White Sewing Mach. Co v. Bullock

• Citation: 76 S.E. 634, 161 N.C. 1
• Case Date: December 04, 1912
• Court: United States State Supreme Court of North Carolina

76 S.E. 634
161 N.C. 1

WHITE SEWING MACH. CO.
v.
BULLOCK et al.

Supreme Court of North Carolina.

Dec. 4. 1912.

1. Sales (§ 38^*)—Remedy op Buyer—Rescission fob fratjd.

Where a merchant, through the false representations of an agent of a sewing machine company that his competitor who has been handling the machines has only about three on hand and will not receive or sell any more, when in fact he has recently had a large order filled and has about 100 machines on hand, is induced to give an order for a large number of machines believing that he will have the exclusive local sale, he may rescind the contract; such representations constituting fraud and not mere puffing or promissory representations.

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

2. Appeal and Error (§ 927*)—Review—Instruction Amounting to Nonsuit.

An instruction, given by the court at the close of defendant's evidence, that defendant could not, upon the evidence, have contract sued on, rescinded, or recover damages for fraud alleged to have been practiced upon him, is equivalent to a nonsuit, and the appellate court in reviewing the instruction must regard all the evidence as true.

[Ed. Note.—For other cases, see Appeal and Error, Cent. Dig. §§ 2912, 2917, 3748, 3758, 4024; Dec. Dig. § 927.*]

3. Fraud (§ 9*)—Nature and Elements— "Deceit."

Where a vendor makes false representations as to material facts relating to the property sold, having at the time knowledge that his statements are false or what the few regards as equivalent to such knowledge, and intending that the purchaser shall rely upon them as an inducement to the purchase, he is liable in an action of deceit where the purchaser relies thereon to his damage.

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

For other definitions, see Words and Phrases, vol. 2, pp. 1894-1896; vol. 8, p. 7629.]

4. Fraud (§ 18*)—Materiality of Representation.

A false representation is material if the fact untruly asserted or wrongfully suppressed influenced the judgment or decision of the defrauded party to enter into a contract which he would not have otherwise made.

[Ed. Note.—For other cases, see Fraud, Cent. Dig. § 16; Dec. Dig. § 18.*]

5. Sales (§ 38*)—Fraud of Agent—Failure to Investigate.

Where a merchant was induced to order a large number of sewing machines through re liance on the false representation of the seller's agent that a competing merchant had ceased to handle the machines, the seller, in a suit to enforce the contract, could not, though an investigation would have discovered the truth, relieve itself from responsibility by setting up that it was the buyer's duty to investigate and ascertain the facts for himself.

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

6. Contracts (§ 94*)—Fraud—Ignorance of Negligence.

Ignorance or negligence of the party deceived is no bar to his defense that the contract sued on was procured by fraud.

[Ed. Note.—For other cases, see Contracts, Cent. Dig. §8 420-430, 1160, 1164, 1165; Dec. Dig. § 94.*]

7. Fraud (§ 64*) — Action by Seller — Defense—Diligence to Investigate —Jury Question.

Where, in a seller's action for the price of goods sold, the buyer alleges misrepresentation under circumstances placing upon him the duty to have made an investigation, the question whether he exercised due diligence to investigate is for the jury.

[Ed. Note.—For other cases, see Fraud, Cent. Dig. §§ 65 1/2, 67-71; Dec. Dig. § 64.*]

8. Sales (§ 126*)—Rescission—Laches.

Plaintiff's agent represented to defendant that a local competitor selling plaintiff's sewing machines had discontinued the sale thereof, and by such representation induced defendant to purchase a large number of machines for sale in that locality, and 18 days after defendant received the machines, he discovered the falsity of the agent's representation, and immediately gave notice of rescission. Held, that defendant's right to rescind was not barred by laches.

[Ed. Note.—For other cases, see Sales, Cent. Dig. §§ 313-317; Dec. Dig. § 126.*]

9. Evidence (§ 434*)—Contracts — Fraud-Representation of Agent.

A clause in a sale contract exempting the seller from liability for its agent's representations at variance with the contract did not protect the seller, where the contract was void by reason of the agent's fraud.

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

10. Contracts (§ 94*)—Validity—Fraud— Promissory Representations.

Mere promissory representations may be fraudulent and invalidate a contract.

[Ed. Note.—For other cases, see Contracts, Cent. Dig. §§ 420-430, 1160, 1164, 1165; Dec. Dig. § 94.*]

11. Sales (§ 114*) — Right to Rescind — Fraud.

The buyer may rescind the contract of sale induced by fraud of the seller's agent and return the goods.

[Ed. Note.—For other cases, see Sales, Cent. Dig. § 288; Dec. Dig. § 114.*]

Brown and Allen, JJ., dissenting.

Appeal from Superior Court, Granville County; Whedbee, Judge.

Action by the White Sewing Machine Company against I. W. Bullock and another. From a judgment for plaintiff, defendants appeal. New trial.

B. S. Royster, of Oxford, for appellants.

Hicks & Stem, of Oxford, and T. T. Hicks, of Henderson, for appellee.

[76 S.E. 635]

WALKER, J. We are unable to agree with the argument of plaintiff's counsel in this case. There is no essential disagreement as to some of the principles of law stated by them, but the difference between us relates to their application to the facts of this case. The issues made by the pleadings should, in our opinion, have been submitted to the jury upon the question of fraud. In order to a clear understanding of the matter, it will be necessary to state the substance, at least, of the case.

The evidence is as follows: I. W. Bullock testified: "Mr. Massey (agent of plaintiff) came to our store after dinner on October 12, 1910, and said that he represented the White Sewing Machine Company; that there was a large territory in this (Granville) county that machines could be handled in, and I asked him if Mr. Kittrell, of Oxford, had not been handling these machines. He told me that he had been handling them, but that he was not going to handle them any longer; that he was not going to sell any more machines to Mr. Kittrell; that Kittrell had only two or three of the machines of his company on hand. In consequence of this conversation, I signed the order, which is as follows." Then follows the order. It appears therefrom that defendant agreed to take 151 sewing machines at the prices named. It was a "rush order." The order contains this stipulation: "This order is given subject to the approval of the White Sewing Machine Company, and, if accepted or filed in full or in part, to be settled for at the prices and terms above set forth. It is understood that no claim of any understanding or agreement of any nature whatsoever between this company and its dealers will be recognized except such as is embraced in written orders or is in writing and accepted by said company in writing from its home office at Cleveland, Ohio." Bullock & Co.'s store was at Creed-moor, where the order was given, and the order was signed at the time of the representations as to Kittrell's agency.

I. W. Bullock further testified: "I relied upon the statement made to me by Mr. Massey. I signed the order in consequence of such statements. I afterwards found out that Mr. Kittrell was selling the same machine in Creedmoor. I stopped my men from selling the machine and notified the company that the machines were subject to their order. I wrote the following letter, dated November 11, 1910: 'The White Sewing Machine Company, Cleveland, Ohio. Gentlemen: Mr. Massey has just left here. I wrote for him to come and see about placing two cars of machines in same territory. Mr. Kittrell, of Oxford, has been handling your machines in this territory for some time. When Mr. Massey came to see about selling these machines, the first thing I asked him was about Mr. Kittrell selling this machine, and he told me that Mr. Kittrell had a few machines on hand, but would not sell any more. After he told me that Mr. Kittrell was not going to handle the White any more, and making other promises about selling these machines in a short while, I gave him the order for the car of machines, with the understanding that we were not to have any other opposition. Now we are not going to offer another one of these machines for sale. Mr. Massey made a false statement to sell these machines and we do not propose to do any such business. The machines are here subject to your order. Mr. Massey also said that the freight would not be but 77 1/2 cents on the machine, and when they came the freight was over $1.00. We paid the freight and thought we would fix this with Mr. Massey, but when he came he said that I would have to take the matter up with you. Please advise what disposition you wish made of these machines. I. W. Bullock & Co.' I received the following letter, dated November 15, 1910, from the plaintiff, and marked 'Exhibit B': 'Messrs. I. W. Bill-lock & Co., Creedmoor, N. C. Gentlemen: We have your esteemed favor of the 11th, which is carefully read, and in simple fairness to the situation, we state that since our relations with your company were negotiated, we have made no shipments to Mr. Kittrell, of Oxford, which, it seems to us, should meet and satisfy your contentions in this respect. You were aware that we had formerly dealt with Mr. Kittrell. Your statement that Mr N. L. Massey had made certain promises is of a character that we must necessarily place the same before him, and we are obliged to say that accepting your written and signed order, the terms of which are plainly specified, we cannot accept your suggestion that your machines are now subject to our order. What Mr. Massey said to you about the freight is the published rate of the transportation...