Grady v. Easley

This is an appeal from a summary judgment made August 2, 1939, against appellants Easley under section 437c of the Code of Civil Procedure for the sum of $2416.33 and costs, it being contended (1) that the affidavits of respondents filed in connection with their motion for summary judgment are insufficient to support such judgment; (2) that appellants’ affidavit filed in opposition to said motion is sufficient to entitle them to defend or present a triable issue of fact, and that the entry of the summary judgment improperly deprived them of their constitutional right to a jury trial.

Section 437c of the Code of Civil Procedure, at the time the judgment herein was entered, provided as follows: “ . . . when an answer is filed ... if it is claimed that there is no

Respondents, as trustees under the will of Emily B. Garner, deceased, brought the instant action to recover on a promissory note executed by appellants in favor of decedent for the sum of $2500, payable on October 15, 1936. The amended answer to the complaint sets up separate defenses as follows: (1) want of jurisdiction in the superior court over the subject of the action; (2) lack of consideration for the execution of the note; and (3) that the note was obtained from appellants through the fraud, deception and misrepresentations of decedent Garner and her agents, servants and employees in connection with a transaction whereby decedent obtained from appellants their ranch in New Mexico for her citrus grove located at La Habra, California. In addition, said amended answer sets up a counterclaim for the sum of $950, money had and received by decedent, her successors and assigns, for the use of appellants.

According to the allegations of the answer, the fraud complained of consisted of false representations to the effect that

The motion for summary judgment was made upon the ground that the answer is spurious in that “ (a) Where both parties to an exchange have an opportunity to in\restigate, neither can rely on alleged misstatements to avoid the contract ; (b) Where water stock is sold Avith property any representation in connection with water supply is an expression of opinion and not a representation of fact; (c) The conduct of defendants in paying interest and principal for three years and obtaining extension of time constitute a Avaiver of any alleged fraud; (d) Similarly defendants’ failure to file a claim against the Estate of Emily B. Garner is indicative of waiver”; and also ok the further ground that the first and third affirmative defenses do not state sufficient facts to constitute a defense.

The affidavit of respondent Grady avers that from January, 1931, to the date of her death on February 4, 1936, he Avas retained as counsel, financial and business adviser by Mrs. Emily B. Garner; that he was executor of her will and that he and his co-plaintiff Hollenbeak are trustees of her estate, and as such are owners and holders of the note here sued upon.

According to his affidavit, when appellants first came to the office of respondent Grady in September of 1934, which was prior to the time the properties were placed in escrow, he discussed with them ‘ ‘ the trade generally, but not specifically with reference to any items such as the indebtedness of the Grandview Mutual Water Company”, and explained to appelants that 11 the president of the water company would be able to give them any information they desired, pertaining to the water supply or condition of the wells”; affiant also explained to them that the La Habra Citrus Association had a

Affiant avers that during the years 1935, 1936 and 1937 he corresponded with the Easleys regarding the note and at all times the Easleys indicated their willingness to pay the same and thanked him for his “kind patience”. That on October 15, 1937, he received a letter enclosing a check for $650 to be applied $500 to the principal and $150 to the interest then due on the note, said letter reciting: “We want to thank you sincerely for your leniency and consideration in this matter and to assure you that we will further reduce the note at the earliest possible moment. ’ ’

Quoting from the affidavit: “Affiant states that never at any time since the transfer of said properties has the said James I. Easley, or his wife, Marguerite B. Easley, indicated by any word or action that they were dissatisfied with the real estate deal or that any misrepresentation had ever been made to them, because had they done so at a time when it would have been possible this affiant would have made every effort to have re-traded the properties back, as affiant felt in the beginning and feels now that said Emily B. Garner was not benefited at all by the trade of said properties . . . that this is indicated by the fact that said Easleys have been and now are asking $75,000 for the La Habra property, which has about $22,000 against it, while affiant did for years endeavor to sell the said (New Mexico) property for $21,000 with a land purchase contract against it of approximately $1600 . . . (which) was finally traded for some property in La Jolla, California.”

The affidavit then goes on to state that the “Easleys had better sources of information than from this affiant and that affiant would have shown them the water bills, tax bills, etc., which had been paid on the La Habra ranch during the period that the said Emily B. Garner was the owner thereof had he been asked to do so and affiant states that the said Easleys did not inquire of affiant concerning such matters but did of their own accord go to the president of the Grandview Mutual Water Company and to the La Habra Citrus Association for their information.”

Many other facts are averred in said affidavit based on information and belief to the effect that appellants were on friendly terms with Mrs. Garner and her relatives, including her brother, Mr. Beckwith, as well as with affiant, and therefore had ample means at their disposal to have ascertained those facts which they now claim were either concealed from them or were misrepresented to them.

The affidavit of James I. Easley in opposition to the motion for summary judgment is to the following effect: That all negotiations culminating in the execution of the agreement of August 28, 1934 (Exhibit “A”), were had between him and one Captain Beckwith and a real estate agent with whom said Beckwith had listed the La Habra property; that Beckwith is the surviving brother of Mrs. Emily B. Garner and held himself out as the owner of said property and affiant did not know that Mrs. Garner was the owner thereof until just prior to the execution of said agreement, when Beckwith informed affiant in the presence of Mrs. Garner that said “property was not carried in his name for reasons which he would thereafter explain, but that he had had full and complete charge of it and the final say-so.”

That “prior to the execution of said agreement, the said Captain Beckwith and said real estate agent told affiant that the cost of watering the alleged orchard upon said property was between $300 and $400 per year; that the indebtedness on the well which supplied the water to said property was $5,000.00; that the operation of the property would produce

While “Ordinarily, the only question presented upon an appeal from a summary judgment under section 437c is whether or not the trial court abused its discretion” (Kelly v. Liddicoat, 35 Cal. App. (2d) 559 , 560 [ 96 Pac. (2d) 186 ], citing Bank of America etc. Assn. v. Oil Well Supply Co., 12 Cal. App. (2d) 265 [ 55 Pac. (2d) 885 ] ; nevertheless, “The validity of the judgment is to be determined by the sufficiency of the affidavits considered upon the hearing of the motion.” (McComsey v. Leaf, 36 Cal. App. (2d) 132 , 133 [ 97 Pac. (2d) 242 ].) After an exhaustive review of the subject, the opinion in the last named case of McComsey v. Leaf, announces the following rule at page 140 thereof: “to warrant a summary judgment, there ‘must be a failure on the part of defendant to satisfy the court that there is any basis for his denial or any truth in his defense’ (Cardozo in Curry v. Mackenzie, 239 N. Y. 267 [ 146 N. E. 375 ], and unless the defendant does so fail, the case shall proceed to a deliberate trial in the usual course. (Krieger v. Dennie, 123 Cal. App. (Supp.) 777 [ 10 Pac. (2d) 820 ].)”

“It may be conceded at the outset that on a motion for summary judgment the allegations of fact made by defendants in their affidavits must be accepted as true, and that the primary question for the court to decide is whether the affidavits, when so viewed, raise an issue of fact. If an issue of fact is raised, then a summary judgment is improper, and the case must proceed to trial. (Krieger v. Dennie, 123 Cal. App. (Supp.) 777, 780 [ 10 Pac. (2d) 820 ].) If, however, the facts as averred arc accepted and create only an issue of law, the court is bound, under the provisions of section 437c, to render a judgment on motion.” (Bank of America etc. Assn. v. Casady, 15 Cal. App. (2d) 163 , 168 [ 59 Pac. (2d) 444 ].)

In the case of Wyatt v. Madden, 32 Fed. (2d) 838 [ 59 App. D. C. 38 ], cited and relied upon in McComsey v. Leaf, supra, suit was brought by plaintiff to recover on two promissory notes. The defendant in her answering affidavit to the motion for summary judgment averred that she was induced to

In said case it was held at page 839 of the opinion: “The enforcement of rule 73 (relating to summary judgment) deprives a defendant of a trial on the merits. Therefore, we have ruled that plaintiff’s affidavit must be strictly construed. St. Clair v. Corlon, 12 App. D. C. 161 , 163; Riley v. Maltingly, 42 App. D. C. 290 , 294. An affidavit of defense, on the contrary, is to be liberally construed, and, if its terms reasonably warrant the inference that the defendant has a substantial defense to plaintiff’s claim, summary judgment ought not to be entered. Codington v. Standard Bank, 40 App. D. C. 409 ; Lawman v. Johnston, 42 App. D. C. 202 . In the light of these decisions, we are of the opinion that the court erred in entering summary judgment in this case.

“Plaintiff’s suit is based upon defendant’s default in payment of notes. Defendant alleges, in effect, that she was induced to execute these notes through material misrepresentations, known to be false, and made for the purpose of inducing action on her part. By moving for judgment, plaintiff admits every material averment in the affidavit of defense.

“One who has been induced to enter into a contract by false and fraudulent representations may rescind the contract ; or he may affirm it, keeping what he has received under it, and maintain an action to recover damages he has sustained by reason of the fraud; or he may set up such damages as a complete or partial defense if sued on the contract by the other party. (13 C. J. 395; 12 R. C. L. p. 408, sec. 154; Passaic National Bank v. Commercial National Bank, 262 Fed. 234 [ 49 App. D. C. 146 ].)

“The materiality of the alleged false statements can best be determined by a trial on the merits. In Shappirio v. Goldberg, 192 U. S. 232 , 241 ( 24 S. Ct. 259 , 261, 48 L. Ed. 419 ), the court observed that: ‘ There are cases .where misrepresentations are made which deceive the purchaser, in which it is no defense to say that had the plaintiff declined to believe the representations and investigated for himself

In the light of the foregoing authorities, taking into consideration the circumstances presented by the record herein, it is the opinion of this court that the materiality of the alleged fraudulent statements should be determined by a trial on the merits of the case.

The judgment is reversed, and the cause remanded for trial.

Doran, J., and White, J., concurred.

Respondents’ petition for a hearing by the Supreme Court was denied August 28, 1941.