*1 al., al., Plaintiffs-Appellees, THOMAS SMITH et ETHELL et ELDON
Defendants-Appellants. Fourth District No. 4—85—0662 12, 1986.
Opinion filed June Petersburg, Lipsky, appellants. Jefferson Lewis Nolan both of Grosboll, Tice, appellees. & Knuppel, Petersburg, Becker delivered court: opinion JUSTICE WEBBER into for the pur- entered a contract with defendants *2 to of sought chase of a tavern. Plaintiffs cancel the contract because poor They the condition of the initiated suit to recover the sum roof. $5,000 down for the payment pur- transferred to defendants as a chase the After a trial the of Menard tavern. bench circuit court Club, E&E (Eldon) found that defendants Eldon Ethell and County the Inc. the condition of (E&E), fraudulently misrepresented had the close of (Aneta) roof. Defendant Aneta Ethell was dismissed at finding. judg- the evidence on a directed The court entered appeal. ment and Eldon and plaintiffs for E&E the to advertisement in responded On June an plaintiffs vis- announcing the sale of defendants’ tavern. Plaintiffs newspaper tavern, building the inspecting ited the two to three hours spending a over portion ceiling and Plaintiffs observed that equipment. plaintiffs inquired the water about sagged bar and was stained. When roof, “good roof replied the the Eldon that the was condition of Eldon the was caused building.” problem condition an old stated the conditioner, water- a leak in air which was situated above the the roof plaintiffs, to Eldon also them damaged According area. they inquired had never When further whether leaked. Plain- attic, replied lights. the that the attic had no could see Eldon to go tiffs that there was no need testified that Eldon had also stated see to attic, nothing going up that there was could up they plain- It is Eldon did not undisputed physically prevent the attic. suffi- attic, statements tiffs from but that Eldon’s inspecting at- investigation further ciently discouraged plaintiffs residence, to tic. After the went defendants’ inspection parties short period where contract terms finalized. Plaintiffs left a with an they attorney. of time. this visited During period their attor- with them. At stated that did not take the contract they After obtain- business structures. ney’s possible office discussed they to returned defend- $5,000 payment, they ing check for as down a real Aneta was the contract to signed ants’ residence and she had contract, of which in the agent purchase estate and filled office with attorney’s then returned to their forms at home. Plaintiffs in- in the as construction Plaintiffs both work laborers agreement. transaction, in a real estate and never been involved dustry have the tav- residential, contracting purchase to to prior commercial or ern. 11, 1984, visited the June and June
Between acquainted to with together individually get tavern several times arrangements made with the beer distributor They business. they the linen to continue tavern. Each time company servicing ceiling visited and the condition inquire problem would about same inquired the roof. Each time received the they generally lights, conditioner, there air reply: problem were no was the 23, 1984, inspect plain- and there was no reason to the attic. On June Miller, tiff Thomas Smith Jim a friend who is a (Smith) plumber, to hooking up visited the tavern see a water softener. Miller about that he plasterboard hanging testified noticed down the area of damage water and asked Eldon if the roof Eldon re- leaked. When plied conditioner, that the the air Miller with asked to Miller, look at it. According replied Eldon he prefer would go Miller up attic as there were no lights up there and there were customers the tavern. Miller aget flashlight offered truck, out of his Eldon he preferred but stated that Miller refrain later, from doing so. days Two June appeared *3 tavern a flashlight with and stated to Eldon that they going were to inspect the attic. Plaintiffs that upon testified of the attic inspection roof, they beams, discovered holes in the water-soaked and that part of the seal of the roof pulled away. had Based on the of the condition roof, plaintiffs notified of their defendants decision to cancel the con- $5,000. tract and demanded the return of their Defendants refused claiming had the contract plaintiffs breached and defendants en- were titled the for keep money. to Plaintiffs sued the return of the money theories, including alleging several fraud. circuit court ordered a directed verdict for Aneta. The court that Eldon found and E&E had fraudulently the condition of the roof to misrepresented plaintiffs. timely Defendants filed a appeal.
It has that long been held a contract be set may aside be (Abbott cause of a fraudulent misrepresentation. Loving (1922), v. 154, Ill. of a 442.) N.E. The elements fraudulent misrepresenta (1) fact; tion false material (2) are: statement of known or believed to it; (3) be false the intent to the party making induce other to party act; the other in reliance on truth the state (4) party action the of ment; (5) to the other from such damage party resulting and reliance. 282, (Soules Corp. General Motors 79 Ill. 2d the 599.) part Reliance on the defrauded must be party justified. 79 Ill. 402 N.E.2d 599. appeal argue plaintiffs justifiably rely
On defendants did not no plaintiffs on Eldon’s statements. Defendants assert were on the ceiling prior signing tice the condition the the bar to above attic; not They from the prevented inspecting contract. were to flashlight investigate were free at time the cause obtain and, as a damage. Eventually plaintiffs investigate of the water did investigation, result of their cancelled the contract. notice of a agree plaintiffs possible problem
We were on prudence area and that would have ceiling ordinary above bar Schmidt v. In investigate. them to required Landfield the rule that “a supreme 169 N.E.2d our court reiterated on he has justified relying representations is not made when representations to ascertain the truth of the ample before opportunity In 232.) case (20 present he acts.” during the area above the bar damage observed water to spent on June 1984. two premises They their inspection tour included examining building day. three on Their hours discovering potential as as the main level. After the basement well about ceiling, about the roof and plaintiffs inquired with the good told the roof was in condition inspecting They the attic. were Accept for them to lights inspect. there were no the attic but that no there need ing testimony that Eldon them attic, prohibited the fact remains that go up to inspected man the attic. A would have inspecting reasonable damage in order to assure himself that tavern cause of the water unresolved, the state of roof was suitable With final where the contract was went to defendants’ residence ized. had a arguing they right rely respond by
Plaintiffs in knowledge point disparity defendants’ statements. grounds as themselves between experience had Eldon’s statements. Defendants upon justifying acquainted with tavern for nine and were well years owned the ain real es Plaintiffs had never been involved building’s structure. discouraged investigation tate transaction. Eldon’s statements *4 and, argue, justified plaintiffs’ area damaged water Plain good condition. roof was representation on Eldon’s inquiries are rule where a plaintiff’s tiffs support look create a false sense statements which through inhibited defendant’s in failure to investigation, plaintiff’s or block further security v. Mueller 120 (Carter (1983), App. Ill. fatal. vestigate further is not
175 314, 1335.) argue 3d 457 N.E.2d Alternatively, plaintiffs in not saw negligence part investigating damage they on not Plaintiffs mitigate does defendants fraudulent misrepresentation. 134, 89, cite Mann Broberg (1965), App. v. the rule that “a who is of fraudulent person guilty misrepresentation cannot interpose person negligent defense that defrauded was in failing 134, 140-41, to discover the 213 (66 App. truth.” Ill. N.E.2d 92.) acknowledge that the rule is qualified that the defrauded must first he right rely show had a the misrepresentations.
Answering
arguments,
we believe that Eldon’s state-
ments discouraging plaintiffs from an examination of the attic area
were not
sufficiently prohibitive
justify plaintiffs’ reliance on them
and overcome the fact that
were on notice
possible pat
of a
ent defect. In
whether
determining
reasonable,
reliance is
courts look
to all the relevant circumstances surrounding the misrepresentation.
Title
(Chicago
& Trust Co. v. First Arlington
(1983),
National Bank
118
Ill. App. 3d
“It is only circumstances, under the the facts should be to one apparent of his knowledge intelligence from a cur sory glance, or he has something discovered which should serve as a warning deceived, that he is being that he is required to make an investigation his (Prosser, own.” Torts sec. ed. (4th 1971); see Chicago Title & Trust Co. First Arlington National Bank 118 Ill. App. 3d 723.) N.E.2d
We believe that plaintiffs were on notice of a potential defect in the roof of the tavern should have investigated the cause of the water damage. Eldon did not prohibit searching the attic. Ad Eldon mittedly, discouraged plaintiffs from any investigation. Plain tiffs, however, were contemplating purchase tavern, an in $60,000. vestment of The defect was a visible one although cause the defect was unclear without further “A inspection. person may enter into a transaction with his eyes closed to available information and then that he charge has been deceived by (Central another.” States Joint Board v. Continental Assurance Co. App. 936.) In this case plaintiffs noticed a potential enough but satisfied with Eldon’s to sign answer a con tract to Their actions were not those of ordinary prudent men and their argument justifiable reliance must fall. *5 jus-
As we with defendants and hold agree that were statements, in tified on Eldon’s we need not consider defend- relying ants’ other The order of the circuit court of arguments. judgment Menard is reversed. County
Reversed.
MORTHLAND, J., concurs. GREEN, dissenting:
JUSTICE I I do not that reliance on agree dissent. defendants’ matter misrepresentation was as a of law. unjustified In v. Mueller 120 Ill. App. Carter 1335, cited evidence showed that a tenant by majority, prospective checking from on behalf misrepresentations had been dissuaded made he was apartment of a landlord as to the condition of an when told The apartment that a to the was unavailable. First District re key a tenant later became a finding against prospective (who versed held that the tenant) key on a fraud count and statement was investigation. appellate the need further negated unavailable person making court stated that reliance is “where the justified either a inquiries creating statement has inhibited plaintiff’s by false added.) 120 blocking investigation.” (Emphasis or security sense of App. N.E.2d 1340.
Here, plaintiffs upon misrepresentations only relied defendants’ if anything could not see went being after amiss in nothing regard further assured that was attic Thus, [plaintiffs’] by inquiry” the roof. defendants “inhibited investiga- a and also “creating security” by “blocking false sense of and the plaintiffs’ conduct foregoing by tion.” When considered, is it is apparent lack of in business matters sophistication determination that plaintiffs’ court’s supported evidence misrepresentations justified. defendants’ majority the successor text to that cited indi- Interestingly, a away requiring showing movement from sub- strong cates a a a material person may rely upon representation stantial care before The text notes that the Second business transaction. to a negligence to contributory no reference of Torts makes Restatement Prosser & regard misrepresentation. tortious being factor see also Restatement Keeton, (5th 1984); 750-53 ed Torts sec. at (1977). sec. 538(2)(b) of Torts (Second)
Clearly, making investiga conduct of here no further being tion after than the looking dissuaded the attic was less en tering into a transaction with to available information eyes closed Broberg which the court App. Mann deemed to conduct type precluded bringing be which an action for misrepresentation.
I would affirm the the trial judgment of court. BURT, In re MARRIAGE OF C. Petitioner-Appellant, DOUGLAS *6 BURT, Respondent-Appellee. MARJORIE Fourth District No. 4—85—0755 12, 1986.
Opinion filed June