Schnepper v. Halleb

• Decision Date: 02 June 1924
• Docket Number: No. 41.,41.
• Parties: SCHNEPPER et al. v. HALLEB.
• Court: Michigan Supreme Court

227 Mich. 455

198 N.W. 943

SCHNEPPER et al.

v.HALLEB.

No. 41.

Supreme Court of Michigan.

June 2, 1924.

Appeal from Circuit Court, Wayne County, in Chancery, Frank L. Covert, Judge.

Suit by Otto H. Schnepper and Selma H. Schnepper against H. Mohmoud Halleb. From decree for second named plaintiff only, first named plaintiff appeals. Modified, and as modified affirmed.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ.Peter P. Boyle, of Detroit, for appellant.

Lorne W. Weber, of Detroit, for appellee.

BIRD, J.

The bill in this case was filed by plaintiffs, husband and wife, to cancel and have declared void a certain lease, also a contract for the purchase of certain personal property, on the grounds of misrepresentation and fraud. At the conclusion of the hearing the lease and the contract were declared void by the court as to the wife. but relief was refused to the husband.

The history of the case appears to be that David Simmons was the owner of the Rexleigh Apartment Building, situate in Detroit, containing 26 apartments, four single rooms, and five stores. On April 1, 1919, he leased the apartment to Robert D. McCreery, Jr., for a term of 10 years. McCreery soon after assigned the lease, with Simmons' consent, to Haig Taylor. Taylor kept it for a time and then disposed of it to Halleb by sublease, without Simmons' consent. Halleb, in turn, sold the lease and furniture to plaintiffs for $25,000 and in part payment therefor took title to certain real estate owned by Selma H. Schnepper for $5,500, and also title to certain interests in Detroit real estate owned by Otto H. Schnepper, valued at $7,100, leaving a balance due on the lease and contract of $12,400, which was to be paid in deferred payments. After operating the apartment house for a time, they learned the falsity of defendant's representations. They finally defaulted in their payments, and Taylor began proceedings to dispossess both plaintiffs and defendant.

It is the claim of plaintiffs that defendant misrepresented to them the number of tenants which the apartment had, and that he misrepresented the amount of gross and net income which the apartment was then yielding; that he had made all payments which were due his lessor, and other misrepresentations of a minor nature; and that when they discovered what the true conditions were they rescinded the sale of the lease and contract, and tendered them back to defendant. Considerable proof was admitted at the hearing bearing on these questions. At the close of the hearing the trial court said in conclusion:

‘I am satisfied that there were some misrepresentations on the part of the defendant to plaintiffs. I am also satisfied that the property might have been saved had plaintiff Otto H. Schnepper exercised reasonable diligence in the management and care of the property. He was a real estate man of some experience and had assisting him in the transaction one Frahm, his partner, who was also a real estate man. While it is true generally that purchasers have a right to rely upon representations made to them by persons having a particular means of knowing the truth of the condition of the property, yet I feel that Schnepper did not exercise reasonable precaution and diligence in inspecting this property before purchasing it. I also believe that if, after he purchased the property, he had used sound business judgment in the care of the property and the management of it, he would not have lost possession thereof. As the...