Mason v. Thornton , 74 Ark. 46 ( 1905 )

McCuLRdciT, J.

It is urged on behalf of appellant that the complaint states two causes of action, one upon contract of warranty and another for fraud and deceit in misrepresenting the price of the goods sold; that the causes can not be joined in one action; and that the motion of appellant to require an election by plaintiff should have been granted. The complaint is somewhat -ambiguous in terms, but it does not state two separate, causes of action. It states a good cause of action for fraud and deceit, and. should have been treated as such. Fordyce v. Nix, 58 Ark. 136; Ross v. Mather, 51 N. Y. 181; New Orleans, etc. Rd. Co. v. Hurst, 36 Miss. 660; Supervisors v. Decker, 30 Wis. 624.

We think the learned judge who heard the case below misconstrued the contract of the parties, and misinterpreted the character of the action based thereon. Under the contract sued on, there was no warranty by appellant of the prices of the goods.'Warranties in contracts for sales must be either as to title, quality or quantity of the things sold. The contract fixes the prices, or furnishes some basis for its ascertainment. Under this contract, the criterion by which the parties agreed that the prices should be fixed was the marks upon the goods indicating the cost. The recital in the contract was a representation by appellant, the seller, that the marks on the goods truly noted the prices which he paid for them in'Kansas City, St. Louis, or Chicago; and if those representations, or the representations alleged to have been made by him verbally to the purchasers and in his letters, were false and fraudulent, and made with intent to deceive, he is liable.

This court in the recent case of Louisiana Molasses Co. v. Fort Smith Wholesale Gro. Co., 73 Ark. 542, in defining the essential elements of liability for fraudulent misrepresentation, said: “In such case the essentials are that representations shall not only be false, but fraudulent. They must be made by one who either knows them to be false, or else, not knowing, asserts them to be true, and made with the intent to have the other party act upon them to his injury, and such must be their effect.” Citing Yeates v. Pryor, 11 Ark. 58; Hanger v. Evins, 38 Ark. 339; Johnson v. St. Louis Butchers’ Supply Co., 60 Ark. 387.

To this definition should be added, as applicable to the facts of this case, the further statement that, if the marks on the goods were fraudulently altered by the seller for the purpose of deceiving and cheating the purchaser, or if the seller knew that the marks did not correctly show the actual cost of the goods, and falsely and fraudulently and with intent to deceive represented to the purchaser that they did so correctly show the cost, and if the purchaser, relying thereon, was deceived thereby to his injury, the seller is liable.

The court erred in its instructions to the jury numbered three and four, whereby the jury were told that they might return a verdict for plaintiffs if they found that the goods were invoiced at a higher price than the actual cost to defendant in Kansas City, St. Louis and Chicago, without regard to the question of fraud by defendant. The instructions should have used language following the test herein defined as to liability for fraud and deceit.

Numerous instructions were asked by appellant and refused by the court, some of which embodied the law as herein declared, and should have been given, but we do not deem it important to discuss them here. However, as the case must be tried again, we indicate that the instruction asked by appellant which stated the law to be that if the purchaser could have inspected the goods and cost mark, so as to determine whether or not said representations were true, it was his duty to do so, and, failing in this particular, he can not complain,, does not correctly present the law as applicable to this case. Nor is another instruction asked by appellant correct wherein the law is stated to be that, if the purchaser had notice that any of the goods were marked too high, or any notice sufficient to excite the attention of a man of ordinary prudence and call for inquiry which would lead to the fact that the goods were marked too high, he was barred thereby, and can not complain. This is not the law as applicable to the facts of this case, for it makes the right of the purchaser to recover for the fraud and deceit of the seller depend upon his care and negligence in avoiding the imposition in a matter peculiarly within the knowledge of the seller. If appellant, with design to cheat and defraud appellee, changed the marks on the goods, or, knowing that the ma'rks had been changed, or that they did not correctly state the cost of the goods, falsely represented to appellees that the marks -did correctly show the cost of-the goods, and appellees relied thereon, then appellant is liable, even though appellees by the exercise of proper diligence could have discovered the imposition. They had the right to rely upon the truth of the representation made by appellant; and if they did so rely upon it, and have been injured, they can recover. “The very representations relied upon may have caused the party to desist from inquiring and neglect his means of information, and it does not rest with him who made them to say that their falsity might have been ascertained, and that it was wrong to credit them.” Graham v. Thompson, 55 Ark. 299; Gammill v. Johnson, 47 Ark. 335; 14 Am. & Eng. Enc. Law, pp. 120 and 123, and cases cited; Chamberlain v. Fuller, 59 Vermont, 256; Hale v. Philbrick, 47 Iowa, 217.

Reversed and remanded for a new trial.