Vaughan v. Oxenborg, 39197
| Decision Date | 13 February 1962 |
| Docket Number | No. 2,No. 39197,39197,2 |
| Citation | 124 S.E.2d 436,105 Ga.App. 295 |
| Parties | W. W. VAUGHAN et al. v. Stanley OXENBORG |
| Court | Georgia Court of Appeals |
Syllabus by the Court
1, 2. The petition agaisnt two defendants, who allegedly induced the plaintiff to invest money in the organization of a corporation by certain false representations and promises which they had no intention of fulfilling, states a cause of action.
3. Courts of law and courts of equity have concurrent jurisdiction in cases based upon fraud and deceit; and where the prayers of the petition seek only a money judgment for damages, the action is not one in equity.
Stanley Oxenborg brought an action for fraud against William Vaughan and Elmore Putney in the City Court of Hall County, alleging in substance that the defendants are partners doing business as Rocket-Wash of Georgia which purportedly engaged in the sale and establishment of coin-operated automobile wash unite (hereinafter referred to as units) to be installed in service stations; that in response to an advertisement of the defendants in a newspaper, petitioner contacted them to discuss the possibility of investing money in such units; that at said time defendants falsely represented that they had installed two such units in Atlanta during May, 1960, which were returning 30% to 35% profits; that they would furnish plaintiff with similar installed units together with signed leases from service station operators at various locations; that they already had the locations available; that if plaintiff would advance $10,000, defendants would also advance $10,000, in a joint enterprise for the purchase and installation of twelve units; that defendants suggested that plaintiff and defendants form a corporation for this purpose, but insisted that plaintiff sign an individual contract to purchase the units so that defendants could order them from the manufacturer prior to the organization of the corporation, which would enable them to move more quickly; that petitioner signed two purchase orders for a total of twelve units, all parties agreeing that the contrac would bind the corporation when formed; that defendants further falsely represented, prior to the organization of the corporation, that the units had been ordered, and that they already had locations leased for their installation, and it only remained to take delivery of the units and install them; that, relying on all of these representations, plaintiff placed $10,086.60 in a corporation known as Mel Leasing Corporation, which was formed on or about June 20, 1960; that each of the defendants wrote a check to Mel Leasing Corporation for $5,080.80; however, when each of said checks was presented for payment, the same was dishonored; that, in the meantime, defendants issued additional personal checks in the amount of $5,008.80, payable to Mel Leasing Corporation, and on the same day a check in the amount of $19,776, was issued by Mel Leasing Corporation to Rocket-Wash of Georgia; that the defendants opened a bank account in the name of Rocket-Wash of Georgia, deposited the Mel Leasing Corporation check therein, issued checks from Rocket-Wash of Georgia to themselves in the sum of $5,008.80 each, and deposited these checks in their respective individual bank accounts, and the sums so deposited covered their second issue of checks to Mel Leasing Corporation, neither defendant having sufficient funds to cover his check to Mel Leasing Corporation except through the means of this check-kiting device, the result being that defendants did not invest any of their own money in Mel Leasing Corporation.
It is further alleged that the total consideration of the automobile-wash units purchase order was $20,023.20; that substantially all of this was paid to defendants doing business as Rocket-Wash of Georgia; that defendants have failed and refused to deliver any of said units to plaintiff or to Mel Leasing Corporation; that petitioner, who was to be general manager in charge of the units for Mel Leasing Corporation, has not received any signed leases for locations where such units were to be installed; that defendants cannot produce units installed in leased locations pursuant to said contract; that they did not have locations leased nor units on order as represented to plaintiff at the time they induced him to invest his $10,000; that the representation concerning previously installed units was also false and fraudulent; that defendants knowingly made the false representations without any intention of completing the organization of Mel Leasing Corporation 'so that said corporation should become a profit-making organization'; and that defendants falsely represented that the Mel Leasing Corporation funds had to be paid over immediately to Rocket-Wash of Georgia for remittance to the manufacturer of the wash units.
The peition further alleges that the defendants conspired to defraud the plaintiff by their misrepresentations and by the artifice of representing that his finds would be placed with other funds of defendants in a corporation to be formed by the parties, and thereafter, by fraudulently inducing plaintiff to allow the defendants to draw out his funds from the corporation, which funds were then ostensibly used by the defendants to pay for their share of the corporate organization; that they defrauded the plaintiff by taking unto themselves the money they induced the plaintiff to invest; that the corporation is defunct, the stock is absolutely worthless, and the plaintiff has been damaged in the amount of $10,086.60; that the misrepresentations were fraudulent, intentional, and material; that the plaintiff relied on them to his damage; and that he is entitled to punitive damages and attorney fees because the defendants acted in bad faith. The prayer is for actual and punitive damages and attorney fees.
The petition was demurred to on the grounds that it fails to state a cause of action, fails to allege sufficient facts to sustain a judgment, and fails to show that the plaintiff turned over any sum of money to the defendants, and that the petition shows on its face that the money was paid to a corporate third party not a party to the action. The demurrers were overruled, and the defendants except.
John N. Crudup, Gainesville, for plaintiffs in error.
J. Ernest Palmour, Gainesville, Huie, Etheridge & Harland, W. Stell Huie, Atlanta, for defendant in error.
1. Although various special demurrers to the petition were overruled, this ruling is not argued in this court and will be treated as abandoned. Thus, the issue is whether the plaintiff had alleged any fraudulent act on the part of the defendants by which he has been damaged, and whether his petition shows the necessary elements of an action for damages resulting from fraud under Code § 105-301.
As stated in Gaultney v. Windham, 99 Ga.App. 800, 806, 109 S.E.2d 914, 918: ...
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...puffing as to a future performance is not a material misrepresentation of fact that is actionable as fraud. Vaughan v. Oxenborg, 105 Ga.App. 295, 299-300(1), 124 S.E.2d 436 (1962). Statements of opinion are not such factual representations that are actionable as fraud. Buckner v. Mallett, 2......
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