Randell v. Banzhoff
| Decision Date | 31 August 1979 |
| Citation | 375 So.2d 445 |
| Parties | Cortes RANDELL v. Gordon K. BANZHOFF, Jr. 78-400. |
| Court | Alabama Supreme Court |
Calvin M. Whitesell, Montgomery, for appellant.
Ira DeMent, Montgomery, for appellee.
Plaintiff-appellee Gordon K. Banzhoff, a franchisee of a corporation doing business in several states, obtained a judgment against the corporation and the appellant, the corporation's former director of licensing, in the amount of $26,500 on his suit for fraud.
Appellant Cortes Randell is the only defendant who appealed. He urges three grounds of error: (1) That the trial court did not have jurisdiction over him; (2) That the evidence failed to show an actionable case of fraud and deceit; and (3) That the trial court erred in assessing punitive damages under the facts and proof. Upon due consideration, we are of the opinion that appellant's contentions lack merit; and the judgment rendered on findings made by the trial court, sitting without a jury, is due to be affirmed.
Briefly, the facts are as follows:
Appellee, the franchisee, originally instituted this action in fraud and deceit against this appellant individually and as agent for International Trade Exchange, a District of Columbia corporation, which was also made a defendant, but which did not prosecute an appeal. I.T.E. organizes various local "exchanges", which, in turn, solicit businesses and professional persons to join and participate in a system by which goods and services are "bartered" between members. The local exchanges, which are franchised operations, act as clearinghouses for this barter activity, and charge a percentage as membership fees; I.T.E., in turn, sells franchises In September, 1977, appellee Banzhoff and one Rhodes entered into an agreement with I.T.E. headquarters in Virginia by which he and Rhodes would purchase the I.T.E. franchise for the Birmingham, Alabama, area, one of three such "territories" in Alabama. This deal was consummated, and appellee still operates the Birmingham franchise. There are some dispute as to whether appellee was in default on his agreements with I.T.E. concerning the Birmingham franchise, but that disagreement is not important here. In late January, 1978, appellee and Rhodes again entered into negotiations with I.T.E. through its president, one Dyer, and this appellant, Randell, who was, at the time, Director of Licensing, whereby they agreed to purchase the Orlando, Florida, franchise. The terms were $10,000 down payment, $15,000 due one month later and $15,000 due sixty days after the second installment. There was dispute as to whether the third installment was due thirty or sixty days later, but appellant agreed that it could have been sixty. The down payment and first installment were both paid, but the third installment never was.
and collects fees and royalties, while providing training, computer, and other services to member franchisees.
At some point, Rhodes assigned his share in the enterprises to appellee; when this occurred, appellee testified he began to doubt his ability to actually administer the Orlando operation without a partner. In any event, the Orlando operation never was actually set up by appellee, and never operated under his ownership. Appellee testified that he contacted appellant in May, 1978, and requested that appellant sell the Orlando franchise for him. He claimed that appellant agreed and that in June, 1978, he had a buyer for the franchise, one Graves, and that appellee would soon be refunded a good portion of his original purchase price for the Orlando operation which was a company policy to avoid lawsuits by disgruntled ex-franchisees, according to appellant Randell. This money was not forthcoming, despite a later assurance in late June that the funds would be taken from a South Carolina deal. Appellee testified that he later found out by accident that one Sutter was running an Orlando franchise, and had been doing so since early June. Appellee also stated that he did not pay the last payment of $15,000 because this coincided with the negotiations with appellant Randell about the sale of the franchise and that he had not tried to sell the franchise himself, relying instead on appellant's representations.
Appellant testified that appellee was in default, that his franchise in Orlando had been terminated in mid-May, 1978, and that he (appellee) had been informed that the franchise would be re-licensed because appellee had not set up operations there. Appellant denied ever having promised or represented that he would sell the Orlando franchise, but admitted that it was company policy to refund a large portion of franchise fees to those franchisees who could not go through with the operation of a franchise. The trial court, at the close of this testimony found for appellee, and denied appellant's recovery on a counterclaim for breach of the license agreement.
Appellant's initial contention is that the trial court lacked jurisdiction over the defendants, because neither defendant had sufficient "minimum contacts" with this state to justify being subjected to jurisdiction. This contention is without merit.
The evidence shows that I.T.E. franchised appellee by means of a mailed contract; that I.T.E. advertised and solicited business in various newspapers, circulated a trade newsletter, and maintained a toll-free line into its Virginia offices; that I.T.E. performed all computer services and mailed statements from its headquarters; and that I.T.E. was admittedly profiting from the activities of the branches through "license fees" and "royalties". This pattern of activity is sufficient "minimum contact" within Alabama. Cf. Mann v. Frank Hrubetz & Co., Inc., 361 So.2d 1021 (Ala.1978); Tibbets
v. Home State Savings Association, 362 So.2d 844 (Ala.1978).
Appellant secondly contends that appellee failed to show an actionable case of fraud or deceit. It is, of course, axiomatic that where the trial court hears testimony Ore tenus, that court's verdict will have the effect of a jury verdict and will not be disturbed on appeal unless "plainly and palpably wrong." Hill v. Abyssinia Missionary Baptist Church, 370 So.2d 1389 (Ala.1979).
There is sufficient evidence to support the trial court's finding of fraud and deceit as defined by §§ 6-5-101 and 6-5-103, Code 1975.
Taking the facts in a light favorable to appellee, he showed that appellant represented that he would sell the...
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Ex parte Lewis
..."Once an intent to deceive has been established it is difficult to see but that a fraud was committed grossly. Randell v. Banzhoff, 375 So.2d 445 (Ala.1979); Hall Motor Co. v. Furman, supra. Proof of fraudulent intent at the time the representation is made is required in cases where fraud c......
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...37 (1970). Once an intent to deceive has been established it is difficult to see but that a fraud was committed grossly. Randell v. Banzhoff, 375 So.2d 445 (Ala.1979); Hall Motor Co. v. Furman, supra. Proof of fraudulent intent at the time the representation is made is required in cases whe......
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...and the inferences which may be drawn therefrom, must show that the fraud was gross, oppressive or aggravated. Randell v. Banzhoff, Ala., 375 So.2d 445, 448 (1979). This rule has been followed by our courts in numerous cases involving misrepresentations in the sale of motor vehicles. See, e......
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