Court Opinion

ID: 3316133
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:33:45.036823+00
Date Added: 2024-06-11T12:38:42.290482
License: Public Domain

The complaint sets forth that the defendant on October 6th, 1916, entered into an agreement by the terms of which he agreed to sell to the plaintiff his retail liquor business, liquors, license, stock and fixtures in a store conducted in Waterbury, for $16,000: $8,000 of which the plaintiff paid in cash, and $8,000 in a note on which he paid $5,446.02; that defendant falsely and fraudulently represented to plaintiff that the license and liquor business would be transferred to plaintiff, and in reliance thereon plaintiff was induced to make this purchase; that defendant refused and neglected to transfer the liquor business and license, and on or about October 1st, 1917, the plaintiff, as soon as he ascertained that these representations were untrue, demanded a return of the $16,000, and offered to release and discharge defendant from any agreement on his part to sell his saloon to him, but defendant refused and still refuses to accept said release and to pay back said sum. The plaintiff claimed (1) $16,000 damages; (2) that the agreement be cancelled; (3) that the note be delivered up and cancelled.
The answer denied the material allegations of the complaint, and made a special defense and counterclaim by the following averments: The defendant entered into an agreement as alleged in the complaint, which was partly oral and partly in writing, as in the exhibit attached. The written part was a conditional bill of sale of the stock of goods and fixtures for the consideration named, with an agreement by the plaintiff to replenish such portions of the stock as should be sold in the regular course of conduct of the liquor business, so that the stock should always be maintained as large as that transferred by the agreement; and the agreement *Page 699 
provided that when said sum should have been fully paid, the personal property should become the property of the plaintiff, and he be entitled to a bill of sale of the same.
The special defense and counterclaim further alleged that by the oral part of the agreement it was provided that the defendant should retain the license in his own name until the plaintiff had fully complied with the terms of the written agreement, or had paid the balance due for the transfer, and thereupon the license should be transferred to plaintiff; that defendant should furnish plaintiff with a written lease of the premises; that the plaintiff executed this agreement and also the lease, entered into possession of the premises under the lease, and of the fixtures, stock and business, and continued to conduct the liquor business in this place for about a year, and to make the payments agreed upon; that on or about October 6th, 1917, the plaintiff refused to continue payments on the note and lease, and demanded that defendant repay the moneys the plaintiff had advanced, and did not offer to return the goods to the value of $8,000 which defendant had delivered to him under the agreement, and which he had agreed but failed to keep replaced, and did not offer to surrender the lease and possession of the premises; that the plaintiff retained the stock, fixtures, lease and business for about a year, and used up stock of the value of several thousand dollars, without replacing the same as required by his agreement, and thereby waived his right to rescind the agreement, to have his note cancelled and to have the money paid by him returned.
The statement of the facts offered in proof by the defendant is wholly inadequate to fairly present the case as claimed by him. It is patently clear upon the record that all of the allegations of the special defense were supported by evidence offered by the defendant. *Page 700 
The appeal does not present the question of the correction of the finding, and we must take the statement of facts as the record presents it.
The statement of the evidence offered by the plaintiff is supported by the record, and supports the facts of the complaint. The finding specifically recites: "on said day [October 1st, 1917] the plaintiff also offered to release and discharge the defendant from any agreement on his part to sell him the said saloon, and the defendant refused to accept the said release and discharge. From the said first day of October, 1917, to and including the time of trial, the defendant still refused to accept said release and discharge of the said agreement of sale. . . . Because of the refusal and neglect of the defendant to transfer the said liquor business and license to the plaintiff, the plaintiff was unable to pay his rent and was evicted from the said saloon and said saloon premises. After the plaintiff had been evicted from the said saloon, the defendant again resold the said saloon and license to another purchaser."
These are the only facts claimed as tending to prove that plaintiff offered to restore defendant to the same position he was in prior to the sale. The complaint sets up an action for the cancellation of the agreement and note, together with incidental damages. The special defense was that plaintiff had not restored to defendant the consideration received by him under the agreement. A demurrer to this was overruled, the court observing that it stated a good defense, an obviously correct decision.
The court erroneously instructed the jury that "this action is to recover damages for a loss claimed by the plaintiff to have resulted from the false representations made by the defendant and upon which the plaintiff relied." In other words, that it was an action for fraudulent representations. The measure of damages in such *Page 701 
an action is the rule approved in Gustafson v. Rustemeyer,70 Conn. 125, 137, 39 A. 104: "It is now well settled that in actions for deceit or breach of warranty in sales of personalty or realty, the measure of damages is the difference between the actual value of the property at the time of the purchase, and its value if the property had been what it was represented or warranted to be." The court did not so instruct the jury, but gave them another rule of damages. Confusing the action for rescission with that of fraudulent representation, the court charged the jury: "The plaintiff, among other allegations in his complaint, avers that upon the discovery by him of the claimed fraud, and because of the claimed fraud, he offered to restore the defendant so nearly as could be done to the position occupied by the defendant prior to the negotiations and transactions mentioned in the complaint, and demanded that the defendant restore the plaintiff to the position which he occupied before such negotiations and transactions." This was a complete misconstruction of the complaint. That did not allege an offer to restore, but an offer "to release and discharge him [the defendant] from any agreement on his part to sell said saloon to him." The court was right in placing this allegation among the necessary elements, if this was a case of rescission, and the complaint would have been defective in failing to allege this. But the case submitted by the court was one for fraudulent representations.
Another part of the charge, set forth in assignment of errors two, assumes to detail the facts in evidence, and instructs the jury as follows: "It appears from the evidence that the defendant for more than twenty years was engaged in the retail liquor business and during that period was a licensed retail liquor dealer; that the plaintiff up to the time of the transaction mentioned in this suit was resident without this State; that at the *Page 702 
time of the alleged sale the defendant informed the plaintiff that the defendant was familiar with the methods of procuring liquor licenses in this State; that the plaintiff was not familiar with the laws relating to the procuring and transferring of the liquor licenses; that the defendant assumed the duty of transferring the license to the plaintiff; that the plaintiff paid defendant $750 for the license which he believed would issue and was thereafter informed was issued to him; that the plaintiff did not know that the license was not issued to him until about October 1st, 1917. If you find these facts proven from the evidence, and that the plaintiff was not equally in the wrong with the defendant in respect to the sale and transfer or want of sale and transfer of said license, he would be entitled to recover in this action."
If the action were one of fraudulent representations, then this statement left out of consideration the element of intent to defraud and the reliance upon these representations and the consequent damage. It is true that these elements were referred to in an earlier part of the charge, but in this, the only statement of the facts necessary to be proven to establish the plaintiff's case, they are omitted. If the case were one of fraudulent representations, the charge was wrong and must have been harmful; and if the case be one of rescission, the charge is likewise bad, for it left wholly out of consideration the duty of restoration on the part of the plaintiff, and this was a fact necessary of proof before recovery could be had.
The court instructed the jury that the plaintiff must rescind within a reasonable time after discovering the fraud. That, as applied to a case of rescission, was correct. The court further charged that in the circumstances of this case, what was a reasonable time was a question of fact for them. It appears unquestioned *Page 703 
that the plaintiff ascertained the fraud of the defendant October 1st, 1917. Thereafter, and with full knowledge of the fraud, on November 29th, 1917, he paid $25 to the defendant on the amount due under this agreement, and he paid the November rent. More than this, he continued in possession of the liquor store and conducted the liquor business there and sold in regular course of business the stock of goods in the store, and when the defendant obtained possession of the store on March 5th, 1918, upon execution under summary process (the plaintiff having resisted dispossession in three summary process actions), the larger part of the stock was gone and the business very much diminished. Under these circumstances the plaintiff cannot be held as matter of law to have rescinded his contract with reasonable promptness after discovery of the fraud. WaterCommissioners v. Robbins, 82 Conn. 623, 642, 74 A. 938. For five months after knowledge he continued to enjoy the fruits of his conduct. He should be held to have waived by his conduct his right to rescind.
The verdict of the jury necessarily found, as a part of the agreement of sale, the conditional bill of sale, and also that the agreement was induced by the fraudulent representations of the defendant. "The unquestioned rule of law is that a party seeking to avoid a contract on the ground of the fraud of the other party, must offer to return to him whatever he has received under the contract, and thus put him in the same condition in which he was when the contract was made." Disbrow v. Secor,58 Conn. 35, 38, 18 A. 981. The plaintiff had had placed in his possession, under this conditional sale, the stock of goods and fixtures, and the equipment of and in the liquor store, under agreement to maintain the stock as large as it was at the time of the transfer. The plaintiff continued to conduct the liquor business in this store for about a year, and on October 1st, 1917, *Page 704 
as the jury must have found, ascertained for the first time the fraud practiced upon him. He, on said day, demanded the return of the money he had paid the defendant, who refused to return it; and the finding is that the plaintiff also offered to release and discharge the defendant from any agreement on his part to sell the said saloon. The plaintiff did not offer to turn over the store, fixtures and stock to defendant, and to replenish the stock, or pay for the part of the stock he had depleted; and until he did that he failed to make out a case for rescission of his contract.
In charging as to the measure of damages, the court instructed the jury as follows: "If you find that the plaintiff is entitled to a verdict, then he is entitled to be replaced so far as it is possible to the position which he was in prior to the signing of this agreement with the defendant at the time of the purchase. In other words, . . . he is entitled to a return of the consideration with which he parted, which is represented by $8,000 in cash and whatever sum you find he has paid by way of monthly instalments. He is also entitled to interest from the date when the various amounts making up this sum were paid. As against this, he is bound to return to the defendant, in so far as it is possible for him to do so, the consideration which he, the plaintiff, received from the defendant, that is, the saloon property. In other words, he is bound to return to the defendant the saloon and liquor business which he purchased together with any profits made therein during the period of his occupancy." It is thus seen from this extract that the jury were nowhere told that the plaintiff must return the stock, replenished by the amount used, so that the stock returned should be as large as the stock purchased. The rule of damages, if the case had been one of rescission, was incorrectly given. At the conclusion of the charge the court gave this instruction: *Page 705 
"In the plaintiff's complaint, gentlemen, you will notice at the end of paragraph 6 — the paragraph headed, `Plaintiff claims, first, $16,000 damages; second, that the said agreement of purchase and sale be delivered up and cancelled; third, that the note referred to above be delivered up and cancelled, — you will have nothing to do with the paragraph headed so. It is only a question of whether or not the plaintiff shall recover damages or whether your verdict shall be for the defendant." With this constant confusion of the issues of damages for fraudulent representations and for a rescission and no adequate or proper rule of damages given, the jury were in no position to consider the case fairly or intelligently.
The court followed the plaintiff's requests to charge pretty largely, and this undoubtedly accounts for the contradictory features of the charge. The verdict was for $8,000 with interest at five per cent from October 6th, 1916, up to date. The verdict followed the submission of the case to the jury as one of damages. The judgment entered was not only for the recovery of the $8,000 damages in accordance with the verdict, but it adjudicated that the agreement entered into on October 6th, 1916, be cancelled and rescinded, and that the defendant deliver and cancel the note drawn by the plaintiff to the order of the defendant on October 6th, 1916. So far as appears on the record no adjudication was ever had of any thing except the element of damages.
Further, the facts upon which these equitable adjudications were made are not recited in the judgment. Their presence in the judgment is not made a part of the appeal, but the impropriety of their being in the judgment is manifest.
This does not exhaust the criticism which could properly be made of this record. But it does, as I *Page 706 
think, show that this defendant has not had a fair trial, and it may be that serious injustice has been done him.
The principal answer to these considerations has been that they are not made a part of the appeal. That is true of the great majority of these. But the court may of its own motion consider an error apparent upon the face of the record, notwithstanding the failure to assign it as a reason of appeal. It ought not to do this when it can see that the judgment is substantially just: it ought to do it when this does not appear and the error is manifest. Cole v. Jerman, 77 Conn. 374,382, 59 A. 425; State v. Gannon, 75 Conn. 206, 218,52 A. 727. In my opinion this case is within this rule.
But we do not need to rely upon this as the basis of sustaining the appeal. One of the errors assigned is the refusal of the court to set aside the verdict. There was no evidence before the jury on which to base a verdict for damages for fraud, as there was no testimony of the value of the property transferred as represented and as in fact; and if the case be regarded as one of rescission, there was no evidence of an offer of restoration by the plaintiff.
That part of the charge detailing the facts before the jury, to which we have referred and found erroneous, was assigned as error two. *Page 707