Moore Ford Co. v. Smith, 80-68

Decision Date22 September 1980
Docket NumberNo. 80-68,80-68
Citation270 Ark. 340,604 S.W.2d 943
PartiesMOORE FORD COMPANY, Appellant, v. Gladys Hurley SMITH, Appellee.
CourtArkansas Supreme Court

Hoofman & Bingham, P.A. by John Biscoe Bingham, North Little Rock, for appellant.

J. R. Nash, North Little Rock, for appellee.

JOHN R. ELROD, Special Justice.

This is an action for misrepresentation.

In March, 1977, appellee purchased a new 1977 Mustang automobile from Moore Ford Company. She executed a conditional sales contract, assigned by Moore Ford Company to Ford Motor Credit Corporation, consistently made her monthly installment payments thereon, and drove the car for approximately sixteen months before she discovered that it had prior body work performed on the hood and one fender. Thereupon, she brought this cause of action, alleging that the car had been represented as a new car at the time of purchase when in fact it was something less because of the repaired body damage.

The jury returned a plaintiff's verdict, awarding $1,250 compensatory damages and $15,000 punitive damages, from which Moore Ford appeals, citing eight points for reversal, consolidated into five for purposes of this discussion.

I.

First, appellant argues that the trial court erred in refusing its proffered instruction defining a new and unused vehicle. The requested instruction was:

In determining whether a vehicle is a new vehicle factors which you may consider in determining whether a vehicle is a new vehicle include:

(1) Time elapsed since manufacture;

(2) Extent of use incident to dealer's business before sale to customer;

(3) Whether the customer is the first one to buy the car at retail.

Appellant cites Relyea v. Pacific Fire Ins. Co., 124 Conn. 654, 2 A.2d 377 (1938) as its authority. Appellee, however, correctly points out that the Relyea court included a fourth factor-that of "accident experience", or prior exposure to accidents, in its approved test of newness. A party which fails to offer a correct instruction cannot complain on appeal of its rejection. New Empire Ins. Co. v. Taylor, 235 Ark. 758, 362 S.W.2d 4 (1962).

Furthermore, it was unnecessary to the resolution of the issues of the case that the jury be instructed in any manner on the definition of a "new" car. It was uncontroverted that the appellee believed she had purchased a new car. It was uncontroverted that the appellant represented the vehicle as a new car in the generally accepted sense of those words as they apply in the retail marketplace. The odometer showed six miles at the time of purchase.

II.

Appellant next asserts that reversal should occur because the trial court erred by refusing to give a requested instruction regarding its defense of waiver, and that the court erred in refusing to grant appellant's motion for directed verdict, contending the appellee's continuation of her monthly payment obligations to Ford Motor Credit subsequent to her discovery of the misrepresentation constituted waiver as a matter of law.

The requested instruction was:

If, from a preponderance of the evidence, you should find that after the plaintiff discovered that the automobile in question was not a new vehicle, that she knowingly continued to make her monthly payments as they fell due, then you are told that this constituted a waiver by the plaintiff of her right to maintain this action, and your verdict should be for the defendant, Moore Ford Company.

This instruction would require a defendant's verdict because it was an uncontroverted fact that Mrs. Smith continued making her monthly payments to Ford Motor Credit following her discovery of prior damage. The trial court properly rejected the instruction and the motion. Continuation of payments, by itself, does not necessarily constitute a waiver as a matter of law.

We defined the defense of waiver in Ray Dodge, Inc. v. Moore, 251 Ark. 1036, 479 S.W.2d 518 (1972):

Waiver is the voluntary abandonment or surrender by a capable person of a right known by him to exist, with the intent that he shall forever be deprived of its benefits. It may occur when one, with full knowledge of the material facts, does something which is inconsistent with the right or his intention to rely upon it. . . . (I)t is essential that it be shown that the defrauded party intentionally condoned the fraud, affirmed the contract, and abandoned his right to recover damages for the loss resulting from the fraud.

Appellant cites Union Motor Co. v. Turbiville, 223 Ark. 92, 264 S.W.2d 592 (1954) to support its position, and it is correct that in Union this court gave its approval to an instruction which may appear to conflict with the Ray Dodge definition of waiver:

If . . . you . . . find that after the Plaintiff discovered the automobile . . . was not a new car, . . . she knowingly continued making her monthly payments . . . , this constituted a waiver by the Plaintiff of her right to maintain the action, and your verdict should be for . . . Union Motor Company.

However, in the Union Motor case the specific fact question being decided by the jury, on controverted evidence, was whether the plaintiff had continued making her payments after she knew the car was not a new car, for at some point in time, after consultation with an attorney, she ceased making payments. The above instruction properly framed the issue for a general verdict based on the specific facts of that case.

Here, Mrs. Smith learned of the repaired damage in June or July, 1978, and filed suit in October, 1978. She could not have waived her right to maintain suit by making payments on the purchase money note prior to her knowledge of the misrepresentation because up until that moment there was not a right known by her. The payments made by her following institution of suit were certainly made under protest and, therefore, no waiver could have occurred after October, 1978. Thus, the fact question presented at trial was whether payments for July, August, and September, at the most, constituted a waiver. The Union Motor instruction under these facts, would not have been appropriate.

In most cases the question of waiver will be one of fact, and the Ray Dodge instruction will be proper. It is unrealistic to expect a layperson plaintiff to be aware that he is automatically, as a matter of law, waiving a cause of action otherwise existing, simply by the act of making a monthly payment on an installment contract after discovery of a misrepresentation by the seller. That is not to say that there could never come a time when long continued payments, coupled with knowledge of material facts, could constitute waiver as a matter of law. The facts of each case will control the instruction given.

It being unnecessary to do so, we will not discuss the ramifications of the fact that the payments here were made to a third party assignee and not directly to the tortfeasor.

III.

Next, appellant urges that the trial court erred in refusing its requested instruction regarding the quality of circumstantial evidence necessary to prove fraud which read as follows:

Fraud or misrepresentation . . . may be proven by direct or circumstantial evidence. If proved by circumstantial evidence, the circumstantial evidence must be so strong and well connected as to clearly show fraud.

Appellee correctly points out that all of the Arkansas cases cited by appellant in support of its assertion involved the reformation or cancellation of written instruments. (DuFresne v. Paul, 144 Ark. 87, 221 S.W. 485 (1920); Stringer v. Georgia State Savings Association of Savannah, 218 Ark. 683, 238 S.W.2d 629 (1951); Harris v. Shaw, 224 Ark. 150, 272 S.W.2d 53 (1954)).

The jury was instructed in accordance with AMI 104 which defines circumstantial evidence. Certainly circumstantial evidence can serve as a basis for the jury to infer fraud just as to infer any other fact. Ray Dodge, supra. We hold there was no error.

IV.

Appellant contends reversal should occur because appellee failed to provide substantial evidence that appellant knew or should have known of the alleged misrepresentation, and that she failed to produce substantial evidence of the amount of the compensatory damages awarded to her, $1,250. At trial these issues...

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