Sandler v. Elliott

• Decision Date: 21 March 1957
• Citation: 335 Mass. 576,141 N.E.2d 367
• Parties: Harry SANDLER v. Bernard S. ELLIOTT. Harry SANDLER v. Israel JACOBS.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 367

141 N.E.2d 367

335 Mass. 576

Harry SANDLER v. Bernard S. ELLIOTT.

Harry SANDLER v. Israel JACOBS.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 5, 1956 and Feb. 26, 1957.

Decided March 21, 1957.

Stanley H. Rudman, Boston (Norman M. Goldberg, Boston, with him), for plaintiff.

Lawrence R. Cohen, Boston (Albert R. Mezoff, Boston, with him), for defendant Elliott.

Before WILKINS, C. J., and RONAN, COUNIHAN, WHITTEMORE and CUTTER, JJ.

WHITTEMORE, Justice.

These are two actions of tort for deceit. There was a verdict for the plaintiff in each case which the trial judge set aside pursuant to leave reserved. The plaintiff duly excepted in each case. The declarations were in substance identical. The defendant Elliott contends both that the evidence was insufficient to support the verdict and that there was a material variance.

I. The Case Against Elliott

1. We consider first the action in which Bernard S. Elliott is the defendant. The substitute declaration was filed just before trial. It averred, in part, that 'the defendant by fraudulently representing to the plaintiff * * * that he had contracts with all leading hotels and inns in Massachusetts for the installation of * * * 'coin operated radios' * * * [and] that he would furnish 'coin operated radio' * * * which could be operated on either DC or AC electrical current * * * induced the plaintiff to buy from the defendant the franchise * * * in Massachusetts for $10,000, $5,000 in cash and an additional $5 to be paid on each radio installed * * * [up to one thousand]; that the plaintiff, relying on the fraudulent representations of the defendant, who knew of their falsity, paid to the defendant $6,948.75; * * * that the defendant did not have [installation] contracts with all leading hotels in Massachusetts * * * and the plaintiff was unable to make sales * * *; that the defendant did not and was not able to furnish 'coin operated radio' which could be operated on DC electric current, wherefore plaintiff was unable to make installations * * *; that the defendant intended to deceive the plaintiff * * * and did * * * [so]. Wherefore, the plaintiff claims damages as in his writ alleged' (Emphasis added).

The evidence was such as to permit the jury to find a case made out under these allegations except that the franchise was in fact purchased from a corporation in circumstances hereinafter stated.

The jury could have found, inter alia as follows: The defendant in preliminary negotiations falsely and with knowledge of the falsity represented (1) that he had up to seven contracts for the installation of instruments called Tradios, which were coin operated radios, in hotels, including 'Sheraton Hotels' and important hotels that used direct current, although in fact he had contracts with no more than two of the smaller hotels among those which had been mentioned, and (2) that the plaintiff could have D. C. sets within two or three weeks or a month although he knew that expected delivery time was four months. The plaintiff, on July 2, 1946, went with his brother Hyman and the plaintiff's attorney, Mr. Gack, to sign the contract covering the purchase of the franchise and instruments. The document offered for signature showed, as the seller of the franchise, Elliott Enterprises, Inc., a corporation in which the defendant Elliott and the defendant in the companion action, Jacobs, were the sole stockholders and of which Elliott was the treasurer and Jacobs the president. The plaintiff had not before heard of the corporation and when the plaintiff said that he thought he was doing business with Elliott the latter said 'that [the corporation] is the name I go under in business, but you are doing business with me. You trust in me and I will do right by you. I will see to everything.' The contract had been drawn in contemplation that the plaintiff would be the 'purchaser' under it; it referred to $1,000 which had been theretofore paid by 'one Hyman Sandler' (the plaintiff's brother) for an exclusive franchise for Essex County and stated that 'said agreement * * * is to be set aside and cancelled by mutual agreement and in consideration of these presents, it is therefore now agreed that the aforesaid one thousand ($1,000.00) dollars shall be applied to the credit of the purchaser herein * * *.' The brother Hyman signed the contract on July 2, as did the plaintiff, the brother doing so to give the plaintiff the benefit of the $1,000, having some time before had an arrangement with the plaintiff about that. At some time, which could have been after the contract was signed, the names 'Hy and Harry Sandler' were inserted in the blank left to describe the 'purchaser' and before the contract was signed Mr. Gack caused to be added thereto, in long hand, the words 'Whenever the word purchaser appears it shall be construed as purchaser their assigns, heirs and administrators and executors' (Emphasis added). The plaintiff's brother was not 'a partner of his in this transaction' at least in the factual contemplation of the Sandlers. The plaintiff paid up to $5,795 ¹ on account of the purchase price of the franchise and $10,000, more or less for instruments.

We do not agree with the defendant that there was insufficient evidence of reliance. The plaintiff testified that he signed the contract as the result of what the defendant said to him. The defendant testified that he intended that the plaintiff should rely on whatever statements he made prior to July 2, and that they should be an inducement to the plaintiff to sign a contract, that he was aware that the plaintiff did rely on them, and that the plaintiff told him that he did. This was evidence of reliance. It is not necessary to show that the misrepresentations were the sole or even the predominant factors in the plaintiff's decision to take the franchise. National Shawmut Bank v. Johnson, 317 Mass. 485, 490, 58 N.E.2d 849. The plaintiff would not be barred even if he had not been diligent to verify in his own interest or because he employed an attorney to attend the conference at which the contract was settled. Yorke v. Taylor, 332 Mass. 368, 370, 373-374, 124 N.E.2d 912. The omission of the plaintiff to ask that the relied on representations be included in the contract was evidence of nonreliance; it does not establish nonreliance as a matter of law.

The bill of exceptions shows evidence from which the jury could have found that the plaintiff was damaged. The evidence permitted the jury to find that as between the plaintiff and his brother the plaintiff alone had all the beneficial interests of the 'purchaser' under the contract even if the brother, legally, was also a 'purchaser' and hence bound to the corporation on the obligations of the contract. The jury could have found that the franchise, if supported by existing installation contracts and the availability within two or three weeks of direct current instruments, as represented, would have been worth the contract price of $10,000 and that, without these concomitants, it was worth much less than this. They could have found that the plaintiff would not be able to get expected orders, and hence would give Elliott Enterprises, Inc., little business and the latter would shortly lose its underlying contract so that there would be no source of instruments to supply the plaintiff's orders. The jury could have found that it was implicit in the actual state of affairs on July 2 that, because of the nonexistence of the misrepresented facts, the plaintiff would not enjoy the franchise for a long enough period to establish a business from which he would get any substantial return on his investment. See Whiting v. Price, 172 Mass. 240, 242-243, 51 N.E. 1084. There was therefore evidence from which damages could be found in a substantial amount, perhaps up to the full amount of the plaintiff's payments for the franchise. Piper v. Childs, 290 Mass. 560, 562, 195 N.E. 763; Bellefeuille v. Madeiros, 335 Mass. ----, 139 N.E.2d 413.

The bill of exceptions does not enable us to determine whether the statement therein that the plaintiff 'testified further with regard to some of the financial losses suffered by him in this transaction' refers to testimony which would support the verdict in the much larger sum of $10,500. That is not material on the issue of whether the case should have gone to the jury.

2. The variance point is open to the defendant whether or not the motion for a directed verdict specified the variance. ² Where such a motion is allowed, or, as here, a verdict for the plaintiff is set aside under leave reserved, Brightman v. Blanchette, 307 Mass. 584, 589, 30 N.E.2d 864; Berwick & Smith Co. v. Salem Press, Inc., 331 Mass. 196, 197, 117 N.E.2d 825, we 'take it that the ruling of the judge was made with the declaration before him and in view of its averments.' Brasslavsky v. Boston Elevated Railway, 250 Mass. 403, 404, 145 N.E. 529; Glynn v. Blomerth, 312 Mass. 299, 302, 44 N.E.2d 784; Zarski v. Creamer, 317 Mass. 744, 747, 59 N.E.2d 704. Cases like Leigh v. Rule, 331 Mass. 664, 121 N.E.2d 854, on which the plaintiff relies to support his contention that the variance point is not open on the bill of exceptions, are cases where the trial judge denied the motion for a directed verdict. In such cases, if the evidence is sufficient in any legal form of declaring to justify a finding for the plaintiff, an exception to the denial of a motion for a directed verdict not based on the pleadings will not be sustained. Ibid., 331 Mass. 667-668, 121 N.E.2d 854.

The defendant contends that the specification of the defendant as the seller of the franchise and the omission of a reference to the corporation were material in respect of stating the cause of action. We disagree. Nothing turned on the fact that the plaintiff's franchise rights came from the corporation rather than the defendant. The cause of action is the same. Packard v. Pratt, 115 Mass. 405....