Walters v. Hagan
| Citation | 53 Ga.App. 547,186 S.E. 563 |
| Decision Date | 18 June 1936 |
| Docket Number | Nos. 25438, 25442.,s. 25438, 25442. |
| Parties | WALTERS. v. HAGAN. HAGAN. v. WALTERS. |
| Court | United States Court of Appeals (Georgia) |
Syllabus by the Court.
1. Where, on account of false material representations as to the ownership of property or as to its previous profitable use by the vendor, a contract of conditional sale is promptly rescinded by the vendee or by both parties, and the vendee restores, or unsuccessfully offers to restore, to the vendor his original status quo, the vendee, being likewise entitled to a restoration of his own status, may recover any part of the purchase price paid before discovery of the fraud.
2. If, as alleged in the instant case, the vendor through an agent represented to the vendee that the vendor was using the soldequipment in conducting a profitable restaurant business at the place where the equipment was located, the vendee, in seeking a recovery of the paid part of the purchase-price, would be entitled to show the falsity of the representation as a statement of a past or existing fact, provided that it was material in actually inducing the contract. But such a representation and its falsity could not be shown as a breach of warranty or promise that the vendee, like the vendor, would realize profits and not sustain losses. Such damages, being too speculative, would not be recoverable.
3. The vendee would be entitled to show that he relied upon any false material representation as to the ownership of, or liens or debts against, the fixtures sold, made to him l>y the vendor in an affidavit furnished under the Bulk Sales Law, even though that law, relating only to goods, wares, and merchandise, did not cover such a transaction, since the writing expressed and would evidence the misrepresentation.
4. The instant petition by a vendee against a vendor, as first amended without objection, stated a good cause of action for the recovery of any part of the purchase price which the vendee may have paid before discovery of the alleged fraud and also for rescission, but it stated no cause of action for the recovery of losses or lost profits in conducting a business with the purchased restaurant equipment. Therefore, under the preceding rulings, and for the reasons elaborated in the opinion, the court erred in dismissing on motion the petition as first amended, erred in disallowing the second amendment to the petition, and erred in sustaining the fifth, sixth, seventh, ninth, tenth, and twelfth special grounds of demurrer to the petition; but did not err in sustaining special grounds part of 2, as indicated, 3-b and 8, and in overruling special grounds 3-a, 3-c, 4, and 11, of the demurrer.
Error from Superior Court, Fulton County; G. H. Howard, Judge.
Suit by Mrs. E. M. Walters against H. T. Hagan. To review the judgment, the plaintiff brings error, and the defendant files a cross-bill of exceptions.
Affirmed in part, and reversed in part on main bill of exceptions, and affirmed on cross-bill of exceptions.
Statement of facts by Jenkins, Presiding Judge:
Mrs. Walters, the vendee under a conditional sale contract, sued Hagan, the vendor, for $2,500, on account of alleged fraudulent representations, made through an agent, inducing her purchase of restaurant equipment as described in the contract. To the contract was attached an affidavit by the vendor, stating that he was the sole owner of the properties, owed no debts therefor, and had a legal right to sell. The original petition, containing these averments, also alleged that the plaintiff relied upon another representation that the vendor had been using the equipment in operating a restaurant at the place where it was then located, and had realized net profits of $300 to $400 a month from such operation during the previous year or longer. It was further stated that all of these representations were untrue; that about the middle of May, 1934, plaintiff was informed that the stools and silver napkin holders, all included in the bill of sale, had not been paid for and did not belong to defendant, as he later admitted; that defendant took the properties back about June 9, 1934; that defendant injured and damaged plaintiff in the amount of the consideration paid, $600 cash and $151.50 during March and April, 1934, and also in the amount of loss, between $300 and $400 a month, which plaintiff sustained in operating the restaurant from February 9, 1934, the date of purchase, to June 9, 1934. In an amendment, which was allowed without objection, it was alleged that, in buying the personal property and in leasing the place of business from the owner, a third person, plaintiff relied upon defendant's representations that all debts on the properties had been paid and there were no creditors, and that defendant had been operating the business at the stated monthly profit; whereas, as the plaintiff did not discover until the latter part of May, 1934, the stools, napkin rings, and cash register had not been paid for and were not owned by defendant, and the business had not been operated by him at the profit stated, but had been previously sold to a number of persons, who turned it back to defendant; that, when plaintiff discovered that these representations were false and fraudulent, "she promptly took the matter up with defendant * * * and tendered him back all the property and effects that she had received from defendant in said trade, who accepted and took the same back, but defendant failed and refused torepay plaintiff any of the money that she paid him on the purchase-price of said property, or to pay her any other sum"; that said property "was in as good a condition as it was when she received the same when returned to the defendant, and that the rental value of the same during the time that she had it was not worth anything for the use thereof." The cash receipts and expenditures in her operation of the business, showing a total loss of $1,348.59, were elaborated in detail.
After allowing this amendment, the court overruled a general demurrer and certain of the grounds of special demurrer, confined to the original petition; but sustained other grounds of the special demurrer, with ten days' leave to amend. At the trial plaintiff offered a further amendment striking the name of the agent making the representations, who in the original petition had been joined as a party defendant with the vendor, and alleging that the contract had been completely rescinded about June, 1934, by defendant's receiving back the entire property and retaining possession since that time, and that plaintiff had paid $751.50 on the purchase price before the rescission. She prayed judgment...
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