190 Iowa 650 | Iowa | 1921
— 1. The original notice was served upon defendants on March 4, 1919. The petition was filed on March 6, 1919, and an amended and substituted petition in November following.
On January 12, 1920, defendants filed their motion to strike. The motion is in 18 paragraphs, and the grounds of the motion as to each paragraph are:
“a. The same is the mere expression of an opinion.
“b. More than two years have elapsed since said statement.
“ e. No fraud could be predicated on such a representation.
‘1 d. The same is redundant and immaterial.
The parts sought to be stricken are:
“1. At the time, he [Coleman] represented to the plaintiff that the business of the defendants was worth much in excess of $25,000.
“2. That they had been offered large sums therefor, of about that amount.
‘ ‘ 3-. And that the business was capable of earning and had earned and was earning many thousands of dollars per year.
‘ ‘ 4. That the business was completely organized.
“5. That .the defendants had earned therefrom about $20,000, and that all of this amount had been earned from the business.
“6. That this was the first time this business had ever been offered for sale, and Hogan was the first man who had been approached for the purpose of selling the business.
“7. That said business was producing, and for some time had been earning, over $9,000 per year.
‘18. That each of the McCombs Bros, was worth, conservatively, $100,000 apiece, and that all of their wealth had been accumulated out of said business; that they had received nothing from the outside, except about $50.
“9. That the only reason McCombs Bros, would consider selling was to devote all their time to the management of their properties.
‘ ‘ 10. That the livery business in Marshalltown had not been hurt by automobiles.
“11. That, on or about the 28th day of January, said Coleman showed to- the plaintiff the residences of each of the McCombs Bros, and three business properties owned by the McCombs Bros., and represented that said McCombs Bros, owned 80 acres of land and several rental properties and elegant apartments, and orally represented that all of this property was the result of accumulated profit of this said business, and was earned by said McCombs Bros, out of said business solely.
“12. That said McCombs Bros., and especially Harry McCombs, in the presence of Charles McCombs, orally represented that each took out of the business $300 to $450 a month, and that their gross earnings were $36,000 a year, and pretended to read
“13. That said McCombs Bros, showed the plaintiff pictures of their various buildings and property, and stated that said property was all free from incumbrance, and all of .which was earned from said business; that said business produced a net profit of $9,000 a year; that said funeral business alone produced a net profit of $4,000 a year; that the livery business was very profitable; that none of their property had been left to them; that all of their assets had been earned-out of the business; that all of the property which Mr. Coleman had shown them had been paid for strictly from the business.
“14. That Harry McCombs, in the presence of Charles McCombs, further represented that the business was the biggest profit-paying business in town; that the business was carried on by 14 employees; that they received 25 cents a trunk and $6.00 a load for .all scenery which was hauled to the opera house, but did not disclose to the plaintiff that there was a 20 per cent discount on all of said business.
“15. That they never deposited less than $100 per day.
“16. Said McCombs Bros, further represented that each of the cars in the garage were paying monthly rentals of $5.00 per month; that they were also collecting $20 a month from a man who rented a portion of it for a motorcycle delivery.
“17. They also represented that the business was increasing rapidly, and that it was growing so fast that it took too much of their time; that the sole reason for getting out of the business was that they had grown too wealthy.
“18. Plaintiff further alleges that, in reliance upon said representations, he purchased said business, likewise leased the buildings used in said business from the defendants, and that defendants induced the plaintiff to enter this lease by misstating and fraudulently representing to the plaintiff that they derived a monthly rental from the upstairs of said building covered by said lease of $75 a month for space rental for vehicles and automobiles of outside customers.”
The motion was sustained as to all assignments.
The statements in Paragraph 1, as to value, present a question for the jury, under all the circumstances of the case. See appellant’s cases, supra, and 12 Ruling Case Law 244, 251.
The matter set out in Paragraph 4 may be proper, if it appears that the business was not completely organized, was insufficiently equipped, etc.
The matter set out in Paragraphs 5, 8, and 11 may be somewhat in the nature of trade talk and exaggerations, and perhaps, standing alone, would not be sufficient. But they might have a tendency to induce plaintiff to believe that the business was prosperous and profitable, and at least are admissible in evidence as a part of the transaction, in connection with the other circumstances alleged.
Speaking in a general way as to the foregoing propositions, the general rule is that, in order to constitute actionable fraud, a false representation must relate to a matter of fact, and such fact must be one which exists in the present, or which has existed in the past, and that fraud cannot be predicated upon the mere expression of an opinion, which is understood to be only such, or cannot reasonably be understood to be anything else. But to these general rules there are exceptions, growing out of the need of preventing the successful perpetration of fraud. There is no certain rale by the application of which it can be determined when false representations constitute matters of opinion or matters of fact; but each case must, in a large measure, be adjudged upon its own facts, taking into consideration the nature of the representations and the meaning of the language used, as applied to the subject-matter, and as interpreted by the surrounding circumstances. The law does not hold a seller to a strict accountability for those vague commendations of his wares which manifestly are open to difference of opinion, and which do not imply untrue assertions concerning matters of direct observations, nor has the buyer any right to rely on such statements. Among such are exaggerated statements as to the value and quality of property, and the like. But this doctrine has no application to false representations of material facts which are in their nature calculated to deceive, and are made with intent to deceive. The modern tendency is to hold a merchant to a fairly strict accountability for his representations made in connection with the sale of his goods. See 12 Ruling Case Law 244, 251, supra, where many cases are cited, among them some of our own. The text gives illustrations of matters of opinion which