McKeehan v. Wittels

• Decision Date: 26 March 1974
• Docket Number: No. 35059,35059
• Citation: 508 S.W.2d 277
• Parties: Dorothy C. McKEEHAN, Plaintiff-Respondent, v. Jacob M. WITTELS et al., Defendants-Appellants. . Louis District, Division Two
• Court: Missouri Court of Appeals

Page 277

508 S.W.2d 277

Dorothy C. McKEEHAN, Plaintiff-Respondent, v. Jacob M. WITTELS et al., Defendants-Appellants.

No. 35059.

Missouri Court of Appeals, St. Louis District, Division Two.

March 26, 1974.

Susman, Willer & Rimmel, Leonard Komen, St. Louis, for defendants-appellants.

Thomas M. Carney, Robert H. Garfield, St. Louis, for plaintiff-respondent.

McMILLIAN, Judge.

This is an appeal by defendants, Jacob M. Wittels, Malcolm Wittels, Ilene Wittels, and Wittels Investment Co., Inc. from a joint judgment entered by the Circuit Court of St. Louis County, Missouri, in favor of plaintiff, Dorothy M. McKeehan, in the amount of $29,942.65 actual damages and $25,000 punitive damages. The case was tried before the court without a jury.

Appellants challenge the sufficiency of the evidence to support a finding of breach of fiduciary duty. Specifically, appellants claim:

1. The judgment was against the weight of the evidence because the material elements of an action for breach of fiduciary duty had not been proven.

2. There was insufficient evidence to support the trial court's finding of individual liability of appellants Jacob M. Wittels, Malcolm Wittels and Ilene Wittels.

3. There is insufficient evidence to support an award of punitive damages owing to a failure to prove appellants acted in a willful, wanton or malicious manner. Appellants also assert that the evidence did not support the amount of actual damages awarded to respondents.

As a result of appellants' failure to appear at trial, the case was tried without a jury. Plaintiff submitted the following evidence to the trial court to support her cause of action: Malcolm Wittel's deposition, in-court testimony of three (3) witnesses, thirty-one (31) exhibits consisting of copies of the various deeds of trust sold by Wittels Investment Co. to plaintiff Dorothy McKeehan, recapitulations of transactions between plaintiff and defendant Wittels Investment Co. Inc., tax statements issued on the properties in question, etc. Plaintiff's witnesses were Fred M. Reichman, who was the initial attorney for Dorothy McKeehan in this matter, Lawrence Benard, Manager of the Missouri Property Insurance Placement Facility, and plaintiff Dorothy McKeehan.

The scope of our review of this court-tried case is defined in § 510.310(4), RSMo, V.A.M.S. and Rule 73.01(d), Rules of Civil Procedure, V.A.M.R. We review both the law and the evidence as in suits of an equitable nature; the judgment is not to be set aside unless clearly erroneous and due regard is to be given to the opportunity of the trial court to judge the credibility of the witnesses. Atherton v. Atherton, 480 S.W.2d 513, 515 (Mo.App.1972); Upshaw v. Latham, 486 S.W.2d 656, 658 (Mo.App.1972). Where the factual issue can only be determined from directly conflicting oral testimony, we defer strongly to the trial court's finding on the matter of credibility. Upshaw v. Latham, supra, at 656.

None of the parties below requested findings of fact or conclusions of law for final submission, nor did the trial court indicate grounds for its decision. Under such circumstances, we must assume that all fact issues were found in accordance with the result reached. Atherton v. Atherton, supra. As in Upshaw v. Latham, supra, the question for our determination is not whether plaintiff made a submissible case, but whether, on the evidence in the record, plaintiff is entitled to a judgment. We must determine whether the court below was clearly erroneous in rendering judgment for the plaintiff. These established principles form the basis for our affirmance of the judgment as to defendants Jacob Wittels, Malcolm Wittels and Wittels Investment Co., Inc., and our reversal of the judgment as to Ilene Wittels.

Appellants challenge the sufficiency of the evidence to establish proof of the material elements on an action for Breach of Fiduciary Duty. We feel that the record amply supports the judgment with respect to Jacob and Malcolm Wittels and Wittels Investment Co., Inc. On the other hand, however, with respect to Ilene Wittels, we hold that there was insufficient evidence to support the finding and judgment of Breach of Fiduciary Duty.

The judgment must be construed with reference to the records as a whole, including the pleadings. Chuning v. Calvert, 452 S.W.2d 580, 582 (Mo.App.1970). Consequently, we look to plaintiff's complaint, defendants' answer, and the evidence introduced at trial as well as case law to determine the validity of the trial court's finding and judgment.

As the first element of her cause of action, plaintiff Dorothy McKeehan pleads the creation and existence of a confidential relationship between herself and defendants, Malcolm, Jacob, and Ilene Wittels and Wittels Investment Co., Inc. The fiduciary duty or 'fiduciary relationship' discussed in this case is usually referred to as applicable to suits in equity but the principles underlying the doctrine in equity are also applicable to cases at law where the relation is sometimes referred to as a 'confidential relation.' Klika v. Albert Wenzlick Real Estate Co., 150 S.W.2d 18, 24 (Mo.App.1941); Bacon v. Soule, 19 Cal.App. 428, 434; 126 P. 384, 386 (1912). It is established law that an agency relationship can arise impliedly from the behavior and conduct of the parties. Although '. . . (t)he parties may not have intended to create the legal relationship or to have subjected themselves to the liabilities which the law imposes as a result of it, nevertheless, the relationship exists 'if there has been a manifestation by the principal to the agent that the agent may act on his account, and consent by the agent so to act. '' Groh v. Shelton, 428 S.W.2d 911, 916 (Mo.App.1968); Utlaut v. Glick Real Estate Company, 246 S.W.2d 760 (Mo.1952). A fiduciary relationship is created and established where there has been 'a special confidence reposed in one who in equity and good conscience is bound to act in good faith, and with due regard to the interests of the one reposing the confidence . . .' Klika v. Albert Wenzlick Real Estate Co.,supra, 150 S.W.2d at 24. A confidential relation exists when one relies upon and trusts another in regard to handling of property and business affairs, thus creating some fiduciary obligations. Davis v. Pitti, 472 S.W.2d 382 (Mo.1971).

We believe that the record supports a finding that a fiduciary relationship existed between plaintiff Dorothy McKeehan and defendants Malcolm and Jacob Wittels and Wittels Investment Co., Inc. The transcript reflects that from the outset of the series of transactions in question, plaintiff dealt directly with Malcolm and Jacob Wittels who constantly assured her that they would take care of her investments. Plaintiff also testified that Malcolm Wittels urged her to entrust her funds with the Company and claimed that the Company had extensive experience and knowledge in handling such investments. Defendant Malcolm Wittels denies in his deposition that he or anyone made such promises to Dorothy McKeehan. However, this fact issue turns completely on the credibility of the witnesses. Consequently, we apply the principle enunciated in Upshaw v. Latham, supra, and defer to the trial court's finding that Dorothy McKeehan's testimony was the more credible. The testimony of Dorothy McKeehan, coupled with Mr. Reichman's testimony at trial amply supports the trial court's finding that a fiduciary or confidential relationship existed between plaintiff Dorothy McKeehan and defendants Malcolm Wittels, Jacob Wittels and Wittels Investment Co., Inc. But there is no evidence either direct or circumstantial, that Ilene Wittels participated in the active management of the business or individually contributed in any way to the creation of a fiduciary relationship with plaintiff.

As the second element of her cause of action, plaintiff pleads that defendants breached their fiduciary duty by deliberately failing to follow her instructions, failing to disclose essential information affecting the security of her investments, and misrepresenting certain facts for the purpose of furthering their own financial position. It is established law in this state that '. . . (w)hen a loss results to a principal from his agent's failure to pursue the instructions given to him, a cause of action arises in favor of the former . . .' Marshall v. Ferguson, 94 Mo.App. 175, 67 S.W. 935, 936 (1902).

'. . . (S)ometimes instructions are violated in such a way as to authorize a principal to proceed directly against the agent as a debtor or for conversion. Loyalty to their trust is firmly exacted of all agents by the law, and when one uses his position for his own ends, regardless of the welfare of his principal, he becomes responsible for a resultant loss, as if he unscrupulously handles money or property confided to him to benefit himself . . . (A)n agent cannot ignore the directions given him as to how the business put into his hands shall be transacted, and cannot use his agency for his own advantage, to the detriment of the principal.' Marshall v. Ferguson, supra, 67 S.W. at 936.

Likewise, a fiduciary relationship between principal and agent obligates the agent to fully disclose all material facts to the principal, to strictly avoid misrepresentation and in all respects to act with utmost good faith. Groh v. Shelton, supra, 428 S.W.2d at 916; Klika v. Albert Wenzlick Real Estate Co., supra; Dittmeier v. Missouri Real Estate Commission, 237 S.W.2d 201 (Mo.App.1951). If plaintiff presented sufficient evidence to prove either that defendants deliberately ignored her instructions in order to further their own financial position, or failed to disclose material facts to plaintiff or actively misrepresented material facts to plaintiff, she will have produced sufficient evidence to support the trial court's finding of proof of the second material element of her cause of action, breach of fiduciary duty arising out of a confidential or fiduciary...