Vandervoort v. Sansom

• Decision Date: 08 June 1956
• Docket Number: No. 15725,15725
• Citation: 293 S.W.2d 271
• Parties: H. Carl VANDERVOORT, Jr., et al., Appellants, v. H. E. SANSOM, Appellee.
• Court: Texas Court of Appeals

Page 271

293 S.W.2d 271

H. Carl VANDERVOORT, Jr., et al., Appellants, v. H. E. SANSOM, Appellee.

No. 15725.

Court of Civil Appeals of Texas, Fort Worth.

June 8, 1956.

Rehearing Denied Sept. 7, 1956.

Henry Mack and Cal Estill, Fort Worth, for appellants.

Mays & Mays, and Charles Lindsey, Fort Worth, for appellee.

MASSEY, Chief Justice.

This is an appeal by the defendants from a judgment for the plaintiff rescinding a contract of sale to plaintiff of a coin-machine business, inclusive of the machines and the route on which they were operated under percentage of profit agreements with the merchants in whose stores the machines were located. Substantially, the basis of defendants' appeal is their claim that the evidence established that plaintiff had waived the fraud found by the jury in connection with the defendants' representations which induced plaintiff's purchase and/or that he was estopped to claim relief in equity because of his conduct and delay after discovery of the fraud and also after the suit was pending.

The judgment is affirmed.

Not all the various alleged fraudulent representations were found to have been false, been made for purpose of inducing plaintiff to purchase, been a material inducement to the purchase, believed by plaintiff at time he purchased, and relied upon in making the purchase. However, three of the alleged fraudulent representations were severally found by the jury to have been. By its answers the jury established that these three were as follows: (a) Exhibition of collection slips shown plaintiff, all showing a gross profit per week per machine on location and in operation, after the commission had been paid to the merchant on whose premises the machine was located, of $33.33 or more, along with representation that said slips were representative of the average machine on location; (b) representation that under no conditions had returns from an average group of machines, after commissions were paid, been less than $25 per week or $100 per month; (c) representation that as to a 'substitute' established route and the machines located thereon (to be replaced by new macnines) and accepted by plaintiff in the stead of those originally contracted for but not received far exceeded $25 per week or $100 per month average per machine gross profit, after commissions were paid.

We have carefully examined the evidence in the record and are of the opinion that by the date (the latter part of July, 1954) plaintiff testified that he was in possession of knowledge that all the alleged representations (inclusive of these three) were fraudulent, reasonable minds could differ as to whether it was a fact that he had not theretofore learned of the falsity of the representations found by the jury and listed by us as (a) and (c). Questions of fact were presented for this reason, if not for other reasons, of the timeliness of plaintiff's proffered rescission. We believe that the evidence does conclusively establish that plaintiff knew of the falsity of the representation listed by us as (b) and had waived any fraud in connection therewith, hence no question of fact existed thereupon. However, the fact that plaintiff knew of the falsity of (b) at such a time that his subsequent action and conduct might be such as would foreclose recourse to the equitable remedy of rescission because thereof, he would not be foreclosed from recourse to such remedy because of fraudulent representations (a) and (c). A purchaser may be willing to waive one or more acts of fraud in such instances where he would at the same time be unwilling to waive another or others which operated in conjunction therewith, or independently, to induce him to enter into the contract. It is the act or acts of fraud which he is unwilling to waive and has not waived upon which he necessarily predicates any proper suit for rescission. Deaton v. Rush, Tex.Com.App.1923, 113 Tex. 176, 252 S.W. 1025; Ingram v. Abbott, 1896, 14 Tex.Civ.App. 583, 38 S.W. 626, error refused.

To review briefly the history of the controversy, it is noted that the transaction leading up to the contract entered into by the parties began with an advertisement in the Fort Worth Star-Telegram of Sunday, March 21, 1954. In this advertisement 'money making routes of coin operated Kiddie Karousels' being established in various cities in Texas were offered with the invitation for interested persons to write to a box of the newspaper. The Kiddie Karousels, the machines in question, are sort of 'two-man', or more correctly 'two-child', 'merry-go-rounds', which operate on a turn-table moving caricature horses and rabbits for about a minute and which start upon the dropping of a coin in a coin box attached thereto. They are manufactured and located by the defendants, H. Carl Vandervoort, Jr., et al., doing business as the Texas Kiddie Rides Company, in various mercantile establishments under individual agreements with merchants whereby they receive a percentage of the 'take' from the coin boxes when these boxes are periodically 'robbed' by the operator of the machines. In some instances the agreement involves a 'robbing' of the coin boxes by the merchants themselves, who deduct their proper commissions and mail the balance to the machine operator-owner. The defendants sell the machines 'on location, in operation' along with the individual agreements with the merchants, to purchasers thereof. It was such an offer that was made in the advertisement of March 21, 1954. It is of interest to note that the advertisement stated that the 'routes' offered consisted of from 10 to 100 machines along with the statement that 'incomes (therefrom) will vary from $500 to $5,000 per month, depending upon the mumber of machines on location in each route.' This would be a minimum of $50 per month and a maximum of $500 per month per machine.

As a result of plaintiff's answer to the advertisement a representative of the defendants called him and arranged a personal meeting in Fort Worth. Upon the occasion of this meeting an agent of the defendants, assisted by defendant Vandervoort, sold plaintiff on taking a route or routes consisting of thirty (30) new machines, to be placed on locations supplied by defendants, in operation, and delivered to plaintiff. A contract to this effect was entered into under date of March 27, 1954. The representations inducing plaintiff to so contract included those found by the jury and heretofore listed by us as (a) and (b).

About a week later the same representative of the defendants negotiated further with plaintiff. He advised plaintiff that there was some difficulty and delay in getting his new machines manufactured and located and placed in operation so that he would have an operating route. He advised plaintiff that defendant Vandervoort had a route which was in operation and where there were already thirty machines located, two of which were 'boat-rides' rather than Kiddie Karousels. He stated that he had convinced Mr. Vandervoort that defendants should be permitted to offer this route to plaintiff in substitution of the one contemplated to be established and that this could be done if plaintiff would pay an additional $1,000 for the two 'boatrides'. It is not absolutely clear in the statement of facts but appears that in the substitute transaction plaintiff would get new Kiddie Karousels replacing the older ones already on the route and in operation, would have the 'boat-rides' in the shape and at the locations where they were in operation, and would have the two additional new Kiddie Karousels delivered to him, on location and in operation, as soon as they were manufactured. Plaintiff accepted this contract in substitution and paid an additional $1,000 upon representations including that found by the jury and heretofore listed by us as (c).

In the early part of April, 1954, plaintiff, having moved to Fort Worth in the interim, went to the defendants' offices prepared to take charge of the business purchased. While it is inconsequential, not having been found by the jury to constitute a fraudulent ground because of which plaintiff was entitled to rescind, he found that only fourteen machines were on location on the route at that time. However, by May 1, 1954, all thirty-two machines were located and in operation. In April plaintiff received the 'mail ins' on four machines located out of town, where the merchants robbed the boxes, deducted their commission, and mailed the balance to the operator-owner. The weekly gross profit so received on all four machines was between $11 and $12. A subsequent check on the same machines did little better than this. Plaintiff took the matter up with defendant Vandervoort and asked him what the average weekly 'take' ran on the four machines and was informed that it was $19.03 per machine. Plaintiff complained and Vandervoort told him that the machines were old and that when the new machines were placed in their stead the income from the locations should rise. Plaintiff was in position by about ...