Nowicki v. Podgorski

101 N.W.2d 371, 359 Mich. 18, 1960 Mich. LEXIS 428
CourtMichigan Supreme Court
DecidedFebruary 25, 1960
DocketDocket 48, Calendar 48,105
StatusPublished
Cited by30 cases

This text of 101 N.W.2d 371 (Nowicki v. Podgorski) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nowicki v. Podgorski, 101 N.W.2d 371, 359 Mich. 18, 1960 Mich. LEXIS 428 (Mich. 1960).

Opinion

Carr, J.

This is an action for damages for fraud and misrepresentation allegedly inducing plaintiff to purchase from defendants certain real and personal property. In February, 1954, defendants owned and operated a grocery and meat business located at 13291 Buffalo avenue in the city of Detroit. Plaintiff wished to enter the grocery business, and defendants were willing to sell. Following negotiations between the parties an agreement was entered into under date of February 15, 1954, by the terms of which defendants agreed to sell and plaintiff agreed to purchase the said grocery business, together with the real estate and furnishings, fixtures, equipment, and inventory. The agreed purchase price, excluding the inventory for which plaintiff undertook to pay on the basis of cost to defendants, was the sum of $20,700 with $1,000 payable on the execution of the memorandum of agreement and the further sum of $6,000 upon execution of a land contract and a bill of sale, with the balance payable at the rate of $127 per month, with interest. It was further stipulated that the sum of $1,000 should be paid within 90 days from the date of the proposed land contract.

The record before us indicates that the transaction between the parties was consummated on February 23, 1954, and possession of the store and other prop *22 erty was given to plaintiff on March 1st following. Plaintiff made payments in accordance with the contract and carried on the business of selling groceries and meats at retail.

It is the claim of the plaintiff that at the time of her negotiations with defendants the latter represented to her that they were taking in $3,500 per week from their sales, and that they further stated that the building, the fixtures, and the appliances used in connection with the business were in good shape. It was her claim, as set forth in the declaration filed, that she subsequently discovered that such representations were false in that the receipts from the business were not and never had been as represented and did not amount on the average to the sum of $3,500 per week gross, that the fixtures and building were not in the condition stated, and that, in consequence, the property that she had purchased, including the business, was actually worth much less than what its fair value would have been had defendants’ statements been true.

The memorandum executed by the parties on February 15, 1954, contained a provision that the defendants should not, either directly or indirectly, engage in a competitive business for a period of 4 years within a radius of 2 miles from the store on Buffalo avenue, or accept employment in a competitive business for such period. Plaintiff alleged in her declaration that the agreement was violated and that, in fact, it was made by defendants without any intention of performing it. Damages were sought therefor as well as for the claimed false representations in connection with the sale, and which plaintiff asserted induced her to buy the property, including the business.

Defendants by answer denied making any misrepresentations as claimed by plaintiff, and further asserted that while defendant Walter Podgorski had *23 done some work in another store such conduct was not in violation of the agreement, and that no injury resulted to the plaintiff’s business in consequence thereof. By way of special defenses defendants’ answer alleged that defendant Sophie Podgorski was a married woman and that the consideration for the sale of the premises did not benefit her sole and separate estate, that plaintiff was guilty of laches, that plaintiff by making payments on the land contract after its execution, and, in fact, after the bringing of her action for damages, had waived her alleged cause of action for fraudulent misrepresentations, and that the provision of the contract against defendants’ entering into competition with the business sold -was illegal and void.

The testimony of the parties, and of their witnesses, on the trial was materially in dispute. Defendants’ motion, made at the conclusion of plaintiff’s proofs, for a directed verdict was denied, and the jury returned' a verdict for plaintiff in the sum of $7,500. Defendants’ motion for a new trial was denied. They have appealed, alleging that there were several errors committed during the course of the trial of such nature as to be prejudicial to them, and on the basis of which a new trial should be granted.

The argument is advanced by counsel for appellants that plaintiff was not entitled to maintain her action for damages in view of the undisputed proofs that after learning of the alleged fraud in the inducement of the sale of the property to her she had continued to make payments on the land contract and had continued so to do after starting suit. However, at the time plaintiff claimed she discovered that the representations concerning the business and tangible property were not true the contract between the parties had been performed except as to the making of further payments to the defendants and final convey *24 anee on completion thereof. The business had been turned over to plaintiff, and she was engaged in operating it. She made the initial payments. Nothing further remained to be done on the part of defendants other than to receive the amounts stipulated to be paid by the purchaser of the property and to execute a deed of the real estate on the completion of the contract.

Under the circumstances plaintiff was not required to assume the risk of recovering adequate compensation for her damages, and payments made to defendants, in a suit for rescission. Under the rule generally observed in such cases she had the right to proceed under the contract and keep the property, and to recover damages in such amount as her proofs might justify. In accord with the general holding on the subject is Morman v. Harrington, 118 Mich 623, 628, 629. In determining the legal question as to the rights of a plaintiff under circumstances of the character involved in said case, as well as in the case at bar, it was said:

“Counsel for plaintiff also claim that the defendant, having paid the $50 due on the purchase price of the land, and taken the deed, with knowledge of the fraud, is now estopped from making the defense here set up, as the parties cannot be placed in statu quo. This contention cannot be sustained. The defendant by his plea set up the fraud in the transaction, and seeks to recoup his damages by reason of it. He had the right to elect his remedy. If he sought to rescind the contract, there would be some force in the contention made by plaintiff’s counsel. That is not what is attempted here by the defendant. He proposes to keep what he has received, and recover the damages he has sustained. This he has the right to do; and the fact that he paid the balance of the purchase money, and received his deed, after the discovery of the fraud, will not estop him from setting up the *25 fraud in defense to the action. Warren v. Cole, 15 Mich 265; Lenox v. Fuller, 39 Mich 268, 273.”

The decision in Morman v. Harrington was approved in the case of Elson v. Harris,

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Bluebook (online)
101 N.W.2d 371, 359 Mich. 18, 1960 Mich. LEXIS 428, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nowicki-v-podgorski-mich-1960.