Wrenn v. Morgan

• Court: North Carolina Supreme Court
• Writing for the Court: HOKE
• Citation: Wrenn v. Morgan, 148 N.C. 101, 61 S.E. 641, 128 Am. St. Rep. 581 (N.C. 1908)
• Decision Date: 29 May 1908
• Parties: WRENN. v. MORGAN et al.

148 N.C. 101

61 S.E. 641

WRENN.

v.MORGAN et al.

Supreme Court of North Carolina.

May 29, 1908.

1. Sales—Warranties.

To hold a bargainor in a sale responsible for a warranty, it is not necessary that the warranty should be given in express terms; but an affirmation of a material fact, made by a seller at the time of the sale, and as an inducement thereto, and accepted and relied on by the buyer, will amount to a warranty.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 43, Sales, §§ 727-735.]

2. Same—Question for Jury.

In an action on a note given for an interest in a business, whether there was an express warranty of the seller that the firm's debts were a certain amount held to be for the jury.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 43, Sales, §§ 1303, 1304.]

3. Same—Breach of Warranty—Damages.

If there has been a breach of warranty as to the amount of a firm's indebtedness in a contract for the sale of an interest in the company, where a stock of goods was the subject-matter of sale, the damages should be measured by the effect that the difference in the indebtedness had on the value of the stock which was sold.

[Ed. Note.—For eases in point, see Cent. Dig. vol. 43, Sales, § 1285.]

Connor, J., dissenting.

Appeal from Superior Court, McDowell County; Peebles, Judge.

Action by T. F. Wrenn against J. L. Morgan and another. Judgment for plaintiff, and defendants appeal. Reversed and remanded for a new trial.

Defendants, admitting the execution of the note, set up by way of counterclaim a demand for damages for false and fraudulent representations of the plaintiff as to the amount of the company's indebtedness at the time of the trade, and for breach of warranty as to such indebtedness. At the close of the testimony the court held in effect that, if the evidence was believed by the jury, the plaintiff had established his claim to the amount of the purchase note and interest, and that there was no sufficient evidence in which to submit the question of defendants' counterclaim to the jury in either aspect of the demand. Verdict and judgment for plaintiff, and defendants excepted and appealed.

Justice & Pless, for appellants.

Watson, Buxton & Watson and Shepherd & Shepherd, for appellee.

HOKE, J. It is established beyond question that there was a mistake as to the amount of the company's indebtedness existing at the time of the sale, and that the trade by which plaintiff's interest was purchased was made on the basis of an existing indebtedness of $629.43, whereas, in truth and in fact, it was over $2,000, and that this excess has been paid by the defendants after they had bought out plaintiff's interest. As this, however, is not an effort on the part of defendants to set aside the sale for mis take, it is required to sustain the counterclaim that defendants should establish that the trade was induced by false and fraudulent representations of plaintiff, reasonably relied on by defendants, or that there was a breach of a warranty given in the contract of sale. A careful consideration of the testimony leads to the conclusion that there was no testimony of intentional deceit on the part of plaintiff, but we are of opinion that the question of whether there was a warranty given in the contract of sale should be considered and determined by the jury.

There was evidence tending to show that originally plaintiff and defendants, with one Landis, owned the factory, each having one-fourth interest, and at first the affairs of the company were managed by Landis. The owners, plaintiff and defendants, becoming dissatisfied with Landis, bought out his interest, making them the co-owners each in one-third interest, and the management of the factory was turned over to plaintiff, who, with the approval of the others, put his cousin Junius Wrenn in active charge of the operations—the manufacture and. sale of the furniture. Defendants, becoming dissatisfied with this management, began to treat for a purchase or sale, and some 10 or 11 days before defendants bought out plaintiff's stock, for which the note sued on was given, the plaintiff, as we interpret the evidence, supplied defendant Morgan with a written statement of the company's affairs showing an indebtedness of $692.43, and in giving an account of the conversation when the trade was consummated between plaintiff and defendants defendant Morgan, among other things, testified as follows: "He [Wrenn] said he would give or take $6,000. We told him if he bought one-third he would have to buy it all. We finally bought his one-third at $6,000. We bought on the statement that the company owed $692.43. I thought it was correct, and relied upon it. Bills payable were marked on the statement at $692.43. They were over $600, somewhere between $2,000 and $3,000, but this did not appear on the books or the statement furnished. Creditors began to call on us, and I wrote plaintiff to come over and straighten them out." On cross-examination, speaking to this same matter, this witness testified: "After this inventory was made out we began to negotiate to buy or sell. Mr. Wrenn offered to sell his interest for $6,500. I offered to give him $6,000. Mr. Wrenn said he would give or take $6,000 for one-third, but he would not buy two-thirds. After this Maj. Conley was present, and he and I went out and talked it over and came back and told Mr. Wrenn that we would accept his proposition if there were no more indebtedness than the $692.43. I did not know at that time, or have any suspicion, that there was other indebtedness. Maj. Conley and I told him that we would accept...