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Borbonus v. Daoud

Decided: January 20, 1955.


Haneman, J.s.c.


Plaintiffs herein originally brought suit for the rescission of a contract for the purchase of a diamond ring, or in the alternative, damages for the breach of a warranty in connection with said purchase. At the time of trial, plaintiffs abandoned their demand for rescission and restricted the relief demanded to damages for said alleged breach of warranty.

The facts in connection herewith are as follows: Plaintiffs had, over a period of time, transacted a considerable amount of business with the defendant Maud Daoud, a dealer in precious stones and objects of art, both in the form of loans made to and jewelry purchased from her. On or about February 3, 1952 the plaintiffs were staying at the Hotel Savoy Plaza in New York City as the guests of defendant Maud Daoud. At that time the defendant was indebted to the plaintiffs in the sum of $25,000 and while there they advanced to her an additional $25,000. On February 5, 1952, just prior to the plaintiffs' return to their home in Ocean City, New Jersey, while in the defendant's suite at the Hotel Savoy Plaza in New York City, they had exhibited to them by her one pear-shaped diamond ring. The plaintiffs had had considerable experience in the purchase of diamonds, as was demonstrated not only by the jewelry which was traded in on account of this purchase, but by various other items of jewelry which they had from time to time deposited with the defendant on consignment for sale.

Plaintiffs contend that the defendant stated that the diamond in question was "perfect and flawless in every respect,"

and of the weight of 15 carats. The defendant denies the statement of perfection and absence of flaw. This alleged statement becomes important by reason of the facts hereinafter set forth, and the connotation given such a statement in the diamond trade. In that trade, the three elements which are considered in grading a diamond are: (1) the color of the stone, (2) the make, manufacture or cut of the stone, and (3) the perfection of the stone itself. A stone which is perfect in all three of these respects is denominated a gem. Plaintiffs contend, in effect, that what the defendant warranted was that the diamond was a gem, i.e. , perfect in color, perfect in make, and without any flaw whatsoever. Although it is admitted that the diamond in question was of an excellent blue-white color and of a good make and manufacture, there did exist a flaw or imperfection in the stone, consisting of a small carbon spot discoverable by the use of a 7- or 8-power loop and not normally visible to the naked eye. The flaw in the stone was such as was classed in the trade as "v.v.s.," meaning very, very slight. The presence of this flaw prevented the diamond from being classed a perfect stone.

Within three hours after the ring had first been shown to the plaintiffs they had consummated the sale had the ring sent out to a jeweler to be "sized" to fit the finger of Georgia Borbonus, and left for Ocean City.

The stone here in question was purchased by the defendant from Harry Winston, Inc., one of the largest dealers in diamonds of this kind in the world. Although the stone had been consigned to the defendant and several other dealers or retailers for sale at $60,000 some time prior to February 1952, on or about February 1, 1952 the sale price had been reduced to $55,000. On February 5, 1952 the price was again reduced, at defendant's request, to $53,000, at which price it was sold to her, less a discount of 5%.

In considering this price and the testimony of the experts, hereafter alluded to, it must be remembered that the wholesale price is the price charged by the dealer to a retailer and

is free of any federal tax, and that the retail price is that charged by the ordinary retail jeweler to the public, and was, at the time of the sale here involved, subject to a tax of 20%.

The testimony of the plaintiffs and that of the defendant in connection with the alleged warranty is sharply at odds. The defendant and her witnesses deny the making of any such warranty as the plaintiffs allege. The testimony of the two plaintiffs is also in some conflict. Georgia Borbonus testified that the defendant advised her that the sale was being made at the defendant's wholesale cost, i.e. , $52,000 plus the federal tax, or a total of $58,000. William E. Borbonus, on the other hand, testified that at the same time and in the same conversation referred to by his wife, defendant said that her wholesale cost was $58,000 and it was at this price that she was selling the ring to the plaintiffs, without tax. I am satisfied that the plaintiff Georgia Borbonus' recollection is the correct one, especially in the light of the price for which defendant purchased the ring, and of the testimony of the defendant and her witnesses that she represented that she was selling the ring at her actual wholesale cost, plus tax. Although it might seem doubtful that the defendant would have consummated such a transaction at a price upon which simple arithmetic would seem to demonstrate that she sustained a loss, a more or less intimate knowledge of the manner in which these merchants transact their business would demonstrate that such a transaction was not unusual or peculiar.

It is always difficult, at best, to determine who of opposing witnesses is telling the tuth where there is such a complete conflict in the testimony as is here present. However, the truth may be ascertained by ...

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