Wild v. Krenke

55 S.E.2d 544 | Ga. | 1949

1. Where an equitable petition is amended without objection, whereby all equity is eliminated, the Supreme Court is without jurisdiction to review a judgment on demurrer to the amended petition. But here the amendment is demurred to, and the judgment overruling the same is brought under review. The Supreme Court has jurisdiction to review an exception to the judgment on the demurrer to the amended petition.

2. Where a petition praying for rescission of a contract of purchase upon the ground of alleged fraud, consisting of a misrepresentation as to the net profits of the business purchased, is dismissed on general demurrer, but providing that an amendment curing the defect might be allowed within a stated time, the amendment tendered failing to show fraud, the petition, as thus amended, is subject to general demurrer, and it is error to overrule such demurrer.

(a) The amendment, which alleges a new agreement as a basis for the recovery of a judgment for the amount due under such agreement, and which contains allegations that contradict allegations of the original petition, is itself fatally defective.

No. 16773. OCTOBER 12, 1949. Lloyd J. Krenke filed a petition against W. H. Wild and the Trust Company of Georgia, alleging substantially the following: In October, 1947; the plaintiff purchased a one-half interest in a business known as State Dry Cleaners from the defendant for the consideration of $9000; that the defendant fraudulently induced the plaintiff to make the deal by falsely representing that the business was making a monthly net profit of $250, and the books and records of the business would show this; that such representations were knowingly false, and made for the purpose of deceiving and defrauding the plaintiff. The consideration "was paid and is being paid to the said W. H. Wild in the following manner: $1940 cash; $3060 by selling and transferring a certain note executed by C. R. Chadwick bearing interest at 6% and endorsed with recourse by your petitioner; and by the payment to the Trust Company of Georgia of $4000 covering a loan on the equipment." Certain payments in the amount of $120 per month have become due and have been paid on the Trust Company loan. As part of the transaction, the plaintiff entered into a partnership with Wild. Within two weeks from the time of the purchase, the plaintiff discovered the alleged fraud, since the business was barely earning expenses. He promptly tendered the entire business, including all assets, back to Wild; and demanded a return of all amounts he had paid on the purchase-price and a release of the $4000 note held by Trust Company of Georgia. Further, he repeatedly demanded a rescission of the contract, and his demands have been refused. Trust Company of Georgia is threatening to foreclose its claim, and it knew of the fraud Wild perpetrated upon him.

The prayer was for judgment against Wild for $9000, cancellation of the partnership agreement, cancellation of the $4000 note payable to the Trust Company of Georgia, and that Trust Company of Georgia be permanently enjoined from proceeding to collect the same.

A general demurrer to this petition was sustained and the petition dismissed, but the plaintiff was allowed a stated time to cure its defects by amendment. Thereafter and within that time, an amendment was allowed subject to demurrer. This amendment in substance alleged that the business was supposedly earning a net profit of $250 a week; that the books would supposedly show this; that Wild, having operated the business, knew this information was false; that the books did not show the same; and that the plaintiff had confidence in and believed Wild, and entered into the contract relying on his statements.

In addition, new paragraphs were added alleging that, within two weeks after signing the contract, the plaintiff "actually delivered said property and rights back to defendant Wild, and said defendant Wild accepted and acquiesced in petitioner's demand for rescission and cancellation of said contract purchase and of said partnership agreement"; that the cancellation and rescission were mutual, and Wild took complete charge; that Wild has, pursuant to the mutual cancellation, sold the business, and has paid the Trust Company of Georgia in full; that by such sale Wild is estopped to deny his acquiescence in the cancellation and rescission of said contract; that, upon said rescission and cancellation, the parties (plaintiff and Wild) were as a matter of law entitled to be restored to their original status; that the plaintiff is entitled to a judgment against Wild for $480 with interest, the same being an amount that he had paid on the Trust Company debt; that, in addition, he is entitled to a judgment against Wild for $5000 paid by the plaintiff to Wild.

The prayer was amended by striking "$9000" and substituting "$5480," but otherwise the original prayer was repeated and retained. In addition, a second count, in substance the same as the first, and praying for the same relief, was added.

General and special demurrers to the amended petition were then filed and overruled. The exception here is to that judgment. 1. Since the equitable relief sought in the original petition was rescission and cancellation of the purchase contract and partnership agreement, the amendment, alleging rescission and cancellation of these contracts by mutual agreement, would eliminate all equity; and thus deprive the Supreme Court of jurisdiction of the writ of error if the amendment had been allowed without objection. But the defendant's demurrer assails the amendment, and the judgment overruling that demurrer is brought under review by this bill of exceptions. A decision here sustaining the demurrer would have the effect of restoring the case to its original nature, which was one seeking relief in equity.

Therefore, it must be held that the Supreme Court has jurisdiction of the writ of error. Harrell v. Parker,186 Ga. 760 (198 S.E. 776); Shoup v. Elliott, 192 Ga. 213 (14 S.E.2d 736).

2. A clear statement of the status after the general demurrer to the petition was sustained eliminates considerable irrelevant matters that are argued in the briefs. That judgment, having been acquiesced in, is the law of the case. Under it, all of the averments of fraud and misrepresentation are insufficient to authorize rescission and cancellation as there sought. It reduces the case to the one simple question of whether or not the amendment alleges fraud which will authorize the rescission and cancellation prayed for. On this point the amendment merely alleges that the petitioner requested the defendant Wild to show him the books. The defendant replied that the books were not available, but that they would corroborate his statement; and he threatened to sell the business to someone else; and the petitioner bought immediately without inspecting the books for fear that another would buy unless the petitioner bought at once. It is apparent that these averments show no more than that the petitioner was so anxious to buy that he voluntarily elected to take the risk as to what the books would show, instead of waiting to inspect the books for himself. It has often been said by this court that equity just simply will not excuse negligence and grant relief from injury which is the result of such negligence. We repeat that statement in order to emphasize the firmness and inflexibility of the rule. The amendment in this respect makes no material change in the deficiency which resulted in dismissing the petition on demurrer. Since the amendment thus fails to correct the defect, which caused the dismissal of the petition, that judgment has become final.

If it be contended that, although failing in this respect, the amendment alleges a good cause of action in that it shows rescission by mutual agreement, and prays for judgment for the amount paid on the purchase-price, the reply is that in thus seeking recovery on a basis of a new agreement, a new cause of action is alleged. This cannot be done. Cox v. GeorgiaRailroad Banking Co., 139 Ga. 532 (77 S.E. 574); Harrell v. Parker, supra; Code, § 81-1303.

A further insuperable legal obstacle in the way of allowing the amendment is that it contains allegations that are in sharp contradiction to allegations of the petition which are not stricken. As illustrative of this point, the petitioner alleges repeated demands for rescission, tender of restitution, and rejection by the defendant Wild — whereas the amendment alleges that the petitioner and the defendant Wild mutually agreed to rescind, restitution by the petitioner, and estoppel of the defendant Wild to deny the rescission. Upon which of these conflicting allegations does the petitioner seek recovery? If the petitioner is unable to make a choice between the conflicting allegations, as to which he will stand upon, then obviously he has no right to expect the court to make that choice for him.

From what has been said, it follows that the amendment is fatally defective and subject to the grounds of the demurrer, as it did not cure the deficiency in the original petition which caused its dismissal. Consequently, the court erred in overruling the demurrer and in failing to dismiss the petition as amended. However, this decision does not constitute res judicata on the question of whether or not, in a proper suit, the petitioner is entitled to recover what he has paid on the purchase-price.

Judgment reversed. All the Justices concur.