Hanson v. Acceptance Finance Co.
| Decision Date | 03 May 1954 |
| Docket Number | No. 21862,21862 |
| Citation | 270 S.W.2d 143 |
| Parties | HANSON et ux. v. ACCEPTANCE FINANCE CO., Inc. |
| Court | Missouri Court of Appeals |
William E. Tipton, Kansas City, Barak T. Mattingly, St. Louis, for appellant.
Robert M. Murray, Charles V. Garnett, Kansas City, for respondents.
BOUR, Commissioner.
This is an action to recover actual and punitive damages for alleged fraud in a loan transaction. The plaintiffs are Richard L. Hanson and Martha M. Hanson, his wife. The original petition and the first amended petition, as originally filed, designated the defendants as 'Local Finance Company, a corporation, Motors Insurance Corporation, a corporation, and Union Mutual Life Insurance Company, a corporation'. Before trial, and on April 7, 1952, the parties filed a written stipulation which reads in part as follows: The record contains an entry, dated April 7, 1952, which reads in part: 'By leave of court plaintiffs amended their amended petition by substituting as party defendant, Acceptance Finance Company, a corporation, in lieu of defendant Local Finance Company, * * * in accordance with stipulation filed herein * * *.'
The first amended petition was drawn in two counts. At the close of plaintiffs' case plaintiffs were granted leave 'to amend their amended petition' in certain particulars. In count one of the petition, as amended at the close of plaintiffs' case, plaintiffs prayed for actual damages in the sum of $119.50. In count two plaintiffs prayed for punitive damages in the sum of $15,000. The parties are not in complete agreement as to the nature of the cause of action which plaintiffs attempted to plead. However, the case seems to have been tried as an action for damages for fraud and deceit. In view of the conclusions which we have reached in the case it would serve no useful purpose to summarize the pleadings. It may be stated in passing that the division of the petition into counts was unnecessary.
The record shows that before trial plaintiffs dismissed their case as to defendant Motors Insurance Corporation. At the close of plaintiffs' case the court directed a verdict for defendant Union Mutual Life Insurance Company on both counts of the amended petition. At the close of all the evidence the remaining defendant, Acceptance Finance Company, moved for a directed verdict on both counts of the amended petition, which motion was overruled. The jury returned a verdict against defendant Acceptance Finance Company, for $119.50 actual damages and $5,500 punitive damages, and judgment was entered accordingly. The Acceptance Finance Company has appealed.
Plaintiff Martha M. Hanson testified in person and the deposition of plaintiff Richard L. Hanson was read to the jury. The Acceptance Finance Company called no witnesses, but for reasons unknown to us it introduced in evidence plaintiffs' first amended petition. For convenience, Richard L. Hanson will sometimes be designated as 'Hanson' and his wife as 'Mrs. Hanson'; and hereafter, when we use the term 'defendant' or 'loan company', we have reference to defendant-appellant Acceptance Finance Company, d/b/a Local Finance Company.
The evidence showed that on December 21, 1948, the plaintiffs, being in need of money to pay certain debts, aggregating $1,220.36, and to defray certain expenses 'at Christmas time', went to defendant's office in Kansas City, Missouri, and applied for a loan of approximately $1,400. After discussing the matter with B. L. Smith, defendant's local manager, and pursuant to an agreement between the parties, plaintiffs executed and delivered to the loan company their promissory note dated December 21, 1948, in the sum of $1,890, payable in 18 installments of $105 each, the first installment being payable on January 31, 1949, and one of the remaining installments being payable on the last day of each of the succeeding 17 months. The note reads in part as follows: 'For value received the undersigned promises to pay to the order of Local Finance Co., at its office in Kansas City, Missouri, the amount of the principal debt as indicated above and payable in installments as indicated herein, with interest after maturity at the rate of eight per cent (8%) per annum until paid (interest to maturity at the highest lawful contract rate having already been deducted)'. (Italics ours.) It is conceded that the 'highest lawful contract rate' was 8% per annum. Sec. 3227, RSMo 1939, now Section 408.030 RSMo 1949, V.A.M.S. For the purpose of securing the payment of the note, plaintiffs executed a chattel mortgage on their household goods and automobile, and Dale E. Culver signed the note as an accommodation maker.
Before the note and chattel mortgage were executed, Smith informed plaintiffs that they would be required to purchase credit life insurance on Hanson's life, as well as health and accident insurance for Hanson, and to insure for defendant's benefit the automobile described in the chattel mortgage, as additional security for the payment of the loan. Smith told plaintiffs that the cost of the life, health and accident insurance would be $201.76 and that the cost of the automobile insurance would amount to $43.90. Plaintiffs objected to paying the insurance premiums but it was finally agreed that the total cost of the insurance would be included in the note as a part of the principal and the premiums paid out of the proceeds of the loan. As we understand the evidence, Smith prepared the note and chattel mortgage. Plaintiffs testified that they read the note and discussed it with Smith before they signed it; that they were told by Smith that interest on the loan, at the rate of 8% per anmum--the highest legal rate, had been included in the note as a part of the principal. Plaintiffs further testified that Smith told them the interest on the loan, at the rate of 8% per annum, amounted to $226.80.
As stated, that note and mortgage were executed on December 21, 1948. On the same day, and in accordance with the agreement between the parties, defendant loan company issued eleven checks as follows: One for $201.76, payable to Hanson and Daniel Charles, agent for Union Mutual Life Insurance Company; one for $43.90, payable to Hanson and Motors Insurance Corporation; eight for sums aggregating $1,220.36, each of which was made payable to Hanson and one of plaintiffs' creditors; and one for $197.18, payable to Hanson. The first two were endorsed by Hanson and left with Smith. Policies of insurance (life, health and accident, and automobile insurance) for the premiums stipulated were obtained and held by the defendant until after the note for $1,890 was paid in full. There was no evidence that the defendant or its agent, Smith, received any part of the insurance premiums; nor was there any evidence that the defendant or Smith received any commission by reason of the insurance policies having been written. Hanson also endorsed the eight checks drawn for sums aggregating $1,220.36 and each check was sent by defendant to the creditor named therein, so that the debts incurred by plaintiffs before they applied for the loan were paid in full. Mrs. Hanson testified that the check for $197.18 'represented actual cash we got from the loan company'. The aggregate amount of the eleven checks issued by defendant was $1,663.20. The sum total of $1,663.20 and $226.80, the interest charged by defendant, is $1,890, the principal amount of the note executed by plaintiffs. It is conceded that the amount of interest ($226.80) included in the note as a part of the principal exceeded the maximum lawful rate of 8% per annum.
On direct examination, Mrs. Hanson testified in part as follows: * * *
* * *
Exhibit 1, did you read the note or go over it with Mr. Smith before you signed it? A. We did; Mr. Hanson and I.
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...relies and acts to his or her detriment.") (citing Gerhardt v. Harris, 261 Kan. 1007, 1013 (1997)); Hanson v. Acceptance Fin. Co., 270 S.W.2d 143, 149 (Mo. Ct. App. 1954) ("Comprehensively stated, the elements of actionable fraud consist of: (1) A representation. (2) Its falsity. (3) Its ma......
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