Schagun v. Scott Mfg. Co.

• Decision Date: 17 April 1908
• Docket Number: 2,689.
• Citation: 162 F. 209
• Parties: SCHAGUN v. SCOTT MFG. CO. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

162 F. 209

SCHAGUN v. SCOTT MFG. CO. ^[1]

No. 2,689.

United States Court of Appeals, Eighth Circuit.

April 17, 1908

Silas M. Finch (John H. Steele, on the brief), for plaintiff in error.

Clarence A. Webber (Fred B. Dodge, on the brief), for defendant in error.

Before SANBORN and ADAMS, Circuit Judges, and PHILIPS, District Judge.

PHILIPS District Judge.

The plaintiff in error, on March 20, 1907, brought suit against the defendant in two counts, which will be considered in their order. The plaintiff was and is a citizen of the state of Minnesota, and the defendant is a corporation organized under the laws of the state of Missouri, with its principal office in the city of St. Louis. The substance of the allegations of the first count is that prior to March 20 1905, the defendant represented to the plaintiff that a secondhand three-mold Andrus brick press owned by it possessed certain qualities which fitted it for making brick out of sand and cement, and that it was capable of manufacturing a given quantity of brick per day; that the plaintiff, relying upon said representation as true, was thereby induced to enter into a written contract for the purchase of said press at the sum of $1,000; that he built a concrete foundation for said press, furnishing material etc., at an expense of $1,500.

It is then alleged that said representations were false and fraudulent, and so known to be to the defendant, and were made to induce him to enter into said contract; that the press was out of repair, broken, and incapable of being operated, which was well known to the plaintiff, whereby he was damaged in the sum of $2,500, in addition to the expenditure of the sum of $1,000 in setting up said machine and for materials furnished in trying to operate it. The answer, after admitting the existence of the corporation and its residence, denied each and every other allegation otherwise alleged in the petition.

The proof was that the contract was in writing, in the form of a letter addressed to the plaintiff by F. C. Frost, of date March 20, 1905, which was accepted by the plaintiff on the same day in writing. There was nothing on the face of this writing to indicate that the defendant was a party thereto or had any responsible connection with the transaction. The oral testimony tended to show that whatever representations or statements as an inducement to the plaintiff to enter into the agreement were made by Frost. The evidence further shows that said agreement was changed or modified on the 20th of April, 1905, in writing, signed only by said Frost on his own behalf and by the plaintiff. It contained the following provision:

'This additional agreement is hereby made part of the original agreement herein, and is in consideration of the payments therein provided for, and is to be considered of effect from date of original instrument.'

While the evidence showed that, at the time the negotiations leading up to the contract were conducted between Frost and the plaintiff, the machine in fact belonged to the defendant, it was in Frost's possession, who obtained from the defendant the lowest price it was willing to take for it. The evidence discloses the fact to be that Frost sold the machine to the plaintiff on his own account, in connection with a lot of other machinery and articles belonging to him, at the aggregate price of $1,500, and that he realized about $1,100 on account of the machine in question, which he obtained from the defendant at a sum not exceeding $1,000, including transportation charges. The petition was not framed on the theory that in making the contract in his name Frost was in fact acting merely as the agent, and therefore the defendant should be held responsible for any misrepresentations he may have made.

More than this, the facts developed on the trial furnish a further sufficient reason why, on the issues joined on this count, the plaintiff could not recover. The machine proving unsatisfactory to the plaintiff, on the 17th day of July, 1905, by written contract, he bought from the defendant another machine, designated as a 'four-mold Andrus improved brick press,' at the price of $4,000, and as part payment thereon, the defendant allowed to the plaintiff a credit of $1,500 on account of the said three-mold Andrus press, which the plaintiff was to reship to the defendant at Keokuk, Iowa.

When he consented to be thus credited on the purchase price of the four-mold machine, he waived any claim he might have for the damages sued for; so that, had he alleged in the petition that Frost was acting as the agent of the defendant, and, therefore, it should be held responsible for the alleged misrepresentations of Frost, the defendant could have answered that any damages resulting from the sale of the first machine were settled, by accord and satisfaction, on the 17th day of July, 1905, in the manner above stated. The Circuit Court was therefore warranted in holding that the proof did not sustain the allegation of the petition, and in directing a verdict for the defendant as to the first count.

The second count of the petition, in substance, alleges that on or about the 17th day of July, 1905, the defendant represented to the plaintiff that a certain four-mold Andrus improved brick press, with its equipments, was a new machine manufactured by the defendant, capable of manufacturing sand and cement brick, and, when properly set up, was capable of manufacturing 16,000 bricks per day, running 10 hours; that, relying upon said representations and believing them to be true, he was induced to enter into a written contract with the defendant, agreeing to pay for said last-named press the sum of $4,000 and the freight from Keokuk, Iowa, to Minneapolis, Minn., amounting to $125, which freight the plaintiff paid on the arrival of the press at Minneapolis; that, relying on the truth of said representations, he was induced to perform labor and furnish material in building a foundation, and to furnish fuel to operate the same to the amount of $1,000; that said press failed to make brick to the amount of 16,000 per day, or any quantity, and that it was worthless; that the plaintiff was thereby induced to make, execute, and deliver to the defendant three promissory notes in part payment of said press, bearing the date of November 25, 1905, for the sum of $2,159.50, with interest from date, which notes the defendant fraudulently transferred for value to a third party, who had obtained judgment against the plaintiff thereon for the full amount thereof. The petition then charges that the said representations were false and fraudulent, known to the defendant to be such at the time they were made, and were made for the purpose of deceiving and defrauding him. The damages claimed are $6,059.

To this count the defendant tendered the general issue, except as therein admitted. It admitted entering into a contract in writing with the plaintiff, attached as 'Exhibit A' to the answer. The answer further alleged that on or about the 25th day of November, 1905, it and the plaintiff entered into a further contract, supplementary to said 'Exhibit A,' which is attached to the answer as 'Exhibit B,' which said contracts constitute the only agreements between the parties. It then alleged delivery of the machine, its acceptance by the plaintiff in accordance with the contract, and the execution of the note and making the cash payment in performance of the terms of the contract.

The answer further alleged that on or about the 25th day of November, 1905, at the time of the execution of said supplemental contract, 'Exhibit B,' the plaintiff delivered to the defendant the promissory notes therein agreed to be delivered. It admitted that before the maturity of the last-mentioned notes it transferred them to third parties, but as to whether or not a judgment had been rendered thereon against the plaintiff it denied any knowledge or information sufficient to form a belief, and alleged that the plaintiff had never paid said notes, or any part thereof. The answer further pleaded that on the 25th day of November, 1905, after full opportunity to test said machine, and after testing the same, the plaintiff in adjustment, paid the defendant the sum of $400, as set forth in the said 'Exhibit B,' as part of the contract price of the machine, and executed to it the three promissory notes mentioned in the amended complaint and in said 'Exhibit B.'

The reply denied that the said machine was accepted by the defendant as conforming to the contract, and alleged that the contract, 'Exhibit B,' and the notes mentioned therein, were obtained by plaintiff through false and fraudulent statements and representations made by the defendant at the time, and denied that on the 25th day of November, 1905, there had been full opportunity to test said machine, or that it had been tested to the satisfaction of the plaintiff, and charges that the sum of $400 was paid and the said notes executed through fraudulent statements and representations made by the defendant at that time.

At the conclusion of the plaintiff's evidence the court directed a verdict for the defendant. The question to be decided is, did the court err in so doing? It matters not on what ground the court placed its ruling, as it will not be disturbed on writ of error if it is justified by the facts and the law. The action predicated in the petition is essentially for fraud and deceit, ad damnum. To authorize recovery in such action, the burden rests upon the plaintiff to establish:

'First, that the defendant has made a representation in regard to a material fact; secondly, that such representation is false; thirdly, that such representation was not actually believed by the defendant on reasonable grounds

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