Opinion
Rehearing Denied May 9, 1961.
Hearing Granted June 6, 1961.
Opinion vacated 16 Cal.Rptr. 368.
Wallner & Miller, Sacramento, for appellant.
Clarence H. Pease, Sacramento, for respondent.
VAN DYKE, Presiding Justice.
This is a judgment roll appeal from a judgment entered in an action for rescission of the sale of a business. Appellant challenges the sufficiency of the findings of fact to support the judgment.
The trial court found that defendant owned and desired to sell a business known within defendant's business organization as the 'Northern Division of the Ideal Scale Company'; that in a published advertisement, repeated orally in later negotiations for sale, defendant represented that the business was 'netting over $15,000 per year'; that in reliance upon said representation plaintiff entered into a preliminary written agreement for the purchase by him of said business from defendant, in which the same representation was repeated and which provided for the furnishing by defendant of a profit and loss statement; that the statement prepared covered the period of time from January 1, 1956, to May 31, 1956, and indicated collections and expenses, together with a net average profit per month of $1,365.17; that all of the representations so made and relied upon as to past net earnings of the business were false, material and fraudulent; that in reliance thereon plaintiff entered into a further written contract with defendant on or about July 20, 1956, which was supplementary to the preliminary agreement and, pursuant to said second agreement, agreed to purchase, and there was transferred to plaintiff, all of the assets, good will, stock in trade, fixtures, tools, equipment and other assets of the Ideal Scale Company as conducted in the area involved; that concurrently therewith plaintiff transferred to defendant real property, cash, secured promissory notes, money to discharge sales taxes accrued and a promissory note for $61,392.50, payable in five installments; that thereafter plaintiff discovered the falsity of the representations concerning the profits of the business and on February 19, 1957, rescinded the contract of sale and offered to restore the consideration received by him; that during the reported period of January 1, 1956, to May 31, 1956, the business had netted only $818.66 per month; that during the priod of time from July 1, 1953, to June 30, 1956, the annual net profit for three years averaged $9,305.60; that defendant had rejected plaintiff's offer of restoration on rescission and had refused to return the consideration received by defendant or any part thereof; that thereafter plaintiff had necessarily devoted time to the management, operation, control and preservation of the assets purchased and had suffered loss through undertakings on leases necessary in the operation of the business; that during the period of time he operated the business the plaintiff had received the total income of $37,251.21, and had incurred expenses aggregating $30,174.92, netting only the sum of $7,076.29. The court made a blanket finding that all allegations of the complaint as to which specific findings had not been made were true, and among these were allegations that defendant had known the falsity of his representations, had made them to induce plaintiff to buy through reliance thereon and that plaintiff had relied thereon and had bought to his damage.
The judgment declared the rescission of the sale by reason of fraudulent procurement thereof on defendant's part, directed defendant to reconvey to plaintiff the The sufficiency of the foregoing findings to support the judgment is obvious. Appellant defines actionable fraud, quoting from Wishnick v. Frye, 111 Cal.App.2d 926, 930, 245 P.2d 532, 534, as follows:
'* * * The elements of actionable fraud, which must be pleaded and proved if a plaintiff is to prevail, consist of a false representation of a material fact, made with knowledge of its falsity and with the intent to induce reliance thereon, upon which plaintiff justifiably relies to his injury. * * * The omission of a single one of these elements in an action for deceit will normally prevent recovery.'
Appellant asserts that the findings can be searched in vain for any indication on the part of the trial court that it found any knowledge on the part of the defendant of the falseness of representations as to past profits, that failure to so find is fatal since '* * * it [scienter] constitutes a vital element of plaintiff's cause of action, and must affirmatively appear in the findings to support a judgment for fraud.' Wishnick v. Frye, supra, 111 Cal.App.2d at pages 930-931, 245 P.2d at page 535. The decision referred to is distinguishable upon its facts from the situation here presented for in this case the complaint contained specific allegations that the false representations had been made with knowledge of their falsity and with the intent to induce the sale. The trial court found, as above noted, that these allegations were true. This was a sufficient finding of scienter. On a judgment roll appeal we must, of course, assume that evidence was introduced which support the findings made. Estate of Larson, 92 Cal.App.2d 267, 206 P.2d 852; Kubon v. Kubon, 51 Cal.2d 229, 232, 331 P.2d 636; Reid v. Valley Restaurants, Inc., 48 Cal.2d 606, 609, 311 P.2d 473.
There was appended to the complaint a copy of the final contract of sale between plaintiff and defendant. It was alleged in the complaint and admitted in the answer that this contract had been executed by the parties. That contract contained the following language: 'Seller represents that the net operating profit for the subject business is in excess of Fifteen Thousand ($15,000.00) Dollars per annum. Net operating profit is defined as follows: the total of the operating expenses consisting of payroll, rental, insurance premiums, phone, transportation, maintenance and deducted from the gross collections of the scales located in the territory hereinabove described.' To say that the execution of the contract containing the quoted matter is a fact established is not to say, on a judgment roll appeal, that the evidentiary effect of the quoted portion of the contract is conclusive. There may have been evidence negating the claimed effect of the quoted language in the contract. In the absence of a record other than the judgment roll we must assume such evidence had been received.
The judgment appealed from is affirmed.
SCHOTTKY, J., and WARNE, J. pro tem., concur.