Horne v. Timbanard

• Decision Date: 23 October 1967
• Docket Number: CA-CIV,No. 2,2
• Citation: 6 Ariz.App. 518,434 P.2d 520
• Parties: Howard S. HORNE, dba Howard S. Horne & Associates Investment & Realty Company, Appellant, v. Joseph TIMBANARD, Appellee. 345.
• Court: Arizona Court of Appeals

Page 520

434 P.2d 520

6 Ariz.App. 518

Howard S. HORNE, dba Howard S. Horne & Associates Investment & Realty Company, Appellant, v. Joseph TIMBANARD, Appellee.

No. 2 CA-CIV 345.

Court of Appeals of Arizona.

Oct. 23, 1967.

Rehearing Denied Nov. 15, 1967.

Review Denied Dec. 19, 1967.

Lesher, Scruggs, Rucker, Kimble & Lindamood, by Robert O. Lesher, Tucson, for appellant.

Strickland, Altaffer, Davis & Eppstein, by Robert W. Eppstein, Tucson, for appellee.

MOLLOY, Judge.

This appeal presents the question of whether the trial court, as it was presenting issues of fact to a jury, properly eliminated on its own motion certain factual issues framed by a pretrial order.

The complaint filed in the lower court is one by a real estate salesman against his broker for a share of certain commissions. Part of the relief sought in the complaint is a rescission of an agreement to accept substantially less than the salesman's regular share (60 per cent) of the commission on a certain real estate sale because of an alleged false representation made by the broker that the commission on the sale had to be shared with another broker. In that part of the complaint asking for rescission, the traditional nine elements of fraud were alleged. See Moore v. Meyers, 31 Ariz. 347, 253 P. 626 (1927).

The pretrial order included among the issues of fact:

'4. Are all of the elements of actionable fraud present to overcome the compromise and settlement, if in fact there was a compromise and settlement?'

At the conclusion of the trial, the trial court denied the broker's request for instructions informing the jury of the nine elements of fraud, and gave its own instruction on innocent misrepresentation as follows:

'A transaction into which one is induced to enter by reliance upon untrue and material representations as to subject matter made by the other party to the transaction is subject to rescission at the election of the person deceived.'

The broker complains that in giving this instruction, the trial court '* * * went outside the pretrial order to take this case away from counsel and reshape it to fit a framework of its own theories.' The broker relies upon Loya v. Fong, 1 Ariz.App. 482, 404 P.2d 826 (1965). But we do not see here any injection into the trial of a factual issue eliminated by the pretrial order, as in Loya. We see only a commendable narrowing of the issues to focus the attention of the jury on the critical factual issue in the case. The trial court presented this case to the jury under special interrogatories in pursuance of Rule 49(g), R.Civ.P., 16 A.R.S. The question presented on rescission was:

'If the Plaintiff, Joseph Timbanard, agreed to accept $2,000.00 as his share of commission on the first Vertlieb sale, is he now entitled to have this agreement rescinded because of alleged misrepresentations of the Defendant, Howard S. Horne?'

The elimination by the trial court, Sua sponte, of the elements of actionable fraud in tort which were not included in the issues submitted to the jury, we regard as an appropriate exercise of the responsibility of the trial court to simplify and expedite litigation when possible. The essence of all pleading is to give notice of opposing claims. The broker here had clear notice from the pleadings and the pretrial order of all allegations of facts which, if true, entitled the salesman to rescind. There is reputable authority holding that a litigant is entitled to no more and has no legitimate complaint if legal theories be changed after the factual issues have congealed. See Spomer v. City of Grand Junction, 144 Colo. 207, 355 P.2d 960 (1960). In this case, the 'theory' of the plaintiff's case has been altered only by the elimination of unnecessary appendages.

A suit to rescind a contract is one in equity. Kostolansky v. Lesher, 95 Ariz. 103, 106, 387 P.2d 804 (1963); and see 1 Pomeroy's Equity Jurisprudence (5th ed. 1941) § 112, p. 146. Equity has regarded a suit to rescind a contract for innocent misrepresentation as being one sounding in 'fraud.' 3 Pomeroy's Equity Jurisprudence (5th ed. 1941) § 885, pp. 486--87; 1 Black Rescission and Cancellation (2d ed. 1929) § 102, p. 301; and see 23 Am.Jur. Fraud and Deceit § 134, p. 932. The 'fraud' perceived by equity courts was in the attempt to retain the benefits of a bargain induced by misrepresentation.

The general law is well established that the pleading of immaterial averments does not require proof of such averments in order to prevail. Spomer v. City of Grand Junction, supra; Hinton v. Wilmes, 80 Wyo. 360, 343 P.2d 201 (1959); 41 Am.Jur. Pleading § 369, p. 545; 71 C.J.S. Pleading § 522, pp. 1078--1079. We see no reason why this same law does not apply to a pretrial order. The purpose of a pretrial order is to simplify litigation and not to complicate it. When there is no more change in 'theory' than presented here, we hold that if immaterial issues are included in a pretrial order, they may be eliminated by the court at the conclusion of the evidentiary-taking phase of the trial.

The broker questions whether the well-established law permitting rescission in equity for innocent, material misrepresentation is the law of this state. We have indicated in two prior decisions that we believe § 476 of the Restatement of Contracts, ¹ is part of the law of this jurisdiction. Apolito v. Johnson, 3 Ariz.App. 358, 359, 414 P.2d 442, 443 (1966); Miller v. Boeger, 1 Ariz.App. 554, 558, 405 P.2d 573, 577 (1965). The broker relies upon Godfrey v. Navratil, 3 Ariz.App. 47, 411 P.2d 470 (1966), as holding contrary to these pronouncements. Insofar as Godfrey may be authority that all nine elements of tortious fraud are necessary to rescind a contract, we find it unsupported by authority and hence decline to follow it. We reaffirm our statements in Apolito and Boeger.

We do not pass upon the contention that the wording of the instruction on innocent misrepresentation was too 'abstract.' In substance, the instruction properly stated applicable law. There was no objection voiced to the form of the instruction at the time instructions were settled and such objections cannot now be raised. Rule 51(a), R.Civ.P., 16 A.R.S.; Kostolansky v. Lesher, 95 Ariz. 103, 387 P.2d 804 (1963).

Nor do we find the instructions to be a comment upon the evidence. In evaluating this criticism, we take note that there was no dispute in the evidence but what, if the alleged representation was made by the broker, the statement was completely false. Under the undisputed evidence, if such representation was made, it was 'material.' Restatement of Contracts § 470(2). ² Also, it is undisputed that the salesman was under no duty to compromise the amount of his commission. Under these circumstances, there was no need to present the questions of falsity, duty or materiality as issues of fact for jury determination. Rule 49(g), R.Civ.P., 16 A.R.S.; Reda v. Lowe, 185 Kan. 306, 342 P.2d 172 (1959); Morrison v. Goodspeed, 100 Colo. 470, 68 P.2d 458, 71 P.2d 154 (1937); 37 C.J.S. Fraud § 125, p. 453; and cf. Corbett v. Kingan, 19 Ariz. 134, 166 P. 290 (1917).

If 'right to rely' is a necessary element in a suit to rescind for innocent misrepresentation, then this issue falls in the same category under the undisputed facts of this case. Unlike the situation presented in Godfrey v. Navratil, supra, there are no red flags to alert the recipient of the falsity of this misrepresentation. The salesman here was dealing with his employing broker, a person in whom he should be justified in placing confidence. When the facts are clear, the 'right to rely' is a matter for court decision rather than jury determination. Albert v. Title Guarantee & Trust Co., 277...