stating rule generally applied by Georgia courts that issue of plaintiff's proper diligence is for determination by the jurySummary of this case from Gibson v. Home Folks Mobile Home Plaza, Inc.
DECIDED APRIL 3, 1963.
Action for damages; fraud and deceit. Fulton Civil Court. Before Judge Smith.
Aaron Baranan, for plaintiff in error.
Nick G. Lambros, Casper Rich, contra.
In a petition for damages for fraud and deceit by misrepresentations, the allegations that the defendant had previously done satisfactory work for the plaintiff, that one of the defendant's employees was misrepresented to be an engineer, that the plaintiff was a layman as to matters misrepresented, and that the defendant's misrepresentations as to the dangerous condition of the plaintiff's heating system caused the plaintiff to act to his injury out of fear that his home and family were in jeopardy, were sufficient to authorize a jury to find that the plaintiff was justified in relying on the alleged misrepresentations in the exercise of common prudence and diligence; the other essential elements of the cause of action having been alleged, the court erred in sustaining a general demurrer to the petition and dismissing the action. The question of the measure of damages is not raised by a general demurrer.
DECIDED APRIL 3, 1963.
Stanley M. Daugert sued Holland Furnace Company for damages for fraud and deceit arising from the defendant's alleged misrepresentations with regard to its installation of a furnace and hot water heater in the plaintiff's home. The petition as amended alleged substantially as follows: The plaintiff requested the defendant company to clean his furnace and furnace pipes and service his furnace burner. Three of defendant's employees, one of whom was introduced and referred to several times as an "engineer," inspected the plaintiff's heating system and made the following fraudulent misrepresentations: That the furnace was in such a dangerous condition it could burn up the house at any time; that the furnace combustion chamber and heating system was in such a dangerous and defective condition that it was generating and sending noxious gases into the living area of the home with resulting great danger of asphyxiation of the plaintiff's family; that the plaintiff's hot water heater was in such poor condition that it was likely to break down at any minute; that they could and would replace these defective items within a few days; that one of the employees was an engineer (the same being a violation of Code Ann. § 84-2102). These misrepresentations were fraudulently made by the defendant and its agents, who knew they were false, to induce the plaintiff to sign a written contract for the replacement of the items misrepresented to be defective. The defendant had cleaned the plaintiff's furnace previously and the plaintiff, being a layman in these matters, relied on the defendant's prior satisfactory service, plus its representations that an engineer had inspected the system and that it was defective. The plaintiff did not know the representations were false at the time they were made. The defendant commenced the replacement under the contract, but the installation was so improperly done that it was condemned by the Department of Inspection of DeKalb County. Thereafter the defendant refused either to remove the defective installation or to return the plaintiff's original equipment and the plaintiff was forced to have a third party replace the heating system improperly installed by the defendant. The defendant's actions are part of a massive systematic sales scheme effectuated by means of false representations and coercive and scare tactics, having been practiced upon the public for about a decade or longer and still being utilized. At the time of the alleged fraud upon the the plaintiff, the defendant was subject to a cease and desist order of the Federal Trade Commission under the Federal Trade Commission Act, Sec. 5 ( 15 USCA § 45), affirmed by the U.S. Court of Appeals for the Seventh Circuit, covering such misrepresentations, as well as a similar injunction by the District Court in the Third Judicial District of the State of Minnesota. The prayer was for damages for the replacement cost of the plaintiff's furnace, taken by fraud, exemplary damages, and attorney's fees.
The court sustained the general demurrer to the petition as amended and dismissed the action, to which judgment the plaintiff excepts.
"Where the purchaser of personal property has been injured by the false and fraudulent representations of the seller as to the subject matter thereof, he ordinarily has an election whether to rescind the contract, return the article, and sue in tort for fraud and deceit, or whether to affirm the contract, retain the article, and seek damages resulting from the fraudulent misrepresentation. . ." Nichols v. Williams Pontiac, Inc., 95 Ga. App. 752 (1) ( 98 S.E.2d 659); Dunn v. Citizens c. Co., 47 Ga. App. 600 (1) ( 171 S.E. 170); Code §§ 96-201, 96-202, 20-502, 37-703, 105-302. In the instant case we construe the petition as one sounding in tort for fraud and deceit, rescinding the contract, since under the allegations the contract was fraudulently induced. The plaintiff alleged compliance with the requirement of Code § 20-906 of an offer to restore the subject matter of the contract by his request of the defendant to remove the installation.
"In Georgia the essential elements of a cause of action for the common-law tort of deceit based upon fraud have been stated to be: `(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.' (Emphasis added). Snow's Laundry c. Co. v. Georgia Power Co., 61 Ga. App. 402, 405 ( 6 S.E.2d 159)." Doanes v. Nalley Chevrolet, Inc., 105 Ga. App. 846, 847 ( 125 S.E.2d 717). "Misrepresentations are not actionable unless the hearer was justified in relying on them in the exercise of common prudence and diligence." Doanes v. Nalley Chevrolet, Inc., supra, at p. 848, citing Brim v. Couch, 184 Ga. 310 ( 191 S.E. 94); Lewis v. Foy, 189 Ga. 596 ( 6 S.E.2d 788); Jackson v. Smith, 94 Ga. App. 697 ( 96 S.E.2d 193); Camp Realty Co. v. Jennings, 77 Ga. App. 149 ( 47 S.E.2d 917); 37 CJS 271, Fraud, § 30. "Where the basis upon which the contract was entered upon lies in the existence or nonexistence of certain material facts, the verity of which needs must be ascertained from the statement of one acquainted with such facts, each of the contracting parties has a right to rely upon the truth of the other's statements with reference thereto, when such statements relate to matters apparently within the knowledge of the party asserting them; and to do this without checking up the statements with the declarations of other and different persons, in order, by such an investigation, to test their probable truth [citations]." Deibert v. McWhorter, 34 Ga. App. 803, 804 ( 132 S.E. 110); Anderson v. R. H. Macy Co., 101 Ga. App. 894, 897 ( 115 S.E.2d 430). "We are not aware of any rule of law, or decision of any court, that goes to the extent of saying that one who has been imposed upon by a deceitful and false statement can have no relief unless, before acting upon such a statement, he had exhausted all means at his command to ascertain its truth. This would be, in effect, holding that scarcely under any circumstances will relief be granted to one who has been the victim of misplaced confidence in his fellow-man." Fenley v. Moody, 104 Ga. 790, 793 ( 30 S.E. 1002); Anderson v. R. H. Macy Co., supra, at p. 898. "The right to rely on representations is generally conceded where the hearer lacks equal facilities for ascertaining the truth, as where the facts are peculiarly within the knowledge of the speaker and are difficult for the hearer to ascertain, as where misrepresentations relate to latent defects, where, because of the hearer's ignorance and inexperience, it would be necessary for him to employ a third person to make an examination in order to learn the truth, where the employment of an expert would be required, or where from the circumstances attending the transaction the hearer is compelled to rely on the speaker's statements. Redress for fraud may also be had where, there being no particular confidential relation, reliance is placed on the speaker on account of his special knowledge and the hearer's ignorance, as where the speaker is an expert with respect to the transaction involved and the hearer is not; and in such cases the hearer may without further investigation rely on the speaker's statements even where they might otherwise be deemed mere expressions of opinion or `dealers' talk,' or assertions of quality or value. To come within this rule it is not, however, necessary that the fact misrepresented should have been exclusively within the speaker's knowledge." 37 CJS 279, Fraud, § 34 (a). "[T]he tendency of modern decisions is not to extend but to restrict the rule requiring diligence and similar rules, such as caveat emptor and the rule granting immunity for dealer's talk, and to condemn the falsehood of the fraud-feasor rather than the credulity of his victim." 37 CJS 274, Fraud, § 30 (b).
"Ordinarily the question whether the complaining party could have ascertained the falsity of the representations by proper diligence is for determination by the jury." Elliott v. Marshall, 179 Ga. 639 ( 176 S.E. 770); City of Dalton v. U.S. Fidelity c. Co., 216 Ga. 602, 604 ( 118 S.E.2d 475); Anderson v. R. H. Macy Co., 101 Ga. App. 894, 899, supra and cit.; Pirkle v. Gurr, 218 Ga. 424, 426 ( 128 S.E.2d 490). In the present case it is alleged that the defendant had done satisfactory work for the plaintiff in the past, that the plaintiff was a layman as to such matters, that the plaintiff was led to believe that one of the employees was an engineer and that his home and family were in jeopardy if he did not replace the heating system. We think these allegations are sufficient to authorize a jury to find that the plaintiff was justified in relying on the alleged misrepresentations in the exercise of common prudence and diligence. The other eight essential elements of the cause of action for fraud and deceit having been alleged, the petition was not subject to the general demurrer; therefore the court erred in its judgment sustaining the demurrer and dismissing the action.
Judgment reversed. Eberhardt and Russell, JJ., concur.