Stanfield v. O'Boyle

• Decision Date: 20 January 1971
• Docket Number: No. B--2146,B--2146
• Parties: Harry M. STANFIELD, Petitioner, v. Jim O'BOYLE, Respondent.
• Court: Texas Supreme Court

Page 270

462 S.W.2d 270

Harry M. STANFIELD, Petitioner, v. Jim O'BOYLE, Respondent.

No. B--2146.

Supreme Court of Texas.

Jan. 20, 1971.

Akin, Steinberg & Stanford, Paul H. Stanford, Alto B. Cervin, Dallas, for petitioner.

Rosenfield, Berwald, Mittenthal & Koppman, Max R. Rosenfield and Elihu E. Berwald, Dallas, for respondent.

CALVERT, Chief Justice.

This suit by petitioner Stanfield, plaintiff, against respondent O'Boyle, defendant, grew out of a transaction between the parties which is described in an opinion in an earlier appeal reported as Stanfield v. O'Boyle, 421 S.W.2d 745 (Tex.Civ.App.--Dallas 1967, writ ref'd n.r.e.). The following factual statement is adopted from that opinion:

'On August 16, 1957 Jim O'Boyle pledged to Harry M. Stanfield certain shares of stock in consideration of a loan in the sum of $50,000. On January 25, 1958, Stanfield released the stock to O'Boyle in consideration of the execution by O'Boyle of an agreement to substitute certain real estate for the shares of stock. Stanfield thereafter, on January 23, 1962, brought suit against O'Boyle alleging breach of the agreement and praying that O'Boyle execute a deed to the real estate in question or, in the alternative, for judgment in the amount of $52,050. Thereafter O'Boyle was adjudged to be a bankrupt and was discharged on September 1, 1964 by the bankruptcy court. In his schedule of obligations in the bankruptcy court O'Boyle listed the obligation owed to Stanfield. On November 16, 1966, Stanfield filed his first amended original petition in which he alleged that O'Boyle, in order to induce Stanfield to release the shares of stock, made false and fraudulent representations. Stanfield also countered O'Boyle's discharge in bankruptcy contention by contending that since the property in question had been obtained by O'Boyle due to false pretenses or false representations the indebtedness was not discharged under the Bankruptcy Law of the United States. O'Boyle answered this amended petition by pleading the statute of limitations and further pleading that the indebtedness had been discharged in bankruptcy.'

The trial court originally sustained a motion by O'Boyle for summary judgment on the ground that Stanfield's cause of action was barred by a statute of limitation, and rendered judgment that Stanfield take nothing by his suit. The Dallas Court of Civil Appeals reversed and remanded, holding expressly that the cause of action was not barred by the statute of limitation. Stanfield v. O'Boyle, supra. Following remand of the cause, the trial court in a non-jury trial rendered judgment that Stanfield recover of O'Boyle the sum of $50,000 with interest from the date of the judgment at 6%, but denied a recovery of pre-judgment interest. The Waco Court of Civil Appeals reversed the judgment of the trial court and remanded the cause for retrial. 452 S.W.2d 574. We reverse the judgment of the court of civil appeals and remand the case to that court.

The trial court filed findings of fact in support of its judgment, including express findings that O'Boyle promised to convey to Stanfield real estate of a value of $50,000 if Stanfield would release the corporate stock held as security; that this was a 'false promise made as an inducement to plaintiff to release' the stock as security; that plaintiff had relied on the promise in releasing the stock; that O'Boyle did not then own $50,000 worth of realty and did not intend to convey it as agreed; and that plaintiff did not have actual or constructive knowledge 'of the fraud committed by defendant' until within two years of the filing of the suit. The court concluded that: (1) Stanfield's claim was based upon O'Boyle's obtaining property by false pretenses and representations and was not discharged in bankruptcy; (2) the cause of action was not barred by any statute of limitation; (3) O'Boyle's conduct amounted to actionable fraud in violation of Article 4004, Vernon's Tex.Civ.Stats.; (4) '(t)he measure of damages suffered by the plaintiff as a result of the fraud committed by the Defendant is $50,000.00'; and (5) the plaintiff was not entitled to pre-judgment interest.

The court of civil appeals expressly held that Article 4004 has no application to the facts of this case, and we agree with that holding. The statute deals with '(a)ctionable fraud in this State with regard to transactions in real estate or in stock in corporations or joint stock companies * * *', and provides that such fraud may be predicated upon a 'false promise to do some act in the future which is made as a material inducement to another party to enter into a contract and but for which promise said party would not have entered into said contract'; but the rule of damages provided for in the statute is 'the difference between the value of the property as represented or as it would have been worth had the promise been fulfilled, And the actual value of the property in the condition it is delivered at the time of the contract.' ¹ Two courts of civil appeals have held, and we believe correctly, that Article 4004 'is applicable only when a conveyance of the property has been made, and not where there is merely a contract to convey.' Rawdon v. Garvie, 227 S.W.2d 261, 265 (Tex.Civ.App.--Dallas 1950, no writ); Campbell v. Wilson, 238 S.W. 318 (Tex.Civ.App.--Fort Worth 1921, no writ). Respondent cites Hoad v. Winchester, 279 S.W.2d 875 (Tex.Civ.App.--San Antonio 1926, writ dism'd) for a contrary holding. Article 4004 damages were not involved in the cited case.

But the fact that Article 4004 is inapplicable to the facts of this case, thus preventing a recovery of the measure of damages there provided, does not defeat Stanfield's right to recover...