Dicker v. Smith, 47422

• Decision Date: 15 June 1974
• Docket Number: No. 47422,47422
• Parties: Michael Henry DICKER, Appellant, v. Benjamin Neal SMITH and Yvonne Smith, and Edwin R. Clarke, d/b/a Ed Clarke Company Realtors, Appellees and Cross-Appellants,
• Court: Kansas Supreme Court

Page 371

523 P.2d 371

215 Kan. 212

Michael Henry DICKER, Appellant, v. Benjamin Neal SMITH and Yvonne Smith, and Edwin R. Clarke, d/b/a Ed Clarke Company Realtors, Appellees

and Cross-Appellants,

No. 47422.

Supreme Court of Kansas.

June 15, 1974.

Syllabus by the Court

1. In an action for damages based solely on alleged fraudulent misrepresentations, where there is evidence of fraud sufficient to go to the jury on the question of actual damages the plaintiff is entitled to have the jury consider also his claim for punitive damages.

2. Where the jury finds that a defendant has been guilty of fraud and that the plaintiff has suffered actual damages as a result, the court should not accept a verdict awarding punitive damages only.

3. Where it appears from the record that the jury was either confused in awarding damages or arbitrarily disregarded the instructions of the court on that issue a new trial should be granted.

4. In an action against the sellers and a real estate broker for fraud in the sale of a house it is held that the trial court erred (1) in removing from the jury the issue of punitive damages against the broker and (2) in not granting a new trial when the jury returned a verdict against the sellers for punitive damages only.

Richard V. Foote, Blair, Matlack, Rogg, Foote & Scott, P. A., Wichita, argued the cause and was on the briefs for appellant and cross-appellee, Michael Henry Dicker.

Ernest McRae, McRae & Early, Wichita, argued the cause and was on the brief for appellees and cross-appellants, Benjamin Neal Smith and Yvonne Smith.

W. Jay Esco, Wichita, argued the cause and was on the brief for appellee and cross-appellant, Edwin R. Clarke, d/b/a Ed Clarke Co. Realtors.

FOTH, Commissioner:

This is an action for actual and punitive damages for fraud in the sale of a home in Wichita. The plaintiff, Michael H. Dicker, alleged that the defendants fraudulently represented the house to be free from termites when he bought it. The defendants Benjamin and Yvonne Smith are the owner-sellers, and the defendant Edwin R. Clarke is the real estate broker who handled the sale.

At the conclusion of plaintiff's case the trial court sustained a motion by the realtor, Clarke, for a directed verdict on the issue of punitive damages as to him. Plaintiff's later efforts to have this issue reinstated were fruitless, and as to Clarke the case was submitted to the jury on the issue of actual damages only. The jury returned a verdict against him for $795, the full amount of actual damages prayed for, representing the cost of treating the house for termites and repairing the damage they had done. Clarke appealed from this judgment, but has abandoned his appeal in this court.

As to the defendant sellers, the Smiths, the case went to the jury on both actual and punitive damages. The jury returned a verdict against them for $2,750 in punitive damages only-as to them no actual damages were awarded. They did not appeal from this judgment. Rather, they filed a motion for relief from the judgment under K.S.A. 60-260(b)(4) on the theory that it was void because not supported by a judgment for actual damages. The trial court overruled their motion and they have appealed from that order.

The main appeal in this case is by the plaintiff, Dicker. He contends that it was error for the trial court, first, to take away from the jury his claim for punitive damages against Clarke, and second, to accept the verdict against the Smiths for punitive damages only. Although at least nominally the successful party below, he seeks a new trial as to all defendants. Resolution of the issues raised requires a brief examination of the transactions among the parties.

In February, 1971, Dicker was househunting in anticipation of his impending marriage. A Clarke employee showed him the Smith house, and when he showed interest conveyed him into the presence of Clarke himself. Dicker explained that he would have to finance the purchase through a no-down-payment Veterans Administration loan, and Clarke volunteered to assist him in obtaining such a loan. One V.A. requirement, Clarke explained, was a certificate showing that the house was free of active termites. A proposed sales contract was drawn by Clarke and executed by Dicker, containing a covenant that the sellers Smith would furnish the necessary termite certificate.

The next day, February 18, 1971, Clarke presented the offer to his clients, the Smiths. They signed, with a slight price modification subsequently assented to by Dicker, and the sale was 'on'.

As soon as the Smiths signed the contract Clarke arranged to have the house inspected for termites by Hawks Inter-State Exterminators, a pest control firm Clarke frequently employed for such inspections. The inspection was made the same day. The inspector, one Herbert Stepp, found active termites and, he testified, so advised Mrs. Smith. He also called Clarke to advise him of the findings, and forwarded a written report to Clarke.

Clarke, in turn, called the Smiths and informed them of the report. There was some discussion as to whether the Smiths were bound to employ Hawks and it was agreed that the Smiths could call in another firm.

Smith in due course had another inspection made by United Pest Control, on March 14, 1971. He did not tell United of the Hawks inspection or findings. United reported 'no termites', and certified their finding to Clarke, who used their certificate to satisfy the Veterans Administration.

Five days later, on March 19, 1971, the sale was closed. Neither Clarke nor the Smiths ever mentioned the first inspection by Hawks Inter-State, or that active termites had been found in the house.

Dicker and his new bride didn't actually move in until late August, following a session of summer school in Michigan. It was the following April that Mrs. Dicker first noticed and cleaned off a mud blob on an exposed ceiling beam. When it reappeared a week later she pointed it out to her husband, who noticed some small insects in the area. After capturing a few specimens Dicker sought a termite inspection.

As luck would have it he called Hawks Inter-State, who sent out the trusty Mr. Stepp. Stepp remembered the house and, as he told Dicker, he found termites just where he had found them a little more than a year before. Although his proposal to treat the house had been declined by the Smiths, Stepp was surprised at finding termites still there, and that the house had not been treated. Dicker, needless to say, was even more surprised. This suit followed.

We turn first to the claim against Clarke. When the trial court took the issue of punitive damages away from the jury, it commented 'fraud is hard to prove' and that as to Clarke it had 'heard no testimony of any fraud or misrepresentation.' Yet Dicker's claim against Clarke was based solely on a theory of fraudulent concealment. While all the instructions are not in the record on appeal, it appears the jury was thoroughly instructed on that theory. A specific...