Statement of the Case.

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[37 App.

fied that "we asked him to bring a record of the business the night he came to our house, and he did not bring any record of the business except on a little piece of note paper. He said he had the average of three consecutive days preceding the night he visited our house, and which daily sales he said would average $39. * * We asked him where he got it from, and he said that the books were in such a jumble then that he could not tell what the profits were, that he could only do it by a rough approximation," that Pancoast further stated, "I am sure that the business is there and is paying enough to justify me getting the notes" (referring to the deferred-payment notes). Witness further testified that during the first month he and his father ran the business, the average receipts were $30 a day; that ten or fifteen days after the sale he heard his father tell Mr. Pancoast "that he (the father) had been stuck;" that his father upon that occasion offered to sell the business back to Pancoast; that the business was run for another month, that is, during the month of February, when they "simply closed up;" that the loss was "about $150 a month;" that they kept the keys "until matters were straightened up and the old bills paid."

The complainant testified that Mr. Pancoast, by arrangement with complainant's son, called to see complainant, and stated during the interview that the business was paying $150 a month; that he wanted $2,200 for it, and complainant offered him $1,800; that a few nights afterwards they met again. Witness was asked if anything was said to Mr. Pancoast in reference to an examination of his books, and replied that he did not think there was; that he "was leaving the matter of details in a great measure to his son;" that Mr. Pancoast brought up a slip of paper which showed average daily sales for three days of $39. The witness was then asked whether Mr. Pancoast had said anything about what the expenses would be, and answered: "The expenses he figured up in a rough way with a pencil, but I cannot remember the figures. It was simply an approximate estimate of what they were;" that Mr. Pancoast said "the books were in a confused condition, and

that the whole business had been kept together so that it would be impossible to separate them so as to tell from the books what he was making out of each business."

The foregoing is substantially all the testimony introduced by the complainant as to the representations which induced the sale.

The complainant further testified that ten or fifteen days after the sale Mr. Pancoast was in the café, when the complainant made the statement that he (complainant) "had been stuck," and that he offered to sell the business back at less than cost; that witness told Pancoast that he was going to advertise the place for sale, whereupon Pancoast suggested "that we advertise his business and my business together." About the 1st of February, Pancoast came to collect a milk and cream bill, when complainant told him: "Now, look here, I am not going to pay you any money at all. You stuck me bad enough in this place, and I am going to law about it;" that complainant offered to sell the business back for $300 less than cost. Pancoast, however, said that the company had no money, and that he did not want the business. The defendant's books remained on the premises, and witness was asked whether he had made an examination of them, and replied: "I did. But it was a pretty hard job to go over it. I am a bookkeeper myself, and it would take an expert to go over his books and really find out what he was doing. I got a general idea." Witness then testified that as near as he could remember the average daily sales for three months as shown by defendant's books were between $30 and $35; and that the tangible prop erty which he received when he purchased the business was worth about $500, the balance of $1,500 representing good will, etc.; that witness had made up a statement for the month of January showing the receipts and expenditures of the business, but that his books had not been posted for the month of February. The statement thus made showed a loss of more than $150.

The complainant offered evidence tending to show that there

was no falling off in the business after he purchased it, and that it was properly conducted.

It developed that part of the building occupied by the café was rented to other parties, both before and during complainant's tenancy. Complainant admitted that he collected rent from the subtenants for the month of March. It further developed that complainant's son was nineteen years of age, and that he had had little business experience.

The defendant, Pancoast, denied all allegations of fraud, and stated that the negotiations between the McSweens and himself extended over a period of about three weeks; that a book called a day book was kept, which showed the daily receipts of the café business; that this book was offered to Mr. McSween, and that defendant was perfectly willing that all the books should be inspected; that the statement which he submitted to the McSweens showed average daily receipts for three days, covering the period just before the middle of December, 1905, which immediately antedated the interview at which the statement was submitted; that this statement showed the receips to have been between $39 and $40 a day. Witness denied that he had ever stated that the business had been paying $150 a month. He did say that he had shown the McSweens how they could run the business for about $150 a month less than it cost the company; that several weeks after the sale, complainant expressed a desire to sell the business, and said he was going to put an advertisement in the paper for that purpose; that he offered to sell the business to the witness for $300 less than cost; that he had offered to sell to others; that complainant's cook had the smallpox, and the premises were closed, and a sign placed in the window which read, "Closed on account of public safety;" that complainant continued to run the business down to that time; and that after the business was closed, complainant made threats of suit.

Defendant put in evidence two letters written him by complainant. In the first, dated January 18th, 1906, complainant alluded to negotiations with a third party for the sale of the business, and suggested that he would not be able to accept

the offer made by such party unless the defendant accepted $800 in payment of the $1,000 then due him. The letter continues: "This I think you will find to your advantage to do as it would be practically a cash sale for you of $1,800, which is all the business is worth. I bought the business on your statement that you were making $150 a month, I knew pretty near the value of stock and fixtures, and would never have given the price, but that I thought the business was paying about what you said. I really don't think you knew what you were making, and may not have intended to say anything to deceive me; I dont believe you did, still the statement was misleading, and my lawyer tells me, would make the foundation for a suit to recover, and set aside the sale." In the letter dated January 19th, 1906, complainant said: "Kindly let me know at once what you would be willing to allow for ice cream business, as the party I am dealing with would take café without it. I wish you would come down soon, so we could talk matters over. Let me hear from you as soon as possible."

The bookkeeper who had kept the books for the defendant company testified that, during the period covered by the negotiations leading up to the sale, the books were lying on the desk and accessible to the complainant. Witness had examined those books, and stated that the daily receipts from the café and ice cream business for July, 1905, were $44.53, August $40.16, September $42.21, October $41.28, November $41.24, December $37.94. Defendant also introduced evidence to the effect that a deterioration of the service followed the sale to the complainant, which resulted in a falling off of the busi

ness.

Dr. William C. Fowler, medical inspector of the District in charge of contagious diseases, testified that he inspected the premises adjoining said café on the 28th of February, 1906, and there found cases of smallpox; that the house was quarantined for a period of time; that Mr. McSween called to see him at the health department "and talked over the situation, and remarked that the waiters or some of the employees of the dining room had been carrying into that house, adjoining

Opinion of the Court.

[37 App. (the affected premises), food, and he was uneasy on that account;" that Mr. McSween stated, according to the doctor's best recollection, that "he thought it was best to close up his place for awhile;" that within a day or two the doctor observed a placard in the window of the café stating that the place was closed for the public good, or words to that effect; that on the 2d of March a man who had been employed in the lunch room was found to be suffering from smallpox, and was taken to the smallpox hospital.

Mr. Charles Cowles Tucker, Mr. J. Miller Kenyon, and Mr. Henry B. F. Macfarland for the appellants.

Mr. John C. Gittings and Mr. J. Morrill Chamberlin for the appellee.

Mr. Justice ROBв delivered the opinion of the Court:

Without stopping to inquire whether it was incumbent upon the complainant, before invoking the aid of equity, to offer, so far as practicable, to place the defendant in the position it occupied when the sale was made, we pass at once to the question whether the complainant has made out such a case of fraudulent representation as to sustain the decree.

To rescind a sale upon the ground that it was induced by false and fraudulent representations, and thus judicially brand the vendor as a fraud, is a serious matter, and a court of equity will not exercise such extraordinary power unless the evidence is of a very convincing character. "Canceling an executed contract is an exertion of the most extraordinary power of a court of equity. The power ought not to be exercised except in a clear case, and never for an alleged fraud, unless the fraud be made clearly to appear; never for alleged false representations, unless their falsity is certainly proved, and unless the complainant has been deceived and injured by them." Atlantic Delaine Co. v. James, 94 U. S. 207, 24 L. ed. 112. See also, Shappirio v. Goldberg, 20 App. D. C. 193.