Capitol Dodge, Inc. v. Haley

• Decision Date: 08 November 1972
• Docket Number: No. 1271A281,1271A281
• Citation: 154 Ind.App. 1,288 N.E.2d 766
• Parties: CAPITOL DODGE, INC. and Bill Allen, Defendants-Appellans, v. Thomas C. HALEY, Plaintiff-Appellee. Thomas C. HALEY et al., Defendants-Appellants, v. CHRYSLER CREDIT CORPORATION, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 766

288 N.E.2d 766

154 Ind.App. 1

CAPITOL DODGE, INC. and Bill Allen, Defendants-Appellans, v. Thomas C. HALEY, Plaintiff-Appellee.

Thomas C. HALEY et al., Defendants-Appellants, v. CHRYSLER CREDIT CORPORATION, Plaintiff-Appellee.

No. 1271A281.

Court of Appeals of Indiana, Second District.

Nov. 8, 1972.

Richard M. Mantel, Mantel & Semones, Indianapolis, for Capitol Dodge and Bill Allen.

Howard L. Whitecotton, Wendell W. Mayer, Endsley, Whitecotton, Timmons & Endsley, Indianapolis, for Thomas C. Haley, Loren M. Haley and Edna Haley.

SULLIVAN, Judge.

The two lawsuits for damages were consolidated for trial below and for appeal to this Court. They involve an installment contract purchase of an automobile from defendant-appellant Capitol Dodge, Inc. and more particularly alleged fraudulent misrepresentations concerning insurance coverage made by an additional defendant, Bill Allen, a salesman for Capitol Dodge. The financing agent for the purchase and holder of the installment contract after execution was Chrysler Credit Corporation.

The record discloses that Thomas Haley, together with his parents, Loren M. Haley and Edna Haley, executed a retail installment contract on April 10, 1970 for the purchase by the son of an automobile from Capitol Dodge. ¹

Thomas Haley testified that he had told the salesman before the contract was signed that he had to make sure that he could have 'full coverage insurance' because he didn't want to be driving and get sued, and that Allen replied 'we got you all taken care of--you don't have anything to worry about.'

Loren Haley testified that in the course of negotiations Haley told Allen that he wanted his son to have 'full coverage' and 'that (he) wouldn't have anything to do with the car unless it had full coverage insurance.' According to the senior Haley, Allen assured him that he had nothing to worry about, and that Thomas would be fully covered. Mr. Haley then signed the contract. Mr. Haley indicated, however, that he did not read the contract prior to signing it.

Thomas Haley testified in essence that he did not read the contract thoroughly but only looked at the top part of the contract which included the provision concerning insurance coverage. The precise contract provision concerning insurance coverage was limited to 'physical Damage' coverage only for the vehicle purchased by Haley. No liability coverage was afforded by the contract. The face of the contract, otherwise printed in blue ink, contained a provision in red letters near the point at which the Haleys signed as follows:

'The Insurance Contracted for in Connection With This Retail Installment Sale Does Not Provide for Liability Insurance for Bodily Injury and Property Damage'

Nothing of record, however, indicates that Haley's attention was specifically called to the exclusionary language. See Woodruff v. Clark County Farm Bureau Coop. Assn. (1972), Ind.App., 286 N.E.2d 188.

The line immediately above the space provided in the contract for the purchaser's signature read as follows:

'NOTICE TO THE BUYER: Do not sign this contract before you read it or if it contains any blank spaces. You are entitled to an exact copy of the contract you sign.'

On May 20, 1970, Thomas Haley received a notice of cancellation of the physical damage insurance from the insurer, Car City Insurance Company of Detroit, Michigan, effective May 31, 1970.

Thomas Haley subsequently retained counsel and was advised not to drive the car without insurance but to continue payments. Thomas testified that he made one more payment on the contract. He also stated that he eventually demanded from both Capitol Dodge and Chrysler Credit that the contract be rescinded, that his down payment of $395.00 be returned to him within fourteen days; and that the sum of $495.70 representing a 'trade-in' by Haley be returned to him within the same period. Haley also tendered the return of the purchased automobile. Upon refusal of his demand and having discontinued payments, he returned the car to Capitol Dodge. Chrysler Credit, in turn, repossessed the car and sued Haley for the deficiency.

Thereafter, Haley's lawsuit against Capitol Dodge and Allen was tried to a jury which returned a verdict in favor of Haley for $874.90 as compensatory damages and $2,000.00 punitive damages. Chrysler in its suit received a verdict against Haley and his parents for $1,226.44, representing the deficiency balance upon the auto. Judgments were entered upon the verdicts.

1. THE CAPITOL DODGE CASE

Thomas Haley is the sole plaintiff in the claim for relief against Capitol Dodge and Bill Allen. The thrust of his complaint is to the effect that he was induced to execute the contract for purchase of the automobile by the representations of the salesman, Allen, that 'full coverage' insurance was provided. It should be noted that Haley sought monetary damages only, not rescission of the contract.

The sole assertions of error argued in appellant Capitol Dodge's brief are to the effect that:

1. Plaintiff Haley did not prove all the essential elements of fraud, i.e., representations, falsity, scienter, deception (reliance) and injury.

2. The award of punitive damages was erroneous.

PUNITIVE DAMAGES NOT UNWARRANTED AS MATTER OF LAW

Because it requires little discussion, we treat appellant's assertion as to punitive damages first. As stated in Jones v. Hernandez (1970), Ind.App., 263 N.E.2d 759, 763:

'In Indiana punitive damages are proper where the acts of the wrongdoer are such as to indicate heedless disregard of the consequences.'

In the light of what we state hereinafter, concerning the propriety of the jury's finding of fraud, we cannot say that as a matter of law that the jury was unreasonable in assessing punitive damages. In this connection, it might be kept in mind that punitive damages are not compensatory in their nature but are designed to punish the wrongdoer and to dissuade him and others from similar conduct in the future. Indianapolis Bleaching Co. v. McMillan (1916), 64 Ind.App. 268, 113 N.E. 1019. We deem such awards to be particularly

appropriate in proper cases involving 'consumer fraud'. JURY

NOT UNREASONABLE IN FINDING ALL ESSENTIAL ELEMENTS

OF FRAUD PRESENT

With respect to the more broadly sweeping contention of Capitol Dodge we treat separately those elements of fraud which Capitol asserts were unproved.

A. FALSITY OF REPRESENTATIONS

There can be no dispute that the installment contract in question did not provide for liability insurance coverage. The 'full coverage' representation by Capitol's salesman, Mr. Allen, was therefore patently false. In this connection it was not inappropriate for the jury to conclude that the parties to the transaction were all aware that 'full coverage' was intended by Haley to include liability insurance since Thomas Haley testified that he told Capitol's salesman:

'. . . I don't wanta be driving and suing somebody and getting my hind end sued off.'

B. SCIENTER

The statements heretofore alluded to as made by Capitol's salesman could have reasonably been found by the jury to have been made recklessly and without regard to their truth or falsity. Such unconcern for the truth may serve as an imputation of scienter. Jordanich v. Gerstbauer (decided October 4, 1972), Ind.App., 287 N.E.2d 784. When coupled with a finding by the jury that Haley was not unreasonable in his reliance upon such statements, this imputation serves to underpin a proper verdict against Capitol for fraud.

C. RELIANCE

Capitol's most plausible argument concerns the matter of reliance by Haley upon the representations made by Allen, and we are inclined to agree that it perhaps harbors a measure of naivete to conclude, without reservation or hesitance, that a literate adult who insists upon the inclusion of a particular subject in a purchase contract would bind himself to that contract without availing himself of the opportunity to read the document in order to satisfy himself that the desired subject was within the contract terms. See Miller v. Powers (1889), 119 Ind. 79 at 87, 21 N.E. 455. Nevertheless, the question whether Thomas Haley reasonably relied...