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Lawskills.com Georgia Caselaw
KRYS et al. v. HENDERSON.
33903.
Suit on notes; from Fulton Civil Court-- Judge Lowe. October 15, 1951.
TOWNSEND, J.
Where no fiduciary relationship exists between a vendor and a purchaser, the latter may not blindly rely upon general statements as to the value of the property when means of knowledge are at hand and equally available to both parties, and, after failing to take any precautions whatever to ascertain whether the representations as to value have a basis in fact, complain thereafter that he has been deceived thereby.
J. R. Henderson filed suit against Albert S. Krys, George M. Green, C. H. Cullens, and Charlie Jones jointly on two notes dated May 23, 1949, alleging a balance due thereon of $667.80 exclusive of interest and attorney fees. Krys, Jones, and Cullens filed an answer, which was stricken on demurrer with leave to amend. The defendants within the extension of time permitted for amendment then struck their original answer and filed an amended one, denying the indebtedness and showing that on May 23, 1949, the plaintiff and the defendants entered into an agreement by which the defendants purchased a certain business known as the University Bakery for a total consideration of $3500; that this consideration "was predicated on the fact that the gross sales of the business for the preceding twelve months totaled at least $24,000"; that the plaintiff further stated that the business was highly prosperous and expanding and increasing in volume all the time, and that, on the basis of an annual gross income of $24,000, it was worth $3500; that the plaintiff made these statements for the purpose of consummating the sale, and the defendants acted on them to their hurt, because, if they had known the representation to be false, they would not have purchased the business. The defendants then pleaded a partial failure of consideration based on a pro rata formula of the amount owing in relation to a figure of $15,000 gross sales, which they alleged to be the gross sales for the twelve-month period in which they operated the business after purchasing the same.
Subsequently, a general demurrer to this plea and answer was sustained, the answer stricken, and, the case proceeding to trial, judgment was entered for the plaintiff for the balance due on the notes. Error is assigned on the striking of the answer and judgment for the plaintiff.
Merchants & Farmers Bank, 24 Ga. App. 475 (1) (101 S. E. 196). "When the means of knowledge are at hand and equally available to both parties to a contract of sale, if the purchaser does not avail himself of these means, he will not be heard to say, in impeachment of the contract, that he was deceived by the representations of the seller." Miller v. Roberts, 9 Ga. App. 511 (71 S. E. 927). See also Brooks v. Boyd, 1 Ga. App. 65 (57 S. E. 1093); Martin v. Harwell, 115 Ga. 156 (41 S. E. 686). The answer fails to make out any valid defense based on the fraudulent procurement of the contract by misrepresentation as to a material fact.
Insofar as the defendant relies, in support of his plea of fraud, upon representations of the seller to the effect that the business was expanding in value and would continue to make gross sales in the future of $24,000 or larger amounts--whereas as a matter of fact the business grossed only $15,000 during the twelve-month period in which it was operated by the defendant--these statements are insufficient to constitute actionable fraud. Generally, warranties relate to future events, and representations to past or existing facts, and mere unfulfilled predictions and erroneous conjectures as to future events do not constitute actionable fraud. Rogers v. Sinclair Refining Co., 49 Ga. App. 72 (174 S. E. 207). "Mere 'puffing' does not constitute legal fraud, the same not being calculated to really mislead a purchaser, especially when he is afforded a full opportunity to form his own independent opinion as to the advisability of becoming a purchaser." Terhune v. Coker & Co., 107 Ga. 352, 354 (33 S. E. 394).
In Spells v. Swift & Co., 34 Ga. App. 620 (130 S. E. 593), and Empire State Jewelry Co. v. Grant Jewelry Co., 19 Ga. App. 125 (91 S. E. 214), cited by counsel for the defendants, the defense was that the defendant had purchased certain merchandise by weight, and had not received the weight or quantity purchased. Here there is no contention that the defendants did not receive the entire property purchased, which was a business, together with its good will and certain personal property to be used in its operation. In Daniel v. Browder-Manget Co., 13 Ga. App. 392 (79 S. E. 237), it was held that misrepresentations as to the solvency of the company and the amount of capital invested therein, when as a matter of fact it was insolvent, together with other matter of defense, were sufficient to withstand a general demurrer. In Fellows v. Sapp, 45 Ga. App. 89 (2) (163 S. E. 314), it was held that, where the selling price is based upon the cost to the seller, misrepresentations as to cost price may be pleaded in defense of an action brought by the seller against the purchaser. These cases are thus not applicable to the facts of the case here.
It is also difficult to see how gross sales alone could establish the earning capacity of a business and fix its value. Had the defendants been able to finance the sale of their merchandise at less than cost during the year following the purchase, they could doubtless have grossed much more than $24,000, depending upon the size and capacity of the facilities of the business. This procedure, however, would necessarily result in loss and could in no way fix earning capacity. If the defense here had been based squarely upon misrepresentations by the seller as to the previous earning capacity of the business, and facts had been set out which, if supported by proof, would have authorized a jury to find the seller had misrepresented the previous earning capacity in such manner that the defendants, in the exercise of ordinary diligence, could not have discovered such misrepresentations--as, for example, if the defendants had examined audits of the business which had been altered in such manner as to deceive them--there would have been a good defense. Here, however, it appears merely that the defendants were unable to make the profits they had been led to expect. The personality, business acumen, knowledge of the business, and changes in market conditions being so intimately associated with the profits any business will earn in a given period of time--it is obvious that the mere fact that the defendants failed to realize the profits they expected is no ground upon which to seek a reduction of a purchase price forming the consideration for the sale.
The trial court did not err in striking the plea and answer and in thereafter entering judgment for the plaintiffs on their notes.
Robert G. Young, Heyman & Abram, contra.
S. S. Robinson, Abraham J. Walcoff, for plaintiffs in error.
DECIDED FEBRUARY 19, 1952.
Saturday May 23 04:51 EDT


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