Smart & Perry Ford Sales, Inc. v. Weaver, 770A117

Citation274 N.E.2d 718,149 Ind.App. 693
Decision Date09 November 1971
Docket NumberNo. 2,No. 770A117,770A117,2
PartiesSMART & PERRY FORD SALES, INC. & Bud Dillon, Appellants, (Defendants Below), v. John D. WEAVER, Jr., Appellee. (Plaintiff Below)
CourtCourt of Appeals of Indiana

Acher & Gholston, Franklin, for appellants.

Samuel J. Kagan, Martinsville, Rogers & Rogers, Franklin, for appellee.

STATON, Judge.

Smart and Perry Ford Sales, Inc. and one of its salesmen, Bud Dillon are appealing from a judgment of the Johnson Circuit Court. The original action was brought by the appellee-plaintiff, John D. Weaver, Jr., to recover damages of Forty Five Hundred Dollars ($4,500.00) as the result of an alleged fraud perpetrated by Smart and Perry Ford, Inc. and its salesman, Bud Dillon. A jury returned a verdict for Two Thousand Five Hundred Dollars ($2,500.00).

Before discussing the facts in greater detail, we will make the following substitution of references to the parties in an attempt to achieve brevity, clarity and conciseness:

1. Substitute 'seller' for Appellant-Defendant Smart & Perry Ford Sales, Inc.

2. Substitute 'seller's for Appellant-Defendant salesman' Bud Dillon

3. Substitute 'buyer' for Appellee-Plaintiff John D. Weaver, Jr.

The buyer entered into a contract with the seller to purchase a 1964 Ford Thunderbird on April 21, 1965. The buyer's preliminary negotiation with the seller's-salesman included financing arrangements as well as the purchase of a thirty-six (36) months fire-theft, collision and comprehensive insurance. The insurance premium of Five Hundred and Seven Dollars ($507.00) was to be incorporated in the overall financing arrangement and made a part of the buyer's monthly payment under the contract. The contract on its face clearly shows that a premium was to be paid in the amount of Five Hundred and Seven Dollars ($507.00) for thirty-six (36) months of insurance and that the premium was included in the total contract price. Thirty-six (36) monthly installments of One Hundred Thirty-Seven Dollars and Eighty-Two Cents ($137.82) were to be made by the buyer. The buyer executed a contract for the purchase of the car and he received a policy of insurance from the Central National Insurance Group of Omaha some forty-five (45) days later. The envelope which contained the policy had imprinted on it 'your policy'. Without opening the envelope, the buyer placed the insurance policy in a metal box. Later, the buyer did open the envelope to examine the policy and found that the coverage afforded by it was for three hundred and forty-three (343) days instead of the thirty-six (36) months stated in the contract. The insurance premium for the three hundred and forty-three (343) days of coverage was the same as the thirty-six (36) months of coverage quoted in the contract to the buyer by the seller's-salesman. The buyer confronted the seller's-salesman and office manager with the change in the terms of coverage. He was told that he should cancel the policy and purchase other insurance. Both the seller and the seller's-salesman disclaimed any responsibility for the failure of complete coverage during the period of the contract. The buyer mailed a letter dated November 20, 1965 to the American Fletcher National Bank and Trust Company who had purchased his contract. In the letter he stated that he could not afford to purchase any additional automobile insurance and continue to meet his financial obligation under the contract. However, the buyer did not cancel the contract but continued to make payments as provided under the terms of the contract. The automobile was totally wrecked in an accident on September 21, 1967. The buyer commenced suit against the seller, seller's-salesman and the insurance company. The complaint was in three paragraphs: Paragraph I alleged a breach of contract against all defendants; Paragraph II alleged fraud against all defendants; and Paragraph III alleged a quasi contract against all defendants. A motion for directed verdict made by seller and seller's-salesman was granted as to Paragraphs I and III but overruled as to Paragraph II which alleged fraud. A motion for directed verdict made by the insurance company was granted as to all three legal paragraphs. The motion to correct errors cites the following:

'1. The verdict of the jury is not sustained by sufficient evidence.

'2. The verdict of the jury is contrary to law.

'3. Error of law occurring at the trial as follows:

(a) The court erred in overruling the defendants', Smart & Perry Ford Sales, Inc., and Bud Dillon, motion made at the close of plaintiff's evidence to instruct the jury to return a verdict for the defendants.

(b) The court erred in overruling the defendants', Smart and Perry Ford Sales, Inc., and Bud Dillon, motion made at the close of all the evidence to instruct the jury to return a verdict for the defendants.'

The argument to reverse the judgment relies heavily upon the sufficiency of the evidence. We cannot weigh the evidence on appeal. Kraus v. Kraus (1956), 235 Ind. 325, 132 N.E.2d 608. The verdict of the jury will only be set aside: (1) Where the verdict is against all the evidence; (2) Where there is a total lack of evidence to sustain the verdict; and, (3) Where it is against uncontradicted evidence. 2 I.L.E., Appeals, § 578, page 515.

The seller and the seller's-salesman have briefed a number of legal questions coupled with evidentiary assessments. The legal questions briefed are:

1. Misrepresentation

2. Deception

3. Reliance

4. Waiver

5. Proximate Cause

and we will discuss these legal questions in the above order.

Misrepresentation: The representation made by the seller's salesman was that he could obtain thirty-six (36) months of insurance coverage for Five Hundred and Seven Dollars ($507.00). The term of the contract for financing the purchase of the automobile and insurance was thirty-six (36) months. He further represented that the amount of Five Hundred and Seven Dollars ($507.00) could be paid by monthly installments under the contract. The seller contends that mere expressions of opinion honestly and correctly given do not constitute actionable fraud. Whether the statements made by the seller's-salesman was a statement of fact or an opinion must first be determined. The general rule in Indiana is that what is susceptible of exact knowledge when the statement is made is usually considered to be a statement of fact. Jenkins v. Long (1862), 19 Ind. 28, 81 Am.Dec. 374; 37 Am.Jur.2d, Fraud and Deceit, § 46, p. 74. In the case at bar, it would have been possible for the jury to believe that the insurability of the buyer was an ascertainable fact. The seller's-salesman testified that he had been employed by the seller as a salesman for six (6) years. He explained in his testimony that he often arranged the financing for his customers and that the automobile could not be delivered until it was insured. There was further testimony by the seller's-salesman that he acknowledged to the buyer that the bank insurance rates were high and suggested that he obtain insurance elsewhere. The rate charged was taken from a chart furnished by the financing bank which the seller's-salesman used in calculating the monthly installment payments which were to be a part of a binding written contract. From this testimony as well as other testimony given by the seller's-salesman from page 319 of the transcript to page 327 of the transcript, the jury could have believed that an ascertainable fact was being offered. However, even when the statement is one of fact, if it were an honest error and not given recklessly or carelessly, there may be no fraud. Furnas v. Friday (1885), 102 Ind. 129, 1 N.E. 296. This general rule has its limitation of application as pointed out by the court in Furnas v. Friday, supra:

'* * * If the complaint had shown that the defendant professed to be an expert, and that he induced the plaintiff to rely upon his superior judgment or skill, * * * a very different case would have been presented.' (Emphasis ours).

The above quotation is referring to the doctrine of constructive fraud. Constructive fraud is defined as a fraud which arises as an operation of law from statements, acts, or a course of conduct, which if sanctioned by law would secure an unconscionable advantage to the one making such statements. Brown v. Brown (1956), 235 Ind. 563, 135 N.E.2d 614. The test to determine whether or not a constructive fraud has been perpetrated is set forth in New v. Jackson (1911), 50 Ind.App. 120, 125, 95 N.E. 328:

"An unqualified statement that a fact exists, made for the purpose of inducing another to act upon it, implies that the person who makes it knows it to exist, and speaks from his own knowledge. If the fact does not exist, and the defendant states of his own knowledge that it does, and induces another to act upon his statement, the law will impute to him a fraudulent purpose." New supra, 50 Ind.App. at 125, 95 N.E. at 330.

In Kirkpatrick v. Reeves (1889), 121 Ind. 280, 22 N.E. 139, three tests for constructive fraud were set out by the court:

1. Were the statements made to induce the plaintiff to buy?

2. Were they relied upon?

3. Did the defendant profess to possess knowledge of their truth?

The court in Kirkpatrick, supra, further stated:

"If he states, as of his own knowledge, material facts susceptible of knowledge, which are false, it is a fraud which renders him liable to the party who relies upon the statements as true; and it is no defense that he believed the facts to be true.'

A defendant who makes a statement of his own knowledge cannot escape liability upon the ground that he acted upon trustworthy information.' Kirkpatrick, supra, 121 Ind. 282, 22 N.E. 140.

The jury could have found from the evidence that there was constructive fraud. There was evidence in the record from which the jury could have found all of the above elements present. This court will not disturb a jury verdict where there is...

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