Bankers' Utilities Co. v. Cotton Belt Savings & Trust Co.

237 S.W. 707, 152 Ark. 135, 1922 Ark. LEXIS 22

• Court: Supreme Court of Arkansas
• Decided: February 20, 1922
• Status: Published

Opinion

Hart, J.

(after stating the facts.) To reverse the judgment, counsel for the plaintiff rely upon the rule laid down in Pratt v. Meyer, 75 Ark. 206, to the effect that where an order for goods sold stipulates that verbal or written agreements with salesmen shall not be binding on the seller, it is incompetent to prove as a defense,when sued for the purchase price of the goods, that the plaintiff’s salesman agreed not to sell his goods to any other person in the city.

The contract sued on contained a stipulation that no verbal agreements should be binding on the parties. Under this stipulation the defendant could not, when sued for the purchase price of the display banks, prove as a defense that the plaintiff had agreed not to sell them to any other person in the city. That is not the issue, however, presented by the record in this case. The defense relied upon is that the contract was procured ¡by the fraudulent representations of the seller’s agent. The general rule is that representations of facts that will exist in the future, or which are promissory in their nature, though false, do not afford the basis of actionable fraud. To constitute actionable fraud in the sale of property, the representations must be of existing facts relating to the subject-matter of the contract made by the seller as an inducement to the contract, and such representations must be false and relied upon by the buyer in making the purchase to his damage..

In the application of this rule in French & American Imp. Co. v. Belleville Drug Co., 75 Ark. 95, the. court held actionable a misrepresentation that the plaintiff had not sold any goods of the class contracted for by. the defendant to any one in the same town before the contract sued on was made, when in fact it had already done so. That principle controls here, and the trial court was governed by it in giving its instructions to the jury. It is true that the sale was made by an agent of the plaintiff, but it is elementary that a principal is liable for the fraud of his agent perpetrated within the scope of his employment. The principal can not affirm the action of his agent in making a sale and not assume responsibility for his representations. The plaintiff employed the salesman to sell the display banks and is liable for any false and fraudulent representations made by its agent. It does not make any difference whether the agent knew the representations to be false or not, if in fact they were false as to a material fact affecting the sale and induced the buyer to make the purchase.

Therefore the judgment will be affirmed.