Vogelsang v. Wolpert

• Decision Date: 08 May 1964
• Citation: 38 Cal.Rptr. 440,227 Cal.App.2d 102
• Court: California Court of Appeals Court of Appeals
• Parties: Emily Jane VOGELSANG, as Executrix of the Estate of Otto Ernest Vogelsang, Deceased, et al., Plaintiffs and Respondents, v. Euqene B. WOLPERT et al., Defendants and Appellants. Civ. 218.

Page 440

38 Cal.Rptr. 440

227 Cal.App.2d 102

Emily Jane VOGELSANG, as Executrix of the Estate of Otto Ernest Vogelsang, Deceased, et al., Plaintiffs and Respondents, v. Euqene B. WOLPERT et al., Defendants and Appellants.

Civ. 218.

District Court of Appeal, Fifth District, California.

May 8, 1964.

Stammer, McKnight, Barnum, Bailey & Barnett and Galen McKnight, Lerrigo, Thuesen & Thompson, and Frank Lerrigo, Fresno, for appellants.

Barrett & Wagner, and James F. Wagner, Fresno, for respondents.

CONLEY, Presiding Justice.

The Vogelsangs obtained a judgment against Eugene B. Wolpert and his family corporation, Oxford Investment Company, for $55,806.10, $12,250.84 interest, and $5,000.00 punitive damages in a fraud action involving the transfer by the Vogelsangs to the defendants of virtually all of their extensive real and personal property.

The trial court found that the plaintiffs were induced to turn over to defendants for an allegedly grossly inadequate consideration their property, consisting of 360 acres of improved farm land near Laton, a dairy herd of 259 cows besides bulls and calves, a complete dairy, farm machinery and equipment, including two pickup trucks, four tractors, a 2,200-gallon bulk milk tank, a hay bailer, a hay chopper, four wagons and trailers, hay moving equipment, and other items, a grade A milk producers contract with Knudsen Creamery Company, approximately 1,200 tons of silage, repair and shop tools, together with agricultural parts and farm supplies, irrigation pipe lines and sprinkling equipment, and irrigation accessories sufficient to water plaintiffs' real properties, the sum of $14,950 in cash payable to some of plaintiffs at Visalia Branch of Security Title Insurance Company, from the sale of real property, an 80-acre cotton allotment pertaining to plaintiffs' real properties, other miscellaneous personal properties necessary to conduct a dairy and farming business, and the equity in a house and lot with furnishings and equipment at Pismo Beach in San Luis Obispo County. The court further expressly found that these transfers were induced by 'false, fraudulent, and deceitful acts, promises and misrepresentations of defendants,' and that each 'promise and misrepresentation of defendants set forth * * * constitutes acts, promises and misrepresentations of material facts by said defendants,' that such promises were made without any intention to perform on the part of defendants but solely to induce plaintiffs to transfer their properties to defendants, that all of the misrepresentations were known by the defendants to be false and fraudulent, that the defendants intended that plaintiffs should rely and act upon these deceitful and untrue representations, that plaintiffs did so rely, and that plaintiffs sustained actual damages. The trial court was of the opinion that '* * * the alleged fraud although shrouded in an apparent veil of strict legality was gross.'

The transfer of the property was effected through the Title Insurance and Trust Company at Visalia on January 9, 1958, when the plaintiffs signed written escrow instructions; thereafter, they executed deeds and bills of sale for all of their land, farm machinery and dairy equipment, 259 head of cows and all bulls and calves, and on January 15, 1958, the defendants took possession of the ranch. The defendants paid nothing in hand to plaintiffs for the transfer of the properties; they assumed existing encumbrances and, according to the findings, agreed also to pay other business debts of plaintiffs; they never in fact paid these additional sums.

The plaintiffs also signed at a somewhat later date but as part of the transaction, an agreement dated February 10, 1958, prepared by William B. Mitchell, an attorney at law and an officer and director of defendant, Oxford Investment Company. This document provided that Oxford Investment Company '* * * will offer for sale the said 360 acres of land * * * known as the Laton Ranch * * * and that any sale thereof shall be at such price and on such terms as shall be determined solely * * *' by the Oxford Investment Company. The agreement further stated that '* * * from the proceeds of any such sale' the Vogelsangs 'shall receive twenty per cent (20%) of that portion of the net sales price which exceeds the sum of One Hundred Eighty Thousand and No/100 Dollars ($180,000.00).'

The defendants did not sell the property, claiming at the trial that the obligation was entirely discretionary with the Oxford Investment Company, that it expired in one year, and that the defendants had purchased the real and personal property for the amount of the encumbrances.

THE TRIAL COURT'S FINDING OF FRAUD CANNOT BE DISTURBED.

Numerous points are raised on the appeal involving the pleadings, the findings, and the evidence, and these contentions will be considered in due course, but the principal question to be determined is whether the record contains any substantial evidence to support the conclusion of the trial court that the fraud of the defendants was proven.

Wilful fraud, to borrow a figure from classical antiquity, is a hydra-headed monster; its faces are various; they may differ one from another as markedly as personal and business relationships are unlike in the modern world, but all of them have this in common that wilful fraud is always instinct with guile. By false representations, knowingly made, the beneficiary of actual fraud has wilfully induced another to part with his property without adequate compensation; he has been guilty of overreaching, of dishonest gain by misleading another, of obtaining property under circumstances which are unfair and unconscionable and which the law will not tolerate.

In 37 C.J.S. Fraud, § 1, pages 204-205, it is said:

'Fraud is a generic term which embraces all the multifarious means which human ingenuity can devise and are resorted to by one individual to gain an advantage over another by false suggestions or by suppression of the truth. In its general or generic sense, it comprises all acts, omissions, and concealments involving a breach of legal or equitable duty and resulting in damage to another, or the taking of undue or unconscientious advantage of another; * * *

'Fraud has also been defined as any cunning, deception, or artifice used to circumvent, cheat, or deceive another.'

Our own Civil Code gives appropriate definitions of fraud and deceit:

'ACTUAL FRAUD, WHAT. Actual fraud, within the meaning of this Chapter, consists in any of the following acts, committed by a party to the contract, or with his connivance, with intent to deceive another party thereto, or to induce him to enter into the contract:

'1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

'2. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

'3. The suppression of that which is true, by one having knowledge or belief of the fact;

'4. A promise made without any intention of performing it; or,

'5. Any other act fitted to deceive.' (Civ.Code, § 1572.)

'FRAUDULENT DECEIT. One who willfully deceives another with intent to induce him to alter his position to his unjury or risk, is liable for any damage which he thereby suffers.' (Civ.Code, § 1709.)

Section 1710 of the Civil Code reads:

'DECEIT, WHAT. A deceit, within the meaning of the last section, is either:

'1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

'2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;

'3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want to communication of that fact; or,

'4. A promise, made without any intention of performing it.'

As is said in Zinn v. Ex-Cell-O Corp., 148 Cal.App.2d 56, 68, 306 P.2d 1017, 1025:

'The general elements of a cause of action for fraudulent misrepresentation are (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. See Seeger v. Odell, 1941, 18 Cal.2d 409, 414, 115 P.2d 977, 136 A.L.R. 1291; Rest. Torts § 525 et seq.'

(See also Anderson v. Handley, 149 Cal.App.2d 184, 186, 308 P.2d 368; Lawson v Town & Country Shops, Inc., 159 Cal.App.2d 196, 200, 323 P.2d 843; Clar v. Board of Trade, 164 Cal.App.2d 636, 644, 331 P.2d 89; M. G. Chamberlain & Co. v. Simpson, 173 Cal.App.2d 263, 276, 343 P.2d 438.)

In New v. New, 148 Cal.App.2d 372, 383, 306 P.2d 987, 994, the court aptly sets forth the rules which must control our examination of the record:

'The appellate court must accept as established all facts and all inferences favorable to respondent which find substantial support in the evidence. 'And where appellant urges the insufficiency of the evidence to sustain the findings * * * the rule is that, 'Such contention requires defendants to demonstrate that there is no substantial evidence to support the challenged findings.' Nichols v. Mitchell, 32 Cal.2d 598, 600, 197 P.2d 550, 552. (Emphasis added.) It is said in Crawford v. Southern Pac. Co., 3 Cal.2d 427, 429, 45 P.2d 183, 184, that: 'It is an elementary, but often overlooked, principle of law, that when a verdict is attacked as being unsupported, the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the jury. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court.'' Hartzell v. Myall, 115 Cal.App.2d 670, 673, 252 P.2d 676, 677.'

(See also Ashburn v. Miller, 161 Cal.App.2d...