Kang v. Harrington
| Decision Date | 13 November 1978 |
| Docket Number | No. 6031,6031 |
| Citation | 587 P.2d 285,59 Haw. 652 |
| Parties | Lawrence S. C. KANG, Plaintiff-Counterclaim Defendant-Appellee, v. W. Dewey HARRINGTON, Defendant-Counterclaim Plaintiff-Appellant. |
| Court | Hawaii Supreme Court |
Syllabus by the Court
1. To support a finding of fraud, it must be shown that the representations were made and that they were false, that they were made by the defendant with knowledge that they were false, (or without knowledge whether they were true or false) and in contemplation of the plaintiff's relying upon them and also that the plaintiff did rely upon them.
2. In dealing with written contracts, the standard of proof with respect to a showing of fraud is extremely high. A written contract will be cancelled because of fraud only in a clear case and upon strong and convincing evidence.
3. Where it appears that one party has been guilty of an intentional and deliberate fraud, by which, to his knowledge, the other party has been misled, or influenced in his action, he cannot escape the legal consequences of his fraudulent conduct by saying that the fraud might have been discovered had the party whom he deceived exercised reasonable diligence and care.
4. When property is restored to an owner who has been deprived of it by fraud, the owner of the property should have the profit rather than the one who made the profit therefrom after obtaining it by fraudulent representations, although the enhanced value of the property puts the original owner of the property in a better position than that in which he would have been had no wrong been done to him.
5. The distinction between a fraud on the court and the fraud on the plaintiff is crucial since a finding of fraud on the court is unrelated to the fraud on the plaintiff and will not provide a basis for an award of punitive damages.SC 6. Punitive damages may be awarded only in cases where the wrongdoer has acted wantonly or oppressively or with such malice as implies a spirit of mischief or criminal indifference to civil obligations; or where there has been some wilful misconduct or that entire want of care which would raise the presumption of a conscious indifference to consequences.
7. The proper measurement of punitive damages should be the degree of malice, oppression, or gross negligence which forms the basis for the award and the amount of money required to punish the defendant.
8. The rule has been adopted by this court that it is proper, either for the trial court upon an application for a new trial, or for an appellate court in reviewing a judgment, to permit the party, in whose favor a verdict or judgment has been returned or entered, to avoid the granting of a new trial on account of error affecting only a part thereof, by entering a remittitur as to such erroneous part, when the court can clearly distinguish and separate the same.
9. The test on appellate review as to whether the damages awarded were excessive is whether upon the evidence adduced, reasonable men could have come to the same conclusion as the jury, or the trial court in a jury-waived case.
Paul Devens, Ikazaki, Devens, Lo, Youth & Nakano, Honolulu, for plaintiff-appellant.
Ton Seek Pai, Okumura Takushi Fanaki & Wee, Honolulu, for defendant-appellee.
Appellant, W. Dewey Harrington, appeals from the judgment of the circuit court of the first circuit finding him culpable of fraud with respect to a certain rental agreement. The judgment resulted in the reformation of that agreement and an award of $20,000 punitive damages and $1,800 compensatory damages to appellee, Lawrence S. C. Kang.
Appellee is the owner of a house and lot located at 2927 Hibiscus Place, Honolulu, Hawaii. Appellee's daughter, Dolly Won, lives at 3052 Hibiscus Drive, Honolulu, Hawaii, situated adjacent to the 2927 Hibiscus Place property.
On October 28, 1973, Dolly Won, acting as the agent of appellee, advertised the 2927 Hibiscus Place property as available for rental. On October 29, 1973, Dolly Won met appellant who indicated that he was interested in renting the property. Dolly Won advised appellant that the rent was $450 per month and that no dogs were permitted. Appellant then mentioned that he would be willing to make certain improvements to the property if his dogs would be allowed.
At their next meeting, appellant showed Dolly Won a sketch of the proposed improvements. Appellant stated that he would construct a wall along the ewa side of the property, another wall along the common boundary between the 3052 Hibiscus Drive property and the 2927 Hibiscus Place property and do some terracing and landscaping of the grounds. Consequently, Dolly Won agreed to rent the 2927 Hibiscus Place property to appellant for one year, to permit appellant's dogs and to reduce the rent to $400 per month because of the proposed improvements. Appellant also received an option for an additional one-year term and first consideration in the event that the property was available after the expiration of the second year.
Dolly Won then requested a security deposit of $400 in cash. On November 2, 1973, appellant gave Dolly Won the deposit and a letter of intent which was subsequently signed by both appellant and Dolly Won. The letter, however, stated that the $400 was for the first month's rent of the "house and property located at 3052 Hibiscus from November 6, 1973 for a period of one year with an additional option for a second year at four hundred dollars per month ($400.00) inclusive." Prior to signing the letter the parties revised it to state that the $400 was a security deposit rather than the first month's rent. But no mention was made of the fact that the 3052 Hibiscus Drive property was referred to in the letter instead of the 2927 Hibiscus Place property. Dolly Won then produced the appropriate rental forms but acceded to appellant's request that he be allowed to take them with him to type up at his office.
Appellant returned on November 3, 1973, and gave Dolly Won two copies of the typed-up rental forms to sign. Appellant told Dolly Won that he was in a hurry. Consequently, she initialed and signed all the documents in "a couple minutes" without reading them carefully. The rental agreement prepared by appellant contained an additional provision giving him a perpetual option to rent the 2927 Hibiscus Place property instead of the agreed upon one-year option. The pertinent part of the agreement read as follows:
4. Landlord agrees and tenant accepts this lease as a one year lease commencing on November 6, 1973 and ending on November 5, 1974, however at tenants option this lease may be extended for additional similar periods (one year) for the same monthly rate of $400.00 per month. Options are effected by tenants notifying landlord 30 days prior to the expiration date of each year's lease.
Upon taking occupancy of the premises appellant began to make various improvements in addition to the previously agreed upon walls and landscaping. This included, Inter alia, the enclosure of a patio with screens and sliding glass doors, construction of a concrete patio, electrical and plumbing work, interior repainting and the installation of a picture window, chandelier, sink and appliances.
On or about February 11, 1974, appellant sent a letter to Dolly Won mentioning his long-term intentions with regard to the 2927 Hibiscus Place property and the fact that he had spent and would continue to spend substantial amounts of money to improve the property. On October 3, 1974, Dolly Won received another letter from appellant stating that he had elected to renew his "option for the following year and for many, many years."
On November 25, 1974 appellee filed suit against appellant seeking to reform the rental agreement to limit the option provision to one year and for compensatory damages of $20,000 and punitive damages of $20,000. Appellant answered by alleging that the parties did, in fact, agree to a long-term lease and that appellee had committed an assault and battery against appellant. Appellant sought to reform the rental agreement to provide for a valid fifty-five year lease or declare that the lease was terminated and award appellant his out-of-pocket costs for the improvements. Appellant also sought $30,000 punitive damages for appellee's alleged fraud in construing the rental agreement to relate only to a one-year option and $30,000 punitive damages for appellee's alleged assault and battery against appellant.
The case was heard in the circuit court of the first circuit without a jury. The trial court held that appellant had committed a fraud against appellee in attempting to obtain a perpetual or long-term lease of the 2927 Hibiscus Place property. The rental agreement was reformed to provide for a one-year term with an option for an additional one-year term. Appellee was also given $1,800 compensatory damages and $20,000 punitive damages. The court also held that appellee did not commit an assault and battery against appellant.
On appeal, appellant seeks to set aside the judgment of the circuit court and obtain a new trial. Appellant raises three issues. 1
I. Whether the trial court erred in finding that appellant had committed a fraud against appellee.
II. Whether the trial court erred in awarding $20,000 punitive damages to appellee.
III. Whether the trial court erred in refusing to award appellant his out-of-pocket costs for the improvements on the 2927 Hibiscus Place property.
I.
To support a finding of fraud, it must be shown that "the representations were made and that they were false, . . . (and) that they were made by the defendant with knowledge that they were false, (or without knowledge whether they were true or false) and in contemplation of the plaintiff's relying upon them and also that the plaintiff did rely upon them." Hong Kim v. Hapai, 12 Haw. 185, 188 (1899).
In dealing with written contracts, the standard of proof with respect to a showing of...
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