Miller v. Premier Corp.
| Citation | 608 F.2d 973 |
| Decision Date | 05 October 1979 |
| Docket Number | 77-2543,Nos. 77-2542,s. 77-2542 |
| Parties | W. N. MILLER, Jr. and T. W. Miller, Appellees, v. PREMIER CORPORATION, Appellant, and W. L. Brittain, Robert M. Bohnel, C. Gerald Haarer, Darold F. McCalla, D. V. M., Percy L. Alverson, Edward J. Scheider, and James Ferguson, Defendants. W. N. MILLER, Jr. and T. W. Miller, Appellants, v. PREMIER CORPORATION and National Agricultural Finance Company, Appellees, and W. L. Brittain, Robert M. Bohlen, C. Gerald Haarer, Darold F. McCalla, D. V. M., Percy L. Alverson, Edward J. Scheider, and James Ferguson, Defendants. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
David L. Freeman, Greenville, S. C. (William W. Kehl, Wyche, Burgess, Freeman & Parham, P. A., Greenville, S. C., Charles W. Borgsdorf, Hooper, Hathaway, Fichera, Price & Davis, Ann Arbor, Mich., on brief), for appellant.
O. G. Calhoun, Jr., Greenville, S. C. (Jesse C. Belcher, Jr., Greenville, S. C., on brief), for appellees.
Before BRYAN, Senior Circuit Judge, and BUTZNER and PHILLIPS, Circuit Judges.
These consolidated cases grew out of ill-starred tax shelter investment ventures by two brothers, W. N. Miller, Jr. and T. W. Miller (Millers). When their investment in cattle breeder and feeder operations went bad, each investor sued various corporate managers and financiers of the ventures along with some of their corporate officers for violations of securities and usury laws and for common law fraud. The principal defendant, Premier Corporation (Premier), counterclaimed against each of the Millers for sums allegedly due on promissory notes and management contracts. A jury found for the Millers on their common law fraud claims and against Premier on its counterclaims, and the court sitting without a jury on the usury claims found for the Millers on one and against them on the other. We affirm as to the common law fraud claim; remand for new trial on the counterclaim; affirm denial of the one usury claim; and reverse the award made on the other.
Having realized a substantial gain from the sale in 1972 of a family business, the Millers looked for an investment to defer some of their tax liability and were referred by their attorney to one Carleton B. Foster, a securities broker. Foster was employed by a brokerage firm, Financial Analysts, Inc. (FAI). FAI was at the time a nonexclusive agent for the defendant Premier, a Michigan corporation engaged in the management of breeding cattle operations for outside investors and, through subsidiaries including the defendant National Agricultural Finance Co. (NAFC), the management of cattle feeding operations for outside investors. Premier supplied FAI with copies of its prospectus for cattle breeding investments, and with copies of a pro forma statement of projected expense outlays, cattle sales income, tax savings, and net profit that could be adapted to an hypothesized cattle breeding investment. Premier had specifically instructed FAI not to provide copies of the pro forma statement to investors and not to give any information or make any representations not included in the prospectus.
Foster nevertheless gave to the Millers and used in conferences with them copies of the pro forma statement that were adapted to their particular situation by using personal financial information obtained from the Millers' accountant. According to testimony by the Millers, Foster fleshed this out with oral representations respecting such specific profit factors as the calving rate that was expectable and the sale rate that would be realized in respect of high value animals and came up on the basis of these and other factors with specific profit and tax saving projections. These included a projected net profit for each of more than $200,000 over a five-year period. According to the Millers, Foster assured them that Premier would "make these numbers work."
In October 1972, the Millers signed individual contracts for investment in Premier's cattle breeding program in the amount of $180,000 each, making a downpayment of ten percent and giving installment notes for the balance of $162,000. Although the contracts that each signed contained specific acknowledgments that the signer had received Premier's prospectus that gave clear warnings on its first page that cattle investment involved high risks and that a price drop would yield probable losses and destroy tax benefits, the Millers testified on trial that they invested primarily because of Foster's oral and documentary representations.
Soon after this 1972 cattle breeder investment, Foster recommended that the Millers invest in cattle feedlot operations. At Foster's request, Premier prepared an investment plan for their consideration. After considering it, in December 1972, the Millers entered contracts for investment in Premier's feedlot operation for $176,000 and $318,576 respectively, 1 again making substantial downpayments and giving installment notes for balances due under the contract. The effective interest rate on these December 1972 notes was 8.5 percent.
In January, 1973, Foster instructed the Millers by letter to "ignore any apparent discrepancies" between the payment schedule in his pro forma statement and Premier's bills for their herd expenses, and sent a copy of this letter to Premier. Although this letter plainly revealed that Foster had used the pro forma financial statement in his dealings with the Millers, Premier took no action to warn the Millers against reliance upon it nor to disclaim Foster's action.
In November 1973, responding to a private placement memorandum respecting another feedlot operation to be managed as agent by Premier's subsidiary NAFC, the Millers executed contracts with NAFC for investments in this operation. Each made an initial investment of cash, and subsequently executed notes for purchases of grain for feeding out the cattle in which shares were owned.
With the Millers thus invested in the 1972 breeder operation and the 1972 feedlot operation with Premier, and in the 1973 feedlot operation with NAFC, the cattle market plummeted, reaching its nadir in January 1975. Losses were heavy in the cattle industry generally and specifically in the operations involved here. Plaintiffs of course adduced evidence that among the factors contributing to their own losses were the now-revealed falsity of various ones of the profit factors represented to and relied upon by them. With respect to each of the investments operations steps were taken to cut the Millers' losses. With respect to the 1972 breeder operation, the Millers exercised a buy-back option in May 1975 and sold numerous animals to Premier. Premier lost large sums in fulfilling this option, in repurchasing some steers, and in replacing dead and cull cattle among the Millers' herds. To counter the market drop for the 1972 feedlot investment, Premier completely liquidated the Millers' interests and returned to them their invested funds, including both principal and interest on the December 1972 notes, plus a small profit. To minimize losses on the 1973 feedlot operation, NAFC sold off some of the Millers' grain. On their side, after paying in considerably less than the full amounts due on their respective obligations on the notes given incident to the 1972 breeder cattle investment with Premier, the Millers ceased paying installments when due, leaving substantial amounts owing by each under terms of those notes.
In this state of affairs, the Millers in March of 1977 commenced separate diversity actions against Premier, NAFC, and a number of directors and officers of the two corporate defendants. In original, then amended, complaints each asserted claims against all these defendants under the South Carolina and federal securities laws; against Premier for common law fraud; and against Premier and NAFC for violations of the usury laws. The securities law claims alleged, in general, misrepresentations or omissions of required disclosures in the investment documents. The common law fraud claim alleged misrepresentations of material facts inducing the investments and fraudulent breaches of fiduciary duties. One of the usury claims was against Premier only and related to interest charges on the notes executed in respect of the 1972 feeder investment with Premier; the other was against Premier and NAFC and related to interest charges in respect of the 1973 feeder investment. Premier counterclaimed for balances due on the 1972 breeder investment promissory notes and management contracts, and for the value of materials supplied and services rendered in connection with that investment.
The cases were consolidated for trial and the parties agreed that the usury claims should be determined by the court following jury trial of the other issues. The jury found Premier liable to the Millers on the common law fraud claim, awarding damages of $50,000 to each; no liability against any defendants on the securities law claims; 2 and no liability on Premier's counterclaim. The district court then determined that Premier was liable on the usury claim related to the 1972 feeder investment; but that neither corporate defendant was liable on the usury claim related to the 1973 feeder investment.
Premier then moved for judgment n. o. v. in respect of the common law fraud and counterclaim verdicts; but did not move additionally or in the alternative for new trials in respect of either. See Fed.R.Civ.P. 50(b). The district judge denied the motions.
Premier's appeal and the Millers' cross-appeals assign errors only in respect of Premier's liability on the fraud claim, the denial of Premier's counterclaim, and the allowance of one and denial of the other usury claim. The securities law claims are thus not involved. We take the claims involved on this appeal in order.
Premier's appeal challenges the legal sufficiency of the evidence for...
To continue reading
Request your trial
-
Korotki v. Goughan
...quoting from United States v. The Board of Education of the County of Mineral, 253 F.2d 760, 765 (4th Cir.1958). In Miller v. Premier Corp., 608 F.2d 973, 983 (4th Cir.1979), Judge Phillips wrote that where "the instruction plainly misstated fundamentally controlling substantive principles ......
-
Bailey v. Turner
...preclude appellate review if the instruction "plainly misstates fundamentally controlling substantive principles", Miller v. Premier Corp., 608 F.2d 973, 983 (4th Cir.1979), and thereby prejudices the verdict. In my view the court's decision to tender instructions on good faith amounted to ......
-
Sanders v. Robinson Humphrey/American Exp., Inc.
...see, e.g., Dunn Appraisal Co. v. Honeywell Information Systems, Inc., 687 F.2d 877, 882 (6th Cir.1982) (Ohio); Miller v. Premier Corp., 608 F.2d 973, 980 (4th Cir. 1979) (South Carolina); Edwards v. Travelers Insurance of Hartford, Connecticut, 563 F.2d 105, 113 (6th Cir.1977) (Tennessee); ......
-
Fund of Funds, Ltd. v. Arthur Andersen & Co.
...claims. The "Special Verdict Form" was merely a checklist to record a general verdict on each legal claim. See Miller v. Premier Corp., 608 F.2d 973, 982-83 & n.10 (4th Cir. 1979) (District Court utilized the "perfectly serviceable practice" of submitting various discrete general verdict ch......
-
Theories of Stockbroker and Brokerage Firm Liability
...man would attach importance to the fact misrepresented or omitted in determining his course of action.) 9. Miller v. Premier Corp., 608 F.2d 973, 981 (4th 1979). 10. Id.; see also Bogle v. Bragg, 248 Ga. App. 632, 637, 548 S.E.2d 396, 401 (2001) (finding a statement that security was "a saf......