Demmas v. St. Louis Outdoor Advertising, Inc.

• Decision Date: 24 February 1970
• Docket Number: Nos. 33173,33183,s. 33173
• Citation: 452 S.W.2d 303
• Parties: Mike DEMMAS and Flora Demmas, Plaintiffs-Appellants, v. ST. LOUIS OUTDOOR ADVERTISING, INC., a corporation, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 303

452 S.W.2d 303

Mike DEMMAS and Flora Demmas, Plaintiffs-Appellants, v. ST. LOUIS OUTDOOR ADVERTISING, INC., a corporation Defendant-Respondent.

Nos. 33173, 33183.

St. Louis Court of Appeals, Missouri.

Feb. 24, 1970.

Thomas, Busse, Weiss, Cullen & Godfrey, Carl R. Gaertner, Spencer Thomas, St. Louis, for plaintiffs-appellants.

Sherwood R. Volkman, St. Louis, for defendant-respondent.

PER CURIAM.

This appeal presents two issues: The sufficiency of the evidence to make a case of actionable fraud, and the propriety of the trial court's order granting defendant a new trial on the ground that the verdict was not supported by evidence concerning plaintiffs' damages.

Plaintiffs Mike and Flora Demmas sued defendant sign company for fraud and got a verdict for $5,000 actual and $2,500 punitive damages. Plaintiffs contend defendant's negotiator had induced them to lease an outer wall of their store building for an advertising sign by falsely representing that the written lease gave plaintiffs the right to cancel on thirty days' notice; that relying on this representation plaintiffs contracted to sell the building free of defendant's sign and sold their fixtures and merchandise, but then discovered defendant's lease could not be canceled; that their prospective purchaser refused to buy the building because of defendant's sign thereon.

After the verdict and judgment for plaintiffs the court denied defendant's after-trial motion for judgment but granted its alternative motion for a new trial on grounds concerning damages. Plaintiffs appeal from the new trial order.

The defendant has also appealed, uneffectively, from the order denying its after-trial motion for judgment and now concedes it is not aggrieved by that order since it was granted a new trial. The effect of dismissing defendant's appeal is academic; its basis was a challenge to the submissibility of plaintiffs' case. This contention was preserved in defendant's after-trial motion so we will examine the evidence to determine whether plaintiffs made a case. Schmittzehe v. City of Cape Girardeau, Mo., 327 S.W.2d 918(1).

Defendant challenges only six essential elements of actionable fraud. For all nine elements see Gonseth v. K & K Oil Co., Mo.App., 439 S.W.2d 18(11). To test this challenge we recite the verdict-consistent evidence concerning these six elements.

Plaintiff Mike Demmas was born in Greece about 1900. He had only four years' schooling there and none after immigrating to this country in 1923. Except for a few words he never learned to read English. Mr. Demmas and his wife ran a food store, and when necessary she read business papers to him.

In 1947 plaintiffs bought an unimproved building on Hampton Avenue in St. Louis and fitted it for their store. From time to time they did business with Mr. Roy C. Carraway, defendant's lease negotiator, granting five-year leases for signboards on their building. Mr. Demmas recalled that these leases gave each party the right to cancel on thirty days' notice. In 1953 and again in 1961 defendant removed its signs at Mr. Demmas' request.

On May 28, 1965, while Mr. Demmas was alone at the store, Mr. Carraway came to negotiate another five-year lease. Mr. Demmas noticed that the proffered lease called for $75 annual rental instead of $100 (he could read numerals since they are the same in Greek as in English), and Mr. Carraway thereupon changed and initialed the amount. Mr. Demmas told Mr. Carraway he could not read and would trust him 'to tell what the lease said.' Upon direct inquiry Mr. Carraway told Mr. Demmas the lease provided for removal of the sign on thirty days' notice. ('He told me thirty days I would have my building free to do anything I want to * * * same like before.') Having confidence in Mr. Carraway from previous dealings, Mr. Demmas believed him and signed the lease.

In fact, the lease gave Mr. and Mrs. Demmas the right to cancel on thirty days' notice only if they had commenced construction of a permanent, substantial building requiring the removal of defendant's sign. This clause brought on plaintiffs' troubles.

Mr. and Mrs. Demmas had been considering retirement and in October, 1965, four months after signing defendant's lease, they decided to sell their store. They signed a written contract to sell the building to Mr. Joe H. Scott. Still believing defendant would remove its sign on thirty days' notice. Mr. and Mrs. Demmas agreed in their sales contract with Mr. Scott to have the sign removed and to surrender possession by December 1, 1965. Mr. Demmas immediately notified defendant to remove its sign. Plaintiffs then began selling their store fixtures and merchandise, at a loss hereafter described. The defendant refused to remove its sign and Mr. Scott declined to go through with the sale for that reason.

We find this evidence entitled the jury to believe each of the six challenged elements of actionable fraud.

First, there was evidence Mr. Carraway made a representation about the thirty-day cancellation clause: 'same like before', referring to previous leases and two previous sign removals on thirty days' notice. Second, the representation was false. The actual cancellation clause was hedged with a condition; it was not 'same like before'. Third, Mr. Carraway knew the representation about the cancellation clause was false. For twenty years he had negotiated sign leases--six years for this defendant--and knew of differences in sign leases. We reject defendant's brittle argument that plaintiffs failed on this element since they did not prove Mr. Carraway could read. Fourth, Mr. Carraway was a lease negotiator and his job was to persuade owners to sign leases. During negotiations Mr. Demmas specifically inquired about termination, an essential element of the lease. Since intent is shown by words and deeds, the jury could infer that Mr. Carraway intended for Mr. Demmas to act on his responsive representation about the thirty-day cancellation clause. Fifth, whether Mr. Demmas was ignorant of the falsity of Mr. Carraway's statement about the cancellation clause depended on whether Mr. Demmas read the lease. He testified he did not and could not read it. The jury could believe Mr. Demmas was unaware of the discrepancy between the lease and what Mr. Carraway represented it to be. Sixth, we reject defendant's contention that Mr. Demmas had no right to rely on Mr. Carraway's statement because the means of knowledge were equally available to both parties. Their means were not equal. Further, in a business transaction where a distinct representation is made to induce action, and does induce action, the recipient cannot be faulted for failure to investigate. Tietjens v. General Motors Corp., Mo., 418 S.W.2d 75(4); Restatement of the Law of Torts § 540.

From all this we deny defendant's challenge to the sufficiency of plaintiffs' evidence to show actionable fraud. This leads to the issue raised by plaintiffs' appeal: That the trial court erred in granting defendant a new trial on the ground the $7,500 verdict was unwarranted by the evidence concerning plaintiffs' damages.

Plaintiffs' claim to damages is that the sale of their building was thwarted by defendant's fraud and this in turn caused them to sell their merchandise and equipment at a sacrifice and put them out of business for eleven months. Only plaintiff Mike Demmas testified about this. He said he sold the merchandise and fixtures so he could get out of the building: 'Q After you arranged to sell your store, your property to Mr. Scott, what did you do with the merchandise? A Put it half price, get some company and sold the fixtures, low price, so I could be empty at the 1st of December according to the contract. Q How long did it take you to sell out? A Month's...