MAC Finance Plan of Nashua, Inc. v. Stone

• Decision Date: 30 December 1965
• Citation: MAC Finance Plan of Nashua, Inc. v. Stone, 106 N.H. 517, 214 A.2d 878 (N.H. 1965)
• Parties: MAC FINANCE PLAN OF NASHUA, INC. v. Earl E. STONE.
• Court: New Hampshire Supreme Court

Page 878

214 A.2d 878

106 N.H. 517

MAC FINANCE PLAN OF NASHUA, INC. v. Earl E. STONE.

Supreme Court of New Hampshire.

Argued Oct. 5, 1965.

Decided Dec. 7, 1965.

Rehearing Denied Dec. 30, 1965.

Normand R. Pelletier, Nashua (by brief and orally), for plaintiff.

Alphonse J. Raudonis and Jerome L. Silverstein, Nashua, for defendant.

BLANDIN, Justice.

The substantial issue here is whether the jury were properly instructed. We have often held that it is the duty of the Trial Court "to fully and correctly instruct the jury as to the law applicable to the case' (Burke v. Boston & M. Railroad, 82 N.H. 350, 361, 134 A. 574, 580) and to so phrase his instructions that it was reasonably certain the jury understood them. West v. Boston & M. Railroad, 81 N.H. 522, 532, 129 A. 768, 42 A.L.R. 176.' Davis v. State, 94 N.H. 321, 323, 52 A.2d 793, 794. The two axioms expressed above are of practically equal importance. Obviously the jury must be correctly instructed, and equally obviously, the Court's terminology must be such that laymen who are practically minded, but unversed in legal terms, can know what rules they are to apply. See Cohn v. Saidel, 71 N.H. 558, 571, 53 A. 800: Wood v. Manufacturers & Merchants Mut Insurance Company, 89 N.H. 524, 527, 2 A.2d 305.

In the present case, the basic issue was simple. It was whether the defendant obtained a loan from the plaintiff by making a materially false financial statement upon which the plaintiff honestly relied. If so, the defendant is liable for the balance of the amount borrowed under pertinent provisions of the Bankruptcy Act (11 U.S.C.A. § 35, sub. a(2)), which provides that a bankrupt shall not be discharged from 'liabilities for obtaining money or property by false pretenses or false representations * * *.'

The defendant concedes that the Court charged the jury correctly on the burden of proof and the purpose of the Bankruptcy Act. To determine whether the charge sufficiently covered the remaining essential principles of law applicable to the case, it is necessary to compare it with the defendant's requests. Numbers III through IX asked the Court in various terms to state the elements of fraud which the plaintiff had to prove to recover. With relation to this, the Court instructed the jury as follows:

'Now, all the debts of a bankrupt listed in the bankruptcy schedule are discharged upon issuance of the certificate of discharge, with certain exceptions. Now, you will have * * * the receipt of discharge of Mr. Stone and also his schedule of assets and liabilities relative to his bankruptcy. Now, as I said before, one of the exceptions is a debt arising out of a money loan, on the basis of the debtor procuring the money by a materially false financial statement. * * * Now, under New Hampshire law, misrepresentation of a material fact to a person not having equal means of knowledge, with the intent that he act on it, and he does act on it and is damaged as a result of his action. Or concealment of a material fact from a person not having equal means of knowledge, with the intent that he act on it, that he does act on it and is damaged as a result of his action. That is our definition of fraud in New Hampshire. Now, to go further, if the defendant makes a misrepresentation as to a material fact, with a fraudulent intent that the plaintiff act on it and the plaintiff, honestly believing it, does act on the statement to his detriment, the defendant is liable, even though the plaintiff was negligent in not becoming aware of the misrepresentation.'

It thus appears that the jury were told that to find the defendant liable they must believe (1) that he misrepresented a material fact to the plaintiff; (2) with a fraudulent intent that the latter act upon it; and (2) that the plaintiff, honestly believing the misrepresentation, did act upon it to his detriment. This was a proper instruction upon the subject. Hall v. Orient Ins. Company, 91 N.H. 6, 13 A.2d 157; Lampesis v. Comolli, 101 N.H. 279, 140 A.2d 561; Seavey, Fraud in New Hampshire, 1 N.H.B.J., Vol. I, p. 16.

The defendant, in accordance with his requests III & IV, urges that the presiding justice should have elaborated on the difference between a statement of fact and one of opinion. It is believed that a jury understands the difference between a statement of fact and one of mere opinion, at least until courts or lawyers, by drawing subtle distinctions and using many words, try to explain it to them. Throughout the case, counsel stressed that any misrepresentation must have been one of fact and not opinion. The court charged unequivocally that the misrepresentation must have been one of material fact. This must have made the distinction clear to the 'practical, but nonprofessional minds of jurymen.' Cohn v. Saidel, 71 N.H. 558, 571, 53 A. 800, 806. We believe no exception to the charge lies on this score. Wood v. Manufacturers & Merchants Mut. Insurance Co., 85 N.H. 524, 527, 2 A.2d 305.

The pertinent portions of the defendant's request No. XI in substance would have required the Court to charge that if the plaintiff neglected to make 'a diligent and prudent investigation' of the defendant's finances, then its 'carelessness or negligence' barred it from recovery. This is not our law, and the Court rightly refused to give the request. The negligence of the plaintiff is no defense if the defendant's conduct be fraudulent. Smith v. Pope, 103 N.H. 555, 176 A.2d 321. See Seavey, Fraud in New Hampshire, 1 N.H.B.J., Vol. I, p. 16, 23-24.

Defendant's requests Numbers XII-XIV and also XVI in effect ask the Court to instruct the jury that the plaintiff would be bound by the conduct of its agent and branch manager Scott, and if the latter did not require an honest statement or rely upon it or aided the defendants in giving a false one or knowingly acquiesced in their making such, then the plaintiff could not recover. On this phase of the matter, in addition to the portion of the charge already quoted, the Court instructed the jury as follows:

'Now, I would like to make a comment relative to the action of M.A.C. Finance...