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KING SALES COMPANY, INC. et al. v. MCKEY.
38797.
Action for damages. Fulton Civil Court. Before Judge Camp.
FRANKUM, Judge.
1. "A promise to do a certain thing for the benefit of the promisee, made to induce his entrance into a contract, the promisee earnestly believing that he would receive the benefits consequent upon the fulfillment of the promise, when at the time of making the promise there was no intention on the part of the promisor to fulfill it, but on the contrary the promise was made with intent not to fulfill it and was uttered as a mere scheme or device to defraud, is such a fraud as will void any contract induced thereby. A promise thus fraudulently made will authorize rescission of a written instrument purporting to be a contract." Coral Gables Corp. v. Hamilton, 168 Ga. 182 (8) (147 SE 494).
2. The plaintiff's petition does not set forth a cause of action upon the basis of false statements concerning the deleterious effects resulting from eating food prepared in aluminum cookware.
3. The trial court did not err in overruling the defendants' demurrers except as to certain grounds of their special demurrer discussed in the body of this opinion.
Minnie McKey filed suit in the Civil Court of Fulton County against King Sales Co., Inc., and Roy C. King. The following presents a condensed statement of all that is material to an understanding of the questions raised in this appeal and our decision thereon.
Briefly, the petition contains allegations that the defendant King came to the plaintiff's residence and set out on a wilful, false, fraudulent, and deceitful scheme which was calculated to and did mislead the plaintiff, viz., that the use of plaintiff's aluminum cookware, which the plaintiff then owned and used, would inflict the plaintiff and her seven children with cancer, anemia, and various other diseases, whereby the plaintiff was persuaded to purchase from King Sales Co., Inc., a set of stainless steel cookware. In furtherance of this scheme, defendant King exhibited to the plaintiff a volume containing what King knew to be false and deceitful testimonials of sham medical experts to the effect that the use of aluminum cookware causes cancer; that the defendant King then requested permission to use one of plaintiff's aluminum boilers, filled it with water and put some substance which he claimed to be soda in the water and applied sufficient heat to bring the water to a boil; that the defendant King then poured a portion of the liquid into a glass which he had the plaintiff taste; that this substance was extremely bitter, and the defendant King represented to the plaintiff that this was a cancer-producing substance which mixed with and became a part of any food prepared in aluminum cookware; and that in order for the plaintiff to protect herself and her children from this dreaded menace she should purchase and use a set of stainless steel cookware being offered for sale by the defendant King, as agent of King Sales Co., Inc.
The defendant King proposed to the plaintiff that she pay $249.95, plus sales tax, for a set of stainless steel cookware which he was, in acting for the corporation, offering to sell to her, and he informed the plaintiff that the payments would be $16 per month. The plaintiff informed the defendant King that she would be unable to make the monthly payments, and defendant King informed her that she could work for the defendant corporation from 4 p.m. until 6:30 p.m., two days out of each week, and that the defendant corporation would compensate her by either making the payments on the note, hereinafter described, or pay her in cash whereby she could make payments on the note. In reliance upon the wilful, fraudulent and false representations made by the defendant King, believing the representations to be true, the plaintiff accepted immediate delivery of a set of stainless steel cookware and signed a note, as hereinafter described.
Thereafter, a woman came to the plaintiff's home, identifying herself as Mr. King's wife, and informed the plaintiff that she would carry her to the office of the defendant corporation for the purpose of filling out insurance papers and picking up a coupon book; that the woman took the plaintiff to the office of the Franklin Finance Co. instead of the office of the defendant corporation; that the plaintiff was informed by a certain named agent of the Franklin Finance Co. that Mr. King was going to pay the plaintiff's insurance and make the first two payments on the note to be given for the purchase price of the stainless steel cookware; that before signing the papers at the office of Franklin Finance Co., plaintiff informed the agent of Franklin Finance Co. that she had been informed that she could make the payments by working for the King Sales Co., Inc., two evenings each week, and the agent of the Franklin Finance Co. reassured the plaintiff that she could still do this. The plaintiff thereupon signed the note.
Plaintiff further alleges that at the time she signed the note at the Franklin Finance Co. she still believed and relied on the representations made by defendant King. Approximately three days after she signed the note, the plaintiff called the defendant King and inquired as to when she should report for work, and "he thereupon informed her that he had received his money, that the plaintiff owed him nothing, that she owed Franklin Finance Company, and abruptly hung up the telephone"; approximately one week after the conversation, plaintiff again called the defendant King and informed him that unless she could work in accordance with their agreement, she could not pay for the merchandise, and than if she could not work, please come by and pick up the merchandise. Defendant King "again informed plaintiff that he had received his money and that she owed Franklin Finance Company and not King Sales Co., Inc."; approximately two weeks after the second conversation the plaintiff again called the defendant King and asked him to pick up the cookware, and defendant King then agreed to send someone out to pick up the merchandise, but failed and refused to do so.
Plaintiff further alleges that the stainless steel cookware was, in fact, worth not more than $50; that defendant King knew at the time he made the representations stated above that such representations were false; that plaintiff has only an elementary education, having completed only the seventh grade, and because of her ignorance, she was not aware that there was no known connection between the use of aluminum cookware and cancer, and, thus, relied upon the representations of defendant King concerning the use of aluminum cookware, and also, that she could make payments on the stainless steel cookware by working for the defendant corporation; that at all times named in the petition, Roy C. King was agent for King Sales Co., Inc. and was acting for and on behalf of the defendant corporation.
"At the time the defendant Roy C. King represented that plaintiff could make the payments for the stainless steel cookware by working for King Sales Company, Inc., the defendant Roy C. King had no intention of allowing plaintiff to do so and the same was done to aid him further in the perpetration of the fraud upon plaintiff."
It is alleged in paragraphs 25 and 26 of the petition as follows: "25. The defendant Roy C. King and the defendant King Sales Company, Inc., are in the business of selling stainless steel cookware and the method of dealing with plaintiff, as hereinbefore alleged, is the usual and ordinary course of dealings of the defendants with the public and the said defendants are in the business of, and do customarily cheat, defraud, and swindle the public and have done so on many other occasions. 26. Because of the defendant's deliberately false and fraudulent misrepresentations, as herein alleged, which the plaintiff relied upon to her damage, and because of the fraud and deceit that the defendants customarily practice upon the public, and because the defendants are in the business of cheating and swindling the public, the plaintiff is entitled to punitive damages, which plaintiff alleges should be twenty five hundred dollars ($2,500.00), to deter the defendants from continuing their false, fraudulent, and deceitful practices."
The plaintiff prayed for damages in the amount of $225.10, plus $2,500 punitive damages.
The defendants filed general and special demurrers, which the trial court overruled. The defendants assign this ruling as erroneous.
1. "A promise to do a certain thing for the benefit of the promisee, made to induce his entrance into a contract, the promisee earnestly believing that he would receive the benefits consequent upon the fulfillment of the promise, when at the time of making the promise there was no intention on the part of the promisor to fulfill it, but on the contrary the promise was made with intent not to fulfill it and was uttered as a mere scheme or device to defraud, is such a fraud as will void any contract induced thereby. A promise thus fraudulently made will authorize rescission of a written instrument purporting to be a contract." Coral Gables Corp. v. Hamilton, 168 Ga. 182 (8) (147 SE 494). See also Floyd v. Morgan, 62 Ga. App. 711 (9 SE2d 717); Dye v. Wall, 6 Ga. 584; Penn Mutual Life Ins. Co. v. Taggart, 38 Ga. App. 509 (144 SE. 400); Deibert v. McWhorter, 34 Ga. App. 803 (132 SE 110).
"A material representation falsely made by a vendor to a vendee to induce a sale, and made with knowledge of its falsity and acted upon to the vendee's injury, amounts to actual fraud (Emlen v. Roper, 133 Ga. 726 (2), 66 SE 934; Brannen v. Brannen, 135 Ga. 590, 69 SE 1079; Mangham v. Cobb, 160 Ga. 182, 185, 127 SE 408), and will void a contract (Civil Code, 4254), and authorize rescission by the vendee if he acts promptly after discovery of the fraud and restores or offers to restore whatever of value he has received by virtue of the contract." Floyd v. Boss, 174 Ga. 544, 545 (163 SE 606). See also Oliver v. O'Kelley, 48 Ga. App. 762 (173 SE 232).
Plaintiff alleges that defendant King represented that the plaintiff could work at King Sales Co., Inc., two afternoons a week and earn enough money to make the deferred payments for the purchase money of the stainless steel cookware; that when the defendant King made the statement he had no intention of allowing the plaintiff to work for the defendant corporation. When the plaintiff learned that she could not work in accordance with the agreement, she offered to return the merchandise to the defendants. It is alleged that the plaintiff called the defendant King on three occasions, and on each occasion, defendant King refused to allow plaintiff to work as agreed. It is alleged that at the time of the third call the defendant King agreed to pick up the merchandise. The three calls took place within a period of approximately three weeks after the contract was consummated. Applying the above principles of law to the facts of the instant case the trial court did not err in overruling the defendants' general demurrer.
2. From the briefs of the plaintiff (perhaps because the instant case is very similar to another case passed upon by this court, King v. Towns, 102 Ga. App. 895, 118 SE2d 121), it is clear that the plaintiff believes that she has a right to recover from the defendants because of two separate acts of fraud, viz., (1) false statements that the plaintiff could work for the defendant corporation and earn enough money to make the deferred payments for the merchandise she had purchased by reason of the facts set forth in her petition, and (2) false statements that the eating of food prepared in aluminum cookware causes cancer. Because silence of this court upon the latter question might infer that the petition sufficiently alleges a cause of action based upon the allegations in the petition concerning the misrepresentation that the use of aluminum cookware causes cancer, we deem it proper to add some comments which are confined specifically to such alleged fraud. At this juncture we note that there is no special demurrer to the petition upon the ground of duplicity, and, accordingly, the petition must be construed toward that theory which sets forth a cause of action. King Hardware Co. v. Ennis, 39 Ga. App. 355 (4) (147 SE 119); Citizens & Southern Bank v. Union Warehouse &c. Co., 157 Ga. 434 (6, 7) (122 SE 327); Ward v. Nance, 102 Ga. App. 201 (115 SE2d 781).
As stated in Brown v. Ragsdale Motor Co., 65 Ga. App. 727 (3) (16 SE2d 176), the plaintiff must allege: ". . . (1) that the defendant made the representations; (2) that at the time he knew they were false (or what the law regards as the equivalent of knowledge); (3) that he made them with the intention and purpose of deceiving the plaintiff; (4) that the plaintiff relied on such representations; (5) that the plaintiff sustained the alleged loss and damage as the proximate result of their having been made."
In such circumstances the contract is voidable at the option of the injured party (Mashburn & Co. v. Dannenberg Co., 117 Ga. 567, 44 SE 97), and a plaintiff must elect whether to affirm the contract and sue for damages (Brown v. Ragsdale Motor Co., supra; Tuttle v. Stovall, 134 Ga. 325, 67 SE 806, 20 AC 168), or rescind the contract and sue for the return of the consideration (Eastern Motor Co. v. Lavender, 69 Ga. App. 48, 24 SE2d 840).
Upon discovery of the fraud, the injured party must move diligently to protect his interest if he elects to rescind the contract. Lynch Enterprise Finance Corp. v. Realty Construction Co., 176 Ga. 700 (168 SE 782). See also Hadden v. Thompson, 202 Ga. 74 (42 SE2d 125); Foskey v. Lawton, 210 Ga. 193 (78 SE2d 505). "In order to exercise the right of rescission of a contract for fraud, the defrauded party must act promptly upon the discovery of the fraud, and must restore or offer to the other party whatever the former has received by virtue of the contract, if it is of any value [citations]." Tuttle v. Stovall, 134 Ga. 325 supra, at p. 329.
Applying these principles of law to the allegations of the petition in the instant case, it is clear the plaintiff has not sufficiently alleged a cause of action based upon the representations concerning the deleterious effect of eating food prepared in aluminum cookware, because it is nowhere alleged that the plaintiff rescinded the contract upon this ground of fraud. No date is alleged as to then the plaintiff discovered this fraud, or that upon discovery of such fraud, the plaintiff promptly complained. See Lynch Enterprise Finance Corp. v. Realty Construction Co., 176 Ga. 700, supra. Nor does the petition allege that such fraud was discovered after the contract had been rescinded upon another ground. In such case, an offer to return the benefits of the contract to the defendants had already been accomplished, and it would be a useless gesture to require the plaintiff to again tender the benefits of the contract. In absence of such allegations, the petition fails to set forth a cause of action based upon such fraud.
We want to make it clear that we are not intimating that the plaintiff would not have a good cause of action for the alleged misrepresentations, fraud and deceit pleaded by her with reference to the harmful effect of eating food prepared in aluminum cookware, if she had pleaded all facts necessary to state a cause of action based upon such misrepresentations. But in this case the plaintiff's petition is deficient in this respect, in that, it is nowhere alleged that the plaintiff rescinded the contract for the reason of such fraud. The only reason appearing in the petition for the plaintiff's rescission of the contract is that she was not allowed to work for the defendant corporation in accordance with the agreement.
3. The defendants demurred to an allegation in the plaintiff's petition concerning the acts of an alleged agent who came to the plaintiff's home before the defendant King appeared. The allegation is similar to those in King v. Towns, 102 Ga. App. 895, supra. The trial court did not err in overruling this demurrer. Miller v. Southern Ry. Co., 21 Ga. App. 367 (94 SE 619); Conney v. Atlantic Greyhound Corp., 81 Ga. App. 324 (58 SE2d 559). The remaining grounds of the special demurrer are without merit. King v. Towns, supra.
4. After reciting the order of court overruling the general and special demurrers, the plaintiff in error assigns error in the following language: "To this ruling overruling the said demurrers, the plaintiffs in error excepted and now excepts and assigns the same as error as to each and every ground of the demurrers and says that the said rulings was contrary to law and that each and all the said demurrers and pleas in bar to the petition should have been sustained and that the petition should have been dismissed. . . ." This does not amount to an assignment of error on the failure of the trial court to pass on the pleas of res judicata and estoppel by judgment filed by the defendants. Demurrers, pleas, and answer are to be passed upon in the order named. Code Ann. 81-1002. Since this case is here only on the order relating to the general and special demurrers, neither the special pleas nor the merits of the case can be considered by this court at this time.
Judgment reversed in part; affirmed in part. Townsend, P. J., and Jordan, J., concur.
Bullock, Yancey & Mitchell, Kyle Yancey, contra.
Bruce B. Edwards, for plaintiffs in error.
DECIDED JUNE 28, 1961.
Friday May 22 23:35 EDT


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