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Action for damages. Fulton Civil Court. Before Judge Henson. January 20, 1959.
The petition in the instant case sufficiently alleges that the plaintiff purchased certain personal property from the defendant, relying upon the representations of the latter as to its quality; that the representations were false and made with the intent to deceive the plaintiff; that the plaintiff relied upon the representations and was thereby induced to purchase the property to his injury and that, upon discovery of the fraud, he rescinded the contract and tendered back the benefits obtained thereunder. The petition accordingly states a cause of action for the amount of the purchase price of such property received by the defendant under these circumstances.
Best Supply Company brought an action in the Civil Court of Fulton County against General Machinery Corporation, seeking damages because of alleged fraud by which it was induced to enter into a contract of purchase of a power crane. It is alleged that the defendant's authorized agent showed the crane to the plaintiff, represented that it was suitable for the operation of a ready-mixed concrete plant, was in excellent operating condition, had a forty-foot boom with a half-yard bucket, was suitable for the purpose of landing sand and crushed stone in the plaintiff's plant, had a motor in good operating condition and clutch, brakes and all working parts of the mechanism, frame and motor were in like operating condition. The plaintiff alleges that these representations were false in that the boom on the crane was not 40 feet but 30 feet in length; that it was too light to handle a half-yard bucket with a forty-foot boom; that the engine was in poor condition and not powerful enough for the job intended; that the tracks, rollers, sprockets and chains, as well as the brake bands, swinging and travel braking mechanism and center pin are in dangerous condition and will not operate correctly, and that the operating parts of the boom, hoist, brake bands, fraction bands and boom brake are in dangerous condition. The plaintiff alleges that the representations were false; that they were made to deceive the petitioner; that he was deceived thereby and did purchase the crane for a sum of $2,000, that he has been damaged in the sum of $2,000, and that the acts alleged constitute wilful and malicious fraud. By amendment, the plaintiff alleged that he had promptly tendered back to the defendant the machinery purchased. A general demurrer to the petition was overruled, and this judgment is assigned as error.
Code 20-906 provides: "A contract may be rescinded at the instance of the party defrauded; but in order to rescind he must promptly, upon discovery of the fraud, restore or offer to restore to the other whatever he has received by virtue of the contract, if it be of any value." The elements necessary to be shown in such an action are that the representations of the vendor were material and knowingly false; that they were made for the purpose of inducing the purchaser to enter into the contract; that he relied upon the false misrepresentations and was thereby induced to act, and than he did so to his injury. Rescission, where the right to rescind is not expressly reserved, cannot be had for mere constructive fraud or breach of warranty, but the fraud must be actual. Hendley v. Chambliss, 30 Ga. App. 736 (119 S. E. 351). "If the sale is so tainted with fraud as to authorize the principal to rescind for fraud, upon such rescission an action may be maintained either by the principal or the agent for the recovery of the purchase-money, as for money had and received." King v. Dobbs, 30 Ga. App. 441 (5) (118 S. E. 428). It follows that an action such as this, considered as an action for money had and received, can be sustained only if the allegations and proof are sufficient to show such fraud on the part of the vendor as to justify the ex parte rescission by the vendee. That this petition contains these essential elements, and is not subject to general demurrer, see Mosely v. Johnson, 90 Ga. App. 165 (82 S. E. 2d 163). The petition fails to show whether or not the contract between the parties was in writing, and, if in writing, whether or not all warranties were waived by the vendee, and accordingly the argument of the plaintiff in error going to these questions is beyond the scope of our examination at this time. "No form of or limitation in a warranty will protect a party from a rescission of a contract on the ground that it was induced by actual fraud." Dove v. Roberts & Co., 50 Ga. App. 321 (178 S. E. 169).
A party cannot, of course, rescind on the ground of fraudulent misrepresentations of the vendor if, in the exercise of reasonable diligence, he could have ascertained for himself that the representations were untrue. Mosely v. Johnson, 90 Ga. App. 165, supra; Lewis v. Foy, 189 Ga. 596 (6 S. E. 2d 788). The petition here alleges that the defendant showed the plaintiff the machinery in question; accordingly it would seem that as to certain of the representations, such as the length of the boom, even a casual inspection would have disclosed their falsity and the plaintiff could not rely on such statements as grounds of actionable fraud. There are other alleged misrepresentations, however, as to the dangerous condition of the machinery, which this court cannot hold as a matter of law would have been revealed to the purchaser on such inspection, and, as to these, a jury question is presented. Only the petition can be considered as against a general demurrer thereto, and the petition makes no allegations from which it might reasonably be inferred that the defendant by written contract accepted the machinery in an "as is" condition. Evidence that the plaintiff purchased the equipment under such a contract would constitute a defense upon the trial of the case, unless it further appeared that the limitation of warranty was itself obtained by such fraud as to vitiate the contract.
The trial court did not err in overruling the general demurrer to the petition.
Ben T. Beasley, Jr., contra.
Grady E. Rozar, for plaintiff in error.
Saturday May 23 00:41 EDT

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