Case Name: ZANDSTRA v. STEWART
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1972-09-27
Citations: 43 Mich. App. 36
Docket Number: Docket No. 12077
Parties: ZANDSTRA v STEWART
Judges: Before: J. H. Gillis, P. J., and R. B. Burns and Danhof, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 43
Pages: 36–44

Head Matter:
ZANDSTRA v STEWART
Opinion op the Court
1. Fraud — Evidence—Findings op Fact — Appeal and Error.
A trial court’s findings of fact rejecting plaintiffs’ allegation of fraud were clearly erroneous where the plaintiffs offered into evidence: (1) that defendants had advertised their dry-cleaning establishment as the only one in town, and (2) the testimony of two disinterested witnesses that the defendants knew a competitor would soon be opening, while defendants’ claim of lack of knowledge of such competition prior to sale of the business was supported only by the testimony of the obviously interested defendants.
2. Fraud — Misrepresentations—Measure op Damages.
The measure of damages in a suit by a vendee defrauded when he entered into a contract of sale of a business because of misrepresentation of material facts is the difference between the actual value of the property at the time of making the contract and the value it would have possessed had the representations been true.
Dissent by J. H. Gillis, P. J.
3. Fraud — Vendor and Purchaser — Duty to Inform — Rumors.
A vendor, after advertising his dry-cleaning business as the only one in town, had no duty to inform the prospective purchaser of rumors of impending competition where the rumors were mere speculation with little orno basis in fact.
4. Appeal and Error — Findings op Fact.
It is not the function of the Court of Appeals to substitute its judgment for that of the trial court on issues of fact unless the trial court’s findings are contrary to the clear preponderance of the evidence.
References for Points in Headnotes
[1, 4] 37 Am Jur 2d, Fraud and Deceit §§ 486, 487.
37 Am Jur 2d, Fraud and Deceit § 342.
37 Am Jur 2d, Fraud and Deceit § 146 et seq.
Appeal from Kent, John T. Letts, J.
Submitted Division 3 April 11, 1972, at Grand Rapids.
(Docket No. 12077.)
Decided September 27, 1972.
Complaint by Gerrit Zandstra and Sena Zandstra against Billie G. Stewart and Evelyn J. Stewart for damages sustained because of misrepresentations inducing purchase of a dry-cleaning business. Judgment for defendants. Plaintiffs appeal.
Reversed and remandéd with instructions.
Russell & Ward, for plaintiffs.
Thomas D. Anderson, Jr., for defendants.
Before: J. H. Gillis, P. J., and R. B. Burns and Danhof, JJ.

Opinion:
R. B. Burns, J.
In this case plaintiff-vendees accuse the defendant-vendors of fraud in connection with the sale of a dry-cleaning business. Plaintiffs' allegations of fraud are: (1) that defendants never fulfilled their promise to instruct plaintiffs on how to run a dry-cleaning business; (2) that the machinery in the dry-cleaning establishment was not in good condition as warranted; (3) that defendants misrepresented weekly gross revenues from the business; (4) that defendants represented that the dry-cleaning establishment was the only one in town when in fact defendants had knowledge that a competitor intended to open a business in town. The findings of fact made by the trial court in its rejection of plaintiffs' first three allegations of fraud are not "clearly erroneous", and support its decision. However, its findings of fact made in connection with the fourth allegation of fraud are clearly erroneous.
The court found that defendants obtained knowledge of the presence of a competitor dry cleaner in the community after the final closing with plaintiffs had taken place. This finding is supported only by the testimony of the obviously interested defendants. In opposition to this evidence stands the fact that defendants advertised their dry-cleaning establishment as the only one in town and the testimony of two disinterested witnesses that the defendants knew, prior to the sale, that a competitor would soon be opening its business.
The elements of fraud set out in A & A Asphalt Paving Co v Pontiac Speedway, Inc, 363 Mich 634, 639 (1961), are present in the instant case. Defendants falsely represented to plaintiffs that there was and would be no competition for them in the community while at the same time having knowledge of the eventuality of such competition.
Plaintiffs are entitled to damages for fraud based upon the difference between the actual value of the property at the time of making the contract and the value that it would have possessed if the representations made had been true. See D'Alessandro v Vander Hooning, 365 Mich 66, 73 (1961).
Reversed and remanded for determination of damages. Costs to plaintiffs.
Danhof, J., concurred.
See GCR 1963, 517.