Court Opinion

ID: 9884960
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:26:18.71368+00
Date Added: 2024-06-11T07:48:42.862263
License: Public Domain

MR JUSTICE GOLDENHERSH, dissenting: I respectfully dissent from the majority opinion. I would reverse the judgment of the appellate court and affirm the circuit court. Neither the appellate court nor the majority cite any authority in support of their holding that defendant’s alleged fraud entitled plaintiff to rescind the contract and for the very good reason that none exists. In reversing the judgment of the trial court both the appellate court and the majority have failed to observe the long-established rule that findings of fact by the trial court sitting without a jury will not be disturbed unless they are against the manifest weight of the evidence. The trial court found, and in my opinion the record supports the finding, “That there was no misrepresentation by the defendant, STEPHEN H. ROBIN, to the plaintiff, HERBERT SHER, or to anyone else, concerning the gross margin of profit of NORTH SHORE SPEED AND AUTO, INC., for the fiscal period ended March 31, 1966, or for any other period; that the gross margin of profit of said business, as disclosed by the financial statements admitted in evidence as plaintiff’s Exhibit 7, was substantially correct and was not contravened by any other credible evidence, but was supported by other credible evidence.” Further, the record fails to support the appellate court’s finding that the plaintiff in any way relied on the so-called misrepresentation and demonstrates clearly that, assuming arguendo such reliance, plaintiff had no right to rely thereon. The rule applicable to the facts in this case is stated in Schmidt v. Landfield, 20 Ill.2d 89, wherein at page 93 the court said: “Even if it is assumed that the plaintiffs in fact relied upon the misinformation which had been previously given them by defendant, it cannot be said that such reliance was justified so as to sustain the cause of action sought to be alleged here. As a general rule one who is guilty of fraudulent misrepresentation cannot interpose a defense that the person defrauded was negligent in failing to discover the truth. (Roda v. Berko, 401 Ill. 335.) The general rule is subject to the qualification, however, that the party seeking relief had a right to rely upon the representation made. (Morel v. Masalski, 333 Ill. 41.) This court has pointed out accordingly that ‘In all cases where it is sought to hold one hable for false representations, the question necessarily arises, whether, under all circumstances, the plaintiff had a right to rely upon them. In determining this question, the representations must be viewed in the light of all the facts of which the plaintiff had actual notice, and also of such as he might have availed himself by the exercise of ordinary prudence.’ (Dillman v. Nadlehoffer, 119 Ill. 567, 577.) The rule is well established that a party is not justified in relying on representations made when he has ample opportunity to ascertain the truth of the representations before he acts. When he is afforded the opportunity of knowing the truth of the representations he is chargeable with knowledge; and if he does not avail himself of the means of knowledge open to him he cannot be heard to say he was deceived by misrepres entations. ’ ’ The record shows that in at least one discussion with the defendant, plaintiff was accompanied by a friend who was a licensed attorney (not practicing) with “an accounting background,” and who discussed with defendant the markup on various types of merchandise. At that time both plaintiff and his friend had examined a financial statement prepared by defendant’s accountant which contained a balance sheet as of March 31, 1966, a statement of income and retained eaenings for the year, and a statement of earnings for the quarter ending on the same date. The statement bore the following comment: “The following statements were prepared from the books and records without audit or verification and therefore are presented without opinion.” The record reflects that plaintiff had a degree in chemical engineering and a master’s degree in business administration and management. Prior to entering into this transaction he had owned and operated an office service business and a mail order business which sold household goods. In the transaction involved in this case he purchased all of the outstanding capital stock of the corporation. The contract between plaintiff and defendant contained a number of provisions which could affect the final purchase price, such as the amount of prepaid advertising and the value of the current inventory. It also contained warranties concerning outstanding capital stock and liabilities and provided for the escrow of $14,700 to pay any liabilities covered by defendant’s warranty. It contained no language in any manner relevant to the markup on merchandise sold. The contract provided for delivery to the plaintiff of all of the outstanding shares of the capital stock of the corporation, and the record contains nothing which indicates that plaintiff did not, as is customary in this type of transaction, come into possession of the corporate books and records. There is nothing in the record to indicate why he and his adviser did not examine the corporate books and records to ascertain whether the statement upon which he claims to have relied truly reflected the sales and markup. Obviously he had the opportunity to do so and the caveat in the financial statement would certainly suggest the advisability of that precaution. In concluding that there was misrepresentation on the part of the defendant the appellate court appears to have relied upon the testimony of Theodore Perry. A fair reading of his testimony does not support the finding that defendant misrepresented the markup on sales, and to the extent that it is based upon anything but Perry’s conclusions, is corroborative of defendant’s position. Nothing in the record supports the statement in the appellate court’s opinion that “it appears indisputable that defendant sought to defraud either defendant or the federal government, and understandably, it has not been argued in this court that the income tax return was false.” The majority apparently relies on so-called impeachment of the defendant by means of a pretrial deposition and his inability to point out in the corporate books and records any instances of purchases of “close-out” merchandise. These matters relate to the defendant’s credibility, which was for the trial court to determine, and do not support the majority’s conclusion that “considering the entire record, the appellate court did not err in reversing the judgment ***.” In my opinion, the plaintiff failed to prove a fradulent misrepresentation and assuming, arguendo, that he did, he failed to prove a legal basis for reliance thereon, and the record proves beyond question the availability of the opportunity and means to ascertain the truth, and plaintiff’s unexplained failure to do so.