Martin v. Winfield

• Decision Date: 22 August 1984
• Docket Number: No. 55065,55065
• Citation: 455 So.2d 762
• Parties: Marcus MARTIN v. Robert M. WINFIELD and Juanita Gayle Winfield.
• Court: Mississippi Supreme Court

Page 762

455 So.2d 762

Marcus MARTIN v. Robert M. WINFIELD and Juanita Gayle Winfield.

No. 55065.

Supreme Court of Mississippi.

Aug. 22, 1984.

Michael P. Younger, Johnston & Younger, Brandon, for appellant.

William H. Jones, Petal, for appellees.

Before ROY NOBLE LEE, P.J., and ROBERTSON and SULLIVAN, JJ.

ROBERTSON, Justice, for the court:

I.

This action has been brought by the payees on a $16,800.00 sight draft made and delivered by an experienced lessee of oil and gas rights. The maker admits delivery of the draft and that it was intended as payment of the agreed-upon rental, but charges affirmatively that it was procured by fraudulent misrepresentation.

A Rankin County jury rejected the maker's fraud defense and returned a verdict in favor of the payee holders. Finding in the record substantial evidence supporting the verdict of the jury, we affirm.

II.

A.

Marcus E. Martin is an insurance agent and attorney who for the last 20 years has bought and sold gas and oil property. His general method of operation has been to locate an area where there is active leasing or oil and gas activity. He then contacts land owners and tells them that, whatever the highest offer is for the lease on their land, he, Martin, will pay them $10.00 more per acre than that offered. After acquiring a lease, Martin generally resells the lease to the large company which has bought up most of the area.

The Winfields had been making inquiries about the possible leasing of the oil, gas and other minerals on lands owned by them in Simpson County, Mississippi. Martin heard about the availability of a lease on the Winfield property. Martin contacted Winfield by telephone.

Here the testimony begins to conflict. Martin says that he asked Mr. Winfield what his best bona fide offer for a lease on the property had been and that Winfield told him it was $200.00 per acre. Martin says that on the basis of this offer, he offered Winfield $210.00 per acre which Winfield accepted. Mr. Winfield's version of the negotiations is slightly different. First of all, it does not appear that Winfield is sensitive to the difference between a bona fide contractual offer for his minerals and a general estimate of the value of his minerals. Winfield says that he told Martin "it was between $150.00, $200.00, an acre". This statement by Winfield to Martin was apparently based on what he had been told by minerals leasing agent named Frank Prescatory.

Martin testified further that Winfield had assured him that leasing was going on in the section where the Winfields' land was situated, and that drilling was occurring within a mile of his property. Winfield testified that it was quite possible that he had relayed on to Martin such information regarding leases and drilling and that his belief in such information was based on what Mr. Prescatory had told him.

Through these negotiations, the stage was set. On January 25, 1982, Martin, purportedly relying upon representations regarding offers and leasing/drilling activity made by layman Winfield and having made no independent investigation of the matter, drove to a restaurant in Hattiesburg to close the deal. The Winfields, assuming they had reached a fair price for their lease with an experienced oil man, arrived at the same restaurant. The Winfields executed the mineral lease prepared by Martin and delivered it to Martin, who in exchange tendered to the Winfields a 15 day sight draft which provides as follows:

Upon approval of title but not later than 15 days after sight.

Martin went to the office of the Chancery Clerk of Simpson County to record the lease. When he got there, Martin asked about and found that there was no leasing or drilling activity whatsoever going on in the Winfields' area. Martin decided not to record the lease. In the days following, Martin contacted several oil leasing interests and inquired if they would be interested in buying the Winfield lease. He found no takers. During this same time, Martin cancelled payment on the draft he had given the Winfields. Martin never returned the executed lease to the Winfields nor did he tell them the lease was rescinded.

B.

On June 18, 1982, the Winfields commenced in the Circuit Court of Simpson County an action against Martin predicated on the unpaid sight draft. In due course thereafter, the venue was changed to Rankin County, Martin being a resident of that county. Martin then filed an answer denying the essential allegations of the complaint and setting up an affirmative defense of fraud.

Trial was held on August 18, 1983, in the Circuit Court of Rankin County, R.L. Goza presiding and sitting with a jury. That same day the jury returned a verdict in favor of the Winfields and against Martin in the full sum of $16,800.00.

Martin thereafter timely filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial, which was promptly overruled. On August 25, 1983, the Circuit Court entered final judgment on the jury's verdict. This appeal has followed, where Martin's sole complaint (though couched in four assignment of error) is that on the record before it the Circuit Court was required as a matter of law to sustain his affirmative defense of fraud.

III.

Reduced to its essence, this is an action by the payee of an instrument against its maker. On its face, the only condition in the instrument is that title be approved. The record containing not the slightest suggestion of any defect in title, the Winfields, as payees and holders of the instrument, are entitled subject only to any defenses which may be available in law to enforce it against Martin according to its tenor. Cf. Figg v. Cupit, 401 So.2d 722 (Miss.1981) (restriction in instrument pertains only to title).

Miss.Code Ann. Sec. 75-3-306(b) (Supp.1983) provides that Martin has "all defenses of any party which would be available in an action on a simple contract". Bank of Crystal Springs v. First National Bank of Jackson, 427 So.2d 968, 970 (Miss.1983). One such defense is fraud in the procurement of the instrument. McCorkle v. Hughes, 244 So.2d 386, 388 (Miss.1971); see also Austin v. Atlas Subsidiaries of Mississippi, Inc., 223 So.2d 297, 299 (Miss.1969) (concurring opinion recognizing that fraud of payee would be defense in suit by payee against maker but not in suit by holder in due course). Cases under the Uniform Commercial Code from other states recognize fraud as a defense to an action by a holder/payee not a holder in due course. Viracola v. Dallas International Bank, 508 S.W.2d 472 (Tex.Civ.App.1974); Thompson v. First National Bank and Trust Co., 142 Ga.App. 174, 235 S.E.2d 582 (1977), reversed on other grounds, 240 Ga. 494, 241 S.E.2d 253; Brown v. Scales, 109 Ga.App. 138, 135 S.E.2d 525 (1964).

Martin denies liability on the instrument via an affirmative defense of fraud. Martin charges that the Winfields made fraudulent misrepresentations which induced him to enter into the agreement and to execute and deliver the instrument sued upon.

The elements of a claim or defense of fraud in this state are well established. They include: (1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's knowledge of its falsity or ignorance of its truth, (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated, (6) the hearer's ignorance of its falsity, (7) his reliance on its truth, (8) his right to rely thereon, and (9) his consequent and proximate injury. Gardner v. State, 235 Miss. 119, 130, 108 So.2d 592, 594 (1959); see Stringfellow v. Stringfellow, 451 So.2d 219, 221 (Miss.1984) (citing Gardner on this issue); Johnson v. Brewer, 427 So.2d 118, 120-21 (Miss.1983) (same); Franklin v. Lovitt Equipment Co., 420 So.2d 1370, 1373 (Miss.1982) (same); Crawford v. Smith Brothers Lumber Co., 274 So.2d 675, 678 (Miss.1973) (same); Anderson Dunham, Inc. v. Aiken, 241 Miss. 756, 761, 133 So.2d 527, 529 (1961) (same); see also Hamilton v. McGill, 352 So.2d 825, 831 (Miss.1977) (formulation of fraud similar to Gardner); McMahon v. McMahon, 247 Miss. 822, 836, 157 So.2d 494, 499-500 (1963) (same).

Proving fraud is difficult, as it ought to be. Clear and convincing evidence is required. Cotton v. McConnell, 435 So.2d 683, 685-689 (Miss.1983); Franklin v. Lovitt Equipment Co., Inc., 420 So.2d 1370, 1373 (Miss.1982).

Here Martin has an even more difficult hill to climb in that he is appealing from an adverse jury verdict. Fraud is essentially a question of fact. Specifically, our question is whether Martin has proved by clear and convincing evidence the nine elements of his affirmative defense. On review we must presume that all conflicts in the evidence have been resolved in favor of the Winfields. City of Jackson v. Locklar, 431 So.2d 475, 478-79 (Miss.1983); Paymaster Oil Co. v. Mitchell, 319 So.2d 652, 656-57 (Miss.1975); General Tire & Rubber Co. v. Darnell, 221 So.2d 104, 105-07 (Miss.1969). The question is not whether we think Martin was defrauded but whether the evidence of fraud is so clear that no hypothetical reasonable juror hearing the proof could conclude otherwise.

Considering the facts as we must in the light most favorable to the Winfields, there are any number of the elements of fraud Martin has not established. For example, Winfield thought Martin...