Pihakis v. Cottrell

• Decision Date: 04 February 1971
• Docket Number: 8 Div. 384
• Citation: 286 Ala. 579,243 So.2d 685
• Parties: Louis PIHAKIS and Alabama Equity Corporation of Birmingham, a Corp. v. Elizabeth COTTRELL.
• Court: Alabama Supreme Court

Page 685

243 So.2d 685

286 Ala. 579

Louis PIHAKIS and Alabama Equity Corporation of Birmingham, a Corp. v. Elizabeth COTTRELL.

8 Div. 384.

Supreme Court of Alabama.

Feb. 4, 1971.

F. Eugene Wirwahn, Birmingham, for appellants.

Brewer & Lentz, Decatur, for appellee.

COLEMAN, Justice.

The defendants appeal from a judgment for plaintiff in an action to recover damages for fraud and deceit.

In outline, the case for plaintiff is that she inquired of one Mason about obtaining a loan to be secured by a mortgage on certain real estate owned by plaintiff. Mason drove plaintiff to Birmingham where she saw defendant Louis Pihakis who was president of the defendant corporation. The result of her meeting with Pihakis was an understanding that the defendant corporation would lend her $7,500.00 to be secured by a mortgage on her property. Subsequently, on January 12, 1968, Pihakis went to Decatur and met plaintiff at her home. Pihakis had an instrument which he represented to be a mortgage; and plaintiff, relying on that representation, signed the instrument without reading it and delivered it to Pihakis. The instrument was a deed to two persons, husband and wife, who are not parties to this lawsuit. Approximately two weeks after she had signed the deed, plaintiff learned that the instrument was a deed and had been filed for record in the office of the judge of probate by Pihakis. Plaintiff called Pihakis on the telephone and told him to 'drop' the loan and it has never been closed.

The case for defendants, in outline, is that Pihakis did not misrepresent the character of the instrument to plaintiff; that she read it, and knew what she was signing; that because of plaintiff's age, a ten-year loan such as she desired was not available; that the deed was made to grantees who were younger and could obtain the loan; that on closing of the loan, the real estate would be conveyed back to plaintiff by a conditional sale contract; and that plaintiff was informed of the procedure and agreed to it.

As hereinafter discussed under Assignment 2, subsequent to the telephone conversation in which plaintiff told Pihakis to 'drop' the loan, Pihakis sent to plaintiff by mail a quitclaim deed. In the quitclaim deed, plaintiff is the grantee, and the quitclaim deed purports to have been executed by the grantees named in the deed signed by plaintiff. The complaint was filed February 1, 1968. Subsequently, Pihakis sent to plaintiff a warranty deed in which plaintiff is the grantee. The warranty deed purports to have been executed by the same grantees named in the deed signed by plaintiff. The warranty deed appears to have been acknowledged by the grantors named therein on May 23, 1968. Pihakis sent to plaintiff a check for $8.00 together with the quitclaim deed, and also a second check for $8.00 together with the warranty deed. The checks were to pay the cost of recording the respective deeds.

Assignment 1.

Defendants assign as error the trial court's action in overruling defendants' demurrer to the amended complaint which recites:

'COURT 1. Plaintiff claims of the defendants the sum of FIFTY THOUSAND DOLLARS ($50,000.00) damages for that in January of 1968 the defendant Pihakis represented to the plaintiff that the defendant Alabama Equity Corporation of Birmingham would make a real estate loan to the plaintiff upon her executing and delivering to the defendants a mortgage on certain real estate owned by the plaintiff more particularly described as follows, to-wit:

'Lots, 1, 2, 19, 20, 21, and 22, Block 4, according to the map of Decatur Mineral and Land Company's property in Section 18, Township 5 South, Range 4 West, of record in the office of the Judge of Probate of Morgan County, Alabama, in Map Book 1, at Page 7.

'The plaintiff further alleges that thereafter on January 12, 1968, the defendant Pihakis presented to the plaintiff a written instrument which was represented by the defendant Pihakis to be a mortgage on the above described property, and the defendant Pihakis requested that the plaintiff execute said instrument in order that her loan could be processed; the plaintiff thereupon executed the written instrument and delivered same to the defendant Pihakis; the plaintiff further alleges that said loan was never closed and that the written instrument was in fact a deed conveying said property to James M. Pihakis and Helen Joyce Pihakis, and said deed was filed for record on January 12, 1968 by the defendant Pihakis in the office of the Judge of Probate of Morgan County, Alabama; the plaintiff further alleges that the representation of the defendant Pihakis that said instrument was a mortgate was false and was known by him to be false, and was willfully made with the knowledge that such was false, and was made for the purpose of deceiving the plaintiff, and the plaintiff alleges that she relied on such representation and signed said instrument ignorant of its contents at the request of the defendant Pihakis. The plaintiff further alleges that she has never received (sic) any consideration from the defendants for the execution of said instrument.

'The plaintiff further alleges that the aforesaid reporesentation (sic) made by the defendant Pihakis was made by him as the agent, servant or employee of the defendant Alabama Equity Corporation of Birmingham, acting within the line and scope of his authority as such agent, servant or employee, and was willfully made, knowing the same to be false, and was made for the purpose of deceiving the plaintiff and did deceive the plaintiff, for which the plaintiff claims damages, and the plaintiff also claims punitive damages.'

Defendants argue that the complaint is defective because it '. . . does not allege the manner in which the plaintiff was damaged or the extent of any damage.'

The only grounds of demurrer, which appear to point out either of the defects upon which defendants now rely in argument, are grounds 4 and 10 which recite:

'4. For that it is not alleged or shown that plaintiff sustained any damage as a consequence of said alleged fraud.'

'10. No damages on the part of the plaintiff have been alleged and shown in said count. For aught appearing from said count plaintiff sustained no hurt or detriment from the alleged fraud.'

Grounds 4 and 10 do assert that the complaint fails to show that plaintiff sustained any damage as the result of the fraud charged against defendants, and we will consider whether the allegations of the complaint sufficiently show that plaintiff was damaged as a result of the fraud.

As to the second defect now urged by defendants that the complaint fails to show the 'extent' of plaintiff's damage, or the 'amount' of the damages to plaintiff, the second defect does not appear to be pointed out by any ground of the demurrer and will not be considered. Defendants cite Bates v. Turney, 26 Ala.App. 98, 153 So. 782, to support their argument with respect to failure to allege 'the amount of damages to plaintiff,' but further consideration of Bates is unnecessary since the defect with respect to the amount of damages is not pointed out by the demurrer.

'. . .. '(F)raud, without damage, or damage, without fraud, gives no cause of action; but, where these two do occur, there an action lieth. " Einstein, Hirsch & Co. v. Marshall & Conley, 58 Ala. 153, 160; Wall v. Graham, 192 Ala. 396, 399, 68 So. 298, 299.

'. . .. 'Deceit and injury must concur. . . . Damage is of the essence of the action of deceit; an essential element to the right of action, and not merely a consequence flowing from it. '' Wall v. Graham, supra.

'. . .. When fraud is pleaded, either at law or equity, the facts out of which it is supposed to arise must be stated. A mere general averment of fraud, without such facts, is subject to apt demurrer properly interposed. . . ..' Crommelin v. Capitol Broadcasting Company, 280 Ala. 472, 474, 195 So.2d 524, 526; Springdale Gayfer's Store Co. v. D. H. Holmes Co., 281 Ala. 267, 201 So.2d 855; and authorities cited.

'(4) . . .. Our decisions require that allegations of fraud in a pleading, to be sufficient, must positively set forth the facts constituting the fraud so that the court can clearly see that fraud has intervened. (Citations Omitted)' Lacey v. Edmunds Motor Co., 269 Ala. 398, 402, 113 So.2d 507, 510.

Damage to plaintiff being an essential element of actionable fraud, the inquiry here is whether the facts alleged in the complaint support the conclusion that plaintiff did suffer injury as a result of the fraud alleged.

The facts alleged are that defendant Pihakis represented to plaintiff that a certain instrument was a mortgage and requested that plaintiff execute the instrument; that the instrument was a deed and not a mortgage; that the false representation was wilfully made with intent to deceive the plaintiff; that plaintiff, relying on the representation and ignorant of the contents of the instrument, signed it and delivered it to defendant Pihakis; that plaintiff has not received any consideration for execution of the instrument; and that defendant Pihakis filed the instrument for record in the office of the judge of probate.

The alleged facts show that by plaintiff's action in reliance on the alleged false representation and the subsequent recording of the deed by one of the defendants, a cloud has been cast on plaintiff's title of record. This court has said:

'. . .. A cloud upon title is that which appears to be title, but in law and in fact is not title. Winters v. Powell, 180 Ala. 425, 61 So. 96.' Gibson v. Elba Exchange Bank, 264 Ala. 502, 88 So.2d 163, 169, (11, 12).

'. . .. Every conveyance from the grantor, through whom the party complaining deduces title, not void on its face, but the invalidity of which can be made apparent only on evidence of extrinsic facts, necessarily casts a cloud upon the title. It will embarrass the alienation of the estate, and freedom of alienation it is the policy of the law to promote. It...