Opinion
File No. 6113.
Opinion filed August 4, 1933. Rehearing denied October 10, 1933.
From a judgment of the District Court of Hettinger County, Lembke, J., defendant appeals.
Modified.
Sullivan, Hanley Sullivan, for appellant.
If one who is able to read, and is not prevented from reading, he cannot avoid the consequences of signing without reading, by showing that he signed because of false representations concerning the contents of the paper made by one whom he knew was adverse to his interests. Lillie v. Shriver, 179 N.W. 632; Ames v. Milan (Okla.) 157 P. 941; Frizell v. Milan (Okla.) 157 P. 944; McInch v. N.W. Thresher Co. 100 P. 524, 138 Am. St. Rep. 803; Kimmel v. Gelsky, 130 Colo. 555, 62 P. 1067; Alexander v. Ferguson, 73 N.J.L. 479, 63 A. 998; Standard Mfg. Co. v. Slot, 121 Wis. 14, 105 Am. St. Rep. 1016, 98 N.W. 923; Colt v. Thompson, 114 Okla. 61, 242 P. 1030; Green v. Cox Machinery Co. 244 P. 414.
Where fraud is claimed in proving the signature to a written contract, the evidence of such fraud must be positive and consistent, and which under the circumstances can fairly be said to excuse the signer for not knowing the character or the contents of the paper which he signed. Standard Mfg. Co. v. Slot (Wis.) 92 N.W. 923.
And the fraud must be established by a preponderance of the evidence, which must be clear and satisfactory. Midland Mfg. Co. v. Rice, 198 N.W. 24; Rokusek v. National Union F. Ins. Co. 50 N.D. 123, 195 N.W. 300.
There must have been reasonable attention and vigilance on the part of the party seeking on that account to avoid it. Carufel v. Kount, 60 N.D. 91, 232 N.W. 609.
In this state the right to contract against implied warranty of fitness exists. Minneapolis Threshing Mach. Co. v. Hocking, 54 N.D. 559, 209 N.W. 996.
Under the uniform sales act the measure of damages in the case of a breach of warranty of quality, loss in the absence of special circumstances showing proximate damage of a greater amount, is regarded as the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered the warranty. 55 C.J. 875.
And such value must be established as at the place of trial. Kramer v. Lee Son Co. 61 N.D. 28, 237 N.W. 166.
Knowledge of price paid is not alone sufficient qualification to speak as to value. Houston R. Co. v. Charwain, 30 Tex. Civ. App. 633, 71 S.W. 401.
The value of the property is to be established by evidence of what it is worth in the market. Warrail v. Des Moines Retail Grocers, 138 N.W. 481; Scott v. Security F. Ins. Co. 98 Iowa, 67, 66 N.W. 1054; Reed v. State Ins. Co. 103 Iowa, 307, 72 N.W. 665, 64 Am. St. Rep. 180.
Before actual value can be shown it must appear that there is no market value. Lundvick v. Insurance Co. 128 Iowa, 376, 104 N.W. 429; Houghtaling v. C.G.W.R. Co. 117 Iowa, 540, 91 N.W. 811.
Jacobsen Murray, for respondents.
The fact that a false representation is made in respect to the paper is not necessarily sufficient to excuse such person for affixing his signature thereto in ignorance of its contents, unless under all the circumstances, in view of his duty to give reasonable attention to the protection of his own interests, the false representation was still reasonably calculated to and did induce him not to make the investigation which he otherwise would have made. Carufel v. Kounts, 60 N.D. 91, 232 N.W. 609; Federal Surety Co. v. Middlewest Constr. Co. 58 N.D. 937, 228 N.W. 432.
The proper procedure in cases of this kind is that the jury should bring in a verdict for the full amount of the purchaser's damages, and then the seller have the trial court reduce the judgment to the amount of the notes. Wuest v. Richmond, 48 N.D. 1081, 188 N.W. 573.
This case has been before this court on a former occasion. Kramer v. K.O. Lee Son Co. 61 N.D. 28, 237 N.W. 166. It grows out of a sale by the defendant to the plaintiffs of a second-hand gas tractor. There was a written order signed by the plaintiffs. The purchase price was $850.00. The plaintiffs paid $300.00 in cash and executed and delivered to the defendant two notes; one for $250.00 and one for $300.00. The plaintiffs also paid freight charges on the tractor amounting to $64.00. The plaintiffs claim that they were induced to sign and deliver the written order in reliance upon and by reason of false and fraudulent representations made by the defendant. They attempted to rescind the contract and brought suit. On the former appeal this court held that the rescission was not timely and that plaintiff's right of action, if any, was one for damages resulting from the alleged fraud. The opinion on the former appeal contains a full statement of the facts. The written order in question is set forth there and will not be reproduced here. In the decision on the former appeal this court held that there was no competent evidence as to the value of the tractor if it had been as warranted and what it was worth in the condition in which it was delivered. In the opinion in the case it was said:
"The plaintiffs must concede liability . . . on the notes and mortgages, but are entitled to offset any damages they may have sustained."
After the case had been remanded to the district court both plaintiffs and defendant filed amended pleadings. In their amended complaint the plaintiffs alleged in substance that the defendant made certain representations and warranties as to the tractor; that it presented to plaintiffs a written order for the purchase thereof and represented that such written order contained all the representations and warranties that the defendant and its agents had made; that the defendant prevented the plaintiffs from reading the order and induced each of them to sign and deliver the same and also to sign and deliver the notes and chattel mortgages; that plaintiffs signed and delivered the same in reliance upon the representations made by the defendants and in the belief that the same were true. It is further alleged that the representations were false and untrue and that the written order contained statements and provisions contrary to what the defendant had represented that it contained. It is also alleged that the tractor had no value. The plaintiffs demanded judgment in the sum of $1500.00.
The defendant, in its amended answer, alleged that the tractor was sold to the plaintiffs under a written contract and order; that it was delivered by the defendant and accepted by the plaintiffs in accordance with such written contract and order and that the same contained the entire agreement between the parties. The answer further denied the allegations of the complaint except those admitted. The defendant further, by way of counterclaim, set forth that the plaintiffs were indebted to it on the two certain promissory notes aggregating $550.00; that such notes were secured by chattel mortgage and judgment was demanded for a dismissal of plaintiffs' action and that defendant have judgment against plaintiff for the amount due upon the promissory notes, and foreclosure of the chattel mortgage. The case was tried to a jury and resulted in a verdict in favor of the plaintiffs for $914.00 with interest from March 16, 1927 (this is the date of the written order and of the two promissory notes). Judgment was entered pursuant to the verdict and the defendant has appealed.
Numerous errors are assigned. The first are directed at the sufficiency of the evidence and are predicated upon the denial of motions for a directed verdict. It is argued that the undisputed evidence shows that the plaintiffs signed a written order; that such written order expressly excludes all warranties; that this order constitutes a written contract binding upon the parties; that, consequently, there was no implied warranty of fitness and that the plaintiffs are precluded from asserting anything contrary to the terms of the written contract. Much of this argument was covered and disposed of in the opinion on the former appeal. 61 N.D. 36, 237 N.W. 169. The plaintiffs here are not seeking to recover on the written contract. They are seeking to recover damages for the wrong which they say was practiced upon them by the defendant in inducing them to sign the contract for the purchase of the tractor, and to purchase and accept the tractor.
It is contended that there was no evidence of fraud sufficient to warrant the submission of that question to the jury. This contention cannot be sustained. The undisputed evidence shows that each of the plaintiffs signed the contract at a different time and place. The plaintiff Roy Kramer signed it in a bank in the city of New England at the solicitation of the president of the defendant company. Thereafter the president of the defendant company took the contract and the notes bearing Roy Kramer's signature to the farm of the plaintiff W.F. Kramer (Roy Kramer's father) where he signed the papers. The latter testified positively that he is unable to read. Both the plaintiffs testified that the president of the defendant company specifically recited to them the warranties which he claimed were embodied in the written order and contract; that he insisted there was no occasion for their reading the order and the testimony as to both plaintiffs indicate reasons which made it convenient and desirable that they accept his representations and sign the order without taking the time to read it or having it read. In the circumstances there is, we think, evidence justifying the submission of the question of fraud to the jury and the defendant is not permitted to say that the plaintiffs should not have accepted his representations as to the contents of the order. 3 Williston, Contr. § 1516; Elliott Supply Co. v. Green, 35 N.D. 641, 160 N.W. 1002; 13 C.J. 371, 372. See also Minneapolis Threshing Mach. Co. v. Huncovsky, 52 N.D. 112, 118, 202 N.W. 280. One who has been guilty of positive fraud in inducing another to refrain from reading a document should not be permitted to excuse his misconduct by the stupidity or credulity of the defrauded party. 3 Williston, Contr. § 1516. If the plaintiffs told the truth fraud was practiced to their injury. The case is not one where this court can say that the testimony of plaintiffs is untrue.
Error is also assigned upon the instructions to the jury. Some of these assignments are not supported by argument; others are related to and covered by what has been said as regards the sufficiency of the evidence.
Appellant also contends that the verdict is in excess of the damages that were proven. This contention is well founded. There is no evidence justifying recovery for any item of damages except for the injury arising from the fact that the tractor was worth less than it would have been worth if it had measured up to the representations and warranties that the plaintiffs claim defendant made as regards it, and which warranties it represented were contained in the written order. The evidence adduced by the plaintiffs is to the effect that if the tractor had been as represented it would have been worth the purchase price agreed upon at the time and place of delivery, namely, $850.00 plus freight or $914.00 in all, but that it was in fact worthless. The undisputed evidence shows that the plaintiffs paid out only $364.00 in cash, and that the defendant still holds the two promissory notes given for the balance of the purchase price and aggregating $550. The verdict returned was for $914.00 with interest from the date of the purchase.
It is obvious that the jury allowed the plaintiffs a verdict, not only for the amount that they had paid, but for the amount of the purchase price which they had not paid and for which the defendant held plaintiffs' notes. These notes were made the basis of a counterclaim, but the counterclaim was in effect disallowed by the verdict of the jury. We are not concerned with the niceties of the particular form that the verdict should have taken. In any view of the case the verdict is erroneous and denied the defendant something to which it was clearly entitled.
Under the evidence the plaintiffs are entitled to recover from the defendant only $364.00 with interest. In a case where a counterclaim is interposed the court should determine the ultimate rights of the parties on each side and render judgment in favor of the one entitled to recover for whatever excess he may be entitled to receive. Comp. Laws, 1913, § 7679. In short, in an action where a counterclaim is interposed and each party has a valid claim against the other, the judgment should fully determine their rights and award a judgment for the excess to the party whose claim exceeds that of the other. The judgment appealed from here awarded the plaintiffs $914.00 with interest. If it had not been challenged by this appeal and had become final it would have constituted a bar so far as defendant's counterclaim is concerned and plaintiffs could have enforced the same for the full amount awarded. The judgment appealed from must therefore be modified so as to award the plaintiffs a judgment against the defendant only for the sum of $364.00 with interest from March 16, 1927. The modification is of such nature as to entitle the appellant to recover costs and disbursements of this appeal. First Nat. Bank v. Calkins, 16 S.D. 445, 93 N.W. 646; Semple v. Burke, 34 N.D. 152, 157 N.W. 978. And inasmuch as the cost of the first trial was not occasioned by any fault of the defendant plaintiffs are not entitled to tax and recover costs and disbursements of such trial but are entitled to tax costs and disbursements of the second trial only. Corbett v. Great Northern R. Co. 28 N.D. 136, 150, 148 N.W. 4; Minneapolis Threshing Mach. Co. v. Huncovsky, 52 N.D. 112, 119, 202 N.W. 280; Taylor v. Minneapolis St. P. S. Ste. M.R. Co. 63 N.D. 332, 248 N.W. 268.
The cause is remanded with directions that the district court enter a new judgment conformable to the directions of this opinion. The defendant is entitled to set off the costs and disbursements awarded to it on the former appeal against the damages and costs awarded to the plaintiffs here.
NUESSLE, Ch. J., and BURR, BIRDZELL and BURKE, JJ., concur.
In a petition for rehearing plaintiffs ask that the former decision be modified in two particulars. It is said that this court erred: (1) "in deciding that the appellant is entitled to set off the judgment which was awarded to it for costs and disbursements on the former appeal;" and (2) "in holding and deciding that the appellant should be awarded costs on this appeal." These propositions will be considered in the order stated.
(1) It is true, as plaintiffs' counsel assert, in this state judgments may not be set off one against the other in such manner as to defeat the exemption laws. Cleveland v. McCanna, 7 N.D. 455, 75 N.W. 908, 41 L.R.A. 852, 66 Am. St. Rep. 670. But the question in this case is not one of setting off mutual final judgments predicated upon different rights of action and obtained in separate and distinct suits. The question is merely one of adjusting costs and disbursements arising out of or expended in the course of the same action, and the rule that applies in off-setting mutual final judgments does not apply. Hoyt v. Godfrey, 11 Daly 278. In a sense all costs and disbursements that are assessed or allowed before the final determination and entry of final judgment are interlocutory. The final judgment should dispose of all questions incident to the litigation including costs and disbursements therein; and the final judgment to be entered in this case upon the remand here should, we think, dispose of every item involved in, or arising during the course of, the litigation including costs and disbursements. We are aware of no rule whereby a party who has instituted an action may insist that when final judgment is rendered it shall be for an amount in excess of that which is actually coming to him at that time, i.e., at the end of the litigation. On the contrary, it is generally recognized by the authorities that not only may costs be set off against costs, but also against the amount of the recovery allowed in the cause of action, and that judgment should be rendered for the excess in favor of the party to whom it actually belongs. Johnson v. Farrell, 10 Abb. Pr. 384; Hullock, Costs, p. 469; Irving Trust Co. v. Leff, 137 Misc. 834, 243 N.Y.S. 728; Damp v. Dane, 33 Wis. 430; Van Pelt v. Phillips, 24 N.J.L. 560.
The suggestion that this court may not take notice of, but should ignore, all that has happened in this litigation and that it may not even take notice of the proceedings had as a result of its own orders and decision in this suit is so obviously without merit as to require no extended consideration. Van Pelt v. Phillips, supra.
We see no reason for modifying the former decision as regards the question under consideration here. Further reflection has merely tended to confirm the views which we entertained when that decision was promulgated. No authority has been cited and none has been found announcing a contrary rule while many announce rules in harmony with such decision.
(2) It is next contended that the court erred in awarding appellants costs on this appeal. This contention is predicated upon the alleged proposition that there are no assignments of error authorizing this court to consider whether the verdict is excessive.
In the former opinion the controlling facts in this case are set forth in some detail. It will be seen from these facts that the verdict returned and the judgment entered against the defendants awarded a recovery for an amount that was clearly in excess of any injury that the evidence established. In short, it allowed the plaintiffs recovery not only for what they had paid and expended but as well for what they had promised to pay and had not paid. In respondent's brief on this appeal it is said:
"After the trial, plaintiff offered to have the judgment reduced, to the amount of the notes held by the defendant and interest. The defendant refused to comply with the plaintiff's request and suggestion. The plaintiff at this time is willing that this court may reduce the judgment to the amount of the notes."
Then follows a statement that the procedure that was adopted in this case is proper, that the jury should bring in a verdict for full amount of the purchaser's damages and that the seller "should have the trial court reduce the judgment to the amount of the notes." This is followed with the statement that the defendant in its motion for a directed verdict did not suggest that the notes be deducted and that he does not specify as error on appeal that the jury did not deduct the notes and that, consequently, as a matter of law, the judgment is correct.
Then follows this statement:
"However, all the plaintiff wants is justice, and he is willing that this court may deduct the amount of the notes, even though the defendant has not suggested or requested it.
"The plaintiff is submitting an affidavit of plaintiffs' attorney, which was offered to the defendant shortly after the trial on the question of off-setting the notes against the judgment."
In the affidavit submitted by plaintiffs' counsel it is stated:
"That within weeks after the judgment was entered in the above entitled action, this affiant had a conversation in his office with one Harvey J. Miller, who tried the lawsuit for the defendant in the district court; that in said conversation said Harvey J. Miller asked this affiant if he was taking the position that he was entitled to recover the full amount of the verdict; that if not, as a matter of law said defendants were entitled as a matter of law to have said notes off-set against said judgment; that in response thereto, this affiant told said attorney that the defendant as a matter of law was entitled to have the judgment reduced to the amount of the notes and interest, and offered to sign a stipulation accordingly; that in response thereto the said Harvey J. Miller said he would take the matter up with his client and let this affiant know what he wanted done; that no action was taken thereon subsequent thereto."
In view of this state of the record it was not deemed necessary to point out in the former opinion the assignments or specifications of error under which the excessiveness of the verdict was considered. The appellants, however, specifically assigned error upon the following instruction:
"You are instructed, Gentlemen of the Jury, with reference to the question of damages in this case that the measure of damages herein is the difference between the reasonable market value of said tractor at the time it was received and the reasonable market value it would have had at said time had it been in the condition as represented by the defendants."
There was, also, a general specification that the verdict was excessive.
The instruction as regards the measure of damages was clearly incorrect. The measure of damages in the case was not as stated by the trial court. That would have been the measure if the plaintiffs had paid the entire purchase price or if their notes had been negotiated to and were owned by a party other than the payee so that it was likely that the plaintiffs might have been required to pay them. Fahey v. Esterley Mach. Co. 3 N.D. 220, 55 N.W. 580, 44 Am. St. Rep. 554. In this case the notes have not been paid. They were in the possession of and owned by the defendant. They formed the subject of his defense and counterclaim. They were produced upon the trial and admitted in evidence. The verdict rendered in this case clearly precludes defendants from ever bringing suit upon the notes. If the judgment had not been challenged by this appeal and had become final, we are aware of no procedure by which the defendants would have been able to have the notes off-set against the judgment rendered upon the verdict here. It was clearly essential for the defendants to take some steps to have the matter corrected. If respondent's counsel had desired to obviate the effect of the excessive verdict he might have served and filed an offer of remission.
The former opinion is adhered to. A rehearing or modification is denied.
BIRDZELL, Ch. J., and BURR, NUESSLE and BURKE, JJ., concur.