Swoboda v. Rubin

The following opinion was filed March 4, 1919: Owen, J. In the case of Karls v. Drake, 168 Wis. 372, 170 N. W. 248, recently decided by this court, following Miranovitz v. Gee, 163 Wis. 246, 157 N. W. 790, it was held that, in the absence of an express intent to defraud, the determination of whether or not, certain representations are statements of facts or of opinion depends upon whether or not the person to .whom the representations are made may, under all the facts and circumstances of the case, including such person’s capacity or want of capacity, rely upon them. Where the person to whom they are made may rely upon them, they are held to be statements of fact. Where the per [167] son to whom they are made may not rely upon.them without being guilty of a want of ordinary care and prudence, they are denominated opinions. It was also there held that whenever there is any doubt as to whether a statement.of this kind is the mere expression of an opinion or that of a fact, it must be determined by the jury or court. See, also, upon this point, J. H. Clark Co. v. Rice, 127 Wis. 451, at page 465, 106 N. W. 231, and cases there cited. It was also held in Karls v. Drake, supra, that a finding of the jury to the effect that, under all the circumstances of the case, the plaintiff was. justified in relying upon the representations made, was equivalent to a finding that the statement or representation made was a representation of a fact. In the instant case the special verdict of the jury finds in plaintiff’s favor all facts essential to his recovery, and it remains but to ascertain whether the findings of the jury are sustained by the evidence. The trial court was of the opinion that the finding of the jury to the effect that the plaintiff did not have opportunity to observe and learn the condition and value of the machinery of the Racine Underwear Mills and to find out for himself whether or not the business of the Racine Underwear Mills was profitable, was not sustained by the evidence. It appears from its opinion that it was induced to this conclusion by reason of the fact that Swoboda participated in the taking of the inventory, and that he had plenty of opportunity between that time and October 22d, when he parted with his money, to advise himself concerning the value of the assists; of the concern and upon the question of whether the business thereof was profitable, or otherwise. In the argument respondents’ attorney contended that if there ever was a case where a purchaser had an opportunity to advise himself concerning the value of that which he was purchasing, this was the case. So far as the element of time was concerned, the contention is conceded. But opportunity to ascertain the truth of representations such as those forming the basis of [168] this action contemplates something besides the element of time. It contemplates competency on the part of the purchaser to form an intelligent judgment of his own upon such questions. “It is the settled doctrine of English and American law that the purchaser is required to notice such qualities of the goods purchased as are reasonably supposed to be within the reach of his observation and judgment.” Bouv. Law Diet. (Rawle’s 3d Rev.) 438. In formulating the rule in Miranovitz v. Gee, supra, by which certain representations are determined to be statements of fact or expressions of opinion, the capacity or want of capacity of the person relying upon them is made an essential consideration. It is true that the purchaser must exercise such faculties as he has for his protection. He cannot close his eyes to the obvious, nor stifle his judgment of matters within his capacity to judge. In fact, he must be alert, careful, and cautious. He must employ his powers of observation and apply his experience and knowledge in his efforts to ascertain the facts and to form an intelligent judgment upon the character and value of the subject of his purchase. But one who is not equipped to form an intelligent judgment with reference thereto, or to deal at arm’s length with his adversary, is not forbidden to do business. In many of the transactions of life purchasers must rely upon the representations of sellers concerning value, for we all at times indulge in purchases concerning the values of which we are wholly uninformed. If under such circumstances sellers were not held to their representations concerning values, the law would license deceit and reward dishonesty. Swoboda was a man who had never had any experience with machinery, especially knitting machinery. He was equally innocent concerning the knitting or underwear business. He was utterly without experience concerning books of account, and such examinations as he could have made of the books of the concern would have revealed nothing to him. [169] He had no knowledge upon those matters and, consequently, could exercise no judgment with reference thereto. This was known to the defendants. Because of Swoboda’s lack of knowledge upon the subjects of these representations the jury was entirely justified in finding as it did, and its verdict should not have been disturbed. Our conclusion is that the trial court erroneously interfered with the verdict of the jury, and that it should have rendered judgment in favor of the plaintiff for such damages as were justified by the evidence. We do not consider the intervention of the new corporation as changing the substantial nature of the transaction, which was a sale to Swoboda by Rubin and Braun of a one-third interest in the property transferred. We say this because the trial court in its opinion intimated that the result might have been different if the action had been by the corporation instead of the plaintiff. The direct result of this transaction was the defrauding of Swoboda by Rubin and Braun. Their destination was as certainly reached, notwithstanding their circuitous route, as though the sale had been made direct to him and not through the intervention of a corporation. It is vigorously contended that the evidence does not sustain the damages fixed by the jury. Swoboda should recover the difference between the market value of the property transferred and its. value as represented. Whatever was transferred was represented to be of the value of $23,350. We know of only two items entering into this total, namely, machinery inventoried at $15,260 and yarn inventoried at $4,390. A copy of the inventory was used upon the trial, but not returned to this court, so that we are unable to ascertain all the items that went to make up the total. One of plaintiff’s witnesses testified that the machinery, valued at $15,260, was not worth more than $5,000. If believed by the jury, and it apparently was, this justifies a reduction of $10,260 from the inventoried price. We also gather, in a [170] general way, from the record that some value was placed on good will. Whatever that value was, the jury was entitled to disregard it altogether, and evidently did. Appellant’s attorneys also contend that debts of the old concern were paid by the new concern. We cannot verify this by the record. There were some, eleven checks offered, as exhibits, in evidence which, it would appear, were for the payment of the debts of the old concern. These exhibits, however, were not returned with the record, and we cannot tell whether these were checks of the new corporation or Rubin’s individual checks. Because of these uncertainties appearing from the record, and because -the trial court has not passed upon the question, we feel that we are not in a position to pass upon the question as to whether the verdict of the jury upon the question of damages is supported by the evidence, and that the case should be remanded with instructions to enter judgment-in favor of the plaintiff for such amount as may be sustained by the evidence, not exceeding, of course, the amount found by the jury. By the Court. — Judgment reversed, and cause remanded with directions to enter judgment in favor of the plaintiff for such damages as are sustained by the evidence, not exceeding the amount found by the jury. A motion for a rehearing was denied, with $25 costs, on April 29, 1919.