made fraudulent representations to him about the car's engine in order to induce the sale. Specifically, Singer alleged that he was led to believe that the car contained a particular engine, a rare and fragile piece of machinery, which is traditionally paired with the Lotus 24 chassis. When shortly after his purchase of the car, Singer discovered otherwise, he requested of Ward to rescind the contract of sale. Ward refused to unwind the transaction.
Following a bench trial, I reserved decision pending the examination of post-trial submissions. After reviewing the submissions, I now reaffirm my initial oral determination that the sale was fraudulently induced. I find that defendant Ward made affirmative fraudulent misrepresentations to Singer in order to induce him to purchase the car, and that plaintiff is entitled to the remedy of rescission.
Grand Prix racing had its genesis with the establishment of a racing series in the first decade of this century. The first Grand Prix event took place in Le Mans, France in 1906. The organizers of the series created a "formula," or a list of parameters within which an event's and a race car's attributes must fall in order to qualify. These guidelines range from course distance and the number of qualifying events to a car's minimum weight requirements and maximum engine displacement. The formula was altered from time to time to accommodate developing automobile technology.
After World War II, the World Championship for Drivers was founded. It sanctioned a new series of racing events -- "World Champion Formula One." The FIA, or the Federation Internationale de l'Automobile, the governing body for sanctioned Grand Prix events, administered the Championship and set the Formula One regulations. The first Formula One event was held in 1950, at Silverstone, England. Top finishers in FIA sanctioned Grand Prix events were awarded points. At the end of each racing season, the racer that had earned the most points in a set number of events was declared to be the World Driving Champion. The formula originally adopted for Formula One races set a maximum engine displacement of 1.5 liters. That cap remained in effect until 1966. Engines in excess of this maximum cylinder capacity were disqualified; races that accepted cars that violated Formula One parameters could not award points to the race's winners. These races were not considered to be official "Grand Prix" events. Pl. Exh. 14; Larry Edsall, Some ABCs of Auto Racing, Autoweek, Jan. 11, 1988, at 53; Cynthia Claes, Those Numbing Numbers, Autoweek, Dec. 17, 1990, at 86.
Uncontroverted expert testimony has already established that only twelve Lotus 24 automobiles were ever built and that only nine are known to still exist. R. of 5/9/94 at 84. They were always raced in Formula One events with either a 1.5 liter "BRM" engine, or a 1.45 liter Coventry Climax engine. Id. at 78-79. Throughout the history of Grand Prix Formula One racing, Lotus 24 automobiles were never paired with two liter engines of any make. Id. at 34-35, 80-81. By the time the displacement formula was relaxed by the FIA in 1966, the Lotus 24 had retired from the Formula One racing scene. Id. at 81.
Defendant has presented evidence that two liter engines could be "destroked," that is, such engines could be mechanically adapted to a lesser 1.5 liter displacement so that they could qualify for an FIA-sanctioned racing event. However, no evidence was offered at trial that any such adaptation was ever attempted with an engine appropriate to a Lotus 24 in an FIA-sanctioned Grand Prix event. It is true that after 1966 and, indeed, to this day, two liter engines are indeed paired with Lotus chasses in certain racing events. However, those events are nonsanctioned and otherwise known as vintage historical races. They are non-FIA; therefore, participation in these events could not earn the race winners legitimate points toward the Championship.
However, for Singer, a vintage car collector, historical racing is entirely beside the point. Singer collects vintage cars; he does not race them. Vintage car collectors are motivated to purchase an automobile by its provenance and its investment potential rather than by any points-winning capability. Because throughout Formula One history a Lotus 24 chassis had never been paired with a two liter engine, the pairing of a Lotus 24 with a two liter BRM engine would seem to a serious collector to indicate an almost blasphemous contempt for the car's distinguished history. As only thirty-one 1.5 liter BRM engines and thirty-three Coventry Climax engines were ever manufactured, they are of tremendous historical significance to collectors of vintage racing machinery and memorabilia. R. of 5/9/94 at 91, 134.
Singer first learned that the Lotus 24 race car which is the subject of this action was for sale from an advertisement that Ward placed in the November 27, 1989, advertisement of Autoweek. It read as follows:
LOTUS TYPE 24/BRM Formula One, 1962 -- Chassis # 945 w/6-spd Colatti box, excellent original condition throughout, first class racing history, some spares, $ 300,000.
Singer testified that he had inquired about the engine paired with the Lotus in late November or early December of 1989. R. of 5/9/94 at 39-47. It is uncontested that the BRM engine that is now found in chassis number 945 has a two liter displacement and that it was manufactured sometime after the Lotus 24 had retired from Formula One competition in 1965.
Though defendant Ward testified that he never represented the engine to have a cylinder capacity of 1.5 liters, for the reasons set forth below, I do not credit his testimony. I find as a matter of fact that Singer had indeed been assured by Ward at that time that the engine was a historically appropriate 1.5 liter BRM model. I also find that this assurance was a material factor in Singer's decision to purchase the car.
Evidence abounds that Ward made an affirmative misrepresentation as to the engine's displacement. Singer's contemporaneous annotations on the Autoweek magazine page confirm that such a representation was actually made. Next to the Lotus advertisement, Singer had pencilled in his own hand. "vint. raced in UK 1.5 1. old wheels new. 2 bodies - Dick Ward." Def. Exh. C. Singer has testified that he had made these notations in late November or early December of 1989, when he first spoke with Ward about the car. As noted above, Singer's writings on the page includes the notation "1.5 1." i.e., that the engine in fact possessed a 1.5 liter displacement. Singer produced documentary evidence, in the form of his telephone bill that revealed that there were communications between Ward and himself as early as December of 1989. On December 10, 1989, only two weeks after the advertisement appeared in Autoweek, Singer telephoned Ward and spoke with him for twenty-six minutes. Pl. Exh. 19; R. of 5/11/94 at 30. Singer's writings were consistent both in format and in substance with his account of this telephone conversation. At one point, Ward's counsel implied that the notes might have been made after the event. Whatever slight possibility there was that this occurred is belied by defendant's false testimony that he never spoke to Singer until sometime in late February or early March of 1990. R. of 5/10/94 at 205. Singer's telephone records establish the falsity of Ward's claim. Moreover, given Singer's demonstrated regard for provenance, it is inconceivable that he would have discussed every feature of the Lotus with Ward save the engine. Therefore, on the basis of this evidence alone, I find Ward's version of the evidence not to be credible. Ward made an affirmative misrepresentation as to the cylinder capacity in December of 1989, three and one-half months prior to the date on which the parties contracted to sell the car.
This conclusion is reinforced by other circumstantial evidence. Sometime prior to the sale, Ward forwarded a 1984 Historic Sports Car Club Vehicle Identity Form ("H.S.C.C. Form") to Singer that designated the engine to be a 1.5 liter BRM that was manufactured in 1962, the same year as the Lotus 24 chassis. The form guaranteed the engine in the Lotus to be "to the original specifications for that chassis number." Pl. Exh. 2, at 4. Though Ward contends that he had sent the form after Singer entered into the sale, the facsimile "cover sheet" sent together with the H.S.C.C. Form evidences that the document was sent prior to the sale for the purpose of inducing Singer to purchase the car. R. of 5/10/94 at 229, 235.
The cover sheet, after noting the inclusion of a series of photographs of the Lotus in the facsimile transmission, reads in pertinent part: "Also I have enclosed the H.S.C.C. Identity Form...Hope you like the car - let me know." Pl. Exh. 2, at 1. The language used by the defendant patently indicates that at the point in time at which the photographs and the H.S.C.C. Form were transmitted to Singer, an agreement between the two parties had not yet been reached. The words themselves imply that Singer had yet to be convinced that he should buy the car that he had long coveted.
Ward additionally warranted in the contract of sale that the engine was "proper and correct for the car." Pl. Exh. 4. The contract was executed on March 31, 1990 and Singer purchased the Lotus from Ward for $ 255,000.00.
These additional facts support the conclusion that Ward's version of the facts is not credible, and that Ward engaged in material misrepresentation in assuring Singer on at least one occasion prior to the sale that the engine had a 1.5 liter displacement. In toto, it is clear that Ward's actions amount to egregious and unquestionable misrepresentations, and that such misrepresentations were made prior to the sale.
Soon after Singer took possession of the car on April 22, 1990, he dismantled the car in order to clean it. After taking apart the chassis, he discovered that the serial number of the engine did not comport with the serial number listed on the H.S.C.C. Form. Further investigation and several consultations confirmed his suspicion that the BRM engine had a maximum cylinder capacity of two thousand cubic centimeters, or two liters.
Exactly one month after Singer took possession of the car, he requested that Ward take it back and refund the sums advanced to him. Ward refused, and Singer filed the instant action. Singer also entered into negotiation with a potential third-party purchaser in an attempt to limit his exposure. Those deliberations never progressed beyond nascency. Def. Exhs. E-HH.
In summary, I make the following findings of fact:
First, because of Singer's status as a collector and his particular concern with provenance, there is no reason to doubt his claim that Ward had specifically assured him in the 26 minute conversation on December 10, 1989 that the car contained a 1.5 BRM liter engine, one of only two models of engine that would be considered historically appropriate for the car, given the Lotus 24's documented racing record.
Second, as noted above, contrary to Ward's testimony before this court, the H.S.C.C. Form was forwarded to Singer prior to the sale and represented the engine to be other than it actually was, namely that it described the engine to be "to the original specification for [a Lotus 24]," and noted the serial number to be other than the number on the engine which Singer actually purchased.