Neff v. Kehoe
| Decision Date | 30 June 1983 |
| Docket Number | No. 82-7227,82-7227 |
| Citation | 708 F.2d 639 |
| Parties | 36 UCC Rep.Serv. 445, 13 Fed. R. Evid. Serv. 1147 Ben NEFF, Plaintiff-Appellant, v. Nell Bilbro KEHOE, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Burns, Shumaker & Davis, Thomas E. Davis, Gadsden, Ala., for plaintiff-appellant.
Inzer, Suttle, Swann & Stivender, James C. Stivender, Roger C. Suttle, Gadsden, Ala., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Alabama.
Before RONEY, VANCE and ANDERSON, Circuit Judges.
This diversity action was instituted by Ben Neff against Nell Bilbro Kehoe as a result of misrepresentations allegedly made in connection with the sale of a coin collection. Neff argues that representations made by Kehoe were knowingly false or that Kehoe recklessly represented facts that were in fact false. In addition to claiming damages based on fraud, Neff alleged a right to recover based on breach of warranty as to the genuine character of the coins.
Neff, a resident of Texas, first learned in 1980 that Kehoe, a resident of Alabama, might be interested in selling her coin collection. Neff confirmed by telephone that the collection might be for sale. Neff requested and received a general description of each coin in the collection. Neff testified that during this conversation Kehoe stated that one coin, a 1907 Roman Numeral Twenty Dollar gold piece, was similar to a coin which the newspaper column "Ripley's Believe It or Not" had reported as having been sold at a 1974 New York City auction for $200,000. Following the conversation, Neff purchased several coin collector's magazines and contacted expert numismatists in New York City, Houston and New Orleans in an effort to obtain information and advice about the value of coins in the Kehoe collection.
Neff traveled to the Kehoe residence in Alabama and examined the coins. After his return to Texas, Neff, by telephone, offered to pay $64,000 for the collection. Kehoe stated that she felt the collection was worth more and should be valued at between $75,000 and $100,000. Neff increased his offer to $74,000 and Kehoe accepted. Neff again traveled to Alabama, paid the $74,000 by two cashier's checks and received the collection.
Upon returning to Texas, Neff had the coins examined by the United States Department of the Treasury. The Department informed Neff by letter that two of the coins, including the Roman Numeral, were counterfeit. Neff filed this action in federal district court. At the conclusion of the evidence by both sides, the district court directed a verdict for defendant Kehoe as to all issues in the case.
Although this is a diversity case, the propriety of the directed verdict is governed by federal law. New England Merchants' National Bank v. Rosenfield, 679 F.2d 467, 473 (5th Cir.1982) (Unit B); King v. Ford Motor Co., 597 F.2d 436, 439 (5th Cir.1979). Because a directed verdict decides contested substantive issues as matters of law, the same standard of review is applied by this court as by the district court. J & H Auto Trim Co. v. Bellefonte Insurance Co., 677 F.2d 1365, 1368 (11th Cir.1982). In determining whether a party's evidence is sufficient to withstand a directed verdict motion, the court must apply the principles articulated in Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969), made binding on this court in Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc). Courts view all the evidence, together with all logical inferences flowing from the evidence, in the light most favorable to the non-moving party:
On motions for directed verdict and for judgment notwithstanding the verdict the Court should consider all of the evidence--not just that evidence which supports the non-mover's case--but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions the motions should be denied, and the case submitted to the jury. A mere scintilla of evidence is insufficient to present a question for the jury. The motions for directed verdict and judgment n.o.v. should not be decided by which side has the better of the case, nor should they be granted only when there is a complete absence of probative facts to support a jury verdict. There must be a conflict in substantial evidence to create a jury question. However, it is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses.
Boeing, 411 F.2d at 374-75. Accord Kaye v. Pawnee Construction Co., 680 F.2d 1360, 1364 (11th Cir.1982); Maxey v. Freightliner Corp., 665 F.2d 1367, 1371 (5th Cir.1982) (en banc). Applying the Boeing standard to the present case, we reverse the directed verdict on both the fraud claim and the breach of warranty claim.
(1)
While the directed verdict standard is drawn from federal law, Alabama law governs the merits of the fraud and breach of warranty claims in this diversity case. In International Resorts, Inc. v. Lambert, 350 So.2d 391, 394 (Ala.1977), the Alabama Supreme Court delineated the elements necessary to sustain a cause of action based on fraud:
Regardless of whether the representations were made wilfully, recklessly or mistakenly, it has been held that there must be (1) a false representation, (2) the false representation must concern a material existing fact, (3) the plaintiff must rely upon that false representation, and (4) the plaintiff must be damaged as a proximate result.
See also Winn Dixie Montgomery, Inc. v. Henderson, 395 So.2d 475 (Ala.1981).
Neff has presented sufficient evidence as to all of the requisite Lambert factors. He adamantly maintained at trial that Kehoe had represented the coins as genuine:
Q. Did she make any statements to you at that time with reference to the authenticity or genuineness of the coins?
A. She repeated again that they were genuine, it was a genuine coin collection. Her husband was a coin collector, and, you know, they were genuine coins.
Q. You said she made that statement again. Had she made it before you came to Gadsden?
A. She made it on the phone the day I called her and she gave me the listing.
* * *
Q. Now, on the second occasion that you came to Gadsden, the trip where you purchased the coins, did she make any statements to you at that time concerning the authenticity or the genuineness of the coins?
A. Yes, sir.
Q. What did she say?
A. She said that they were genuine coins and authentic. I mean, what else?
* * *
A. She told me that she had one that was just like the one that was sold in New York.
Q. Did she say it was just like or appeared to be like it?
A. She said it was just like it. She said it was a genuine coin that looked like the one that sold in New York for two hundred thousand dollars.
Kehoe denied having made representations of genuineness, but the jury might reasonably have credited the testimony of Neff rather than that of Kehoe. The alleged representations clearly concerned a fact material to the transaction contemplated by the parties. It is true that the record does not demonstrate that Kehoe acted willfully with an intent to deceive. But while intent to deceive is an indispensible element of fraud, under Alabama law the requisite intent may be inferred from a showing that the representations were made recklessly or mistakenly. Winn-Dixie Montgomery, 395 So.2d at 476; Lambert, 350 So.2d at 394.
Kehoe contends that Neff failed to present sufficient evidence of reliance. We agree insofar as the alleged representations related to the value of genuine coins, but disagree insofar as they related to the underlying matter of genuineness. Neff's own trial testimony demonstrated that he did not rely, and could not reasonably have relied, upon any arguably false representations as to the coins' value made by Kehoe. The evidence shows that Neff formed an independent judgment on value based on his personal research and inspection of the Kehoe coins. Although "the mere circumstance of making an examination" does not preclude a claim of fraud, the law in Alabama is that if a purchaser actually makes his own investigation of the quality of the articles purchased and "acts on his own judgment, there can be no defense based on fraud." Myers v. Moody, 259 Ala. 638, 67 So.2d 891, 892 (Ala.1953). Neff examined the coins at length during his two trips to Alabama, and both times he was aided by magnifying glass and resource books. Neff also consulted with several experts in the field before completing the transaction. Further, any subjective reliance by Neff on Kehoe's representations as to the coins' value would have been unreasonable. Neff conceded that Kehoe had told him that she was not knowledgeable in the gold coin collection business:
Neff was aware that Kehoe had obtained the coins from her late husband's estate and that Kehoe herself had never purchased or dealt with gold coins and was not knowledgeable in the coin business.
Although the evidence was insufficient to support a jury finding that Neff relied upon representations of the value of the coins if genuine, a jury might have found that Neff relied upon representations of genuineness. The jury could reasonably...
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