Mid-State Homes, Inc. v. Johnson, MID-STATE

• Decision Date: 03 April 1975
• Docket Number: MID-STATE
• Citation: 311 So.2d 312,294 Ala. 59
• Parties: HOMES, INC., a corporation v. Robert L. JOHNSON. SC 992.
• Court: Alabama Supreme Court

Page 312

311 So.2d 312

294 Ala. 59

MID-STATE HOMES, INC., a corporation v. Robert L. JOHNSON.

SC 992.

Supreme Court of Alabama.

April 3, 1975.

Rehearing Denied May 1, 1975.

R. A. Norred, Birmingham, for appellant.

James H. Tompkins, N. Pride Tompkins, Murray W. Beasley, Tuscumbia, for appellee.

EMBRY, Justice.

This appeal is from a judgment for $12,500 damages on a jury verdict. The action was submitted to the jury as one seeking damages owing to false representations and for money had and received. Code of Ala., Tit. 7, § 108; Form 11, Rule 84, ARCP.

The twenty-three assignments of error complain of: rulings admitting or excluding evidence; failure of the court to direct a verdict in favor of defendant; errors in the oral charge to the jury, error for failing to give written jury instructions requested by defendant, and a judgment contrary to the evidence and law, as well as excessive. The substantive question presented for review is, in fact, only one. Does the recognized principle of law: One who has been defrauded may either rescind the transaction or affirm and sue at law, but may not do both, preclude recovery of considerations paid and other damages (including those punitive in nature), after 'dissaffirmance' of the transaction? The circumstances of this particular case dictate an answer in the negative.

Plaintiff, Johnson, sold his farm in Florida in late 1971 and requested his sister Louise Jackson to locate property in Alabama for purchase by him. Several weeks later she located a residence, situated on four acres of land, known as the McClurg property. On the property was a 'for sale' sign displaying a telephone number. Calling that number put her in touch with one Jerry Williams. She later met with Jerry Williams at the office of Jim Walter Homes in Muscle Shoals, Alabama. At a second meeting with Williams she gave him the Florida telephone number of her brother, Johnson. She remained in the presence of Williams while he read a sales contract to Johnson over the telephone. During that conversation the alleged misrepresentation was made:

'A. He (Jerry Williams) read the contract to me on the phone and he said 'Would you like to speak with your sister?' I said 'yes.' So my sister was on the phone and she said 'Is everything all right? Do you want me to give him the money--the deposit--until you come home?' I said 'yes, go ahead and give him the money.' Then they mailed me the contract and I read the contract and I signed it. He told me on the phone that anytime I came home after that, the contract was signed and I could have immediate possession.

'Q. Who said that to you?

'A. Jerry Williams.'

It is apparent from the evidence concerning that conversation with Williams and with his sister, Johnson expected the right to immediate possession of the McClurg property. Obviously he relied on that statement when he instructed his sister to give Williams the money for the down payment or deposit. At the time Johnson did not know that on an earlier date one Harold Savage had purchased the McClurg property after its sale for unpaid taxes. ¹ Savage went into possession following that purchase and made certain repairs to the dwelling house. At trial, in February 1974, Savage claimed continuous possession of the McClurg property from and after his purchase. A certificate of redemption from the tax sale was in evidence. On the face of that instrument it appeared that defendant Mid-State had redeemed the McClurg property almost one and one-half years after Johnson filed suit against Mid-State. By the date of redemption Johnson had purchased other property for his place of residence.

Subsequent to making the down payment for Johnson Mrs. Jackson visited the McClurg property several times. She visited the property twice in the company of Johnson. After Johnson had returned to Florida, Mrs. Jackson was informed by their older brother (who lived near the McClurg property) that Savage disapproved of her coming onto the McClurg property. She passed this information on to Johnson. He returned from Florida and made efforts to communicate with Mid-State or Jim Walter Homes. ² Ultimately he succeeded in talking with representatives of Jim Walter Homes. He was informed that as far as they were concerned he, Johnson, had possession of the McClurg property. He was told he could 'move in.' After Johnson purchased another residence, in which he was dwelling, he was visited by Savage. Savage stated that he, Savage, owned the McClurg property and was in possession.

In its challenge to the sufficiency of the evidence to support the verdict and judgment Mid-State contends that Johnson had the burden to establish lack of possession by Mid-State. It asserts that Johnson failed to meet this burden.

Johnson says that representation was made to him, upon which he relied, of his right to immediate possession; that the tax sale prior to the representation belied the truth of such representation. Knowledge of the falsity of the representation, he says, is patent from the fact the delinquent taxes were owed by the mortgagor against whom Mid-State foreclosed, and obtained title, only by which it could give Johnson the right to immediate possession.

The evidence was sufficient to authorize the jury to find tht the representation was made; was false, known to be false or recklessly made without knowledge; acted on by Johnson; and was of a material fact.

We are not here dealing with competing Claims of title, rather a Representation regarding right to possession. With this in mind the admissibility of the statement of Mrs. Jackson in response to a question asked her by Mid-State becomes evident.

'Q. All right, how many times all total did you go out there before anybody came up to you?

'A. Well, about the third time we went, we found out that this man--my brother that lives out there called me and said that Mr. Savage said he had rather we wouldn't come back out there on that property any more.

'MR. NORRED: I move to exclude that. It is not responsive and it is hearsay--the communication given to her by somebody else.

'BY THE COURT: I overrule the motion.

MR. NORRED: We except.'

Note, this question was not asked and response made in a situation where contested claims of title were being considered. In that circumstance, e.g., an action in ejectment to quiet title, the declaration of a party as to the source of his title would not be admissible. Neither would declarations about past transactions or contracts relating to such be relevant. Weston v. Weston, 269 Ala. 595, 114 So.2d 898.

The fact that the words were spoken, not the truth of them, make the declaration admissible on the issue of colorable Claim of possession by Savage which put Johnson on Notice that his attempt to gain possession would be in the teeth of an asserted adverse claim of Savage. It was the obligation of Mid-State to place him in possession through Its actions. That it made no attempt to do so, the jury could consider in determining whether the representation was false and known to be so, or recklessly made without knowledge.

Great latitude is allowed in admitting evidence on the issue of alleged fraud. May v. Strickland, 235 Ala. 482, 180 So. 93; National Surety Co. v. Julian, 227 Ala. 472, 150 So. 474. Most often the perpetrator of fraud is the sole possessor of actual knowledge of such fraud. Undue restriction should not be placed on the introduction of evidence which has probative value, however slight, on this issue. Weight is for the jury. The trial judge did not err when he failed to exclude the response of Mrs. Jackson to the question. Neither was it error to admit testimony of Savage relating to his purchase of the property at tax sale. That evidence was relevant to show the existence of his claim of possession adverse to that of Johnson.

Now to the prime question. Affirm and sue for damages--rescind and seek restoration, not both?

During trial of this action several illuminating events occurred. Exposition of them may facilitate understanding of this portion of our opinion. In opening statement, Johnson's attorney informed the jury that Johnson was asking for damages. Attorney for Mid-State objected:

'I would like to reserve an objection to that portion of Mr. Tompkin's argument wherein he said 'We ask damages.' I base my objection on the grounds that the plaintiff has already made collection (sic) (election) in this case to rescind the contract and is therefore limited to recovery of the amount that he paid on the contract.'

This objection was overruled.

During its oral charge the court instructed the jury:

'* * * (W)here a person has disaffirmed a contract because of legal fraud, as I defined it to you, and the fraud is oppressive, gross, or malicious, then the damages that may be assessed by the jury, if the jury does assess damages, then the jury has the right to award punitive damages if they so desire. * * *'

Later on in that charge the court said:

'* * * Punitive damages may not be recovered in an action for deceit unless the fraud complained of is gross, malicious, oppressive and committed with an intention to injure and to defraud. * * *'

Next the court related:

'* * * Ladies and gentlemen of the jury, I am going to make a comment on the evidence and the lawyers have agreed that I might do it. In this lawsuit, I think the undisputed facts are, and the evidence is, that the plaintiff in this case is not claiming under the contract. He contends that he has legal reason to disaffirm it and therefore, your verdicts must be consistent in this case. What I mean when I say that is, since the plaintiff is not standing on the contract, you can not bring in a verdict both for the plaintiff against the defendant and the defendant against the plaintiff. Your verdict will have to be either for the plaintiff against the defendant or (sic) his fraud suit or for the defendant, Mid State Homes, under his suit over the contract against the...