Corpus Christi Area Teachers Credit Union v. Hernandez

• Decision Date: 24 July 1991
• Docket Number: No. 04-90-00668-CV,04-90-00668-CV
• Parties: CORPUS CHRISTI AREA TEACHERS CREDIT UNION, Appellant, v. Rogelio HERNANDEZ & Ludivina Hernandez, Appellees.
• Court: Texas Court of Appeals

Page 195

814 S.W.2d 195

CORPUS CHRISTI AREA TEACHERS CREDIT UNION, Appellant, v. Rogelio HERNANDEZ & Ludivina Hernandez, Appellees.

No. 04-90-00668-CV.

Court of Appeals of Texas,

San Antonio.

July 24, 1991.

Rehearing Denied Aug. 20, 1991.

Michael B. Schmidt, Corpus Christi, for appellant.

L.H. Warburton, Jr., Perkins, Oden, Warburton, McNeill, Adami & Paisley, Alice, for appellees.

Before BUTTS, CHAPA and BIERY, JJ.

OPINION

CHAPA, Justice.

Appellant, the Corpus Christi Area Teachers Credit Union, appeals an adverse judgment in favor of appellees, Rogelio Hernandez and Ludivina Hernandez. The dispute arose when Gene Allen Jones and the appellant allegedly defrauded appellees, obtaining title to appellees' 77 acres of land for a mere $4,000, when the appellees paid $50,050 for the land in 1983. Appellant presented no witnesses on its behalf during trial. Although appellant never denied that Jones perpetrated a fraud upon the appellees, it contends on appeal that it was not a party to any fraud, and asserts thirty-seven points of error, which we conclude present the following issues:

1) Whether there is no evidence or insufficient evidence to sustain the jury findings of fraud;

2) Whether the court erred in its charge;

3) Whether there is no evidence or insufficient evidence to sustain the jury findings on damages, or whether the damages findings are so grossly excessive as to require remittitur;

4) Whether the trial court erred in refusing to permit appellant to file appellant's Fourth Amended Original Answer and Special Exceptions on the eve of the trial; and,

5) Whether the trial court erred in overruling appellant's motion for directed verdict as to appellee, Ludivina Hernandez.

Initially, appellant contends that there is no evidence or insufficient evidence to sustain the jury finding of fraud against the Credit Union in Issue No. 1. The entire charge presented to and answered by the jury, was as follows:

Question No. 1

Do you find from a preponderance of the evidence that in connection with the transactions at or prior to the signing of the documents in question at Neel Abstract Co. that Defendant Credit Union, was guilty of fraud? You are instructed that "fraud" constitutes (1) false representation, concealment or failure to disclose material facts; (2) that the person responsible for the representation or concealment knew it was false, or made it recklessly without any knowledge of its truth as a positive assertion; (4) that it was relied upon; (5) that injury resulted.

Answer "Yes" or "No".

Answer: Yes

If you have answered the foregoing Question No. 1 yes, then answer the following Question Nos. 2 & 3. Otherwise, do not answer Question Nos. 2 & 3.

Question No. 2

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Rogelio Hernandez for damages, if any, resulting from the occurrence in question?

Answer in dollars and cents, if any.

Answer: $50,000

Question No. 3

What sum of money, if any, should be assessed against Corpus Christi Area Teachers Credit Union as exemplary damages?

"Exemplary damages" means an amount that you may in your discretion award as an example to others and as a penalty or by way of punishment, in addition to any amount you may have found as actual damages.

Answer in dollars and cents, if any.

Answer: $150,000.

In considering a "no evidence" or legal sufficiency point, we consider only the evidence favorable to the decision of the trier of fact and disregard all evidence and inferences to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988); Garza v. Alviar, 395 S.W.2d 821, 824 (Tex.1965).

In considering a factual sufficiency point, we may not substitute our judgment for that of the jury, but must assess all the evidence and reverse for a new trial only if the challenged finding is so against the great weight and preponderance of the evidence as to be manifestly unjust, shock the conscience, or clearly demonstrate bias. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986); Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (great weight and preponderance); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). Further, courts have emphasized that:

[i]n considering an 'insufficient evidence' point, we must remain cognizant of the fact that it is for the jury, as the trier of fact, to judge the credibility of the witnesses, to assign the weight to be given their testimony, and to resolve any conflicts or inconsistencies in the testimony.

Texas Employers' Ins. Ass'n v. Jackson, 719 S.W.2d 245, 249-50 (Tex.App.--El Paso 1986, writ ref'd n.r.e.), citing Commonwealth Lloyd's Ins. Co. v. Thomas, 678 S.W.2d 278, 289 (Tex.App.--Fort Worth 1984, writ ref'd n.r.e.).

The elements of actionable fraud in Texas are: "(1) that a material representation was made;" (2) "that it was false;" (3) "that when the speaker made it, he knew it was false or made it recklessly as a positive assertion without any knowledge of its truth;" (4) "that he made it with the intention that it be acted upon by the party;" (5) "that the party acted in reliance upon it;" (6) "and that he thereby suffered an injury." Voskamp v. Arnoldy, 749 S.W.2d 113, 119 (Tex.App.--Houston [1st Dist] 1987, writ denied), citing Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex.1983). "A jury finding of recklessness is sufficient to establish a basis for misrepresentation of facts." Trenholm, 646 S.W.2d at 930.

"In determining issues of fraud courts allow a wide latitude, and the evidence thereon may embrace all the facts and circumstances which go to make up the transaction, disclose its true character, explain the acts of the parties, or throw light on their objects and intentions", remaining cognizant that "[f]raud is deductible from artifice and concealment as well as from affirmative conduct of a character to deceive." Campbell v. Booth, 526 S.W.2d 167, 169 (Tex.Civ.App.--Dallas 1975, writ ref'd n.r.e.).

Further, "the rule that a party in interest may become liable by mere silent acquiescence for the fraudulent misrepresentations of a third party" is recognized in Texas. See Beazley v. McEver, 238 S.W. 949, 952 (Tex.Civ.App.--Dallas 1922, no writ). "The partaking of the benefits of a fraudulent transaction makes the participants principals and liable as such." Five Star Transfer & Terminal Warehouse Corp. v. Flusche, 339 S.W.2d 384, 387 (Tex.Civ.App.--Texarkana 1960, writ ref'd n.r.e.). "Each party to a fraudulent transaction is responsible for the acts of the others done in furtherance of the fraudulent scheme," and "all who participate are liable for the fraud, ... irrespective of proof that they shared in the profits, for the gravamen of the action is injury to plaintiff and not benefit to defendant." Crisp v. Southwest Bancshares Leasing Co., 586 S.W.2d 610, 615 (Tex.Civ.App.--Amarillo 1979, writ ref'd n.r.e.) (citations omitted).

A presumption of fraud is raised when the evidence discloses a extortionate and unconscionable contract. Fults v. Duren, 427 S.W.2d 951, 955 (Tex.Civ.App.--Houston [1st Dist.] 1968, writ ref'd n.r.e.). "Our courts universally hold that, where a contract, on its face, is so extortionate and unconscionable as to raise a presumption of fraud, it requires but a small amount of evidence to justify setting same aside," and "13 C.J. 366 states the rule as follows: 'Where the inadequacy (of consideration for contract) is so gross as to shock the conscience and common sense of all men, it may amount both at law and in equity to proof of fraud, oppression and undue influence.' " King v. Cliett, 31 S.W.2d 350, 354 (Tex.Civ.App.--Waco 1930, writ ref'd). "Our courts have uniformly held that, where a party, through fraud, obtains title to land, all those who participated therein or who received benefits therefrom are liable in damages to the party defrauded." Id. at 353.

"Where one has been induced to enter into a contract by fraudulent representations, the person committing the fraud cannot defeat a claim for damages based upon a plea that the party defrauded might have discovered the truth by the exercise of proper care." Isenhower v. Bell, 365 S.W.2d 354, 357 (Tex.1963); see also Trenholm, 646 S.W.2d at 933. "Indeed, in Texas, the doctrine has been carried to the length of protecting innocent victims who showed childlike faith in relying on misrepresentations of those who, as has been said, led them like lambs to the slaughter." Blaine v. Lowery, 157 S.W.2d 713, 716 (Tex.Civ.App.--Dallas 1941, no writ). Therefore, "[i]t is well settled that contributory negligence is no defense to a suit based on fraud, an essential element of estoppel." National Auto. & Casualty Ins. Co. v. Allco Ins. Agency, 403 S.W.2d 174, 179 (Tex.Civ.App.--Austin 1966, no writ). Further, it is recognized that where a claimant "has waived his suit based on negligence that there can be no defense of contributory negligence interposed by the [the defendant]." Id., at 177.

It is also well settled in Texas, that "[i]nferences may be drawn from actual facts proved." Beazley, 238 S.W. at 952. Moreover, "[f]ailing to produce evidence within its control or to call its own officers and employees or [a party's] field representative raise[s] a presumption or inference that such evidence and testimony, if produced, would have been unfavorable to [the same party] on the challenged findings." John Deere Co. v. May, 773 S.W.2d 369, 377 (Tex.App.--Waco 1989, writ denied).

The evidence, together with proper inferences and presumptions, viewed in the light most favorable to the verdict, reflects that the appellees utilized all their savings to purchased the 77 acres in question for $50,050 in 1983; that appellees made improvements on the land; that in June of 1986, financial problems forced the appellees to seek a $4,000 loan in response to an newspaper advertisement placed by Gene Allen Jones (hereinafter "Jones") which promised loans without credit checks; that Jones, being...