Ray Dodge, Inc. v. Moore

• Decision Date: 21 February 1972
• Docket Number: No. 5--5749,5--5749
• Citation: 479 S.W.2d 518,251 Ark. 1036
• Parties: RAY DODGE, INC., Appellant, v. Orville F. MOORE, Appellee.
• Court: Arkansas Supreme Court

Page 518

479 S.W.2d 518

251 Ark. 1036

RAY DODGE, INC., Appellant, v. Orville F. MOORE, Appellee.

No. 5--5749.

Supreme Court of Arkansas.

Feb. 21, 1972.

Rehearing Denied March 20, 1972.

Branscum, Schmidt & Mazzanti, Little Rock, for appellant.

Gentry & Huckabay, Little Rock, for appellee.

FOGLEMAN, Justice.

Appellee brought this action to recover compensatory and punitive damages for the alleged fraud and misrepresentation of appellant, an automobile dealer, in the sale of a used pickup truck. Appellant seeks reversal of a judgment for $350 compensatory damages and $5,000 punitive damages, asserting error in (1) the denial of its motion for a directed verdict, (2) instructing the jury that appellee had the burden of proving fraud by a mere preponderance of the evidence rather than by clear and convincing evidence, and (3) submitting the question of punitive damages to the jury and instructing the jury that a corporation could be held liable for exemplary or punitive damages based upon unauthorized and unratified acts of its agents. Appellant also argues that the jury verdict for punitive damages is excessive in that it bears no reasonable relationship to the actual damages and that it was based upon passion and prejudice. We find no error and affirm the judgment.

Insofar as the contention of appellant as to the denial of directed verdict is concerned, we have carefully considered the evidence as abstracted and, giving it its strongest probative force and drawing all reasonable inferences in his favor, it is sufficient to present a jury question. See Greiner Motor Co. v. Sumpter, 244 Ark. 736, 427 S.W.2d 8. Appellee based his cause of action upon allegations that the distance traveled by the pickup truck he purchased had been misrepresented to him by the officers and agents of appellant. Appellant's argument in this regard is that appellee waived whatever cause of action he might have had by continuing to make monthly payments upon the installment sale contract, without protest, for a period of six weeks to four months after discovering that the odometer reading on the vehicle had been set back to reflect only 25,600 miles when the actual mileage was approximately 42,000.

Conflicting conclusions might be drawn from the evidence on this point. The vehicle was purchased by appellee Moore on November 8, 1969. He testified that he discovered the actual mileage sometime in the summer of 1970, in a conversation with William Lee Adams, who traded the truck to appellant. He said that Jim Ray, a salesman and one of the owners of Ray Dodge, Inc., had stated when the purchase was made that if anything was wrong with the truck he could bring it back for repairs, and that Ray also assured him that the odometer reading was correct. He did take the vehicle back for a tune-up and oil change, for rebuilding of the motor and carburetor and for problems with the heating and air conditioning systems. He was staisfied with the service on most items, but said that he was displeased with results on the heating and air conditioning control system and on the failure to replace shock absorbers as promised, and disgusted with the necessity for repeated returns of the truck for such services. Appellee said that he first learned of the mileage discrepancy not more than six weeks prior to the date of filing of the suit, which was August 3, 1970. He said that he and his wife were debating the steps to be taken during this interval. He admitted that payments on the contract were not discontinued and that he did not make any objection to appellant about the misrepresentation before filing suit.

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. Sirmon v. Roberts, 209 Ark. 586, 191 S.W.2d 824. In the cited case, we said that conduct amounting to waiver should be carefully inspected and all evidence upon the subject impartially scrutinized. In Southark Trading Co. v. Pesses, 221 Ark. 612, 254 S.W.2d 954, where a recoupment of damages was allowed, the appellant argued that the appellees had waived all rights for damages by making payments on a purchase price partially represented by notes on which the suit was brought. We held that in order to invoke the rule of waiver in such cases the affirmance of the contract must be equivalent to ratification and that it 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. See also, Cockrum v. Pattillo, 246 Ark. 594, 439 S.W.2d 632.

Appellant relies upon such cases as Advance Aluminum Casting Corp. v. Davenport, 224 Ark. 440, 274 S.W.2d 649; Pate v. J. S. McWilliams Auto Company, 193 Ark. 620, 101 S.W.2d 794; West v. Carter, 235 Ark. 970, 363 S.W.2d 415. In the first case, although the purchaser made only one payment on the purchase contract, he made no complaint of any kind to the seller for seven months after discovery of the defects in the merchandise involved. In the second, monthly payments were made for at least six months after the discovery of the alleged fraud before any complaint was made. In West, rejection of the plea of waiver was sustained where the purchaser made repeated complaints and continued payments only after the seller promised to repair the allegedly defective merchandise. In virtually all such cases, the evidence concerning waiver was undisputed. Of course, when reasonable minds could not differ as to the inferences to be drawn from the conduct relied upon, a determination that there was or was not a waiver as a matter of law is proper. Otherwise, the question is one of fact to be determined by the jury. Lary v. Young, 13 Ark. 401, 58 Am.Dec. 332. See also, 31 C.J.S. Estoppel § 163, p. 788. According to the testimony of appellee and his wife, considered in the light most favorable to him, it may well be that only one payment was made between the discovery of the fraud and the filing of the suit, and during that interval Moore was debating his future course of action. These circumstances were sufficient to make the question of waiver one for the jury, so there was no error in the refusal of a directed verdict.

Appellant's argument that the proof of fraud must be clear and convincing is based upon the premise that the fraud charged is contradictory of the written vehicle buyer's order signed by appellee, citing Belew v. Griffis, 249 Ark. 589, 460 S.W.2d 80 (1970). The order contains an acknowledgment that no warranties were made by the dealer. Appellant contends that the alleged representations as to the mileage traveled by this vehicle contradicted that instrument. In Belew, however, the alleged representation related to the total amount required to pay the deferred purchase price and was clearly contrary to the recited consideration in a deed. Clear and convincing evidence of fraud is required to cancel or reform a solemn writing, but not to establish fraud in obtaining a contract by fraudulent misrepresentation. Clay v. Brand, 236 Ark. 236, 365 S.W.2d 256; Parker v. Johnston, 244 Ark. 355, 426 S.W.2d 155. The instruction given was correct since the written instrument involved contained no statement about the vehicle mileage.

The questions pertaining to the award of punitive damages are not presented as clearly as they might be as an instruction complained of by appellant is not abstracted. The major issue, however, pertains to the propriety of permitting the jury to consider the question of exemplary or punitive damages. Appellant argues that its conduct was not characterized by either wilfulness and malicious conduct or gross fraud required as a basis of such damages. Particular emphasis is given to the facts that appellant's salesmen readily gave appellee the name of the owner of the vehicle from whom they acquired it and from whom appellee eventually learned that the mileage was considerably greater than that registered on the vehicle odometer and that appellee himself had once dealt in used cars.

We have said that before punitive damages may be awarded, it must be shown that there was a wanton disregard for the rights and safety of others on the part of the tortfeasor. Nance v. Cook, 240 Ark. 336, 399 S.W.2d 262. According to one text a recovery of exemplary or punitive damages in an action based on a fraudulent sale, generally speaking, will be allowed only where the fraud is an aggravated one, as where it is malicious, deliberate, gross or wanton. 37 Am.Jur. 466, Fraud and Deceit § 347. It is also said that, in ordinary cases, recovery of exemplary damages will not be allowed in an action of deceit unless the wrong involves violation of a duty springing from a relation of trust and confidence, or the fraud is gross, or there are extraordinary or exceptional circumstances clearly indicating malice and wilfulness, as exist when it appears that the tortfeasor acted with a deliberate intent to injure the one defrauded. 37 C.J.S. Fraud § 144, p. 489. We denied the allowance of exemplary damages in Chicago, R.I. & P. Ry. Co. v. Whitten, 90 Ark. 462, 119 S.W. 835, 21 Ann.Cas. 726, a negligence action, saying that before a verdict for exemplary damages is justified, the party to be charged must be guilty of wilfulness, wantonness, or conscious indifference to consequences from which malice will be inferred. We said:

Here the motive of the injuring party becomes material. Mere negligence, indifference, or careless disregard of the rights of others is not...