Jefferson Standard Life Ins. Co v. Hedrick

• Decision Date: 11 October 1943
• Citation: 181 Va. 824,27 S.E.2d 198
• Parties: JEFFERSON STANDARD LIFE INS. CO. v. HEDRICK.
• Court: Virginia Supreme Court

27 S.E.2d 198

181 Va. 824

JEFFERSON STANDARD LIFE INS. CO.

v.HEDRICK.

Supreme Court of Appeals of Virginia.

Oct. 11, 1943.

Error to Circuit Court, Arlington County; Walter T. McCarthy, Judge.

Action for deceit by B. M. Hedrick against Jefferson Standard Life Insurance Company for damages alleged to have been sustained by reason of false representations of an agent of defendant during negotiations for a loan. A judgment for plaintiff was entered upon a verdict of the jury, and defendant brings error.

Affirmed.

Before CAMPBELL, C. J, and HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

Gardner L. Boothe, of Alexandria, for plaintiff in error.

Anna F. Hedrick, of Arlington, for defendant in error.

SPRATLEY, Justice.

Under review is a judgment in the sum of $3,000, entered on the verdict of a jury in favor of B. M. Hedrick against the appellant, in an action for deceit, to recover damages alleged to have been sustained by reason of a false representation of a material fact by an agent of the appellant relied upon as true by Hedrick.

We are asked to set aside the judgment as contrary to the law and the evidence, without evidence to support it, for errors of law in the granting and refusal of instructions and for the non-admission of a certain writing in evidence.

The material evidence is substantially without conflict.

The Jefferson Standard Life Insurance Company is a corporation, whose principal office is in Greensboro, North Carolina. Its manager in this State, Frank H. Bell, maintained an office at Richmond, Virginia. Bell was authorized to solicit loans for his company. His duty was to get completed applications and submit them to the loan committee of his company at the home office for its approval or disapproval.

Hedrick, a resident of Arlington County, Virginia, desiring a loan to construct an apartment house in Arlington county, andhearing that the appellant was desirous of making loans of its funds on such properties, asked for an interview with Bell. Bell called on Hedrick at the latter's office, and, as a result of their conference, Hedrick submitted his application for a loan in the sum of $35,000 from the company, to be secured by a first lien on the proposed building. The application was on a standard form, adopted by the appellant, and furnished to its agents. It provided that no agent could bind the company to make a loan, and that the company could not be committed to make a loan until it had been approved by its finance committee.

On June 6, 1940, Hedrick wrote Bell calling his attention to the fact that he had not heard from him in reference to his application, and pointed out 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.

In reply, on June 11, 1940, Bell wrote that he would be unable to have an inspection of the property made before the latter part of the week or around the middle of June, which he hoped would not then be too late, and that he would do everything possible to rush the inspection.

On June 25, 1940, Hedrick wrote Bell the inspection not having been made, and not having heard anything further in reference to his application, he would appreciate information as to what action had been taken.

On June 28, 1940, Bell advised Hedrick, in writing, that his company would not consider "a loan for more than approximately $25,000" on his property, and that if he desired a loan around that sum to let him know, and he would get his company to negotiate further.

On July 1, 1940, Hedrick acknowledged receipt of the above letter, and stated he believed he could finance his building with a loan between $25,000 and $30,000, and asked that the company send him a definite commitment, stating the amount that it would be willing to lend, the rate of interest, the cost of the loan, and the terms of repayment.

On July 3, 1940, Bell replied thanking Hedrick for reducing the amount of his application and said: "I am today completing application, and instead of sending the blue prints to you I will mail them to our Home Office in order that we may give you a definite commitment. I am sure we will have something definite within the next week."

On July 10, 1940, Bell answered the above letter as follows:

"I have everything set up in connection with your application for loan at Arlington, Virginia, and almost ready to be submitted to our loan committee, but before they will accept it it will be necessary for us to have the inspection fee of $15.00. I shall appreciate it if you will let us have your check for this amount at your earliest convenience, and if the inspection is not made this money will be refunded to you."

The next day Hedrick forwarded his personal check for $15.

On July 12th, Bell returned Hedrick's personal check by mail, stating that he had called at the latter's office during his absence on the day before, and had then received a check from Hedrick's sister for $15. He further said: "Your application for loan is now in the proper shape and I hope to have it before our Committee on next Tuesday morning, and hope to give you something definite around the middle of next week."

On July 17, 1940, Bell wrote Hedrick: "This is to advise that your application for mortgage loan has been submitted to our Home Office, and will come before our Committee on Friday, July 19th.

"I hope to have something definite for you within the next few days."

On July 27, 1940, Hedrick wrote Bell, stating that he had not heard from the home office of the insurance company, and requested that Bell contact the home office as he was ready to begin work as soon as the final commitment was received.

No reply was received to this letter, so on August 22, 1940, Hedrick wrote Bell that he could not understand the reason for delay; that he did not wish to start his building operations until the loan was assured; and that expecting to hear daily from Bell, he had not applied elsewhere for a loan. He requested information as soon as possible because of his anxiety to complete the project before the cold weather set in.

Still receiving no reply from Bell, Hedrick, on August 28, 1940, wrote to the home office of the appellant, reciting the circumstances and requesting an immediateanswer. The company replied on August 29, 1940, advising Hedrick that his mortgage loan application had not been received in the home office, and that it assumed Bell would give the matter his immediate attention, since a copy of the letter of August 28th had been set to him.

All of the letters of Hedrick up to August 28, 1940, were addressed to the "Jefferson Standard Life Insurance Company, Richmond, Virginia, Frank H. Bell, Manager, " or to "Frank H. Bell, Manager Jefferson Standard Life Insurance Company, Richmond, Virginia." The calling card of Bell, left with Hedrick, and the letters of Bell, written on the letterheads of the appellant, designated him as a manager of the company.

Hedrick said he attempted to telephone Bell at least ten times, and talked to him two or three times. On each occasion he was assured that he would get a reply shortly, in the next two or three days.

Hedrick did not again hear from any representative of the insurance company until September 17, 1940, on which date his building plans were returned to him, together with a personal check of F. H. Bell for $15, earmarked "Returning Inspection fee in Connection with Application for Loan."

The return of the plans and the check was the first definite answer Hedrick received to his repeated inquiries as to what action had been taken on his application, which he had been told on July 17th, two months earlier, had been submitted to the home office of the appellant. Hedrick immediately made application to another loan company, obtained a loan commitment, and started the construction of his building about September 20, 1940.

Bell, testifying as a witness, admitted that he did not submit the application for a loan to his home office. His excuse for making the false representation was most unsatisfactory and equivocal.

Hedrick testified that when he received the letter of July 17th, stating that his application had been submitted to the insurance company, he believed it to contain the truth; that he waited, day after day and week after week, to hear one way or another what action had been taken by the company; that in reliance on that letter and on Bell's statements that he would get prompt action, he had been delayed for a period of two months in starting the con struction of his building; that he lost the benefit of the summer months when construction of his type of building was less costly; and that, because of the slower wintertime construction, an additional two months were required to complete the building, deferring its opening for the reception of tenants about four months altogether beyond the time when it would have been completed but for the deception of Bell.

The building was of concrete construction and had to be heated, in the course of its construction, during the winter because concrete does not set as quickly and...