Rice v. Levinger , 141 Or. 413 ( 1932 )

Action by E.L. Rice, doing business under the name of E.L. Rice Company, against Louis Levinger. From the decree entered, plaintiff appeals.

AFFIRMED. The complaint, after averring a contract whereby the plaintiff sold to the defendant merchandise of the agreed value of $284, and nonpayment, demands judgment for that sum of money. The contract, a copy of which accompanies the complaint, referring to the plaintiff, provides: "Any changes, to be binding on us, must be in writing on the original order accepted by us. Verbal agreements with salesmen are not binding." Referring to the defendant, it recites: "We have read this order carefully and find same contains all the conditions agreed upon." The answer admits that the parties attached their signatures to the aforementioned contract, but, as the basis for equitable relief enjoining the maintenance of the action at law, averred that the plaintiff's salesman, who induced the defendant to sign the contract, fraudulently promised the defendant the exclusive right to sell in the city of Baker the merchandise (costume jewelry) manufactured by the plaintiff. The answer avers the materiality of this representation, the defendant's reliance upon it and its falsity. It further avers that in July, 1930, shortly after the defendant had received the merchandise, he discovered that the salesman who made the above alleged promise had sold a similar lot of costume jewelry to one of the defendant's competitors in Baker, and had made him a like promise of exclusive sales rights. The answer alleges that upon this discovery of the truth the defendant immediately notified the plaintiff of his election to rescind the contract; that he requested the plaintiff to state the disposition he desired made of the merchandise; that the plaintiff refused to do so; and concludes with an averment that the defendant is willing to remit for the portion of the jewelry which he sold, and to return the unsold portion. The reply admits that the plaintiff, when he sold the jewelry to the defendant, sold a similar quantity under a like contract to one of the defendant's competitors in the city of Baker. It denies knowledge of whether plaintiff's salesman promised the defendant the exclusive right to sell the plaintiff's merchandise in Baker. All remaining averments of the answer are denied, except the plaintiff admits that the defendant sought a rescission of the contract. Continuing, the reply alleges that when the defendant signed the contract he knew that no agreement with the plaintiff's salesman would bind the plaintiff unless endorsed upon the writing; that when the plaintiff shipped the merchandise and paid his salesman his commission he was ignorant of the alleged parol agreement; and that the defendant continued to deal with the merchandise as his own after he made his alleged discovery of the truth.

At the conclusion of the trial, the court entered a decree enjoining the maintenance of the law action and requiring the defendant to pay to the plaintiff the sum of $50.35, being the invoice value of the jewelry which the defendant had sold before the discovery of the truth, and that he deliver to the plaintiff's attorney the unsold portion. The plaintiff appealed. The principal contention urged by the plaintiff is that the circuit court erred when it overruled the plaintiff's demurrer to the new matter alleged in the answer, and also when it found that the plaintiff's salesman had promised the defendant the exclusive right to sell in the city of Baker costume jewelry manufactured by the plaintiff. It will be recalled that the plaintiff's pleadings admitted that he had made a similar sale to one of the defendant's competitors, and claimed ignorance of whether the salesman had promised the defendant an exclusive sales right. Upon the trial, the defendant and his witnesses fully supported the averments of the answer with proof. The plaintiff did not contradict this testimony. Thus, the facts are that a false promise, which no one intended to perform, induced the defendant to sign the contract which he now seeks to rescind by reason of the aforementioned fraud. This court recently considered a contention similar to the plaintiff's in Sharkey v. Burlingame, 131 Or. 185 (282 P. 546). After bestowing upon the matter much consideration, we there held that the customary recitals in sales agreements which are intended to exclude evidence that the vendor's fraudulent representations induced the purchaser to enter into the bargain were in contravention of public policy, and, therefore, ineffective. We adhere to the laws as there stated and, hence, it follows that these contentions reveal no error.

The plaintiff contends that a promise of an exclusive sales right affects only a part of the consideration, and that, hence, its breach affords no right to a rescission. He cites TichnorBros. v. Evans, 92 Vt. 278 (102 A. 1031, L.R.A. 1918C, 1025). That was an action brought to recover a balance due upon an account. Rescission was not plead and was not involved. The buyer, more than a year after the sale, discovered that the plaintiff had breached the right of exclusive sale, but said nothing about it for the next two years. Since the articles sold were postal card sets, we assume that a restoration of the status quo would have been impossible. In the instant case, the defendant, a druggist, testified that he would not have considered the plaintiff's merchandise, involving, as it did, the installation of a jewelry department in his drug store, had not the plaintiff's representative promised an exclusive sales right. The contract required the plaintiff to supply the defendant with credit checks for distribution in Baker which were peculiarly adapted to an exclusive sales right in a small city. The defendant is in a position to restore the status quo and offered to do so immediately upon discovery of the fraud. His offer is renewed in his answer and was repeated during the trial. We conclude that the rescission sanctioned in the decree is justified; Williston on Sales (2d Ed.) § 467h.

We have carefully considered the other contentions urged by the plaintiff. In our opinion, they present nothing more than issues of fact. We have carefully examined the evidence and have been brought to the conclusion that these contentions lack merit.

The decree of the circuit court is affirmed.

RAND, C.J., BEAN and KELLY, JJ., concur.