Crawford v. Smith

• Decision Date: 13 September 1971
• Docket Number: No. 56171,56171
• Citation: Crawford v. Smith, 470 S.W.2d 529 (Mo. 1971)
• Parties: Richard S. CRAWFORD, Plaintiff-Respondent, v. Emma SMITH, Defendant-Appellant.
• Court: Missouri Supreme Court

Page 529

470 S.W.2d 529

Richard S. CRAWFORD, Plaintiff-Respondent, v. Emma SMITH, Defendant-Appellant.

No. 56171.

Supreme Court of Missouri, En Banc.

Sept. 13, 1971.

Joseph G. Stewart, St. Louis, for respondent.

William R. Kirby, St. Louis, for appellant.

SEILER, Judge.

Plaintiff sued defendant for damages growing out of fraud, allegedly practiced on him by defendant in two related transactions, alleging that defendant represented that she owned certain common stock which she offerd to sell him; that plaintiff agreed to purchase the stock and paid $4,250 for it; that defendant, in fact, did not own the stock and that the representations were made for the purpose of defrauding plaintiff; that the stock had increased in value to $11 per share. Plaintiff sought damages in the sum of $27,500. Defendant's answer to the petition was a general denial and the affirmative defense of laches. A jury trial resulted in a verdict and judgment for plaintiff for $9,500. Defendant appeals. ¹ We affirm.

The evidence at the trial established that as of October, 1961, plaintiff Richard Crawford, defendant Emma Smith, and Eugene Schweigler, had been close friends for over eight years, during which time they were sales representatives for A. G Edwards & Sons, investment brokers. Mrs. Smith and Mr. Schweigler had been keeping company since about 1954 and were very close. During defendant's long acquaintance with plaintiff, she had never given plaintiff cause to distrust her. On or about October 23, 1961, Mrs. Smith represented to the plaintiff that she owned some shares of Marine Petroleum Trust Common, which she offered to sell him. After thinking it over and checking the price, plaintiff, on October 25, 1961, made what he thought was a purchase from defendant of 1,000 shares of Marine Petroleum Trust at $2.00 per share. This took place in defendant's apartment where plaintiff, defendant, and Schweigler were present. Schweigler prepared a written memorandum, which was signed by defendant and Schweigler, and read:

'10/25/61

Received from Richard Crawford $2000 for payment of 1000 shares com Marine Petroleum Trust @ $2.00 per share. Shares to be transferred from the name of Emma L Smith to Richard Crawford.'

Plaintiff then gave Mrs. Smith his check for $2,000.

A few days later, Mrs. Smith offered to sell additional shares of Marine Petroleum Trust. On October 31, 1961, plaintiff gave defendant a check for $2,250 for an additional 1,500 shares of Marine Petroleum Trust, relying on her representation that she owned the stock. This transaction also occurred in Mrs. Smith's apartment, again with Schweigler present.

Plaintiff did not receive the securities. He repeatedly requested them, but it was not until some four or five years later that defendant admitted that she had never at any time owned any shares of Marine Petroleum Trust. ² She did not return the money.

The evidence was that the market value of Marine Petroleum Trust common, at the time of the trial, was $14.25 per share. An offer of proof was made by plaintiff, but rejected by the court, and so not heard by the jury, that the market price of the stock in 1966 was $11 per share.

Defendant's defense was that plaintiff knew she had no such securities; that these transactions were not sales at all, but were loans to Schweigler concealed as sales because of plaintiff's wife's opposition to any additional unsecured loans to Schweigler, all of which was resolved against defendant by the jury. The trial court permitted defendant to introduce parol evidence about the second transaction being a loan, but as to the first transaction, the trial court ruled that the writing which defendant signed was contractual and would not permit defendant to introduce parol evidence to nullify its terms.

Defendant's first claim of error concerns action in the trial court in limiting defendant's voir dire examination of the jurors. Defendant attempted to inquire as to whether they could follow a burden of proof instruction that fraud must be proved by clear, cogent, and convincing evidence. The trial court sustained plaintiff's objection to this line of inquiry. This was not error. See Baker v. Bickel (Mo.Sup.), 386 S.W.2d 105, 111, where the court held that in a fraudulent misrepresentation case tried to a jury, the burden of proof is not greater than in other cases tried to a jury, and that the proper burden of proof instruction is MAI 3.01.

Defendant also raises as error the refusal of the trial court to allow defendant and her witness, Schweigler, to testify the transaction of October 25 was a loan, not a sale. The ruling was based upon the parol evidence rule and the court's conclusion that such testimony would vary the terms of the document, which the court considered contractual. We agree it is contractual, as it contains all the elements of a contract.

In Dowd v. Lake Sites, Inc., 365 Mo. 83, 276 S.W.2d 108, this court held that when the person allegedly defrauded brings an action in fraud for damages, he stands upon the contract. In so standing on the contract, plaintiff treats the contract as having binding legal effect as the agreement of the parties, and it therefore follows that defendant could not introduce evidence which would tend to vary the terms of the agreement as to its being a contract of sale. It is to be noted that defendant did not plead or claim that she had been induced to sign the agreement by reason of fraud. As illustrated by Smith v. Tracy (Mo.Sup.), 372 S.W.2d 925, 938, the parol evidence which is admissible as an exception to the rule where fraud is alleged, is evidence in support of the plea. The evidence offered by defendant was not in support of any plea of fraud; the fact that plaintiff was relying upon defendant's fraud as a basis for his action would not, of course, mean that defendant, the one charged with fraud, could thereby rely on the fraud exception to introduce parol evidence. We rule that the trial court was correct in its ruling.

Defendant also contends it was error to give the damage instruction, which was MAI 4.01, the only MAI damage instruction in force when this case was tried in 1969, and which read:

'If you find the issues in favor of the plaintiff, then you must award the plaintiff such sum as you believe will fairly and justly compensate the plaintiff for any damages you believe he sustained as a direct result of the occurrences mentioned in the evidence',

because there was no proof as to 'difference in actual value of the stock and the price' at which it was sold to plaintiff, and no proof as to the value of the stock at the time of discovering the misrepresentation.

In Monsanto Chemical Works v. American Zinc, Lead & S. Co. (Mo.Sup.), 253 S.W. 1006, 1011, we held that where one is induced to part with money by fraud, '* * * the damages cannot be less than the money * * * he has parted with * * *.' This is not a ceiling, but a floor. Certainly it cannot be said there was no evidence to support the damage instruction, because without question plaintiff was out the $4,250 and had nothing to show for it. Additionally, as is pointed out in 37 C.J.S. Fraud § 141, p. 467: '* * * where the profits lost through fraud can be arrived at with reasonable certainty, they may properly be recovered.' In the case at bar, pl...