Floyd v. Morgan ( 1940 )

1. A mistaken remedy is not a bar to an appropriate remedy.

2. It was not error to overrule the demurrers to the defendant H. D. Morgan's answer.

3. The allegations of conspiracy were not subject to demurrer as being conclusions.

4. A statement by one who has purchased an option, to the seller, that he intends to exercise it, will give rise to a cause of action, if the statement is false and fraudulent, is material, and is acted upon by the recipient to his injury.

DECIDED APRIL 25, 1940. REHEARING DENIED JUNE 17, 1940. A. J. Floyd sued H. D. Morgan and H. D. Morgan Jr., for damages of $7000 by alleged fraud, averring substantially as follows: On or about July 13, 1937, the plaintiff executed and delivered to H. D. Morgan an option which provided, in substance, that in consideration of $300 paid, and upon Morgan paying $6500 to Floyd on or before July 13, 1937, and assuming payment of approximately $500 due on a Dodge truck, the plaintiff would sell and transfer to Morgan all of his (Floyd's) contracts, rights, and leases with the Sinclair Refining Company and of warehouses and filling-stations in Floyd County, and would execute such transfers and assignments of such leases, contracts, and rights as he might have, including agency contracts, consignment contracts, and all other contracts, and to convey two Dodge trucks, being all the trucks owned by the plaintiff then being used in the delivery of gasoline and petroleum products in Floyd County. Before July 13, 1937, the plaintiff had been agent for Sinclair Refining Company in Floyd County and surrounding territories for six years, and had built up a demand for the products of said company in this territory. Before that time Morgan had sought to buy a half interest in said business, and a price of $2500 had been agreed upon, but thereafter the written agreement was rescinded by mutual agreement. Thereafter petitioner Floyd had numerous conversations with Morgan relative to the purchase of the agency, Morgan stating that he wanted it for his son, who was finishing school. Thereafter and before July 26, 1937, Morgan notified petitioner that he desired to exercise the option and buy the business. They went to the bank, and Morgan stated in the presence of an officer of the bank that he was buying the business and would need certain money to exercise the option, and was told by this officer that the bank would let him have the money. Acting upon the statement of Morgan, petitioner notified the Sinclair Refining Company that he was selling the business and desired to terminate his connection with the company, and requested that he be checked out as agent. In accordance with this request the company sent an auditor to make an inventory and check the books, for the purpose of relieving petitioner as agent. While said auditor was checking the books Morgan repeated his statement that he would exercise the option, and told the auditor that he would exercise it. Acting upon this statement, petitioner turned over to the auditor all the property and keys of the agency. That Morgan was present, and actually helped check the amount of gasoline and oil on hand at the time. During the taking of the inventory Morgan was present, and would pat his pockets and say that he was ready to exercise the option, implying that he had the money with which to do it. After petitioner had turned over the keys, Morgan took him to an automobile to straighten out the details, and while there Morgan stated that he would not pay petitioner; that petitioner was out of the business, and that he (Morgan) was in; and that it was not worth what he had agreed to pay. This was the first notice petitioner had that Morgan did not intend to comply with the agreement; and it was then too late to withdraw his resignation as agent of the company. Immediately following this and on the same day, H. D. Morgan Jr. was named agent for the company at Rome, and went into the place of business of petitioner. All of the acts done were for the purpose of defrauding petitioner and causing him to resign for the purpose of having one of the Morgans named agent at said place. The younger Morgan was just twenty-one years old, without business experience, and that all of the money incident to the transaction was furnished by Morgan Sr. All of the acts done were a part of a conspiracy between the defendants to obtain the agency for nothing, and it was obtained for nothing. All of the statements and acts by Morgan were for the purpose of deceiving and defrauding petitioner into believing that Morgan in good faith intended to exercise the option and to pay according to its terms; and petitioner was deceived by the statements and acts, or he would not have resigned as agent but would have continued to act. He had no conversation with the younger Morgan, but the younger Morgan accepted the benefits and acts of his father and ratified them and was responsible therefor. As soon as Morgan Jr. was named as agent, the father denied all liability under the option and refused payment. Petitioner had been agent for six years, and had built up a demand for the product of the refining company, and the reasonable value of his business was $7000.

H. D. Morgan Sr. demurred to the petition generally, and specially on the grounds that it set out no measure of damages; and that all the allegations of conspiracy were conclusions of the pleader. The other grounds of special demurrer are covered and merged in the questions raised by the general demurrer and by the two grounds just stated. H. D. Morgan Jr. demurred on the ground that no conspiracy was alleged. H. D. Morgan answered, denying the allegations of the petition, and averring, in substance, that he paid the plaintiff $300 for the option on the property but upon investigation found that the plaintiff was unable to deliver the property and that the company would not approve the transfer of the lease and franchise; that plaintiff never delivered to him any of such property, but had sold the same and otherwise placed himself in a position where he could not deliver the property. The plaintiff demurred to the answer of H. D. Morgan, on the ground that it was not alleged what property plaintiff did not have to deliver. Morgan filed a plea in abatement, on the ground that a suit was instituted by the plaintiff for a breach of the option contract, on the trial of which a nonsuit was granted, and that the plaintiff had neither paid the costs in said suit nor filed the affidavit required by law for recommencing his suit. The demurrer to the answer of Morgan was overruled. The demurrers of the defendants were sustained, and the action was dismissed. To these rulings plaintiff excepted. A demurrer to the plea in abatement was sustained, and to this ruling Morgan excepted by cross-bill. 1. It was not error to sustain the demurrer to the plea in abatement and dismiss it. It was held, in the case involving an alleged breach of the option contract, that the plaintiff was not entitled to recover. Floyd v. Morgan,60 Ga. App. 496 (4 S.E.2d 91). The above suit was simply the effort to pursue a mistaken remedy, and is not a bar to the present action. It is not a recommencing of the same suit. 20 C. J. 18, 21, §§ 12, 17. Board of Education of Glynn County v.Day, 128 Ga. 156, 167 (57 S.E. 359); Hawthorne v. Pope,51 Ga. App. 498, 500 (180 S.E. 920); Kennedy v. Manry,6 Ga. App. 816, 818 (66 S.E. 29); Puett v. Edwards, 17 Ga. App. 645, 647 (88 S.E. 36);Rowland v. Kell Co., 27 Ga. App. 107, 114 (107 S.E. 602);Sparks v. Fort, 29 Ga. App. 531, 537 (116 S.E. 227);Curry v. Washington National Insurance Co., 56 Ga. App. 809,811 (194 S.E. 825); Wm. W. Bierce Ltd. v. Hutchins,205 U.S. 340, 347 (27 Sup. Ct. 524, 51 L. ed. 828).

2. It was not error to overrule the demurrer to the answer of Morgan. It would not be material whether the plaintiff did or did not have the property described in the option. If the allegations of the petition are true, the defendant would be liable. If he was unwilling to buy under the option, his course would have been simply to refuse to buy, and the plaintiff's failure to be in position to deliver would not justify the acts alleged to have been committed by the defendant.

3. The allegations of conspiracy were good as against the demurrers of the defendants. Young v. Wilson, 183 Ga. 59 (187 S.E. 44).

4. The petition was not subject to demurrer in that it alleged no measure of damages. It sufficiently alleged what the plaintiff's business was, that it was lost by reason of the defendant's fraudulent conduct, and its reasonable value. It is not incumbent upon the plaintiff to allege the evidence by which he intends to establish his allegations.

5. The petition set forth a cause of action against both defendants. While it is true that generally there is no liability for a false promissory statement, it is also true that "When a promise is made with no intention of performance, and for the very purpose of accomplishing a fraud, it is a most apt and effectual means to that end, and the victim has a remedy by action or defense." Goodwin v. Horne, 60 N.H. 485. See CoralGables Cor. v. Hamilton, 168 Ga. 182 (147 S.E. 494), and cit.; notes in 68 A.L.R. 637, 91 A.L.R. 1295. Moreover, "the state of a man's mind is as much a fact as the state of his digestion." 3 Restatement of the Law of Torts, 69, § 530. "One who fraudulently misrepresents to another that he or a third person intends to do or not to do a particular thing is subject to a liability under the conditions stated in § 525." Id. § 530. "One who fraudulently makes a misrepresentation of fact, opinion,intention or law for the purpose of inducing another to act or refrain from action in reliance thereon in a business transaction is liable to the other for the harm caused to him by his justifiable reliance upon the misrepresentation." Id. 59, § 525. "A fact is material if (a) its existence or non-existence is a matter to which a reasonable man would attach importance in determining his choice or action in the transaction in question, or (b) the maker of the representation knows that its recipient is likely to regard that fact as important although a reasonable man would not so regard it." Id. 86, § 538. "The recipient in a business transaction of a fraudulent misrepresentation of intention is justified in relying thereon if the existence of the intention is material and the recipient has reason to believe that it will be carried out." Id. 101, § 544. Under comment (b) it is stated: "So, too, the holder of an option is justified in regarding the constantly reiterated statements of a prospective purchaser that he intends to buy property covered by the option as soon as minor questions are settled as sufficiently material to justify the holder in refraining from offering the option to other possible purchasers until its near expiration has made it impossible for him to dispose of it." It is clear, under the allegations of the petition, that the statement of intention was material, that the recipient had a right to rely on it, and that such reliance and action upon it resulted in injury to him. It would not be material that the plaintiff resigned, and that Morgan Jr. was appointed agent, if the practical result was the same as could have been accomplished by a transfer of the agency with the company's consent. It was error to sustain the demurrers and to dismiss the action.

Judgment reversed on the main bill of exceptions, andaffirmed on the cross-bill. Stephens, P. J., and Sutton, J.,concur.