Joseph Frederick HORNE and wife, Dixie Smith Horne
v.
C. A. CLONINGER, Jr.
No. 316.
Supreme Court of North Carolina.
December 13, 1961.*113 Richard A. Williams, Newton, for defendant, appellant.
Corne & Warlick, by Thomas W. Warlick, Newton, for plaintiffs, appellees.
HIGGINS, Justice.
The court correctly held the evidence sufficient to go to the jury on the issues of fraud and damages (Brooks v. Ervin Construction Co., 253 N.C. 214, 116 S.E.2d 454) but insufficient on punitive damages (Swinton v. Savoy Realty Co., 236 N.C. 723, 73 S.E.2d 785). The charge on the issue of fraud was correct and in accord with the established authorities. With respect to damages, however, the court fell into errorinduced in part, at leastby the emphasis the parties placed on the cost of moving the house from the sinking to a solid foundation.
On the issue of damages, the court charged: "That is, if you should find that they (plaintiffs) have used ordinary and reasonable diligence in attempting to see what this situation was * * * and find that it would now cost somewhere in the neighborhood of the amount asked for to fix it, then they would be entitled to recover that amount or some amount in that general vicinity. * * * The result is * * * that you can return as your answer to this second issue, if you come to it, such amount from $1.00 on up to the amount sued for, $7,100, or any figure in between that you find represents the cost of repairing the property at a time when it was discovered by the plaintiffs, or in the exercise of ordinary and reasonable diligence it should have been discovered by them."
The courts have been careful to define the rights of parties to a fraudulent transaction. The purchaser has the right at his election to rescind or to keep the property and recover the difference between its actual value and its value as represented. Hutchins v. Davis, 230 N.C. 67, 52 S.E.2d 210. "The great weight of authority sustains the general rule that a person acquiring property by virtue of a commercial transaction, who has been defrauded by false representations * * * may recover as damages in a tort action the difference between the actual value of the property at the time of making the contract and the value that it would have possessed if the representation had been true." 24 Am.Jur., Fraud and Deceit, § 227, p. 55. To like effect, Hutchins v. Davis, supra; Morrison v. Hartley, 178 N.C. 618, 101 S.E. 375; Lunn v. Shermer, 93 N.C. 164; Small v. Pool, 30 N.C. 47.
The rights of the parties are determined as of the date of the transaction. The statute of limitations on plaintiffs' cause of action, however, begins to run from the time the fraud was discovered, or should have been discovered. Solon Lodge etc., v. Ionic Lodge, 247 N.C. 310, 101 S.E.2d 8.
The jury, having established the fraud, should have awarded as damages the difference between the actual value and the value if the house and lot had been as represented. Cost of repairs, either at discovery or at the time of the trial, is not the test of actual damages. For the error indicated, the judgment and verdict are set aside and the defendant is awarded a
New Trial.