Court Opinion

ID: 5656770
Source: CourtListenerOpinion
Date Created: 2022-01-11 23:59:48.128439+00
Date Added: 2024-06-11T08:38:50.458101
License: Public Domain

MOORE, P. J.
I dissent. The statements made on July 18,1950, by Mrs. Leary to induce the purchase of her business as testified by Mrs. Ross are as follows: That her business was a solid, terrific concern; she was drawing $125 per week out of it; she had brought into the business some operators who had brought with them a great following, a great volume of business which had really built up the business; the operators are getting 75 per cent and are using their own supplies ; they will stay with you and carry on the business.
If no more had been said and respondents had done nothing but rely upon the representations, their recovery would be the logical conclusion from the findings that such statements had been the sole inducement to make the purchase. But such was not the fact. As appellant completed her sales talk, Mrs. Ross said she and Mr. Baker would like to see some figures on all she had to say; would like to see some books, some figures which appellant promised to get. Thereafter, the latter gave respondents a financial statement of the busi*110ness and the three had a meeting “np in Hollywood Boulevard. ’ ’ Mrs. Leary showed some figures which respondents “felt they didn’t pertain to the business that she was trying to sell us at the time. The figures were at a loss and we really didn’t even discuss them too much. We told them: ‘Well this is not the right thing,’ and she said: ‘Well, I’ll try and get the other figures from the accountant as soon as he has them. ’ ” Thereupon, appellant showed them her financial statement of her business which respondents did not “take too much notice of . . . because it wasn’t what she was talking about when she was selling us the business . . . this is at a loss; the business she was selling us was making a profit.” She made excuses for the financial statement, saying it did not contain the proper figures. Mrs. Boss took notice of the loss of $3,000 by the business as reflected in the financial statement, showed it to Union Bank when she attempted to borrow money to complete the payments to Mrs. Leary, but the bank refused to make a loan although Mr. Baker was one of its customers. That financial statement was the only document respondents ever had before purchasing the business. Despite the losses there indicated, respondents thought that by reason of Mr. Baker’s experience in the line they could make a go of it.
The transaction was not consummated until August 15th. In the meantime, both Mrs. Boss and Mr. Baker—a man experienced in operating such businesses as that of Mrs. Leary —proceeded to make investigations of the enterprise and of appellant’s representations. Not only did they learn from her financial statement that her business had been losing money, but they learned also that it had no standing with the bank. The investigations they commenced would have led them into a full knowledge of all facts appertaining to Mrs. Leary’s operations. But they abandoned their undertaking in the very heat of battle. They did not rely upon the statements of Mrs. Leary. It was 27 days from the first interview until the purchase was completed during which they either completed their investigations or abandoned them on their own motion. Therefore, they did not rely upon app ellant’s statements.
Under such circumstances one who claims to have been deceived by his adversary “cannot be allowed to later claim that he acted upon the representations, even though he voluntarily abandoned his investigation before it was completed. ’ ’ (Hefferan v. Freebairn, 34 Cal.2d 715, 720 [214 P.2d 386].) *111The facts for which respondents searched were not of a technical nature. Whether the business was a moneymaker could have been ascertained by a glimpse of her cashbook showing receipts and disbursements. While the financial statement showed losses and no gains, one demand upon appellant would have brought forth the complete record of the operations or an admission that she had kept no books showing the amount of profits she had earned.
Likewise, it is true that after Mrs. Leary told them she had imported some operators who would stay and help them run the business, they asked her to allow them to interview the operators; they “would like to come there and see them during the day.” When she gave them the tame excuse that “the best thing is not to see them,” respondents cheerfully gave up their quest to interview the employees.
It is a rule of wide renown that a party may not complain of misrepresentations regarding matters (1) which he has investigated or (2) when he is afforded the means of investigation and commences to make inquiries which, if efficiently prosecuted, would have resulted in proving the falsity of the representations; or (3) when the representation is in regard to generalities, equally within the knowledge of the parties, or (4) when the knowledge is equally within the reach of both parties.” (Dow v. Swain, 125 Cal. 674, 681 [58 P. 271].) Under the first and second rules, respondents are not entitled to prevail and the authority cited is still the law of California. In the broad field of industry, trade and commerce, men must have some freedom of action. When a vendor deals at arm’s length with his prospective vendee and the latter does not rely upon the vendor’s representations with respect to a commodity offered for sale or exchange, but investigates to his satisfaction, he has thereby anticipated and arbitrated his own grievances and the courts are powerless to afford him a remedy.
The judgment should be reversed.
A petition for a rehearing was denied July 24,1953. Moore, P. J., was of the opinion that the petition should be granted. Appellant’s petition for a hearing by the Supreme Court was denied September 4, 1953.