Zandstra v. Stewart

R. B. Burns, J.

In this case plaintiff-vendees accuse the defendant-vendors of fraud in connection with the sale of a dry-cleaning business. Plaintiffs’ allegations of fraud are: (1) that defendants never fulfilled their promise to instruct plaintiffs on how to run a dry-cleaning business; (2) that the machinery in the dry-cleaning establishment was not in good condition as warranted; (3) that defendants misrepresented weekly gross revenues from the business; (4) that defendants represented that the dry-cleaning establishment was the only one in town when in fact defendants had knowledge that a competitor intended to open a business in town. The findings of fact made by the trial court in its rejection of plaintiffs’ first three allegations of fraud are not "clearly erroneous”,¹ and support its decision. However, its findings of fact made in connection with the fourth allegation of fraud are clearly erroneous.

The court found that defendants obtained knowledge of the presence of a competitor dry cleaner in the community after the final closing with plaintiffs had taken place. This finding is supported only by the testimony of the obviously interested defendants. In opposition to this evidence stands the fact that defendants advertised their dry-cleaning establishment as the only one in town and the testimony of two disinterested witnesses that the defendants knew, prior to the sale, that a competitor would soon be opening its business.

The elements of fraud set out in A & A Asphalt Paving Co v Pontiac Speedway, Inc, 363 Mich 634, 639 (1961), are present in the instant case. Defendants falsely represented to plaintiffs that there was and would be no competition for them in the community while at the same time having knowledge of the eventuality of such competition.

Plaintiffs are entitled to damages for fraud based upon the difference between the actual value of the property at the time of making the contract and the value that it would have possessed if the representations made had been true. See D’Alessandro v Vander Hooning, 365 Mich 66, 73 (1961).

Reversed and remanded for determination of damages. Costs to plaintiffs.

Danhof, J., concurred.

1 See GCR 1963, 517.