Keith v. Murfreesboro Livestock Market, Inc.

• Citation: 780 S.W.2d 751
• Parties: Lois McGill KEITH, Plaintiff/Appellee, v. MURFREESBORO LIVESTOCK MARKET, INC., and Carlton Reeves, Defendants/Appellants. 780 S.W.2d 751
• Decision Date: 30 August 1989
• Court: Court of Appeals of Tennessee

Page 751

780 S.W.2d 751

Lois McGill KEITH, Plaintiff/Appellee, v. MURFREESBORO LIVESTOCK MARKET, INC., and Carlton Reeves Defendants/Appellants.

780 S.W.2d 751

Court of Appeals of Tennessee,

Middle Section, at Nashville.

Aug. 30, 1989.

Permission to Appeal Denied by Supreme

Court Nov. 27, 1989.

Rondal Wilson, Shelbyville, for defendants/appellants.

Thomas Reed, Jr., Murfreesboro, for plaintiff/appellee.

OPINION

KOCH, Judge.

This appeal involves a dispute arising from the sale of cattle through a livestock market in Murfreesboro. The executrix of the cattle owners' estates filed an action in the Circuit Court for Rutherford County alleging that the market's owner committed fraud by replacing her decedents' cattle with inferior stock before they were sold. The jury awarded the estates $3,000 in compensatory and $40,000 in punitive damages, and the livestock market and its owner have appealed. We affirm the judgment.

I.

James Benton McGill and Gladys McCary McGill owned a farm in the Dilton community in Rutherford County. Mr. McGill raised beef cattle until October 8, 1984, when he and his wife died. The responsibility for administering their estates fell upon their only child, Lois McGill Keith. Mrs. Keith was a school teacher who lived in Franklin with her husband, the Reverend Myron Keith.

The Keiths met Carlton Reeves for the first time on the day of the McGills' funeral. Mr. Reeves owned and operated a sale barn in Rutherford County doing business as the Murfreesboro Livestock Market, Inc. He sought to ingratiate himself with the Keiths by telling them that he had been a close friend of the McGills and that he had done a great deal of business with Mr. McGill.

During the days following the funeral, Mr. Reeves contacted the Keiths to offer assistance in disposing of the McGills' cattle. On October 18, 1984, he met at the McGills' farm with the Reverend Keith, William McGill, James McGill's brother, and one of James McGill's neighbors. He told the Reverend Keith that his sale barn would be conducting a sale on October 19, 1984, and he recommended that the McGills' best cattle should be sold at his sale barn rather than at the contemplated dispersal sale at the farm. Mr. Reeves explained that the cattle would bring more money that way and even offered to bear the expense of feeding the cattle and of transporting them to the sale.

The Keiths permitted Mr. Reeves to select the cattle from the McGill herd that he thought would bring the best price. Accompanied by William McGill, Mr. Reeves selected fifty-nine of the best cattle, mostly Charolais, including twenty cows, thirty-eight calves, and one bull and hauled them off to his sale barn. He discouraged the Reverend Keith and William McGill from attending the sale, saying "I'll take care of your interest for you. You have a whole lot on you." He promised to mail the proceeds to the Keiths on the day following the sale. Trustingly, neither the Keiths nor any of the McGill family attended the sale.

About a week later the Keiths received a set of checks from the sale barn totaling $12,217.14 which supposedly represented the proceeds from the sale of the McGill cattle. They also received a bill for Mr. Reeves' expenses for picking up the cattle and transporting them to the sale and for their upkeep. Both the Reverend Keith and William McGill were surprised that the check was so small. Mr. McGill, a cattle farmer himself, thought that the cattle Mr. Reeves took from his late brother's farm should have sold for twice what the Keiths received.

The Reverend Keith was so dissatisfied with the amount of money they received that he requested Mr. Reeves to meet with him at a lawyer's office in Franklin to discuss the matter. At the meeting, Mr. Reeves apologetically explained that the McGills' cattle brought a low price because of an unexpected drop in the market and an unanticipated lack of major buyers at the sale.

Though disgruntled, the Keiths let the matter rest. However, in March, 1985, they were contacted by a marketing specialist from the United States Department of Agriculture who had learned of their dissatisfaction with Mr. Reeves during an independent investigation into the sale barn. The Keiths requested the USDA to investigate their dealings with Mr. Reeves as well.

The USDA's investigation revealed numerous discrepancies in the sale barn's records concerning the McGill cattle. The records indicated that Mr. Reeves had replaced many of the McGill cattle prior to the sale with inferior cattle weighing less than the McGill cattle and that the money he sent the Keiths was actually the proceeds from the sale of the substituted cattle. The records also indicated that Mr. Reeves had sold one animal that he had earlier reported dead to a meat processing company. The Keiths later discovered that Mr. Reeves had purchased many of the McGill cattle for himself under other names.

In December, 1985, Mrs. Keith, acting as the executrix of her parents' estates, sued the Murfreesboro Livestock Market, Mr. Reeves, and several other related businesses and individuals alleging breach of fiduciary duty, larceny by trick, engaging in deceptive business practices, and common law fraud. The case went to trial in January, 1988, against Mr. Reeves and the livestock market on the issue of fraud alone. The jury awarded Mrs. Keith $3,000 in compensatory and $40,000 in punitive damages. The trial court entered judgment on the jury's verdict and later denied the appellants' motion for a new trial.

II.

We turn first to the appellants' challenge to the sufficiency of the proof of fraud. They contend that Mrs. Keith failed to prove that Mr. Reeves made any false representation of an existing or past fact on which she could have justifiably relied. We disagree. Having reviewed the evidence as required by Tenn.R.App.P. 13(d), we find that the record contains material evidence supporting the jury's conclusion that the appellants committed fraud upon the Keiths.

Tennessee's courts have declined to confine the concept of fraud to a "hidebound definition" ¹ because fraudulent conduct assumes a variety of forms. New York Life Ins. Co. v. Nashville Trust Co., 200 Tenn. 513, 523, 292 S.W.2d 749, 754 (1956). ² Thus, fraud remains a generic term broad enough to encompass

all acts, omissions, or concealments which involve a breach of legal and equitable duty, trust or confidence justly reposed, and are injurious to another, or by which an undue and unconscientious advantage is taken of another.

Smith v. Harrison, 49 Tenn. (2 Heisk.) 230, 243-44 (1870); see also Turley v. Taylor, 65 Tenn. 376, 386 (1873); 3 J. Pomeroy, A Treatise on Equity Jurisprudence Sec. 873, at 422 (5th ed.1941).

In our time, the concept of fraud protects every person's legitimate expectations that he or she can reasonably rely on the representations of others when making decisions--especially business decisions. See generally 2 F. Harper, F. James & O. Gray, The Law of Torts Sec. 7.1, at 378 (1986). Thus, the scope of the concept remains flexible, ³ requiring that each case be considered on its particular facts. See 37 Am.Jur.2d Fraud and Deceit Sec. 1 (1968).

Actions for fraud have four elements: (1) an intentional misrepresentation of a material fact, (2) the wrongdoer's knowledge that the representation is false, and (3) injury caused by the victim's reasonable reliance upon the representation. Holt v. American Progressive Life Ins. Co., 731 S.W.2d 923, 927 (Tenn.Ct.App.1987); Haynes v. Cumberland Builders, Inc., 546 S.W.2d 228, 232 (Tenn.Ct.App.1976). The fourth element requires that the misrepresentation must relate to an existing fact, Haynes v. Cumberland Builders, Inc., 546 S.W.2d at 232, or, in the case of promissory fraud, must embody a promise of future action without the present intention to carry out the promise. Brungard v. Caprice Records, Inc., 608 S.W.2d 585, 590 (Tenn.Ct.App.1980).

The record contains material evidence that Mr. Reeves made two material misrepresentations to the Keiths. First, Mr. Reeves represented to the Keiths that the $12,217.14 he sent them was the proceeds from the sale of the McGill cattle when he knew that many of the cattle that were sold did not come from the McGill herd. Second, the proximity between Mr. Reeves' conversations with the Keiths and the sale of the cattle, together with his later purchase of some of the cattle for himself, provides material evidence that he never intended to sell the cattle at the livestock market in the manner he promised the Keiths.

Intention to defraud is a question of fact. Metropolitan Life Ins. Co. v. Hedgepath, 182 Tenn. 296, 300, 185 S.W.2d 906, 907 (1945); Mann v. Russey, 101 Tenn. 596, 599, 49 S.W. 835, 836 (1898). Considering that Mrs. Keith put on evidence from which the jury could reasonably have concluded that Mr. Reeves intended to defraud the Keiths from the very beginning and considering that the trial court's instructions adequately covered all the elements of fraud, we decline to overturn the jury's verdict that Mr. Reeves' conduct was fraudulent.

III.

The appellants also attack the damage award on two fronts. They insist that Mrs. Keith failed to prove that her parents' estates had been damaged and that the amount of punitive damages is excessive. We disagree.

A.

The party seeking damages has the burden of proving them. Inman v. Union Planters Nat'l Bank, 634 S.W.2d 270, 272 (Tenn.Ct.App.1982). However, in tort cases the proof need not establish the amount of damages with mathematical precision, Provident Life and Accident Ins. Co. v. Globe Indem. Co., 156 Tenn. 571, 576, 3 S.W.2d 1057, 1058 (1928), as long as the proof is as certain as the nature of the case permits, and it enables the jury to make a fair and reasonable assessment of the damages. Wilson v. Farmers Chem. Ass'n, Inc., 60 Tenn.App. 102, 111, 444 S.W.2d 185, 189 (1969). Thus, while damages should not be awarded when the existence of damage is...