Williams v. Rank & Son Buick, Inc.
170 N.W.2d 807, 44 Wis.2d 239 (1969)
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Rule of Law:
A party claiming fraud cannot be said to have justifiably relied on a misrepresentation if the falsity of that statement is obvious and could have been discovered by the party through the exercise of ordinary observation and care.
Facts:
- A car salesman orally represented to a prospective buyer that a used Chrysler Imperial was equipped with air conditioning.
- The buyer stated that the presence of air conditioning was the main reason he decided to purchase the vehicle.
- The dealership allowed the buyer to take the car off the premises for an unsupervised inspection lasting approximately one and a half hours.
- The buyer was a high school graduate who operated his own business with his brother.
- The buyer purchased the car without attempting to operate the air conditioning unit.
- After the sale was complete, it was discovered that the car was not equipped with air conditioning.
Procedural Posture:
- The buyer (respondent) sued the car dealership (appellant) in the Wisconsin circuit court, a trial court, for fraud.
- The trial court found in favor of the buyer, concluding the dealership had committed fraud.
- The dealership appealed the trial court's order to the Supreme Court of Wisconsin.
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Issue:
Does a car buyer justifiably rely on a salesperson's oral misrepresentation that a car has air conditioning when the buyer had ample opportunity to inspect the vehicle and could have easily discovered the absence of the feature through ordinary observation?
Opinions:
Majority - Hanley, J.
No. A buyer's reliance on a seller's misrepresentation is not justified if the buyer fails to exercise ordinary care to discover a falsity that is obvious upon reasonable inspection. While a false statement was made, a claim for fraud also requires justifiable reliance. A party may not blindly act on a statement in disregard of an opportunity to learn the truth. In this case, the buyer was a businessman who had the car for an hour and a half and could have discovered the absence of air conditioning with a 'mere flip of a knob.' Because the falsity of the representation was easily discoverable by exercising ordinary attention, the buyer's reliance was not justified as a matter of law.
Dissenting - Wilkie, J.
Yes. The question of whether reliance is justifiable is a question of fact for the trial court, and its finding should not be overturned unless it is against the great weight and clear preponderance of the evidence. The majority's decision improperly revives the doctrine of 'caveat emptor' (let the buyer beware). The parties had unequal bargaining power, and there is no evidence the buyer was familiar with auto air-conditioning systems, especially 'factory' units which may not be obvious. Given that the car was purchased in March, it is understandable that the buyer would not test the air conditioner. The trial court's finding of justifiable reliance was reasonable and should be affirmed.
Analysis:
This decision places a significant limit on actionable fraud claims by reinforcing the buyer's duty to conduct a reasonable inspection. It establishes that the element of 'justifiable reliance' can be negated as a matter of law if a plaintiff fails to notice an 'obvious' falsity, effectively introducing a contributory negligence standard into fraud analysis. The ruling may weaken consumer protection by allowing sellers to escape liability for direct misrepresentations if a court later determines the buyer should have been more careful. The dissent highlights the tension between this holding and the modern trend toward greater consumer protection.
