Basden v. Mills

• Court: Oklahoma Supreme Court
• Writing for the Court: JACKSON
• Citation: Basden v. Mills, 472 P.2d 889 (Okla. 1970)
• Decision Date: 09 June 1970
• Docket Number: No. 42257,42257
• Parties: E. L. BASDEN, Plaintiff in Error, v. Fred MILLS and Nellie Mills, husband and wife, Defendants in Error.

Page 889

472 P.2d 889

E. L. BASDEN, Plaintiff in Error, v. Fred MILLS and Nellie Mills, husband and wife, Defendants in Error.

No. 42257.

Supreme Court of Oklahoma.

June 9, 1970.

Rehearing Denied July 14, 1970.

Syllabus by the Court

1. Where fraud is properly alleged upon the one hand and denied upon the other, the existence or nonexistence of such fraud becomes a question of fact for the jury to determine under proper instructions, and upon appeal the verdict of the jury upon such facts will not be disturbed by this court, if there is evidence reasonably tending to support such findings.

2. Where exceptions are not saved to instructions, as required by 12 O.S.1961, Sec. 578, this court will review such instructions only to determine whether they are free from fundamental error.

Appeal from the District Court of Pittsburg County; Robert J. Bell, Judge.

Action by plaintiffs, Fred Mills and Nellie Mills, for damages for fraud, against defendant E. L. Basden. From verdict and judgment for plaintiffs, defendant appeals. Affirmed on condition.

Baumert & Cornish, Loren McCurtain, as counsel, McAlester, for plaintiff in error.

Charles V. Foor, Stipe, Gossett & Stipe, by Gene Stipe, McAlester, for defendants in error.

JACKSON, Justice:

In the trial court, plaintiffs Fred Mills and his wife sued defendants E. L. Basden and his wife for damages for fraud. Before the jury trial the action was dismissed as to Mrs. Basden and verdict was for plaintiffs and against defendant E. L. Basden for actual and punitive damages in the total amount of about $48,000.00. After plaintiffs filed a remittitur which was required by the trial court as an alternative to the granting of a motion for new trial, judgment was entered for plaintiffs in the amount of $1186.42 for actual damages and $25,000.00 for punitive damages. Defendant appeals.

Plaintiffs were the owners of a business property in Quinton, Oklahoma, which was subject to mortgages held by defendant Basden in the approximate amount of $12,000.00. The allegations of fraud arise out of a transaction for the sale of this property to a third party for $25,000.00. Briefly summarized, the allegations were that, after a course of conduct during which defendant gained the respect and confidence of plaintiffs and became their trusted business and financial advisor, defendant, in the course of assisting with and participating in the negotiation and consummation of this sale, fraudulently represented to plaintiffs, by his words and conduct, that under the instruments he prepared effectuating the sale, and which they signed, they would be paid for their 'equity' in the property as soon as the transaction was completed, with money he would lend to the purchaser for that purpose.

In the briefs in this court, defendant argues eight propositions, most of which concern either the sufficiency or admissibility of the evidence, or the correctness of the instructions to the jury. The defendant did not testify at the trial, with the result that much of plaintiff's evidence, including some that only the defendant could deny, was uncontradicted. Also, he did not object to any of the court's instructions to the jury and did not offer instructions for the court's consideration.

The evidence shows that in 1956, plaintiff Mills, a barber and carpenter, began the construction of a building to be used as a combination residence-restaurant service station. He did much of the work himself, stopping when he ran out of money, and beginning again when he was able to borrow some. Most of the money he borrowed during the early years came from a Mr. Etchison, from whom he had been borrowing money for many years. He also borrowed from banks and other sources.

The defendant, Mr. Basden, who was in the loan business, stopped at the building site several times to talk with plaintiff Mills and was aware of the slow progress being made. On one of these visits he offered to lend Mills money if he ever needed it. In 1961 Mills began to borrow money from Basden, and did so on several occasions thereafter. In each case, the plaintiff would tell Basden what he needed and for what purpose, and Basden would then write him a check. A day or two later Basden would come by the building site or plaintiff's barber shop with a promissory note and mortgage for plaintiff and his wife to sign; these were printed forms with only the total amount of the loan filled in. Mills testified that he trusted Basden to fill in the details; that he did so properly; and that Mills came to depend on the honesty, integrity and business judgment of Basden. Basden at all times expressed an interest in helping Mills complete the project and apparently did not require payments on the principal amount of any of the notes before the job was completed, but was satisfied with payments of the interest as it accrued. In response to inquiries from Mills as to how much he owed him and what the required payments would be, Basden told him they would wait till the job was completed and then decide how much he could afford in the way of payments. During this time Mills borrowed a total of about $12,000.00 from Basden and gave mortgages covering the building site, his home, some vacant lots in Quinton, the fixtures in his barber shop, and some restaurant fixtures.

The building was apparently completed in 1962, and the business was opened with the Mills family operating it, although Mills himself continued to operate his barber shop nearby. At that time he again asked Basden to 'set me a payment' but Basden suggested that they wait to see how the business did before setting the monthly payment. This arrangement seems to have continued for some time, with Mills paying the interest and possibly a little on the principal.

About two years later, Mills, with Basden's approval, decided to sell his business in order to pay his indebtedness to Basden, and the smaller amounts he had borrowed from others before his dealings with Basden. Early in 1964 a Mr. Eppler, then living in New Mexico but owning a farm in Haskell County, Oklahoma, and some other property, came to see him. He agreed to pay Mills $25,000 for the property but indicated that he would have to borrow the money. Since Eppler was not acquainted with any bankers or money lenders in the vicinity, Mills said he would take him to see Basden.

In Basden's office in his home, Mills explained that he was selling his business to Eppler for $25,000, but that Eppler would need to borrow the money. Of course Basden already knew the extent of Mills' indebtedness to him. After hearing about the property Eppler owned, Basden said that he would make some investigations and that if Eppler owned what he said he did and owed no money on it, 'I can handle it'. At that time Basden suggested that 'There should be a contract drawed up'. Basden then drafted the contract while Mills and Eppler waited. It may be described as a rather informally drawn contract of sale between Mills and Eppler, reciting a consideration of $25,000, with $5,000 to be paid within six months together with interest at 8% Per annum, and the remaining $20,000 to be paid in 120 monthly instalments of $242.66 each. Nothing was said in the contract about any existing promissory notes or the prior mortgages held by Basden. The first mention of a mortgage was in a sentence which required the buyer to keep the premises insured with a loss payable clause in favor of 'first party or mortgage holder'. It was also provided that the '$20,000 and $5,000 mortgages shall be secured by a first mortgage' on the property being sold, Eppler's farm in Haskell County, and his six acre home place near Carlsbad, New Mexico. The contract did not identify the 'mortgage holder' or mortgagee. Mills and Eppler then signed the contract. Before they left Basden told them he would draw the mortgages later and suggested that a 'possession agreement' was needed. After some discussion Mills agreed to give possession in two weeks and Basden told them he would draw the agreement later.

In the next few days Basden apparently made investigations as to Eppler's holdings and the value thereof. In one conversation with Mills he said that the Haskell County farm might be worth $40,000 or more, and that he would be 'well secured for his money.' In others, he suggested that Mrs. Eppler, whose signature was necessary on the mortgages, 'acts like she doesn't want to go through with the deal', and that 'if we don't get her name on the mortgage I won't be able to pay you your money'.

About 4 days after the original conference Mills, Eppler and their wives were having coffee in the restaurant. Basden came in with the necessary instruments to close the transaction. He handed mortgages to Mr. and Mrs. Eppler to sign, and handed to Mills an instrument captioned 'Agreement' for him and his wife to sign. Mills thought it was the 'possession agreement', signed it without reading it, and handed it to his wife saying 'Sign it, we have to move anyway'. However, his wife read the 'Agreement' and did not sign it. During this time Mills, being rather anxious as to whether Mrs. Eppler would sign the mortgages or not, was watching her. Basden took Mrs. Mills into the kitchen of the restaurant where Mrs. Mills told him she would not sign the instrument because it provided that Basden was to get all of his money before the Mills got theirs. Basden then told her the instrument was 'drawed up legally for my security', and that 'When we get all the papers signed, you are going to get your money'. On her inquiry, he also told her that Mr. Mills knew what he had signed. They then returned to the others and she signed the instrument. In the meantime, Mr. and Mrs. Eppler had signed the notes and mortgages, which named Basden as payee and mortgagee.

The instrument signed by the Mills was as follows:

'I, E. L. Basden, holds a first mortgage from Henry Eppler Jr and his wife Lorene Eppler, dated this 24th day of...