Kregel v. Cirkler

158 Minn. 175 | Minn. | 1924

Dibell, J.

Action to recover, upon the ground of fraudulent misrepresentations, the amount paid by the plaintiff for a drugstore stock and a leasehold, and to cancel the note and chattel mortgage and the mortgage on the leasehold given for the unpaid portion of the purchase price. The defendant, denying the fraud, asked the foreclosure of the chattel mortgage and the mortgage on the leasehold. Certain issues were submitted to a jury. There were findings against the plaintiff, and a decree for foreclosure of the chattel mortgage and the mortgage on the leasehold. The plaintiff appeals from the order denying his motion for a new trial.

The plaintiff bought the defendant’s drug store in Minneapolis, including the leasehold of the property on which it was located, on May 1, 1921, for $60,000. Of this sum $10,000 was paid in cash, and a note was given for $50,000, payable $500 per month, secured by a chattel mortgage on the stock and a mortgage on the leasehold. The plaintiff claims that the defendant fraudulently represented that the drug store was producing a profit of $300 per month; that there was no substantial amount of “cut-rate” business; and that there was no amount of “dead” stock.

The court held that there was no proof that the plaintiff did not make so great a profit as $300 per month. No finding upon the question of misrepresentation of the profit was submitted to the jury or made by the court. On October 1, 1921, the defendant took possession of the drug store. The plaintiff claims that he did so upon a voluntary rescission of the parties on agreed terms. The defendant claims that the plaintiff substantially abandoned the proiperty, that he did not agree upon a rescission, and that he took possession to protect his mortgage. Issues substantially as follows were submitted to a jury:

,(1) Did the plaintiff make any representations as to the “cut-rate” business and the amount of “dead” stock?

(2) If they were made, did the plaintiff rely upon them?

(3) If they were made, were they false?

(4) Did the defendant, when he took possession in October, 1921, consent to a rescission of the sale?

(5) Did the plaintiff deliver to the defendant the stock in substantially the same condition in which it was received by him on May 1, 1921?

(6) Did the plaintiff rescind or attempt to rescind within a reasonable time?

All were answered in the negative. Not all of them are material in view of the finding that there was no fraud.

In proof that he was not making so great a profit as $300 per month the plaintiff offered tbe defendant’s books of account. Upon objection the court excluded them. They are included, by reference, in the settled case, though not returned to this court. They show, as we gather from the record, purchases and receipts, but there is no inventory, and nothing, so far as we find, from which it can be determined that he was not making the profit which the plaintiff claims that he represented.

It is claimed that the court erred in charging the jury to disregard the evidence as to the defendant’s income tax. His books showed that in March, 1921, he ipaid an income tax of $305.10 for 1920. The evidence is indefinite, but the plaintiff claims that it shows, at least inferentially, that he paid no taxes for 1921.

An omission to pay an income tax may be an admission that no profit was made. We have held that an admission to list property of which one afterwards asserts ownership is a circumstance against his claim, and that the fixing of values by the owner is an admission. See Thaden v. Bagen, 139 Minn. 46, 165 N. W. 864 and cases cited; Rosenberger v. H. E. Wilcox Motor Co. 145 Minn. 408, 177 N. W. 625; Vernon Shell Road Co. v. Mayor of Savannah, 95 Ga. 387, 22 S. E. 625; 3 Wigmore, Ev. § 1640. The principle invoked here is not different.

The defendant drew money from his business as he wanted it and it was charged to his personal account. Nothing is shown as to other business, or other factors which might affect his income tax. A large return would not indicate that all came from his drug store business, or a small one that there was no profit. The question is indifferently raised, perhaps not sufficiently raised, and with no further showing there was no error.

The proof of value was confined to the books of account and the failure to make an income tax return. The court therefore was right in excluding the claimed misrepresentation of profits as a basis of recovery.

That representations were made as to “cut-rate” business and “dead” stock is conceded. The issues relative thereto were submitted to the jury without objection, upon the theory that misrepresentations were meant. That was the theory upon which the trial was conducted. The evidence sustains the jury’s finding that there was no misrepresentation.

When the first question, understood as explained by the court, was answered in the negative, there was nothing left to the plaintiff’s case, unless there was a voluntary rescission. Besides, the answer to question 3 negatived falsity. With the findings so, errors claimed by the plaintiff in the charge, for instance as to instructions upon reliance, are unimportant.

The answer to the fourth question is sustained by the evidence. There was a dispute between the parties as to whether they agreed to rescind, there was evidence on both sides, and the finding of the jury ends the controversy.

The court found that the stock was worth $35,908.88 on October 1, 1921. This finding is important upon the defendant’s theory that when a sale is made upon the foreclosure of the chattel mortgage an amount of stock equal in value to the value of the stock on October 1, 1921, must be offered for sale.

The proof of the value is based upon an inventory taken immediately after October 1. Apparently it was taken by competent men. The evidence, though meager and unsatisfactory, tends to prove that a fairly complete inventory of the merchandise on hand was taken, though we do not now pass upon its sufficiency. There was proof of the value of some of the merchandise. Of most of it there was none. The price-fixer of most of the values did not testify. The inventory was insufficient- as proof of value within either Itasca Cedar & Tie Co. v. McKinley, 124 Minn. 183, 144 N. W. 768, or Knopfler v. Flynn, 135 Minn. 333, 160 N. W. 860, Ann. Cas. 1918E, 538.

The fifth question, referring to the relative value of the business on May 1, 1921, and on October 1, 1921, submitted to the jury, is of no present importance.

The sixth question, in view of the finding that there was no fraud, has no place in the case, for there was no right of rescission.

There should not be a retrial of all the issues. The plaintiff has failed to prove that he is entitled to relief on his cause of action. The findings in respect thereto should stand. There should be a new trial of the defendant’s counterclaim for a foreclosure of his chattel mortgage and the mortgage on the leasehold. The order is reversed, and the case remanded for the purpose stated.

Reversed with directions.

AFTER REARGUMENT.

On May 2, 1924, the following opinion was filed:

Dibell, J.

Both the plaintiff and the defendant moved for a reargument. The following order was entered:

“A rehearing is granted the defendant upon the question, reference to which is had in paragraph 5 of the opinion, whether the inventory of October, 1921, was sufficient as proof of value. This includes the question as to the sufficiency of the listing of the merchandise in the inventory, the opinion suggesting but not deciding its sufficiency, and the question of valuation.

“The plaintiff is granted a reargument upon the question whether the drug store was making a profit of $300 per month. This includes the effect of the omission to make an income tax return, to which reference is made in paragraph 2 of the opinion, to which the plaintiff’s motion is specifically directed, and also the admissibility and effect of the books of account of the defendant, referred to in paragraph 1 of the opinion, bearing upon the claim that the profits were less than $300 per month.”

Counsel submitted printed briefs and were heard orally. We refer first to the points upon which a reargument was granted the plaintiff, and then to those upon which a reargument was granted the defendant.

The books of account were properly excluded. They did not show the amount of stock at any time. There was no inventory, except one taken about the time of the plaintiff’s purchase. There was not an earlier one with which to compare it. The books were not supplemented by substantial proof of the amount of the value of the stock at a material date for finding wbetber profits were being made as represented. It was proposed to pnt .the books before tbe jury with nothing to supplement them in ascertaining whether there were profits. To be of aid there must have been a somewhat definite showing of value of stock, at a date before tbe purchase, and an analysis of tbe books. All this was lacking. We adhere to our former view, expressed in paragraph 1, that the books were properly excluded.

We have reconsidered our bolding as to tbe income tax, referred to in subdivision 2. We adhere to our former view, without further discussion, that tbe evidence was so indefinite and its effect so uncertain that an instruction to disregard it was not error.

Thé court did not err in excluding evidence as to misrepresentations of profits.

In subdivision 5 of ■ the opinion, referring to tbe October, 1921, inventory, the court said:

“There was proof of tbe value of some of tbe merchandise. Of most of it there was none. Tbe price fixer of most of tbe values did not testify.”

There was evidence of tbe value of tbe surgical instruments and supplies. This tbe court had in mind when it said that there was proof of tbe value of some of tbe merchandise. The court was in error when it said that there was no proof of value of most of tbe merchandise and that the person who priced it did not testify. The evidence shows that a competent witness fixed tbe values on this merchandise. In not giving effect to his testimony tbe court erred and its conclusion upon which the reversal was based was wrong.

Tbe court left undecided tbe question wbetber tbe inventory, the items being properly priced, was taken under such circumstances as to authorize its admission in evidence, and that question is now for decision.

The plaintiff abandoned tbe store about October 1, 1921, claiming a rescission. Notice was given tbe defendant who took possession. He obtained tbe services of men who were experienced in making inventories. There were 10 or 12 of them. Only two testified. One had charge of the inventory of the surgical instruments and supplies and he priced them. The other had charge of the inventory of the rest of the merchandise. He superintended the making of it, to some extent checked the work of the others, and was of the opinion that all of the articles were included in it. He did not do the pricing. That was done by the witness whose testimony was not given effect in reaching the former decision. The inventory would be more satisfactory and less likely to contain error if all participating in its making had testified, but there was a sufficient foundation, considering the circumstances involved in its taking and the purpose of its use, to justify its admission in evidence. In reaching this conclusion we have considered again the cases cited in the former opinion.

We were not in error in our holding in subdivisions 1 and 2 of the opinion. We were in error in our holding in subdivision 5 upon which the order of reversal was made.

The order of reversal is set aside and the order from which the appeal is taken is affirmed.

Order affirmed.