EM Fleischmann Lbr. Corp. v. Resources Corp. Inter.
| Decision Date | 24 June 1953 |
| Docket Number | Civ. A. 1086. |
| Citation | 114 F. Supp. 843 |
| Parties | E. M. FLEISCHMANN LUMBER CORP. v. RESOURCES CORP. INTERNATIONAL. |
| Court | U.S. District Court — District of Delaware |
William H. Foulk and Herbert L. Cobin, of Wilmington, Del., Robert F. Skutch, Jr., and Weinberg & Green, of Baltimore, Md., for plaintiff.
Horace Greeley Eastburn, of Wilmington, Del., and Leonard L. Cowan, of Chicago, Ill., for defendant.
This matter involves the allowability of interest in connection with the damages recoverable in an action of tort based upon the reliance by the plaintiffs upon the untrue or fraudulent representations of the defendant. The facts of the case are set out in a former opinion of this court reported in 105 F.Supp. 681. It was there determined that the plaintiff had a cause of action, but the question of damages was severed for separate determination. Succinctly, the matter involved the question of the purchase by the plaintiff from the defendant of timber rights in a tract of land in Mexico. Certain Indian claims had been made as to a portion of the tract. It was determined in the cited case that the defendant had made incorrect or fraudulent statements as to the minor nature and extent of the Indian claims and had discouraged and prevented the plaintiff from making its own independent investigation. The plaintiff thereupon laid out considerable sums in the furtherance of the undertaking, but the recognition by the authorities of the nature and enlarged extent of the Indian claims caused the abandonment of the project. Subsequently, on April 9, 1953, this court, before which the case had been heard without a jury, determined the measure of damages.
The plaintiff has now moved for the inclusion of interest on the sums laid out by the plaintiff, this question of interest being now first raised.
The allowance of ante-judgment interest is a matter upon which there has been great diversity of opinion, considerable diversity existing even within the same jurisdiction. It seems certain that the trend of modern judicial opinion has been toward the extension of the allowance of interest beyond the limits where such interest was formerly allowable.
Allowance of ante-judgment interest has, at times, depended upon the character of the action, viz., whether in contract or in tort and upon whether the claim is liquidated or unliquidated. This being an action of tort, consideration will be confined to that classification.
In tort actions the allowance of interest, whether as of right or at the discretion of the fact-finding body, depends upon the nature of the tort. There is a class of action such as trover, trespass, replevin, etc., where the conversion or retention of the property of another makes the mere return of the property or its value an inadequate compensation and in such cases interest is or may be allowable. Another class exists such as assault and battery, libel, slander, false imprisonment and seduction, in which it is generally held that interest is not allowable for the reason that no fixed standard exists to ascertain the amount on which interest could be computed.
In tort actions the use of the word "interest" as an addition to the damages awarded by the trier of the facts seems to be not exactly correct. It seems more exactly correct to state that in certain tort cases the exact return of the property or its value does not constitute full compensation to which the party may be entitled and to the damages found there should be added additional damages for the detention of the compensation awarded. This additional amount to be awarded for the detention of the compensation may and should be measured by the interest that such sum would have earned if it had been paid when it should have been paid and the additional damage is spoken of as interest. It is in such sense that the word "interest" is used in this memorandum. Adequate compensation is the fundamental principle of damages and the additional compensation for the detention of the damages, measured by the allowance as interest, is permitted in order to make the awarded damages adequate in amount.
In Hale on Damages (Hornbook series) 2d Ed. 250, it is said:
"The true test to be applied whether interest shall be allowed before judgment in a given case is not whether the damages are unliquidated or otherwise but whether the injury and consequent damages are complete and must be ascertained as of a particular time and in accordance with fixed rules of evidence and known standards of value which the court or jury must follow in fixing the amount rather than be guided by their judgment in assessing the amount to be allowed for past as well as future injury or for elements that cannot be measured by any fixed standard of value."
This brings me to a consideration of the nature of the plaintiff's claims. This court has held that in this transaction the defendant made certain representations as to the minor extent and nature of adverse claims against the property and prevented and discouraged the plaintiff from its own investigation as to the extent of such claims. Acting on these false, mistaken or fraudulent claims, the plaintiff laid out considerable sums. Being prevented by the real nature and extent of the adverse claims from completing the transaction and obtaining the value of the expenditures, the plaintiff seeks to recover the amounts laid out and interest.
The allowance of interest in actions based on fraud or duress is the subject of an exhaustive note in 171 A.L.R. 816-866, where most or all of the authorities are collected. In many of these cases the allowance of interest was sustained where the amount due could be ascertained by computation or reference to recognized standards of value. In Sigafus v. Porter, 179 U.S. 116, 21 S.Ct. 34, 45 L.Ed. 113, the facts bear a strong analogy to the present. There the defendant, in selling a gold mine to the plaintiff, made erroneous and false statements as to ore deposits in the mine and discouraged and prevented the plaintiffs from making an independent investigation. The plaintiff acted upon the representations as made and, the mine being proven of far less value, brought suit. While ...
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