Civ. No. 543.
February 16, 1909.
APPEAL from a judgment of the Superior Court of the City and County of San Francisco. Frank J. Murasky, Judge.
The facts are stated in the opinion of the court.
Robert H. Countryman, for Appellant.
Devoto Richardson, for Respondent.
This action was brought to recover damages for alleged false and fraudulent representations made by defendant to plaintiff, with respect to two barber-shops in San Francisco, in the course of negotiations resulting in a sale of an interest therein by defendant to plaintiff.
The cause was tried before a jury, which returned a verdict in favor of the plaintiff, and assessed the damages at the sum of $450. Judgment was entered accordingly, and this appeal is taken by defendant within sixty days thereafter.
The facts of the case briefly told are these: The plaintiff who was himself not a barber, and wholly unfamiliar with that business, was sought by defendant, and urged by him to buy a half interest in the two shops, including their furniture and fixtures, goodwill and a lease of property on which one of the shops stood, the defendant representing that the net profits of the shops from the beginning of the business down to that time amounted to $100 per week. The plaintiff, relying implicitly upon these representations, on September 18, 1906, agreed to the purchase, and received a transfer of the one-half interest, since which time there has not been realized from the business during any week a profit of more than $40, and many weeks the profit was very much less.
At the conclusion of the plaintiff's case the defendant made a motion for a nonsuit, which was denied. Appellant claims that this motion should have been granted. It is true that no direct evidence was introduced to show that the profits of the shops prior to the sale of the half interest to plaintiff had not been the sum of $100 per week; but the evidence did show that the profits of both shops for the first week thereafter were not $100, but $39, and that for no week during the months that the parties hereto were associated in business did they exceed $40, and for many weeks they were much less. The averment of the complaint as to the profits of the shops was negative in character; but as the plaintiff made it the basis of his suit the burden was upon him to show that it was at least prima facie true ( United States v. Southern Colorado Coal etc. Co., 18 Fed. 273), and this we think he did. Although plaintiff became a partner of appellant, no apparent change was made in the management of the business. Appellant had kept no books of account; and it seems to us that respondent introduced all the evidence on this point that could be reasonably expected of him. With these features of the case it must be remembered that fraud is generally proved by inferences from facts and circumstances, and not by direct and positive proof (14 Am. Eng. Ency. of Law, 2d ed., 195, 196), and that under circumstances like those here a negative allegation does not require the same degree of proof to sustain it as does an affirmative allegation. ( Kelly v. Owens [Cal.], 30 P. 596; 6 Ency. of Ev., 10, and note 12.) We think that the circumstances of this case afforded a satisfactory inference that the representations as to the profits of the shops were false and fraudulent. It therefore follows that the court committed no error in denying the motion for nonsuit. A single material misstatement, knowingly made with intent to influence another to enter into a contract, will, if believed and relied on by that other, afford a complete ground for relief as if it had been accompanied by a multitude of other false representations. ( Davis v. Butler, 154 Cal. 623, [ 98 P. 1047].)
Appellant asserts that respondent by his conduct waived the alleged fraud, and that he is therefore precluded from maintaining this action. To be sure, respondent remained in the business after being satisfied that he had been deceived; but as respondent did not rescind the contract, but instead confirmed it, he had the right to remain in the business. Aside from the circumstance that he did not begin this suit earlier there is nothing in the record that at all tends to show waiver; and as to this delay respondent explained it, and would no doubt have made a fuller explanation if the court had not, upon objection of appellant, excluded testimony offered for that purpose. It is conclusive, however, of the point to say that there was sufficient evidence to warrant the jury in believing — as it must have — that there was no waiver of the fraud by respondent.
The appellant, as we have seen, made positive statements as to a material matter, namely, the profits of the shops; and under the law and the attending circumstances of this case respondent was entitled to act upon these statements and representations; and having done so, and in consequence suffered damage, he is entitled to relief. Representations as to the past profits realized from a business may be considered as a fact lying peculiarly within the knowledge of the party making them, so that they may be relied upon; and if they are false and known to be false they may amount to fraud. (14 Am. Eng. Ency. of Law, 2d ed., 126, and note.)
In Markel v. Moody, 11 Neb. 213, [7 N.W. 853], it was held that an action of deceit could be maintained for false statements as to the amount of business done and profits realized by the sellers while they were keeping the house.
And in the case of Messer v. Smyth, 59 N.H. 41, it was held that misrepresentations by the vendor of land as to the quantity of hay that had been cut by him thereon, the quantity and quality of fruit that he had raised, the amount of pasturage it had furnished, the expenses of carrying it on and the income of it, were all statements of fact peculiarly within his knowledge, and upon which the purchaser had a right to rely, and that an action for damages could be maintained for the deceit. To the same effect are Coon v. Atwell, 46 N.H. 510; Griffing v. Diller, 66 Hun, 633, [21 N.Y. Supp. 407]. (See, also, 1 Bigelow on Fraud, p. 533; Dwight v. Chase, 3 Ill. App. 67; Cottrill v. Krum, 100 Mo. 397, [18 Am. St. Rep. 549, 13 S.W. 753].)
We do not understand that appellant claims that respondent, upon the discovery of the fraud, should have taken steps to rescind the sale to maintain this action, for he certainly had his election to rescind the sale and return the property, or to retain the property and prosecute his claim for damages for false and fraudulent representation. He does, however, seem to claim that as respondent did give notice of rescission (although subsequently he concluded that too much time had elapsed to make rescission effective), he was bound to pursue that remedy, and that therefore he could not maintain this suit for damages. No authorities are cited to support this theory, and comment is unnecessary.
We have examined all the points made on the rulings of the court as to the admission of testimony, and in reference thereto we find that no error was committed.
The judgment is affirmed.
Hall, J., and Cooper, P. J., concurred.
A petition for a rehearing of this cause was denied by the district court of appeal on March 18, 1909, and a petition to have the cause heard in the supreme court after judgment in the district court of appeal, was denied by the supreme court on April 16, 1909.