Grendell v. Kiehl, 86-129

• Decision Date: 16 February 1987
• Docket Number: No. 86-129,86-129
• Citation: 291 Ark. 228,723 S.W.2d 830
• Parties: Don GRENDELL, Appellant, v. Ferdinand KIEHL and Loretta Kiehl, Appellees.
• Court: Arkansas Supreme Court

Page 830

723 S.W.2d 830

291 Ark. 228

Don GRENDELL, Appellant, v. Ferdinand KIEHL and Loretta Kiehl, Appellees.

No. 86-129.

Supreme Court of Arkansas.

Feb. 16, 1987.

Sanford, Pate & Marschewski by James R. Marschewski, Russellville, for appellant.

Hubert W. Alexander, Jacksonville, for appellees.

HAYS, Justice.

Don Grendell brings this appeal from a judgment of $11,329.60 rendered against him by the circuit court. Appellees Ferdinand and Loretta Kiehl brought an action for deceit against Grendell alleging misrepresentation and seeking judgment for compensatory and punitive damages. Grendell argues three points of error on appeal: the circuit judge erred in not directing a verdict at the close of the plaintiff's case; the judgment was not supported by the law and the evidence, and the amount of the judgment is not supported by the evidence. We affirm the judgment of the trial court as modified.

These points, being interrelated, will be considered together, as the result we reach necessarily answers all the arguments. When the plaintiffs rested, the defendant Grendell moved for a directed verdict because the plaintiffs had failed to prove that any of the representations were shown to have been false, or that Mr. Grendell knew they were false.

In reviewing the denial of a motion for a directed verdict, we give the proof its strongest probative force. Such proof, with all reasonable inferences, is examined in the light most favorable to the party against whom the motion is sought and if there is any substantial evidence to support the verdict we affirm the trial court. Northside Construction Co. v. Huffman, 287 Ark. 145, 697 S.W.2d 89 (1985); McCuistion v. City of Siloam Springs, 268 Ark. 148, 594 S.W.2d 233 (1980); ARCP Rule 50.

At the outset we point out that appellant's argument is based in part on a misconception of the law. Citing Robinson v. Williams, 231 Ark. 166, 328 S.W.2d 494 (1959), he argues that fraud must be proved by clear and convincing evidence. That is incorrect. That rule applies to chancery cases, where fraud is urged as a basis for altering a solemn writing. It has no application to actions at law, where the burden of proof of misrepresentation is simply by a preponderance of the evidence. Sellers v. West-Ark. Construction Co., 283 Ark. 341, 676 S.W.2d 726 (1984); Ray Dodge, Inc. v. Moore, 251 Ark. 1036, 479 S.W.2d 518 (1972).

The essential elements of an action for deceit are well established: a) a false, material representation (ordinarily of fact) made by the defendant; b) scienter--knowledge by the defendant that the representation is false, or an assertion of fact which he does not know to be true; c) an intention that the plaintiff should act on such representation; d) justifiable reliance by the plaintiff on the representation; e) damage to the plaintiff resulting from such reliance. Storthz v. Commercial National Bank, 276 Ark. 10, 631 S.W.2d 613 (1982). Nor is it necessary to prove active fraud by the defendant--"representations are construed to be fraudulent when made by one who either knows the assurances to be false or else not knowing the verity asserts them to be true." Kennedy v. Strout Realty Agency, 253 Ark. 1076, 490 S.W.2d 786 (1973); Lane v. Rachel, 239 Ark. 400, 389 S.W.2d 621 (1965).

The critical element in this case concerns scienter, whether Don Grendell made representations which he knew were false, or which he made without knowledge of their truth. We have reviewed the testimony in its entirety and we must agree with appellant, that the proof failed to sustain the amount awarded.

The Kiehls testified that Mr. Grendell began serving as their insurance agent in 1971, that they relied on him for financial advice. At an early point they converted shares of National Investors Life Insurance Company, Associated Investors Securities and Investor Equity Securities for shares in Capital Services, a company organized by Grendell. This company seems to have become insolvent or inactive, resulting in a loss to the Kiehls of $1,329.00, but we find no evidence of any false representations connected with this transaction. The Kiehls rely largely on the loss of an investment of $4,500 in an oil and gas lease, promoted by Mr. Grendell. They testified he told him it was "a good thing" and would "make money" for them. Mrs. Kiehl testified Mr. Grendell "guaranteed we would make lots of money," adding, "We were going to get 50 barrels a day." They were also told part of the money would go to a boys' ranch in Perryville. While we find proof that some of the money was to be used to help a boys' ranch, we find no evidence proving that that representation, whatever may be said of it, was shown to be false.

The testimony that the oil investment was a good thing and would make money, even the inference of "50 barrels a day," fails to rise to the level of a misrepresentation of fact. Even at its strongest, the proof constitutes expressions of opinion in the nature of "puffing." Prosser and Keeton on Torts, (5th Ed.), § 109. Admittedly, Mr. and Mrs. Kiehl were relatively inexperienced in business...