138 Wis. 434 | Wis. | 1909
As this case went off on nonsuit at the close of the plaintiff’s evidence, it is only necessary to inquire whether there was any credible evidence which, taken with all intend-ments and reasonable inferences most favorably to the plaintiff, tended to establish the cause of action. It is undeniable that there was evidence that the defendants represented to the plaintiff that the corporation had assets of about $50,000; that its debts were only about $19,000; that it was doing a prosperous business and earned a substantial profit the preceding year; also that each of those statements was false, that plaintiff relied upon them, and that the stock purchased was of less value than if the facts stated had been true. Materiality of such representations to the making of the contract cannot well be doubted. We presume, however, the court’s reason for entering the nonsuit was, as counsel for respondents argues, that plaintiff had full opportunity for knowing the falsity of the representations made to him before he purchased and therefore could not and did not rely upon their truth.
The rule of law is well established that a purchaser is not justified in relying upon the statements of the seller when their falsity is obvious to him, but this does not require that he shall meet every positive statement with incredulity and must search to ascertain whether it is false. The law recognizes the duty of each to refrain from even attempted deceit of another with whom he deals, and the right of the latter to assume that he will do so. It is an unsavory defense for a
In the light of these principles, let us examine the evidence, at least in its tendency. The opportunities claimed to have been enjoyed by the plaintiff from which, it is asserted, he must have known of the falsity of the statements made to him, are a visit to the store, with opportunity to observe the stock in trade and to examine the books. With reference to the first, we think it entirely open to inference whether mere observation of a dry goods store which, according to defendants’
As to the books which were in evidence, they are a voluminous set of double-entry books, covering all the details of purchases from day to day and of petty sales in a retail business. They consist of a ledger of nearly 600 pages, containing approximately 450 different accounts, several of which extend over many pages, not consecutively, but scattered throughout, the book, without complete reference to each page in any index. The books and designation of the general accounts of the business are highly artificial and capable of giving or withholding information according as the examiner was familiar with the system of bookkeeping and also with the key to the exact meaning of the several accounts. For example^ the merchandise account was closed in January, 1905, with an entry indicating a gross profit on merchandise of some $9,000. Of course a skilled bookkeeper would have understood that this apparent profit was subject to various deductions, but primarily for expense. Had he turned to the expense account he would have found that to amount to but $2,600, but he would have not discovered that various classes-of expenditures were not included under the caption “expense such as salaries and wages, insurance, advertising— each of considerable amount. Thus, unless familiar not only with the theory of double-entry bookkeeping but with the meaning in which the bookkeeper used the titles to the accounts, he might have been deluded into an understanding
One item upon which defendants dwell is the “bills payable” account, which, if understood, would have shown an adverse balance of between $21,000 and $22,000, which they claim, with the verbal information to plaintiff that there was $9,000 of indebtedness in addition to bills payable, as the fact apparently was, at once informed him that the indebtedness was as much as the fact, $32,000. But here, again, a key to the bookkeeper’s terminology was essential to any such deduction. What did bills payable mean ? Did it include or exclude bills owing to wholesale merchants for goods ? The representation to plaintiff was that $10,000 was owing to the bank and about $9,000 to such merchants. The total of $21,000 of the bills payable account would not be violently variant from the total, and on the page on which he must have looked it would have been apparent to a bookkeeper that at least one $3,000 item included in that account represented in
There is also evidence tending to prove that the only time when plaintiff sought to avail himself of the offered privilege of examining the books, he was accompanied to the store on a Sunday by one of the defendants, who spread certain books upon a desk and then told him that he knew nothing about the bookkeeping and could not explain its meaning, whereby plaintiff was unable to gain any information therefrom. The only other actual exhibition of books was made on an evening when plaintiff was called to the store by telephone just as he was retiring for the night. Books were spread upon the table, but all three defendants were present and entered into various discussions with plaintiff and with each other as to the details of an arrangement by which he should come into the corporation, the extent to which his name might be helpful, and to which he should, for the welfare of the concern, have managerial prominence. We think on both occasions there was evidence from which the jury might have well believed not only that no adequate opportunity for the examination necessary to the understanding of the books was enjoyed by plaintiff, but that the action of the defendants was such as to divert him therefrom.
To the foregoing facts may be added the consideration that the defendants were all long-time acquaintances of the plaintiff, some had been his fellow-workmen many years before, and a considerable intimacy of friendship had been maintained between them for a long time. Under such circumstances it has often been held that a positive assertion of a fact by the proposed seller may be thought by the trier of facts a sufficient diversion of the purchaser from availing himself of quite obvious opportunities for examination. We cannot' avoid the conviction that the inference as to whether or not the falsity of the alleged misrepresentations was so apparent to the plaintiff that he must have known it by the exercise of that
Some contention is made by respondents tbat plaintiff, by retaining bis stock and continuing in tbe employ of tbe company, as contemplated at tbe time of tbe purchase, after be must bave ascertained tbe falsity of tbe representations, bas so ratified tbe contract, or waived right to complain of tbe fraud, tbat be cannot recover. Tbis seems to evince much confusion in tbe minds of the respondents’ counsel as to tbe rights of one induced to make and execute a contract by deceit or false warranty. Under such circumstances tbe defrauded purchaser bas at bis election either of two rights: He may rescind tbe whole contract, and upon returning all that he bas received may recover back all tbat be bas paid, so tbat tbe parties may stand in statu quo. To tbis right it is doubtless essential tbat be act with reasonable promptness, and tbat enjoyment of rights under tbe contract will be deemed a waiver. ITe also bas, however, tbe right to enjoy all tbe fruits of what be receives under tbe contract and to recover damages by reason of breach of warranty or deceit for whatever tbe property is in fact worth less than it would bave been if as represented. Bonnell v. Jacobs, 36 Wis. 59; Parry Mfg. Co. v. Tobin, 106 Wis. 286, 82 N. W. 154; Waupaca E. L. & R. Co. v. Milwaukee E. R. & L. Co. 112 Wis. 469, 472, 88 N. W. 308; Smeesters v. Schroeder, 123 Wis. 116, 101 N. W. 363; Palmer v. Goldberg, 128 Wis. 103, 107 N. W. 478; Fox v. Wilkinson, 133 Wis. 337, 113 N. W. 669. Tbis latter right, when be does not rescind, is absolute and destroyed by no lapse of time less than tbat prescribed by tbe statute of limitations. Tbe plaintiff.here bas done nothing more than to retain all tbat be got under tbe contract, and is entitled to recover tbat wbicb be would bave received if facts falsely represented by defendants bad existed.
As to tbe rulings on evidence, we need not decide whether
The remaining question as to competency of plaintiff’s wife as a witness is not likely to arise in the same form upon a new trial, and we therefore forego discussion thereof.
By the Court. — Judgment reversed, and cause remanded for a new trial.