Smith v. Wrehe, 41294

Citation199 Neb. 753,261 N.W.2d 620
Decision Date11 January 1978
Docket NumberNo. 41294,41294
PartiesAlan E. SMITH, Appellee, v. Harold E. WREHE, Appellant.
CourtSupreme Court of Nebraska

Syllabus by the Court

To maintain or defend an action on the ground of false representation, the pleader must allege and prove what representation was made, that it was false and so known by the party making it or was made without knowledge as a positive statement of known fact, that the pleader believed the representation to be true, and that he relied on and acted upon it and was thereby injured.

The fraud involved in the misrepresentation must relate to a present or preexisting fact, and generally may not be predicated on an inference concerning any event in the future or acts to be done in the future unless such representations as to future acts are falsely and fraudulently made with an intent to deceive.

A contracting party cannot, by an assignment of the contract, relieve himself of his obligations thereunder, even where the contract is expressly made assignable and contains a provision that is binding on the assignee of a party. Accordingly, except where a party to the contract expressly agrees to accept the responsibility of the other party's assignee in the stead and place of that of the assignor, making a new contract by way of novation, the assignor remains bound by his obligations under the contract and is liable if the assignee defaults.

Where a general charge fairly presents the case to the jury, it is not error for the trial court, in the absence of a request for a more specific instruction, to fail to give a more elaborate one.

Where a provision in a written contract is not ambiguous, the trial court must determine its meaning as a matter of law, and not submit the issue to the jury.

A provision of a contract is ambiguous when, considered with other pertinent provisions as a whole, it is capable of being understood in more than one sense.

Defenses not raised or litigated in the trial court cannot be urged for the first time on appeal.

Paul E. Watts, Gerald E. Moran, Robert C. Sigler and Julianne M. Dunn, Omaha, for appellant.

Joseph R. Moore, Rochester, Mich., for appellee.

Heard before WHITE, C. J., and SPENCER, BOSLAUGH, McCOWN, CLINTON, BRODKEY, and WHITE, JJ.

BRODKEY, Justice.

Alan E. Smith, plaintiff and appellee herein, initiated this action to recover the balance due on the purchase price of a contract for the sale of a taxicab company to Harold E. Wrehe, defendant and appellant herein. Defendant prayed for dismissal of plaintiff's petition on the grounds that he was not personally liable on the contract, and that he had been induced to sign the contract because of a false representation made by the plaintiff. The trial court determined as a matter of law that the balance due on the contract was owing to the plaintiff and that defendant's claim of misrepresentation was not sustained by the evidence. The court submitted to the jury only the issue of whether the defendant was personally liable on the contract, or whether his assignee was liable. The jury returned a verdict in favor of the plaintiff, judgment was entered thereon, and defendant's motion for new trial was overruled. Defendant has now appealed to this court, contending that the trial court erred in failing to submit to the jury his claim of misrepresentation; and in failing to instruct the jury that should it find that the parties' intent was that the contract could be assigned by the defendant, then it must find that the assignee was liable for any indebtedness on the contract. We affirm the judgment of the District Court.

The facts relevant to this appeal are as follows. On October 1, 1973, defendant contracted to buy plaintiff's taxicab company, which was located in Council Bluffs, Iowa, for a price of $27,900. Initial payments totalling $12,900 were made at the time of closing. The contract provided that the balance of $15,000 "shall be satisfied by the promissory note of the Buyer." Immediately after this provision, the words "or his assignee" were deleted from the contract, which had been prepared by defendant's attorney, and both parties initialed the deletion. The balance due was to be paid in monthly installments of $500, with interest of 8 percent thereon.

The contract also provided: "It is expressly understood that the Buyer expects to cause a new corporation to be formed to own and operate the taxi cab business herein being purchased and to assume the Buyer's responsibilities under this Agreement. The Seller hereby consents to the assignment of the interest acquired by the Buyer under this Agreement to such corporation." The words "which shall then stand in the Buyer's stead to the same extent as if such corporation had been an original party to this Agreement" were deleted from the end of the last sentence quoted immediately above, this deletion being initialed by both parties.

At the time of the sale, the company, the Yellow Cab Company of Council Bluffs, was the only cab company in that city. Defendant did incorporate the newly purchased company, and assigned his rights and delegated his duties under the sales contract to the new corporation. The new corporation made payments on the balance due on the contract until March 1975, at which time neither the defendant nor the corporation made further payments. At the time of trial, approximately $12,000 remained owing on the contract.

The plaintiff testified that prior to the execution of the contract he told the defendant that the cab company was "the only cab company in Council Bluffs." Plaintiff introduced the defendant to city officials of Council Bluffs, in part to enable the defendant to ascertain whether the city would issue a cab company permit to another person so long as the defendant maintained a cab company without complaints. Plaintiff denied that he represented to defendant that he was selling a cab company franchise which was intended to be exclusive in nature.

On direct examination, defendant testified that plaintiff told him that he was buying the "exclusive right to the Yellow Cab Company of Council Bluffs," and that there would be no competition in Council Bluffs. Defendant also stated that a city official of Council Bluffs told him that "there was only one cab company and that was all the town could support." On cross-examination, defendant stated that he did not believe that plaintiff was "in cahoots" with the city officials with regard to the sale. Defendant also stated that he believed that the city officials were honest when they stated that only one cab company could exist in Council Bluffs. Finally, defendant was asked and answered questions as follows: "Q. And really Mr. Smith didn't tell you anything beyond what the city officials told you, did he? A. No, he said that it was only a one cab city, that it should only be a one cab city. Q. And that is exactly what the city officials told you; isn't that right? A. That's right."

After the purchase, defendant's company did not fare well, apparently because of poor management. Approximately 1 year after the contract was executed, a second cab company began operation in Council Bluffs. This second company was founded by plaintiff's business associate, who also was a brother-in-law of the defendant. There was no evidence that the plaintiff was involved, directly or indirectly, with the second company, even to the extent of encouraging or suggesting its formation. Apparently some of the drivers who were employed by defendant's company chose to leave their employment and work for the second company. Defendant's company was eventually closed.

Defendant's claim concerning misrepresentation is that the plaintiff fraudulently represented to him that he would be able to continue the operation of the only authorized cab company in Council Bluffs. Since the trial court directed a verdict in favor of the plaintiff on this issue, we must review defendant's claim in accordance with the rule that a motion for a directed verdict must be treated as an admission of the truth of all material and relevant evidence submitted on behalf of the party against whom the motion is directed. Such party is entitled to have every controverted fact resolved in his favor and to have the benefit of every inference which can reasonably be deduced from the evidence. Jensen v. Shadegg, 198 Neb. 139, 251 N.W.2d 880 (1977).

To maintain or defend an action on the ground of false representation, the pleader must allege and prove what representation was made, that it was false and so known by the party making it or was made without knowledge as a positive statement of known fact, that the pleader believed the representation to be true, and that he relied on and acted upon it and was thereby injured. Cook Livestock Co., Inc. v. Reisig, 161 Neb. 640, 74 N.W.2d 370 (1956). The fraud involved in the misrepresentation must relate to a present or preexisting fact, and generally may not be predicated on an inference concerning any event in the future or acts to be done in the future unless such representations as to future...

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