THOMAS J. POWERS vs. JOSEPH RITTENBERG. SAME vs. SAMUEL WALDMAN.

SANDERSON, J. These are two actions of tort for false representations inducing the plaintiff to enter into a lease of a garage building with garage fixtures and equipment for a term of five years from May 1, 1926. In each case a verdict was returned for the plaintiff in the same amount. The exceptions are based upon the denial of the defendants' motions for directed verdicts and the refusal of the judge to grant certain rulings requested. The defendants owned the garage but the title was in the name of Gertrude P. Golub, and she was named in the lease as lessor. When the lease was executed the plaintiff deposited $2,500 with the lessor to secure the performance of its terms.

The alleged false representations relate to the gross amount of income received by the defendants each year from the garage business, their annual profits therefrom, the amount paid by a certain gasoline company for the privilege of having its gasoline sold at the place, to the rent being paid and promised to be paid by a tenant of the show room, the amount of rent received for the repair shop, the number of cars then in storage, the larger number in storage during the winter months and the capacity of the garage.

The lease contemplated that the garage and equipment would be used by the plaintiff for a garage business. It

Page 224

provided for the delivery of garage tenants and occupants at the termination of the lease. The representations could be found to have been material inducements to the contract. See Lee v. Tarplin, 183 Mass. 52, 57; Noyes v. Meharry, 213 Mass. 598, 600; Vouros v. Pierce, 226 Mass. 175; Mignault v. Goldman, 234 Mass. 205. Decisions excluding evidence of net profits in proceedings to recover damages for land taken by eminent domain are distinguishable from the case at bar, because in such proceedings the recovery is only for the value of the real estate itself or of a leasehold or other interest therein. Net profits of a business conducted on the land are considered immaterial. Whitman v. Boston & Maine Railroad, 3 Allen 133, 141. Bailey v. Boston & Providence Railroad, 182 Mass. 537, 539. Brackett v. Commonwealth, 223 Mass. 119, 126. There was evidence to prove all essential elements in an action for deceit. Thomson v. Pentecost, 206 Mass. 505, 511. Brown v. C. A. Pierce & Co. Inc. 229 Mass. 44, 47.

The plaintiff's attorney testified that, in negotiating for a reduction of the rent with the attorney for the defendants, he stated that the gasoline company was not making monthly payments; that there were not as many cars in the garage as were represented to be there; that the revenue was nowhere near what the plaintiff expected it to be; that no agreement for letting the show room at an increased rental could be found; that the plaintiff insisted on a reduction of rent, "because the representations made to us have not been lived up to"; that the rent was too high for the circumstances and the revenue was not in proportion to the rental. He further testified that the reduction was agreed to; that the plaintiff wanted a reduction because things were not as represented. The plaintiff testified, in substance, that one of the defendants suggested that he hold back $100 a month from the rent when told that the gasoline company was not paying that amount, and that the plaintiff's attorney asked for a reduction of the rent during the summer months because business was not good. There was evidence that one of the defendants said to the plaintiff when complaint was made about the amount of

Page 225

business, "Hang on to it, you will have a big business there this winter," and that he would make it right with the plaintiff. The defendants' testimony tended to prove that the deduction was not made to settle fraud; that nothing was said about any representations, but that the rent was reduced for the summer months because the plaintiff was disappointed in the amount of business he was doing. For each of the four months beginning with July $100 was deducted from the rent.

On November 1 the plaintiff paid the rent called for in the lease. In December of the same year he failed to pay rent and the lessor on December 11, 1926, gave him notice to vacate the premises in fourteen days from that date. On January 28, 1927, the plaintiff by letter notified the lessor that he tendered the garage building with all fixtures and equipment leased; that the lease was terminated because of false representations, and that he would hold the lessor for all damages after the lease had been terminated. The notice to quit was followed by proceedings by summary process for recovery of the premises on which an order to vacate was entered. The parties stipulated that the plaintiff's appeal from this order was still pending in October, 1929. The plaintiff continued to occupy the premises and conduct the business until January 29, 1927, when he left. It appeared that the monthly returns from the business were constantly becoming less after October, 1926.

If the representations relate to facts about which the truth cannot be discovered until the contract has been in part executed, the party who has acted in reliance upon the representations would not forfeit his right to recover for deceit by occupying the property a reasonable length of time to discover whether the representations are true. Irving v. Thomas, 18 Maine, 418. Charbonnel v. Seabury, 23 R. I. 543. See also Andrews v. Jackson, 168 Mass. 266, 268; McKinley v. Warren, 218 Mass. 310, 313; Haven v. Neal, 43 Minn. 315, 317, 318; Moran v. Tucker, 40 R. I. 485. In the case at bar a substantial payment was made in advance and some rent had been paid before any part of the alleged fraud was discovered, and the finding could have

Page 226

been made that the plaintiff was unable to discover its full extent before the time he ceased to pay rent and gave notice of termination of the contract. It was understood that the business would increase substantially during the fall and winter months.

A ". . . right of action for deceit may be settled in the same way as any other right of action - by a release under seal, or by a compromise or accord and satisfaction accompanied by sufficient consideration. In most if not all the cases relied on as showing the possibility of waiving a right to sue for fraud, the element of accord and satisfaction will be found." Williston, Sales, (2d ed.) § 646.

As a general rule requesting and receiving a modification of the agreement because of the fraud after full knowledge of it constitute a waiver of the fraudulent transaction and operate as a bar to the right to recover damages. Tucker v. Beneke, 180 Cal. 588. Doherty v. Bell, 55 Ind. 205, 208. Craig v. Bradley, 26 Mich. 353, 369. The defendants had the burden of proving that the fraud had been waived or that liability therefor had been adjusted. Nashua River Paper Co. v. Lindsay, 249 Mass. 365, 368. The question "Whether there has been waiver is usually a question of fact." Moss v. Old Colony Trust Co. 246 Mass. 139, 151. Graustein v. Wyman, 250 Mass. 290, 296.

It could have been found that when the plaintiff accepted a reduction of the rent for four months he did not have full knowledge of the alleged fraud even though he had then gained some knowledge of it. The plaintiff cannot be held to have deprived himself of the right to sue in deceit because he left the premises or gave the notice as to the termination of the lease under the circumstances disclosed by the evidence after he had received the notice to quit from the defendants.

The evidence considered in the light most favorable to the plaintiff justified the judge in refusing to direct verdicts for the defendants; and in none of the exceptions argued do we find reversible error. In each case the exceptions are overruled.

So ordered.