaintiff that she was the owner of the building. She requested him to take her over to see defendants, which he did. Plaintiff testified that she upbraided defendants and said that the price they had charged plaintiff for the place was ridiculous, because they (defendants) knew that the owners were coming back the following February and would take over the place again the following June. Apparently some further argument ensued between defendants and Mrs. Graham, but, in any event, plaintiff said that he asked Mr. Baker if he would give him back his money and that Mrs. Baker answered him that 'if I wasn't satisfied she would be glad to give me my money back.' Plaintiff testified that within a short time after this visit to the Baker home Mr. and Mrs. Baker came into the restaurant and that he again told them that if they would give him back $2,500 they could have the inventory, as he was willing to take a loss and get out from under. However, defendants declined to do so. A short time later this action was commenced to recover damages resulting from the alleged fraud of misrepresentation on the part of defendants.
Plaintiff testified that he had sustained a loss of $2,000 in the transaction, and based this loss upon the statement 'that I have no business now, and if I work at it hard enough I possibly could...
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