Friedberg v. Weissbuch

This is an action for damages for the alleged breach of a written lease and purchase agreement and an amendment thereto. The property involved consisted of real property in La Mesa, San Diego County, together with furniture, fixtures, medical equipment and other personal property, the good will of a medical practice, and the use of a trade name.

The trial court rendered judgment for the defendants, lessees and purchasers, on the ground that the agreements were void because of fraud and misrepresentations on the part of the plaintiffs, lessors and vendors, which induced defendants to enter into said agreements. Plaintiffs appeal from

The evidence, viewed. in the light most favorable to the respondents (Berniker v. Berniker, 30 Cal.2d 439 , 444 [ 182 P.2d 557 ]) is as follows: Defendant, Dr. Mitchel E. Weissbuch, who had been practicing in Chicago, came to California in December, 1946, seeking to establish a medical practice here. He met with Dr. Irwin Friedberg who owned the premises and equipment herein involved at La Mesa. The premises were then occupied by Dr. Robert D. Cloyes. Dr. Weissbuch was told by Dr. Friedberg that Dr. Cloyes was actively practicing at- the premises and would move out of the community in March of 1947; that when Dr. Cloyes moved out of town all the medical practice in the office would go to Dr. Weissbuch; that he (Friedberg) had between a $40,000 and $50,000 a year practice; that he had been offered $35,000 for the real property but had turned it down because it was inadequate, and that the value of the property was in excess of $35,000. Relying on these statements, Dr. Weissbuch agreed to pay $25,000 for a 49 per cent interest in the property and an agreement.was executed to that effect’ on December 21, 1946. Dr. Weissbuch returned to Chicago and early in January, 1947, Dr. Friedberg notified him that Dr. Cloyes had vacated the premises and they were available to him. Dr. Weissbuch then returned to La Mesa on or about January 7, 1947, and commenced practice. On February 21, 1947, Dr. Friedberg and Dr. Weissbuch entered into a new written agreement of lease and purchase. • It is this agreement and the amendment thereto, dated May 7, 1947, which are involved in this action. This agreement provided for the lease of the property to Dr. Weissbuch for a term of five years at $200 per month, plus the sum equal to 10 per cent of the gross income therefrom in excess of $12,000 per year. The receipt of $1,200 in cash was acknowledged as payment of the last six months’ rent. Dr. Friedberg also agreed therein to sell an undivided one-half interest in the property leased to Dr. Weissbuch for the sum of $18,000. Dr. Weissbuch agreed to pay a monthly sum equal to 10 per cent of the gross income in excess of $12,000 on the purchase price, with a minimum payment of $50 per month for the first six months of the lease and $100 per month for the remainder of the term. It was further provided that Dr. Friedberg, to the extent that he was able and desired to do so, could continue in the practice of medicine at said location and in association with Dr. Weiss

Dr. Weissbuch believed at the time he signed the agreement involved that the real property he was purchasing was worth $36,000, or more, as represented by Dr. Friedberg, and that Dr. Friedberg had a gross income from his business of between $40,000 and $50,000 per year, as represented. Dr. Weissbuch occupied the premises and conducted his profession therein until April 11, 1949. A short time prior thereto Dr. Friedberg called upon him and wanted him to agree to an extension of the lease. Dr. Weissbuch refused and vacated the premises.

The medical practice which was turned over to Dr. Weissbuch did not gross the amount represented by Dr. Friedberg. Dr. Friedberg admitted that he had last conducted an active medical practice on a full time basis in La Mesa in the latter part of 1945. He admitted that he had purchased the real property involved in 1944 for $11,000. A realtor called as a witness by defendants testified that the same property had a market value of $16,000 to $18,000 in 1947, and the same value in 1954. Evidence was received showing that Dr. Friedberg was tubercular at the time the agreements were signed and that fact was not discovered by Dr. Weissbuch until some time in March, 1947. There was also evidence that certain items of office equipment were not of the value represented by Dr. Friedberg.

The trial court found, among other things, that when Dr. Cloyes vacated the premises he was dissatisfied with his lease agreement and left the leased premises, taking a list of the

Actual fraud is a question of fact (Civ. Code, § 1574); and like any other fact, it may be proved by circumstantial evidence. (Pa lmquist v. Mercer, 43 Cal.2d 92 , 100 [ 272 P.2d 26 ].) A single material misrepresentation justifiably relied upon is sufficient ground for rescission of a contract. (Lobdell v. Miller, 114 Cal.App.2d 328 , 336 [ 250 P.2d 357 ].) In Willson v. Municipal Bond Co., 7 Cal.2d 144 , 150 [ 59 P.2d 974 ], it is held that the determination as to whether a particular statement is an expression of opinion or an affirmation of a fact is often difficult, and frequently is dependent upon

In Stumpf v. Lawrence, 4 Cal.App.2d 373 , 376-377 [ 40 P.2d 920 ], it is said: “The statement of the owner of property with respect to its value is usually considered the expression of a mere opinion on his part which may not become the basis of a suit for damages for fraud on that account. But when a positive statement of the value of property is made by the owner,. coupled with other asserted facts or circumstances like a false representation of past income therefrom, it may constitute competent evidence in proof of the alleged fraudulent representations upon which a judgment for damages may be supported.”

In People v. Bennett, 122 Cal.App.2d 244 , 252 [ 264 P.2d 664 ], it is held that:

“There is authority to the effect that where defendant’s opinions were given concomitantly with his statements of fact, which gave material support to his opinions and expressed to men who were ignorant of the true facts, there was actionable fraud ...”

In the instant case there is substantial evidence that Dr. Friedberg made material representations to defendants as to the value of the real property being sold, as to the value of the medical equipment and good will of the business, as to the gross return of the business, and the activities of Dr. Cloyes, as well as to the state of health of Dr. Friedberg; that these representations were false and known to be false by Dr. Fried-berg; that the representations were made with an intent to induce defendants to enter into the contracts involved; and that defendants acted in reliance upon such false representations.

Appellants argue that the defendants, by entering into subsequent agreements with the plaintiffs, waived fraud. We are not in accord with this contention. The subsequent agreement referred to was merely a reduction in the monthly

In California, Credit etc. Corp. v. Goodin, 76 Cal.App. 785 , 794 [ 246 P. 121 ], it is held that section 3412 of the Civil Code “gives a specific remedy for the cancellation of a contract obtained by fraud or which is voidable for other reasons, or is void, and as has been shown the cases above named and others not named are as one in holding that, where a note or other contract has been obtained by fraud, and innocent third parties have not acquired equities therein, the defendant, instead of proceeding under section 3412 of the Civil Code, ‘may abide his time, and when enforcement is sought against him, excuse himself from performance by proof of fraud. ’ ”

The question of whether the delay of defendants in the instant ease was such as to render it inequitable to grant relief from fraud was a question for the trial court and is left to its sound discretion. (Stevenson v. Boyd, 153 Cal. 630 , 638 [ 96 P. 284 , 19 L.RA.N.S. 525 ].) In Filice & Perrelli C. Co., Inc. v. Walton, 95 Cal.App. 7 , 10 [ 271 P. 1096 ], it was held that where the defendants were induced to sign an agreement by misrepresentations of plaintiff they were not bound to rescind but were entitled to plead the fraud in defense of plaintiff’s action on the purported contract.

In Bagdasarian v. Gragnon, 31 Cal.2d 744 [ 192 P.2d 935 ], it is held that an independent investigation or an examination of property does not preclude reliance upon representations where the falsity of the statement is not apparent from an inspection, where the person making the representations has a superior knowledge, or the party relying thereon is,not competent to judge the facts without expert assistance; that where a party learns he has been defrauded, he may, instead of rescinding, elect to stand on the contract and sue for damages, and in such case his continued performance of the agreement does not constitute a waiver of his action for damages. It is further said therein that there is serious doubt whether even, a granted request of a favor, such as an extension of time, could be held to constitute a waiver in the absence of estoppel or the making of a new agreement supported by consideration.

In Lobdell v. Miller, 114 Cal.App.2d 328 , 338, supra, it was held that the fact that plaintiffs obtained concessions from the defendant and obtained an agreement to pay interest only and the principal payments would be waived for a specified