Sanchez v. Martinez

• Decision Date: 02 November 1982
• Docket Number: No. 5367,5367
• Citation: 99 N.M. 66,1982 NMCA 168,653 P.2d 897
• Parties: Heraclio David SANCHEZ and Petra Sanchez, his wife, Plaintiffs-Appellees, v. Sammy MARTINEZ, d/b/a Sammy Martinez Agency, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 897

653 P.2d 897

99 N.M. 66

Heraclio David SANCHEZ and Petra Sanchez, his wife, Plaintiffs-Appellees, v. Sammy MARTINEZ, d/b/a Sammy Martinez Agency,

Defendant-Appellant.

No. 5367.

Court of Appeals of New Mexico.

Nov. 2, 1982.

[99 NM 68] Michael L. Gregory, Las Vegas, for defendant-appellant.

Jesus L. Lopez, Las Vegas, for plaintiffs-appellees.

OPINION

DONNELLY, Judge.

The defendant, Sammy Martinez, appeals from a judgment entered pursuant to a jury verdict which awarded the plaintiffs, Heraclio Sanchez and Petra Sanchez, damages of $7,913.27 for negligent failure to procure fire insurance.

On appeal, the defendant asserts four issues of alleged trial court error: (1) failure to dismiss on the basis of the statute of frauds; (2) incorrect jury instructions; (3) admission of improper damages evidence; and (4) failure to grant a mistrial based on the return of an improper verdict. We reverse.

The plaintiffs purchased a residence in Las Vegas, New Mexico in 1954. In 1959, the plaintiffs moved to Albuquerque and began to purchase insurance for their Las Vegas house through the defendant's agency. The plaintiffs alleged that the defendant agreed orally to act as their insurance agent, procuring and renewing appropriate fire insurance from year to year.

On February 16, 1979, the house was partially destroyed by fire and the plaintiffs requested the defendant to process their insurance claim for the damage incurred. The defendant advised the plaintiffs that the house was uninsured and that he had not acquired insurance on the property. Defendant stated that he had told plaintiffs that the house could only be insured under an assigned risk policy because of the property's run-down condition and that coverage could not be effected unless the premiums were paid in advance. The defendant denied liability for the loss sustained by the plaintiffs and claimed that the plaintiffs were aware that there was no policy of insurance in effect at the time of the loss since they had not paid the premium.

The plaintiffs filed suit on March 18, 1980, demanding a jury trial, and alleging that defendant breached a contract to procure insurance on their behalf; in the alternative, they alleged the defendant negligently breached a contractual duty to obtain a policy of insurance. The plaintiffs' complaint claimed damages of $12,000.00. Defendant's answer denied liability and also raised as affirmative defenses the bar of the statute of frauds and contributory negligence.

The trial court submitted the case to the jury on the negligence theory only and instructed them to consider the issues of comparative negligence. The trial court submitted the case to the jury on special interrogatories rather than general verdict forms.

The answers to the special interrogatories submitted to the jury and signed by the foreman found that the defendant was negligent, that the plaintiffs were not negligent, and that the negligence of defendant was the proximate cause of the plaintiffs' injury. However, the jury failed to enter in their answer to the interrogatories submitted the specific amount of damages which they determined should be awarded. Special interrogatory No. 5, as filled out by the foreman of the jury read:

Issue No. 5. Without taking into consideration the question of reduction of damages due to the negligence of the plaintiff, if any, what is the total amount of damages suffered by the plaintiff, a (proximate) (legal) cause of which was the (accident) (incident) in question?

Answer: $ Full Amount.

The trial court undertook to poll the jury to clarify the meaning of the verdict and the damage award. In an apparent reference to plaintiffs' exhibit No. 11, the court asked whether the jury intended "full amount" to mean the sum of $7,913.27, a figure which had been testified to by the plaintiff Heraclio Sanchez. Several, but not all, of the jurors answered in the affirmative. The court's voir dire of the jury raised serious questions about whether at least ten jurors had concurred in the finding of liability. Following the questioning of certain of the jury members, the court concluded, "I find that the intent of the jury was to award the plaintiff the full amount prayed for in the Complaint--$7,913.27."

(1) Defense of Statute of Frauds

The defendant asserts that the trial court should have granted a directed verdict at the close of the plaintiffs case in chief since the action brought by plaintiffs was based on an alleged oral contract and was barred by the statute of frauds.

The statute of frauds is an affirmative defense applicable in actions seeking to enforce oral contracts. Skarda v. Skarda, 87 N.M. 497, 536 P.2d 257 (1975); Pitek v. McGuire, 51 N.M. 364, 184 P.2d 647, 1 A.L.R.2d 830 (1947); Balboa Const. Co. v. Golden, 97 N.M. 299, 639 P.2d 586 (Ct.App.1981). This defense, however, is not effective in actions grounded in tort. Bynum v. Bynum, 87 N.M. 195, 531 P.2d 618 (Ct.App.1975); McNaughton v. Smith, 136 Mich. 368, 99 N.W. 382 (1904); Burgdorfer v. Thielemann, 153 Or. 354, 55 P.2d 1122 (1936); Kinkaid v. Rossa, 31 S.D. 559, 141 N.W. 969 (1913); W. Prosser, The Law of Torts, Sec. 92 (4th Ed.1971); see also Ringler v. Ruby, 117 Or. 455, 244 P. 509, 46 A.L.R. 245 (1926); cf. Stotlar v. Hester, 92 N.M. 26, 582 P.2d 403 (Ct.App.), cert. denied, 92 N.M. 180, 585 P.2d 324 (1978).

The case of Green v. Hartford Fire Ins. Co., 157 Miss. 316, 128 So. 107, 69 A.L.R. 554 (1930), relied upon by the defendant, involved the application of the statute of frauds defense in an action alleging a breach of oral contract to procure insurance. It is distinguishable, however, from the instant case because there the plaintiff raised no claim of tortious conduct. Here, the plaintiffs brought suit under the alternative theories of tort and contract. In the instant case, as ultimately submitted to the jury, plaintiffs sought recovery solely upon their claim of tort; the jury received the court's statement of case instruction (no. 1) based on a negligence theory. The trial court did not err in denying the motion for directed verdict.

(2) Error in Jury Instructions

The trial court properly denied the defendant's requested jury instruction on the defense of statute of frauds. A party is entitled to have the jury instructed on all correct legal theories supported by substantial evidence. Sandoval v. Cortez, 88 N.M. 170, 538 P.2d 1192 (Ct.App.1975). As a general rule, however, determination of the applicability of the defense of statute of frauds is a question of law for determination by the court, not the jury. See Howland v. Iron Fireman Mfg. Co., 188 Or. 230, 215 P.2d 380 (1950); Brinser v. Anderson, 129 Pa. 376, 11 A. 809 (1888). A factual question, however, concerning the existence of a contract may prevent a ruling as a matter of law on the applicability of the statute of frauds. Sierra Blanca Sales Co., Inc. v. Newco Industries, Inc., 84 N.M. 524, 505 P.2d 867 (Ct.App.), cert. denied, 84 N.M. 512, 505 P.2d 855 (1972). As finally submitted to the jury, the plaintiffs' claims against the defendant were predicated on negligence grounds and not upon contract. The defense of statute of frauds applies only in contract actions. Burgdorfer v. Thielmann, supra; Kinkaid v. Rossa, supra; McNaughton v. Smith, supra.

The plaintiff submitted a jury instruction on implied contract. U.J.I. Civ. 8.3., N.M.S.A. 1978. This instruction was not improper under the facts herein. The plaintiffs alleged in their complaint the existence of a "course of conduct" between the parties whereby the plaintiffs relied upon the defendant "to secure and to continue in effect for Plaintiffs a contract of insurance" on their house.

An insurance agent or broker who undertakes to procure insurance for others and, through his fault or neglect, fails to do so, may be held liable for any damage resulting therefrom. Under such facts, liability may be predicated either upon the theory that defendant is the agent of the insured and has breached a contract to procure a policy of insurance, or that he owes a duty to his principal to exercise reasonable skill, care, and diligence in securing the insurance requested and negligently failed to do so. The defendant may be sued for breach of contract or negligent default in the performance of a duty imposed by contract or both. Brown v. Cooley, 56 N.M. 630, 247 P.2d 868 (1952); see also Lanier v. Securities Acceptance Corp., 74 N.M. 755, 398 P.2d 980 (1965); White v. Calley, 67 N.M. 343, 355 P.2d 280 (1960); Wiles v. Mullinax, 267 N.C. 392, 148 S.E.2d 229 (1966).

An agent who agrees to procure or renew an expired policy of insurance has a duty to either obtain the insurance, renew or replace the policy, or seasonably notify the principal that he is unable to do so in order that the principal may obtain insurance elsewhere. Butler v. Scott, 417 F.2d 471 (10th Cir.1969) (applying N.M. law); Trinity Universal Ins. Co. v. Burnette, 560 S.W.2d 440, (Tex.Civ.App.1977); Ezell v. Associates Capital Corporation, 518 S.W.2d 232 (Tenn.1974); Wiles, supra. Since suit for negligence or default of a duty arising by contract may be predicated upon an agreement between the parties, either express or implied, the giving of the instruction was not error. See Bynum v. Bynum, supra. Evidence of custom or course of conduct between the parties may give rise to a contract implied in fact. Gordon v. New Mexico Title Co., 77 N.M. 217, 421 P.2d 433 (1966); Trujillo v. Chavez, 76 N.M. 703, 417 P.2d 893 (1966).

Where the plaintiff's cause of action is solely in contract based on an oral agreement which cannot be performed within one year, and there is no evidence of partial performance or memoranda confirming the agreement, the statute of frauds may constitute a complete defense. See Fireman's Fund Ins. Co. v. Williams, 170 Miss. 199, 154 So. 545 (1934). Here, however, the plaintiffs submitted the case to the jury on a tort theory based upon the...