Jefferson Stand. Ins. Co. v. Hedrick
| Decision Date | 11 October 1943 |
| Docket Number | Record No. 2694. |
| Citation | 181 Va. 824 |
| Parties | JEFFERSON STANDARD LIFE INSURANCE COMPANY v. B. M. HEDRICK. |
| Court | Virginia Supreme Court |
Present, Campbell, C.J., and Hudgins, Gregory, Browning, Eggleston and Spratley, JJ.
1. FRAUD AND DECEIT — Elements of Fraud — Evidence — Case at Bar. — The instant case was an action for damages alleged to have been sustained by reason of false representation of facts by appellant's agent. Appellant was an insurance company and the agent in question was authorized to solicit loans for the company. Appellee, desiring a loan to construct an apartment house, called at the agent's office and submitted his application for a loan. Some time later appellee wrote the agent, calling the agent's attention to the fact that he had not heard from him in reference to the application and that he wished to know as soon as possible what action had been taken thereon in view of the rising cost of materials and the probability of loss of tenants if the construction of the building was delayed. Appellee made repeated inquiries by telephone and mail as to what action was being taken upon his application and finally wrote the home office of appellant reciting the circumstances and requesting an immediate answer. The company replied that the application had not been received in the home office although the agent had assured appellee that the application had been submitted. The application of appellee and his check for an inspection fee were returned to him two months after he had been told that the plans had been submitted to the home office. The excuse of the agent for not submitting the application for making the false representation was unsatisfactory and equivocal. Due to this delay construction was not begun until cold weather, which increased the cost of construction and wages, and until building materials had become scarcer and more costly.
Held: That the evidence showed clearly that the agent, during the negotiations for the loan, was the agent and representative of his company, acting within the scope and course of his authority; that as such agent, he made a false representation of a material fact meant to be acted on; that appellee, believing it to be true, delayed seeking a loan elsewhere and postponed the construction of his building; and that appellee, under the circumstances and in consequence thereof, sustained substantial and definite damage.
2. FRAUD AND DECEIT — Elements of Fraud — Evidence — Case at Bar. — The instant case was an action for damages alleged to have been sustained by reason of false representation of facts by appellant's agent. Appellant was an insurance company and the agent in question was authorized to solicit loans for the company. Appellee, desiring a loan to construct an apartment house, called at the agent's office and submitted his application for a loan. Some time later appellee wrote the agent, calling the agent's attention to the fact that he had not heard from him in reference to the application and that he wished to know as soon as possible what action had been taken thereon in view of the rising cost of materials and the probability of loss of tenants if the construction of the building was delayed. Appellee made repeated inquiries by telephone and mail as to what action was being taken upon his application and finally wrote the home office of appellant reciting the circumstances and requesting an immediate answer. The company replied that the application had not been received in the home office although the agent had assured appellee that the application had been submitted. The application of appellee and his check for an inspection fee were returned to him two months after he had been told that the plans had been submitted to the home office. The excuse of the agent for not submitting the application and for making the false representation was unsatisfactory and equivocal. Due to this delay construction was not begun until cold weather, which increased the cost of construction and wages, and until building materials had become scarcer and more costly.
Held: That the gist of the action was the willful and culpable deception of the agent, which induced the appellee not to make application for a loan elsewhere, thereby delaying the commencement of the work upon the construction of the building. The false representation was the producing cause of the loss, the delay being a consequence and result of the statement, and, in part, a measure of the loss suffered by appellee.
3. FRAUD AND DECEIT — Definition — Tort. — Fraud is a tort.
4. FRAUD AND DECEIT — Restoration of Former Position. — The usual consequence of fraud is that, as between the parties, the one who is defrauded has a right, if possible, to be restored to his former position.
5. FRAUD AND DECEIT — Misrepresentations — Actual and Constructive Fraud — Whether Misrepresentation Innocently or Knowingly Made. — If one represents as true what is really false, in such a way as to induce a reasonable man to believe it, and the representation is meant to be acted on; and he to whom the representation is made, believing it to be true, acts on it, and in consequence thereof sustains damage, there is such fraud as will support an action for deceit at law, or a bill for rescission of the transaction in equity. Whether the representation is made innocently or knowingly, if acted on, the effect is the same. In the one case the fraud is constructive; in the other it is actual.
6. AGENCY — Liability of Principal — Negligent or Wrongful Act of Agent. — A principal is liable to third persons for the negligent or wrongful acts of his agent, within the scope of his employment.
7. AGENCY — Liability of Principal — Fraud of Agent. — A principal is liable for the fraudulent or deceitful act of his agent committed as an incident to and during the performance of an act which is within the scope of the agent's authority.
8. DAMAGES — Certainty — Intelligent and Probable Estimate. — One should not be allowed to escape all liability simply because the precise amount of the damages for which he is responsible is undertain. Where the existence of a loss has been established, the quantum may be fixed when the facts and circumstances are such as to permit of an intelligent and probable estimate thereof.
9. FRAUD AND DECEIT — Damages — Certainty — Case at Bar. — The instant case was an action for damages alleged to have been sustained by reason of false representation of facts by appellant's agent. Appellant was an insurance company and the agent in question was authorized to solicit loans for the company. Appellee, desiring a loan to construct an apartment house, called at the agent's office and submitted his application for a loan. Some time later appellee wrote the agent, calling the agent's attention to the fact that he had not heard from him in reference to the application and that he wished to know as soon as possible what action had been taken thereon in view of the rising cost of materials and the probability of loss of tenants if the construction of the building was delayed. Appellee made repeated inquiries by telephone and mail as to what action was being taken upon his application and finally wrote the home office of appellant reciting the circumstances and requesting an immediate answer. The company replied that the application had not been received in the home office although the agent had assured appellee that the application had been submitted. The application of appellee and his check for an inspection fee were returned to him two months after he had been told that the plans had been submitted to the home office. The excuse of the agent for not submitting the application and for making the false representation was unsatisfactory and equivocal. Due to this delay construction was not begun until cold weather, which increased the cost of construction and wages and building materials had become scarcer and more costly. The approximate amount of damages was based upon the estimate of those qualified to pass upon its nature and extent but it was contended that the amount of damages had not been proven with certainty.
Held: That the loss to appellee was not merely uncertain and speculative since positive and distinct damages were established. They were such as fairly, naturally, and reasonably flow from the wrong in the ordinary course of events.
10. DAMAGES — Evidence — Inferential Proof. — Where the damages are of such a character that no precise and definite estimation can be made, juries are allowed to act on probable and inferential proof as well as that which is direct and positive.
11. FRAUD AND DECEIT — Fraud of Agent — Evidence of Relationship of Parties — Case at Bar. — In the instant case, appellee brought an action for damages sustained by reason of a false representation of a material fact by an agent of appellant insurance company. The agent was authorized to solicit loans for his company in the State of Virginia and it was while acting in this capacity that the claim arose. Refusal to admit in evidence a contract between the appellant and its agent to solicit applications for insurance in the State of South Carolina was assigned as error.
Held: No error, since the claim did not relate to an application for life insurance but to the deception of an agent authorized to receive and faithfully submit applications for loans on real estate in the State of Virginia.
12. FRAUD AND DECEIT — Misrepresentations of Agent — Negligence in Passing on Application for a Loan — Case at Bar. — The instant case was an action for damages alleged to have been sustained by reason of false representation of facts by appellant's agent. Appellant was an insurance company and the agent in question was authorized to solicit loans for the company. Appellee, desiring a loan to construct an apartment house, called at the agent's office and submitted his application for a loan. Some time...
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