Four R Cattle Co. v. Mullins

• Court: Nebraska Supreme Court
• Writing for the Court: WHITE; GERRARD
• Citation: Four R Cattle Co. v. Mullins, 253 Neb. 133, 570 N.W.2d 813 (Neb. 1997)
• Decision Date: 26 September 1997
• Docket Number: No. S-95-179,S-95-179
• Parties: FOUR R CATTLE COMPANY and Dennis R. Julch, Appellants, v. Jerry MULLINS and Doreta Mullins, Appellees.

Page 813

570 N.W.2d 813

253 Neb. 133

FOUR R CATTLE COMPANY and Dennis R. Julch, Appellants, v. Jerry MULLINS and Doreta Mullins, Appellees.

No. S-95-179.

Supreme Court of Nebraska.

Sept. 26, 1997.

Syllabus by the Court

1. Fraud: Proof: Evidence. The burden of proof in fraudulent misrepresentation actions at law is proof by a preponderance of the evidence.

2. Judgments: Appeal and Error. In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless they are clearly wrong.

3. Judgments: Appeal and Error. When reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling.

4. Actions: Fraud: Proof. In order to maintain an action for fraudulent misrepresentation, a plaintiff must allege and prove the following elements: (1) that a representation was made; (2) that the representation was false; (3) that when made, the representation was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) that it was made with the intention that the plaintiff should rely upon it; (5) that the plaintiff reasonably did so rely; and (6) that he or she suffered damage as a result.

5. Marriage: Fraud: Liability. The marital relationship itself is not sufficient to render one spouse liable for the fraudulent actions of the other.

6. Fraud: Proof: Circumstantial Evidence. In a fraud case, direct evidence is not essential, but proof of fraud drawn from circumstantial evidence must not be guess-work or conjecture; such proof must be rational and logical deductions from the facts and circumstances from which they are inferred.

7. Fraud: Intent: Proof. An intent to deceive is not an indispensable element of a cause of action for fraud based on misrepresentation of a material fact.

8. Fraud: Liability. A party may be liable for misrepresentation when a representation was false when made and the party knew that it was false or made it recklessly and without knowledge of its truth or falsity.

9. Trial: Witnesses. In a bench trial of a law action, the court, as the trier of fact, is the sole judge of the credibility of the witnesses and the weight to be given their testimony.

10. Judgments: Appeal and Error. When reviewing a judgment awarded in a bench trial, an appellate court does not reweigh the evidence, but considers the judgment in a light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

11. Conspiracy: Words and Phrases. A civil conspiracy is a combination of two or more persons to accomplish by concerted action an unlawful or oppressive object, or a lawful object by unlawful or oppressive means.

12. Conspiracy: Proof. Civil conspiracy need not be established by direct evidence of acts charged, but may, and generally must, be proved by a number of indefinite acts, conditions, and circumstances which vary according to the purpose to be accomplished.

13. Conspiracy: Proof. It is necessary to prove the existence of at least an implied agreement, to establish conspiracy.

James E. Bachman, Omaha, for appellants.

William T. Ginsburg, of Zuber & Ginsburg, Omaha, for appellees.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, and GERRARD, JJ.

GERRARD, Judge.

Four R Cattle Company (Four R), a Nebraska partnership, and Dennis R. Julch filed an action at law against Jerry Mullins and Doreta Mullins for fraud, conversion, and conspiracy to defraud for activities arising out of Jerry Mullins' livestock- business. Jerry Mullins confessed judgment in full, and the action proceeded against his wife, Doreta Mullins, only. The district court, in a bench trial, found by a preponderance of the evidence that Four R and Julch had failed to prove that Doreta Mullins participated in a scheme to defraud, and, accordingly, the court entered judgment in favor of Doreta Mullins and dismissed the case against her. Four R and Julch timely appealed. We removed this case to our docket under our authority to regulate the dockets of the Nebraska Court of Appeals and this court, and we now affirm the judgment of the district court.

FACTUAL BACKGROUND

Jerry Mullins did business as C & J Cattle Company (C & J) as a bonded order buyer and livestock dealer. From December 1990 through June 1991, Four R and Julch purchased 502 head of cattle through Jerry Mullins. Four R and Julch paid $280,285.95 for the cattle, $7,000 in processing charges, and $29,040 in pasture rent. All checks and wire transfers were made payable to Jerry Mullins. During this time, Jerry Mullins became involved in the commodities trading market and sold some of the cattle belonging to Four R and Julch to cover his losses. Of the 502 head of cattle, only 240 head were delivered to Four R and Julch. In early 1992, Four R and Julch made oral demand for the remaining 262 head of cattle, but Jerry Mullins was unable to comply with the demand, resulting in damages of $165,094.42.

During the period from December 1990 through June 1991, Doreta Mullins prepared C & J invoices based on information given to her by her husband. The checks and wire transfers from Four R and Julch were made out to Jerry Mullins and contained no reference to Doreta Mullins. When Jerry Mullins was unavailable, Doreta Mullins engaged in telephone conversations with Four R and Julch representatives regarding the price per head of the cattle, the weight of the cattle, processing costs, and pasture rent. In addition, Doreta Mullins wrote checks for the purchase of cattle and the payment of expenses as directed by Jerry Mullins.

The funds for the purchase of the cattle were deposited in the Mullins' joint checking account, over which both Jerry Mullins and Doreta Mullins had check-signing authority. Jerry Mullins covered his futures losses with checks from this account. Doreta Mullins balanced the checkbook for this account. On the date that Doreta Mullins balanced the May 1991 statement, she calculated that there were certain outstanding checks not yet charged to the account that resulted in a negative balance of $4,602.98, even though the bank statement revealed a balance of $9,181.76 as of May 31, 1991. During the period in question, four checks from this account, totaling $78,490.30, were initially returned for insufficient or uncollected funds but were eventually paid by the bank during the same month upon subsequent presentment. At trial, Doreta Mullins testified that she did not recall discussing these four checks with Jerry Mullins; she believed that they occurred in the normal course of the cattle-buying business when Jerry Mullins wrote a check to the sale barn and the check was presented to their bank prior to the time that his customers paid him.

Jerry Mullins testified that he did not discuss the problems regarding the cattle with Doreta Mullins until approximately 30 minutes prior to the meeting at which he informed Four R and Julch that the cattle were not available for delivery.

SCOPE OF REVIEW

The burden of proof in fraudulent misrepresentation actions at law is proof by a preponderance of the evidence. Citizens Nat. Bank of Wisner v. Kennedy & Coe, 232 Neb. 477, 441 N.W.2d 180 (1989); Bock v. Bank of Bellevue, 230 Neb. 908, 434 N.W.2d 310 (1989). In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless they are clearly wrong. Richardson v. Mast, 252 Neb. 114, 560 N.W.2d 488 (1997).

When reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling. Spencer v. Omaha Pub. Sch. Dist., 252 Neb. 750, 566 N.W.2d 757 (1997); Kindred v. City of Omaha Emp. Ret. Sys., 252 Neb. 658, 564 N.W.2d 592 (1997).

ASSIGNMENTS OF ERROR

Four R and Julch assert that the trial court erred in (1) applying the wrong legal standard regarding a party's duty to discover fraud, (2) finding that Doreta Mullins did not know and should not have known of the fraud, and (3) failing to find that Doreta Mullins conspired with her husband to commit fraud.

ANALYSIS

In their third amended petition, Four R and Julch alleged that Jerry Mullins and Doreta Mullins engaged in a fraud or conspiracy, or a combination of the two, which resulted in damages to Four R and Julch. Four R and Julch also alleged a conversion theory of recovery, but they have neither argued nor assigned any error regarding their conversion theory; thus, the conversion theory of recovery will not be discussed.

FRAUDULENT MISREPRESENTATION

We have consistently stated that in order to maintain an action for fraudulent misrepresentation, the plaintiff must allege and prove the following elements: (1) that a representation was made; (2) that the representation was false; (3) that when made, the representation was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) that it was made with the intention that the plaintiff should rely upon it; (5) that the plaintiff reasonably did so rely; and (6) that he or she suffered damage as a result. Evergreen Farms v. First Nat. Bank & Trust, 250 Neb. 860, 553 N.W.2d 728 (1996); Schuelke v. Wilson, 250 Neb. 334, 549 N.W.2d 176 (1996); Gibb v. Citicorp Mortgage, Inc., 246 Neb. 355, 518 N.W.2d 910 (1994).

The marital relationship itself is not sufficient to render one spouse liable for the fraudulent actions of the other. See, e.g., Dodson v. Anderson, 710 S.W.2d 510 (Tenn.1986). Therefore, each element of fraudulent misrepresentation must be proven specifically as to Doreta Mullins. The record is devoid of any direct evidence that Doreta Mullins knew of Jerry Mullins' fraudulent scheme, but Four R and Julch assert that there was sufficient circumstantial evidence for the trial court to find that Doreta Mullins not only knew of Jerry Mullins'...