Traub Co. v. Coffee Break Service, Inc.

Plaintiff brought an action to set aside the purchase of a business on the ground of fraud. Defendants denied the fraud and cross-complained for the balance due on the purchase price which was represented by a promissory note. The trial court, sitting without a jury, gave judgment for defendants and cross-complainants, finding that the alleged misrepresentations of fact had not been shown to have been made by the preponderance of evidence. The court granted plaintiff’s motion for new trial and defendants appeal therefrom.

Defendants Nat Krupp and Morton W. Smith were owners of all the stock of Coffee Break Service, Inc., which operated a coffee distribution business. The Traub Company purchased the entire business for the sum of $58,300 with a down payment of $24,300 and the balance of $34,000 represented by a promissory note.

In support of their action to set aside the purchase and as a defense to a cross-complaint on the promissory note, plaintiff contended that defendants represented that the business as operated at the time of the sale was earning net profits of $40,000 per year; that it had never been offered to anyone for sale; that all its equipment complied with the…