Leary v. Baker

McCOMB, J. From a judgment in favor of defendant in a trial before the court without a jury in an action to recover the balance due upon a promissory note secured by a chattel mortgage after legal repossession and sale of the mortgaged property, plaintiff appeals. Facts: July, 1950, plaintiff owned a beauty parlor in Beverly Hills known as Fletchers Beauty Salon which she sold to defendants for $5,500. Defendants paid $1,335 in cash and executed a note for $4,000, plus $210 advance rent. Defendants took over the business on or about August 15, 1950, and closed it on October 1, 1950. Two weeks after closing the business they served upon plaintiff a notice of rescission on the ground of alleged fraud. Plaintiff instituted the present action to collect the balance due on the note executed by defendants to which defendants filed a cross-complaint seeking cancellation of the note on the ground of fraud and also asking for damages, it being alleged that defendants had entered into the contract to purchase the business in reliance upon the fraudulent representations of plaintiff that (a) the business was a going, profitable and terrific business, and (b) two operators employed in the business would stay and work on the same basis they had worked when they were employed by plaintiff. The trial court gave judgment in favor of defendants for the sum of $2,410. Question: Was there substantial evidence to sustain the trial court’s findings that defendants entered into the contract to purchase plaintiff’s business and gave her a note pursuant to such contract relying upon the representations made by plaintiff that (a) the business was a “going, profitable and terrific business,” and (b) that the operators who had been working for plaintiff would stay and work for defendants on the same basis upon which they were then employed,? Yes. Defendants gave direct testimony that plaintiff made representations to them as set forth in the questioned findings, and that such representations were false and known by plain [108] tiff to be false.* Defendants further stated they would not have purchased the business and executed the promissory note in question had they not believed such representations were true and relied thereon. Clearly such evidence sustained the questioned findings of fact, it being for the trier of fact to determine any conflicts in the evidence, which conflicts in the present case the trial judge determined in favor of defendants. The statement that the business was a profitable one was without question a statement of an existing fact. The further statement that the two operators employed in the business would remain and work on the same basis as they had while they were employed by plaintiff is likewise clearly a statement of an existing fact which would continue in the future. These were not mere statements of opinion. The trial court found, supported by substantial evidence, that the foregoing representations had in fact been made. There is no merit in plaintiff’s contention that any misrepresentations were waived by defendants because they made an independent investigation of the business. The record is to the contrary, plaintiff having testified that the books of the business had not been made available to defendants when they requested to see them. Plaintiff’s testimony was as follows: “Q. Now, do you recall the defendants asking you to show your boobs pertaining to the beauty salon, the business ? A. Um-hum. “Q. And isn’t it true that you told them that the books were not available because they were in the hands of your accountant and they were not made up? Do you remember saying that? A. That’s very true; that’s true.” It is true that a statement pertaining to the business and showing a loss was displayed to defendants but at the time it was shown them plaintiff said, “Well, you know I had a [109] girl, a receptionist in here, and there was an awful lot of fiddling going on, and I wasn’t in the business too much. That’s why this statement shows at a loss. That’s why it wasn’t fair to even show you this, because I am not showing you the proper figures.” The record also discloses that plaintiff told defendants the business was operating at a profit, enough for her to draw $125 a week out of it. It is settled that a single material misrepresentation knowingly made with intent to influence another into entering into a contract will, if believed and relied upon by the other, afford a complete ground for rescission. It is not necessary that there be a multitude of misrepresentations. (Davis v. Butler, 154 Cal. 623, 626 [98 P. 1047]; cf. Miller v. Gusta, 103 Cal.App. 32, 38 [4] [283 P. 946].) Under the foregoing findings and the evidence in support thereof the rule of law just stated is applicable and the judgment in favor of defendants must be affirmed. No useful purpose would be served by setting forth additional testimony of which there is ample in the record which would support the questioned findings. Affirmed. Fox, J., concurred. Footnotes [*] One of the defendants testified as follows: “Q. Was there anything discussed as to contacting the operators? "A. Well, we said that we would like to naturally meet them, and we would like to come there and see them during the day. And she thought the best thing is not to see them. She had handled everything with them and she didn’t want it known in the trade that the business was being sold; it isn’t good for business, she explained. “Q. And did Mrs. Leary mention anything else in connection with the operators, other than you have testified to here? “A. Well the main thing was that they would stay with us and carry on the business, because the business wasn’t worth anything without operators. ’ ’