Case Title: Besett v. Basnett

Citation: 389 So. 2d 995

Docket Number: 57201

State: florida

Court: Florida Supreme Court

Date: 1980-10-23T00:00:00Z

Document:
389 So. 2d 995 (1980)
Merle E. BESETT, Irene D. Besett, and C. Joe Czerwinski, Petitioners,
v.
Robert K. BASNETT and Barbara L. Basnett, Respondents.
No. 57201.

Supreme Court of Florida.
October 23, 1980.
Rehearing Denied December 22, 1980.
*996 C. Guy Batsel and Leo Wotitzky of Wotitzky, Wotitzky, Johnson, Mandell & Batsel, Punta Gorda, and Charles J. Cheves, of Cheves & Rapkin, Venice, for petitioners.
Michael R. Karp of Wood, Whitesell & Karp, Sarasota, for respondents.
ALDERMAN, Justice.
The petitioners, Mr. and Mrs. Besett and Mr. Czerwinski, the appellees in the district court and the defendants in the trial court, seek review of the district court's decision in Basnett v. Besett, 371 So. 2d 705 (Fla.2d DCA 1979). In this case, the district court found that a fraudulent misrepresentation complaint stated a cause of action even though the plaintiffs failed to allege that they had investigated the truth of the defendants' misrepresentations. We accept jurisdiction on the basis of conflict with Potakar v. Hurtak, 82 So. 2d 502 (Fla. 1955), approve the decision of the district court, and hold that the plaintiffs' fraudulent misrepresentation complaint does state a cause of action.
The respondents, Mr. and Mrs. Basnett, the appellants in the district court and the plaintiffs in the trial court, were Connecticut residents interested in resettling in Florida. They obtained information about Redfish Lodge from its owners, the Besetts, and the Besetts' real estate broker, Czerwinski. As prospective buyers, they made several trips to Florida to inspect the lodge. They allege that the sellers misrepresented the size of the land offered for sale to be approximately 5.5 acres, when, in fact, the sellers knew it to be only 1.44 acres. They allege that the sellers knowingly misrepresented the amount of the lodge's business for 1976 to be $88,000 and that the roof on a building was brand new, when, in fact, the business income was substantially lower and the roof was not new and leaked. They also allege the defendants misrepresented to them the availability of additional land for expansion. Relying on these misrepresentations, which they allege were made to induce them to buy, they bought the lodge and the land.
Upon the motion of the defendants, the trial court, relying on Potakar v. Hurtak, dismissed the complaint for failing to state a cause of action. The district court reversed on the authority of its decision in Upledger v. Vilanor, Inc., 369 So. 2d 427 (Fla.2d DCA 1979), cert. denied, 378 So. 2d 350 (Fla. 1979). These cases represent the two divergent lines of authority on this issue which have developed in Florida.
Potakar v. Hurtak was also a fraudulent misrepresentation action. Potakar alleged that he had asked Hurtak if the previous lessees of a restaurant had made a profit, and Hurtak replied they had, even though he knew the previous lessees had lost money for several years. Potakar alleged the misrepresentations were made to defraud, deceive, and influence him to lease the business. In affirming the trial court's dismissal of the complaint for failure to state a cause of action, the court observed that there were "no allegations as to the past profits, no showing as to the right of the plaintiff to rely on past statement, no fact stated as to the diligence on the plaintiff's part in investigating, or failing to investigate such facts, or how he was prevented from investigating the past profits of the said business." 82 So. 2d  at 503. The Court looked to 23 Am.Jur., Fraud and Deceit § 155, at 960-61 (1940), for a statement of the general rule that "a person to whom false representations have been made is not entitled to relief because of them if he might readily have ascertained the truth by ordinary care and attention, and his failure to do so was the result of his own negligence." 82 So. 2d  at 503. The Court concluded that Potakar's complaint did not state a cause of action.
*997 The district court, in Upledger, reached a different result. In that case, Upledger, who was purchasing an apartment building from Vilanor, relied upon misrepresentations made by Vilanor concerning the amounts for which the apartments rented and the duration of the leases. Upledger admitted that he did not undertake an independent investigation, and he claimed that he would not have completed the purchase if he had known the true facts. In reversing the trial court's dismissal of Upledger's complaint, the district court, recognizing that there are conflicting lines of authority, concluded:
369 So. 2d  at 430.
The district court, we believe, made the correct choice. A person guilty of fraudulent misrepresentation should not be permitted to hide behind the doctrine of caveat emptor. The principle of law which we adopt is expressed in Sections 540 and 541 of Restatement (Second) of Torts (1976) as follows:
Comment:
Comment:
*998 A person guilty of fraud should not be permitted to use the law as his shield. Nor should the law encourage negligence. However, when the choice is between the two-fraud and negligence-negligence is less objectionable than fraud. Though one should not be inattentive to one's business affairs, the law should not permit an inattentive person to suffer loss at the hands of a misrepresenter. As the Michigan Supreme Court said many years ago:
Bristol v. Braidwood, 28 Mich. 191, 196 (1873).
We hold that a recipient may rely on the truth of a representation, even though its falsity could have been ascertained had he made an investigation, unless he knows the representation to be false or its falsity is obvious to him. We recede from Potakar v. Hurtak insofar as it is inconsistent with our present holding, and we disapprove all other decisions inconsistent with our holding in this case.
As was the case in Upledger, the petitioners in this case, as owners of the property being sold, had superior knowledge of its size, condition, and business income. As prospective purchasers, the respondents were justified in relying upon the representations that were made to them although they might have ascertained the falsity of the representations had they made an investigation. From the complaint, it does not appear that the respondents knew that the alleged misrepresentations were false, nor can we conclude from that complaint as a matter of law that the misrepresentations were obviously false.
Accordingly, we approve the decision of the district court.
It is so ordered.
SUNDBERG, C.J., and BOYD, OVERTON, ENGLAND and McDONALD, JJ., concur.
ADKINS, J., dissents.