Anderson v. Evansville Brewing Ass'n

Felt, C. J. Appellants commenced this action to recover damages for an alleged fraudulent sale of “temperance brew” to them by appellee. The complaint is in one paragraph, to which a demurrer, for want of facts, was sustained, and the only error presented by this appeal is the ruling on the demurrer. The allegations of the complaint, in substance, are that appellee is a corporation organized under the laws of Indiana; that appellants, on March 1, 1908, were merchants engaged in the sale of general merchandise, restaurant goods and soft drinks in the town of Sullivan; that on said day appellee falsely, wrongfully and fraudulently represented to appellants that “temperance brew,” manufactured and sold by said appellee, was a nonintoxieating beverage, and “not such a beverage as would be prohibited by law, and at said time asked appellants to handle and sell said “temperance brew” at retail at their store;” that appellants, relying on said representations and believing them to be true, bought a large amount of said “temperance brew” from appellee for sale at retail in their store, which fact was known to appellee; that said brew was not a nonintoxicating liquor, but was in fact an intoxicating liquor, and could not be lawfully sold without a license, which fact appellee well knew at the time said representations were made to appellants; that thereafter appellants were indicted, tried and found guilty of having in their possession, for the purpose of sale without a license, said “temperance brew,” and each was sentenced to ninety days’ imprisonment in the Sullivan county jail and to pay a fine of $200; that by reason of the false and fraudulent representations aforesaid, appellees were thrown in jail, taken away from their business, and have been disgraced, damaged and humiliated in the sum of $5,000. [407] 1. [406] Considering the general scope and tenor of the averments, it is apparent that the theory of the complaint is that of [407] fraud of appellee alleged to have been perpetrated in the sale of “temperance brew” to appellants. Merica v. Fort Wayne, etc., Traction Co. (1912), ante, 288. 2. Fraud is not presumed, and to warrant a recovery for fraud or deceit it must be averred and proved. 3. To make a complaint good for general damages resulting from a fraudulent sale of a commodity, it must, in substance, be averred (1) that defendant made a material representation as to an existing fact; (2) that it was false; (3) that he made it, knowing it to be false, or made it recklessly, without knowledge of its truth and as a positive assertion of a fact; (4) that it was made to induce plaintiff to act on it; (5) that plaintiff relied on it and acted thereon; (6) that by so doing he suffered an injury for which a recovery is sought. 20 Cyc. 13, 24; 14 Am. and Eng. Ency. Law (2d ed.) 21; Hartford Life Ins. Co. v. Hope (1907), 40 Ind. App. 354; Kirkpatrick v. Reeves (1889), 121 Ind. 280; Roller v. Blair (1884), 96 Ind. 203, 205. 4. Knowledge on the part of one making misrepresentations, that the representations are false is not in every case a necessary element of actionable fraud. An unqualifled statement that a fact exists, made by one to induce another to act on it, implies that the former knows it to exist, and speaks from his own knowledge, and where the fact does not exist, and the party states of his own knowledge that it does, and thereby induces another to act on the statement, the law imputes to him a fraudulent purpose. Kirkpatrick v. Reeves, supra; West v. Wright (1884), 98 Ind. 335, 339; New v. Jackson (1912), 50 App. —, 95 N. E. 328. 5. There is no averment in the complaint before us that the beverage received from appellee was of less value than that sought to be purchased, or any similar averment. It is therefore apparent that the complaint does not seek to recover general, but special damages. [408] 6. The statute makes it unlawful to sell intoxicating liquors without a license; to keep and operate a place where intoxicating liquors are sold, bartered or given away, or to have in one’s possession intoxicating liquors for such purpose, without a license duly issued. §8337 Burns 1908, Acts 1907 p. 27, §1. 7. To make a complaint for special damages good against a wholesale dealer, it must show not only the fraudulent sale to the local merchant, but, in addition thereto, the unintentional violation of the law on the part of the merchant, either by a sale of the beverage so purchased, or by having it in his possession for that purpose without a license; that for such violation of the law the merchant was duly prosecuted, convicted and punished to his damage, which should be definitely stated. I Joyce, Damages §13 and notes; 6 Thompson, Negligence (2d ed.) §§7159, 7160; Union Traction Co. v. Sullivan (1906), 38 Ind. App. 513; Martachowski v. Orawitz (1900), 14 Pa. Super. 175, 184. The complaint in this ease does not allege that appellee delivered to appellants any of said beverage, or that appellants actually had any of it in their possession. Neither does it allege that appellants actually sold any of it to any person, nor that appellants were not duly licensed to sell intoxicating liquors. 8. When a pleading is tested by demurrer, no presumption is indulged in its favor, and no inferences can be drawn to sustain it, except those that necessarily arise from the facts well pleaded. The pleader is presumed to have stated his cause or defense as fully and favorably to his client as the facts will warrant. 9. The charge in the complaint that “temperance brew” could not be lawfully sold without a license, “which fact defendant well knew at the time,” etc., is insufficient to supply the averment that appellants were not licensed dealers. Nor will the averments showing ar [409] rest, fine and imprisonment for alleged illegal sales, or for having said beverage in their possession, take the place of an averment that sales were actually made by appellants, or that said beverage was actually in their possession for the purpose of resale to customers. The averments of arrest, fine and imprisonment serve the purpose of shewing that special damages resulted to appellants, but they do not supply the essential averments, either of an actual sale, or of having the liquor in their possession for that purpose. 10. 11. While we have held that to recover special damages on the theory of appellants’ complaint, it is material to allege that appellants were not at the time licensed to sell intoxieating liquors in order to show that the sale was illegal and subjected appellee to possible arrest, fine and imprisonment, we hold that it is not necessary to aver that appellee at the time knew they did not have such license. The complaint proceeds upon the' theory that appellants sought to purchase a nonintoxicating beverage, and that appellee, by fraud, sold them instead intoxicating liquor. If under such conditions appellee sold and delivered to appellants intoxicating liquor, it did so at its peril, for it is authorized to make such sales to licensed dealers only. The law in such, case does not place upon appellants the burden of alleging and proving appellee’s violation, or reckless disregard, of the law. 12. The complaint attempts to state a joint cause of action in two plaintiffs, but does not aver that they were partners, or state other facts showing any joint or business interest. The averment that plaintiffs were merchants engaged in the sale of general merchandise, is wholly insufficient to show any joint or partnership interest. If the complaint seeks a recovery for damage to a partnership business, the averments should show such relation between the plaintiffs as to warrant it. Lake Erie, etc., R. Co. v. Priest (1892), 131 Ind. 413, 417. [410] 13. [409] To recover damages for injury to person or character, each [410] person injured, in the very nature of such damages, must maintain a separate action, for the right to recover is of necessity a personal and individual right. The complaint is insufficient to show any joint cause of action in appellants, and is therefore not good on any possible theory for even nominal damages. 15 Ency. Pl. and Pr. 541; Swales v. Grubbs (1893), 6 Ind. App. 477, 480. 14. It is also stated that in any event the damages claimed by appellants cannot be recovered, because they are not the proximate result of the alleged fraudulent sale by appellee; that the alleged injury resulted from sales made by appellants to third persons, and not .from the sale by appellee to appellants; that the case falls within the rule of an intervening responsible agency cutting off the line of causation from the alleged original wrongdoer. In order that the injury may be chargeable to the alleged fraud, it is necessary that there be some connection between the effect and the cause, the injury and the wrong, but this connection need not necessarily be direct or immediate. It is sufficient if it is shown that but for the alleged wrong no injury would have occurred, and that the injury is one which might reasonably have been anticipated by the wrongdoer, though the precise injury complained of need not necessarily have been foreseen. Ohio, etc., R. Co. v. Trowbridge (1890), 126 Ind. 391, 395; Knouff v. City of Logansport (1901), 26 Ind. App. 202, 206, 84 Am. St. 292; Evansville, etc., R. Co. v. Allen (1905), 34 Ind. App. 636. 15. While there is an intervening responsible agent it will not operate to defeat a recovery from the original wrongdoer, if such intervening agency is one whose intervention should necessarily, or might reasonably, have been foreseen by such wrongdoer. Cleveland, etc., R. Co. v. Patterson (1906), 37 Ind. App. 617; Nickey v. Steuder (1905), 164 Ind. 189; Louisville, etc., R. Co. v. Nitsche (1890), 126 Ind. 229, 233, 9 L. R. A. 750, 22 Am. St. 582. [411] 14. [410] If a sale were actually made by a merchant under condi [411] tions before indicated, resulting in Ms arrest, conviction, fine and imprisonment, it would be but the natural and probable result of such sale, and just such a result as might reasonably have been anticipated by the wholesale dealer maMng such alleged fraudulent sale to a merchant. "We should not presume the nonenforeement of the law which penalizes the sale of intoxicating liquor without a license, and where the known purpose of the original purchase was that of a resale, though the sale by the merchant intervenes between the original purchase and the resultant damage, it cannot be said to break the line of causation between the original wrong and the injury resulting therefrom. But for the original wrong the injury would not have resulted from the last sale. 16. It is further contended that it was the duty of appellants to examine and ascertain" for themselves the properties of “temperance brew.” If a seller of goods or wares makes false and fraudulent representations as to existing and material facts relating to the qualities or conditions of such goods, knowing such representations to be false, or if he makes positive statements of facts to be true when he does not in fact know them to be true, and the purchaser, relying thereon, is induced to purchase, when he otherwise would not have done so, and the falsity of such representations is unknown to the purchaser, and there is nothing open and obvious to indicate their falsity, the purchaser may rely on the representations so made, without inspection or examination to ascertain the truth or falsity of such representations. Kramer v. Williamson (1893), 135 Ind. 655, 660; Culley v. Jones (1905), 164 Ind. 168; Manley v. Felty (1896), 146 Ind. 194, 198; Jones v. Hathaway (1881), 77 Ind. 14, 21. Applying the foregoing principles to this case, we hold 1hat the facts averred would not relieve appellee from liability on account of any duty on the «part of appellants to in [412] spect the goods and determine for themselves the extent of their intoxicating properties. 17. The fact that the alleged sale by appellee is a violation of a penal statute does not preclude the recovery of civil damages. 11. Appellee as a manufacturer, and a wholesale dealer in intoxicants, is not authorized to sell intoxicating liquors to persons who were not licensed retail dealers, druggists or wholesale dealers, without violating section one of the act of 1907 (Acts 1907 p. 689, §8351 Burns 1908). "Where, however, a wrong is committed for which the wrongdoer is liable both to a criminal prosecution and to a civil action for damages, exemplary damages cannot be assessed in the civil action, but the injured person may recover compensatory damages. Wabash, etc., Publishing God v. Crumrine (1890), 123 Ind. 89, 93; Tracy v. Hacket (1898), 19 Ind. App. 133, 65 Am. St. 398; Steward v. Maddox (1878), 63 Ind. 51; Koerner v. Oberly (1877), 56 Ind. 284, 26 Am. Rep. 34. Other questions are suggested in the briefs, but we have considered the principal questions enough to show that the complaint is insufficient for several reasons, and that the court did not err in sustaining the demurrer thereto. Judgment affirmed.