Herdan v. Hanson

Action for damages for fraudulent representations whereby defendant procured an exchange of property between himself and plaintiff. Defendant appeals from a judgment in favor of plaintiff.

On May 22, 1913, plaintiff and defendant entered into an agreement whereby plaintiff was to transfer to defendant a stock of merchandise in exchange for two parcels of real property belonging to defendant, one of which was in the city of Los Angeles and subject to a mortgage of three thousand dollars, and the other situated in Flathead County, Montana, and subject to a mortgage of one thou

The main contention in support of the appeal is that the plaintiff, having elected to proceed in an action for rescission, is now precluded from resorting to an action for damages. [1] It is insisted, upon behalf of appellant, that a party having two inconsistent, concurrent remedies may not

[5] Error is claimed in the admission, over defendant’s objection, of testimony as to the value of plaintiff’s stock of goods. The objection was made upon the theory that, while the value of the property transferred to plaintiff was material for the reason that his cause of action depended upon the existence of misrepresentations as to the true value of said property, still the value of the property transferred by plaintiff could not be considered, for the reason that the contract related to the exchange of property only and did not purport to establish or refer to a pecuniary standard of value as to the basis of the deal. Not only was evidence of the value of the properties exchanged admissible under the issue of fraud 'for the purpose of showing the circumstances surrounding and attending the making of the contract (Beverly v. Blackwood, 102 Cal. 83 , 92, [ 36 Pac. 378 ] ; Code Civ. Proc., secs. 1856; 1860), but it was relevant and material to the issue raised by the defendant’s answer as to the true value of plaintiff’s stock of merchandise. (Norris v. Crandall, 6 Cal. Unrep. 706 , [ 65 Pac. 568 ].)

The testimony of the witness Sugarman as to the value of the merchandise was not necessarily incompetent even though it referred to such value at a time some months prior to the date of the execution of the contract in suit. [6] While such value on the date in question was the precise thing to be determined, nevertheless the admission of evidence of such value at times shortly prior or subsequent to the date in question was largely within the discretion of the trial court, and we are not prepared to say that, under the circumstances, the discretion was abused. (Montgomery v.

Several assignments of error and specifications of insufficiency of evidence to support the findings of fact are made and based upon the claim that plaintiff failed to prove any fraudulent representations by defendant by which plaintiff was induced to enter into the agreement. The testimony upon this phase of the case is, in substance, as follows: Plaintiff, being desirous of disposing of his stock of merchandise, placed it in the hands of Morris Reiss, his wife’s nephew, for sale at the price of ten thousand dollars. Reiss was in the real estate business for himself, but having his office with the defendant, and an understanding with the defendant that all commissions earned by him were to be shared equally with defendant. Reiss and defendant discussed the possibility of trading defendant’s Los Angeles and Montana land .for plaintiff’s stock and agreed, in effect, that, if the exchange could be brought about, Reiss was to receive from the defendant the sum of two hundred dollars as commission for his services. At that time defendant told Reiss that he had never seen the Montana land; that he had bought it about two years before from a man named Fisher for two thousand two hundred dollars, paying eight hundred dollars in -cash and giving a mortgage for the balance of the purchase price; that Fisher told him the land was worth $150 an acre,'and was good land for subdividing, in which case $250 an acre might be realized; that some Norwegian friends of the defendant, who were familiar with the land, said it was good apple land because of the elevation and soil. Defendant further -stated: “I’ll stake my life on it that Fisher tells me the truth,” and referred Reiss to Fisher, who was at that time living in Southern California. Reiss reported to plaintiff, in substance and effect, what defeiidant had told him about the land, but did not inform plaintiff that defendant had never seen the Montana land. Plaintiff objected to taking land which he himself had never seen and, upon Reiss so reporting, the defendant then said to Reiss that, if plaintiff took the land, he would later trade it off for plaintiff for “local holdings.” This was reported by Reiss to plaintiff. The night before the contract was signed, Reiss’ wife received a letter from Montana, in response to inquiries made by her con

In contending that the evidence as thus outlined does not support the findings complained of, it is argued that Reiss was the agent of the plaintiff, and that, therefore, the knowledge of Reiss, obtained from the defendant, was that of the plaintiff. Ordinarily, the knowledge of an agent is imputed to his principal. (Civ. Code, sec. 2332.) [7] But, assuming that Reiss was the agent of the plaintiff, it is the rule that, where an agent is interested in the result of a transaction adversely to the interest of his principal, the rule of imputed knowledge on the part of the principal no longer obtains. (31 Cyc. 1595.) In the present case, there was sufficient evidence to support the find

[9] With reference to the contention that the evidence does not support the findings in question because the alleged and found fraudulent misrepresentations were but mere expressions of opinion, it will suffice to say that, when a statement concerning a subject matter of a transaction, which might otherwise be only an expression of opinion, is affirmed as an existing fact, material to the transaction and reasonably induces the other party to consider and rely upon it as a fact, the statement then becomes an affirmation of fact within the meaning of the general rule as to fraudulent representations. (2. Pomeroy’s Equity Jurisprudence, 4th ed., sec. 878.) This rule is frequently, and properly, applied to statements concerning the value of land at a distance when the party to whom the statements are made possesses no other information and is not in a position to investigate. {Crandall v. Parks, 152 Cal. 772 , [ 93 Pac. 1018 ] ; Nichols v. Moore, 181 Cal. 131 , [ 183 Pac. 531 ]; 2 Pomeroy’s Equity Jurisprudence, 4th ed., sec. 878, note h.) Whether the statements as to value in this case were affirmed in such a manner as to permit reliance upon them by plaintiff as statements of actual facts within the knowledge of defendant, and whether the suppression of the information contained in the letter received from Montana amounted to fraud, were questions of fact for the determination of the trial court. {Fulton v. Fisher, 151 Iowa, 429 , [ 131 N. W. 662 ].) [10] While fraud must be clearly proved, direct evidence is not necessary for this purpose, but the “indirect evidence and the inference to be drawn from the proved facts must be so convincing as to satisfy trial court and trial jury that'fraud was designed and accomplished.” {Ryder v. Bamberger, 172 Cal. 791 , 800, [ 158 Pac. 753 , 757].) [11] We are not prepared to say

It is claimed that defendant’s statements made,- while the contract was being drafted, to plaintiff’s daughter were inadmissible because it was not shown that plaintiff heard them and that, in any event, it cannot be fairly said that they formed any part of the inducements to the making of the contract, since the terms of the contract had been previously agreed upon and were actually being reduced to writing at the time the statements were made. No objection was made to the questions which upon direct examination elicited the testimony concerning the statements complained of, but, upon cross-examination, the witness, plaintiff’s daughter, declared that nobody else but she and a Mrs. Orle jan heard the statements. Thereupon counsel for appellant moved to strike out the daughter’s testimony concerning the statements of the defendant made at the time the contract was being drafted, upon the ground that they were immaterial and irrelevant. The ruling of the trial court denying the motion is assigned as error. Of course, if the plaintiff did not hear the statements complained of,' they were not material and relevant as a part of the misrepresentations which, it was claimed, induced the plaintiff to enter into the agreement in controversy. Strictly speaking, the motion to strike out should have been preceded by a previously stated and sufficient objection made at the time of the introduction in evidence of the statements complained of, but, assuming, as may perhaps be properly done, that the nature of the testimony of the witness upon direct examination was not such as to put counsel for appellant upon notice of its irrelevancy and immateriality, and that, therefore, he was not required to interpose an objection upon .those grounds before he could avail himself of a motion to strike out, still the record shows that, in addition to his daughter’s testimony, the plaintiff testified concerning the making of the statements, in effect and without objection, that they were made in his presence, and the fair import of his testimony in this

[13] There is no merit in the contention that the action should have been dismissed because of defendant’s attempted rescission of the contract prior to the commencement of the present action. Defendant had sold the stock of merchandise before making the offer to rescind, and therefore the trial court did not err in concluding that, even if defendant were able to obtain the merchandise from his vendee, he was not able to restore plaintiff to his original position.

The judgment is affirmed.

Lawlor, J., Wilbur, J., Kerrigan, J., pro tern., Angellotti, C. J., Shaw, J., and Olney, J., concurred.

Rehearing denied.

All the Justices concurred, except Shaw, J., and Wilbur, J., who were absent. '