Unitype Co v. Bros

• Decision Date: 26 April 1911
• Citation: 71 S.E. 61,155 N.C. 63
• Parties: UNITYPE CO. v. ASHCRAFT BROS.
• Court: North Carolina Supreme Court

71 S.E. 61

155 N.C. 63

UNITYPE CO.

v.ASHCRAFT BROS.

Supreme Court of North Carolina.

April 26, 1911.

1. Sales (§ 38^*) — Puffing — Fraudulent Representations.

While expressions of opinion by a seller amounting to mere commendation of his goods, though extravagant, are not generally fraudulent in law, yet assurances of value seriously made and intended to be accepted, and reasonably relied on as statements of fact inducing a contract, may be considered in determining whether the making of a contract has been induced by fraud.

[Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 65-77, 85; Dec. Dig. § 38.*]

2. Sales (§ 53*)—Fraudulent Representations—Question for Jury.

Where false statements are made by a seller in the form of opinion or estimates to induce the purchase of goods, and there is doubt as to whether they were intended and received as mere expressions of opinion or as statements of fact to be regarded as material, the question is for the jury.

[Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 145-151; Dec. Dig. § 53.*]

3. Fraud (§ 9*)—Deceit—Cause of Action-Requisites.

To create a right of action for deceit there must be a statement made by defendant, or for which he is answerable, which is untrue in fact, with knowledge of its falsity, or with reckless and conscious ignorance whether it is true or not, made with intent that plaintiff should act thereon, or in a manner apparently fitted to induce him to act upon it, and plaintiff must act thereon to his injury.

[Ed. Note.—For other eases, see Fraud, Cent. Dig. § 8; Dec. Dig. § 9.*]

4. Fraud (§ 23*)—False Representations-Opportunity for Ascertaining the Truth.

A false representation of a fact which materially affects the value of a contract, and which is peculiarly within the knowledge of the person making it, and as to which the party deceived, in the exercise of proper vigilance, has no equal opportunity of ascertaining the truth, is actionable.

[Ed. Note.—For other cases, see Fraud, Cent. Dig. §§ 20-23; Dec. Dig. § 23.*]

5. Fraud (§ 13*)—Deceit—Knowledge—Presumption.

Where false representations as to the condition and capacity of a typesetting machine sold to defendant were made by the inventor of the machine, it would be presumed that he was fully informed as to its qualities, and that the representations were made with knowledge of their falsity.

[Ed. Note.—For other cases, see Fraud, Cent. Dig. §§ 3-5; Dec. Dig. § 13.*]

6. Sales (§ 347*)—Quality—False Representations.

Defendants being about to purchase certain typesetting machines, plaintiff sent an expert machinist and the inventor of the machine sold to defendants, and he induced defendants to purchase it by representations that the machine sold was an improvement on a former one, did not have its imperfections, was constructed so as not to break type in setting or distributing the same, and also as to the capacity and life of the machine, all of which representations were false. Held, that defendants were entitled to plead such false representations in defense to a suit on installment notes given for the price.

[Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 962-972; Dec. Dig. § 347.*]

7. Evidence (§ 434*) — Parol Evidence — Written Contract—Fraud.

Evidence of false representations urged as a defense to a suit to recover the balance of the purchase price of certain machines under a written contract of sale was not objectionable as tending to vary or contradict the contract; its effect being not to change the contract, but to nullify it.

[Ed. Note.—For other cases, see Evidence, Cent. Dig. §§ 2005-2020; Dec. Dig. § 434.*]

8. Corporations (§ 423*)—Acts of Agents-False Representations.

Where a corporation manufactured and sold typesetting machines, and sent out its expert machinist to sell certain machines to defendant, and he to induce the sale made certain false representations on which defendant relied in purchasing the machines, the corporation was responsible therefor.

[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 1692-1695; Dec. Dig. § 423.*]

Appeal from Superior Court, Union County; W. R. Allen, Judge.

Action by the Unitype Company against Ashcraft Bros. Judgment for defendants, and plaintiff appeals. Affirmed.

This action was brought to recover the amount of eight notes, each for $25, given in part payment of the purchase price ($1,750) promised by the defendants to be paid to plaintiff for a Simplex typesetting machine No. 2. C. H. Lombard, an expert machinist and inventor of this machine, was sent by the plaintiffs to close the contract with the defendants, who were printers and publishers of a newspaper at Monroe, N. C. He represented to them, as defendants allege and there was evidence to prove: "(1) That Simplex No. 2 was an improvement on Simplex No. 1, and did not have its imperfections, because of which No. 1 had proved to be a failure and had been taken off the market by the plaintiff. (2) That it was so constructed as not to break type in setting or distributing same. (3) That with the assistance of two men it would set from 5, 000 to 6, 000 ems per hour, or three times as much as hand composition, and with the same economy as hand composition. (4) That said machine was so constructed that the life of the type used in it was the same as when used in hand composition." Defendants further alleged, and introduced evidence to prove, that the representations, each and all of them, were knowingly false, and were fraudulently made, with the intent and purpose to induce the defendants to buy the machine, and that they were misled thereby, while in the exercise of due care and judgment on their part, and induced to buy the machine; that it was impossible to discover the falsity of the representations and the radical defects in the machine, save by the long use of the same, and that themachine was so defective as to cause them great loss and damage, and that plaintiff, by reason of the fraud and damage, was not entitled to recover any part of his alleged claim. Issues were submitted to the jury, which, with the answers thereto, are as follows:

"(1) Did the defendants execute the contract introduced in evidence? Answer: Yes.

"(2) Did defendants execute the notes introduced in evidence? Answer: Yes.

"(3) Did the plaintiff represent and warrant to the defendants that the machine sold to them was an improvement on machine No. 1, that it would not break the type, and that type could be used with it as economically as by hand? Answer: Yes.

"(4) If so, was such representation and warrant false? Answer: Yes.

"(5) If so, did the plaintiff know it was false? Answer: Yes.

"(6) If so, did defendants rely thereon and were they induced thereby to execute said notes and contracts? Answer: Yes.

"(7) If so, what damage, if any, have defendants sustained thereby? Answer: $1,100, with interest from date of notes."

Judgment was entered upon the verdict that the defendants go without day and recover their costs. Plaintiff, having entered exceptions to the rulings of the court, appealed to this court.

Redwine & Sikes, for appellant.

Williams, Lemmond & Love and Adams & Arm-field, for appellees.

WALKER, J. [1, 2] There have recently been several cases of this kind before the court, and we have held that while expressions of opinion by a seller, amounting to nothing more than mere commendation of his goods, "puffing" his wares, as it is sometimes called, or extravagant statements as to value or quality or prospects, are not, as a rule, to be regarded as fraudulent in law, yet "when assurances of value are seriously made, and are intended and accepted and reasonably relied upon as statements of fact, inducing a contract, they may be so considered in determining whether there has been a fraud perpetrated; and, though the declarations may be clothed in the form of opinions or estimates, when there is doubt as to whether they were intended and received as mere expressions of opinion or as statements of facts to be regarded as material, the question must be submitted to the jury. 14 A. & E. p. 35; 20 Cyc. p. 124; Morse et al. v. Shaw, 124 Mass. 59." Whitehurst v. Insurance Co., 149 N. C. 273, 62 S. E. 1067; Cash Register Co. v. Townsend, 137 N. C. 652, 50 S. E. 306, 70 L. R. A. 349.

We also held in the Whitehurst Case, approving what is said upon the subject in Pollock on Torts (7th Ed.) 276, that to create a right of action for deceit there must be a statement made by the defendant, or for which he is answerable as principal, and with regard to that statement all the following conditions must concur: (a) It is untrue in fact, (b) The person making the statement, or the person responsible for it, either knows it to be untrue or is culpably ignorant (that is, recklessly and consciously ignorant) whether it be true or not. (c) It is made with the intent that the plaintiff shall act upon it, or in a manner apparently fitted to induce him to act upon it. (d) The plaintiff does act in reliance on the statement in the manner contemplated or manifestly probable, and thereby suffers damage.

What is still more to the point, we further held that the false representation of a fact which materially affects the value of the contract and which is peculiarly within the knowledge of the person making it, and in respect to which the other party, in the exercise of proper vigilance, had not an equal opportunity of ascertaining the truth, is fraudulent. Thus false and misleading representations made by a vendor to a purchaser of matters within his own peculiar knowledge, whereby the purchaser is injured, are a fraud which is actionable. Where facts are not equally known to both sides, a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion. Smith on the Law of Fraud, § 3; Modlin v. Railroad, 145 N. C. 218, 58 S. E. 1075; Ramsey v. Wallace, 100 N. C. 75, 6 S. E. 638; Cooper v. Schlesinger, 111...