Tobin v. Flynn & Larsen Implement Co.

• Decision Date: 14 June 1985
• Docket Number: No. 85-047,85-047
• Citation: 369 N.W.2d 96,220 Neb. 259
• Parties: Jim TOBIN et al., Appellants, v. FLYNN & LARSEN IMPLEMENT CO., a Nebraska Corporation, Appellee.
• Court: Nebraska Supreme Court

Page 96

369 N.W.2d 96

220 Neb. 259

Jim TOBIN et al., Appellants, v. FLYNN & LARSEN IMPLEMENT CO., a Nebraska Corporation, Appellee.

No. 85-047.

Supreme Court of Nebraska.

June 14, 1985.

Syllabus by the Court

1. Election of Remedies. A party may not plead alternative theories of recovery which are inconsistent in the sense that he or she cannot logically choose one theory without renouncing the other; he or she must elect between them.

2. Contracts: Election of Remedies. A party cannot proceed on a theory of recovery which is premised upon the existence of a contract and at the same time proceed alternatively on a theory which is premised on the lack of a contract.

3. Contracts: Fraud: Election of Remedies. One who has been induced to enter into an agreement by virtue of a material misrepresentation may either affirm the agreement and sue for damages or disaffirm the agreement and sue to be reinstated to his or her position as it existed before entry into the contract.

4. Election of Remedies. A party must proceed on alternative, consistent theories at the same time or forever forgo one theory or the other.

5. Actions: Pleadings. A prayer for equitable relief has no place or role in a law action.

6. Fraud: Proof: Case Disapproved. Fraud must be proved in an action at law by a preponderance of the evidence. Language in cases such as Erftmier v. Eickhoff, 210 Neb. 726, 316 N.W.2d 754 (1982), Page v. Andreasen, 200 Neb. 641, 264 N.W.2d 682 (1978), Kernan v. Modern Woodmen of America, 120 Neb. 333, 232 N.W. 590 (1930), and Hampton v. Webster, 56 Neb. 628, 77 N.W. 50 (1898), that fraud in a law action must be proved by clear and satisfactory evidence, is disapproved.

7. Fraud: Proof: Case Disapproved. Fraud in an equity case must be proved by "clear and convincing" or "clear and satisfactory" evidence. Language in cases such as Saffer v. Saffer, 133 Neb. 528, 274 N.W. 479 (1937), that fraud in an equity action must be proved by a preponderance of the evidence, is disapproved.

8. Evidence: Proof: Words and Phrases. "Clear and satisfactory" evidence is the same as "clear and convincing" evidence, which is that amount of evidence which produces in the trier of fact a firm belief or conviction about the existence of a fact to be proved.

Clarence E. Mock of Johnson & Mock, Oakland, for appellants.

Neil W. Schilke of Sidner, Svoboda, Schilke, Wiseman, Thomsen & Holtorf, Fremont, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

CAPORALE, Justice.

Appellants, Jim and Susan Tobin, husband and wife, sued appellee, Flynn & Larsen Implement Co., a Nebraska corporation, for damages, alleging three alternative theories of recovery: (1) breach of express warranty, (2) breach of implied warranty, and (3) fraud. The trial court sustained the motion of Flynn & Larsen, requiring the Tobins to elect to proceed either on their breach of warranty theories or on the fraud theory. In accordance with that ruling the Tobins elected to proceed to trial on the fraud theory. The jury returned a verdict in favor of Flynn & Larsen, and judgment was entered dismissing the action. The Tobins assign as errors (1) the requirement that they elect to proceed either on their fraud theory or their warranty theories, (2) the instruction to the jury that the fraud must be proved by "clear and satisfactory evidence," and (3) the definition of such standard of proof as demanding "a closer scrutiny of the evidence than in an ordinary controversy." We reverse and remand for further proceedings.

It is true that where a party pleads alternative theories of recovery which are inconsistent in the sense that he or she cannot logically choose one without renouncing the other, he or she must elect between them. Kenyon & Larsen v. Deyle, 205 Neb. 209, 286 N.W.2d 759 (1980). For example, a party cannot proceed on a theory of recovery which is premised upon the existence of a contract and at the same time proceed alternatively on a theory which is premised on the lack of a contract. Consequently, one who has been induced to enter into an agreement by virtue of a material misrepresentation, that is to say, by virtue of fraud, may either affirm the agreement and sue for damages or disaffirm the agreement and sue to be reinstated to his or her position as it existed before entry into the contract. Christopher v. Evans, 219 Neb. 51, 361 N.W.2d 193 (1985). This is so because one remedy, damages, depends upon the existence of a contract, and the other, rescission, depends upon the concept that because of the fraud no contract came into existence. See, 1 S. Williston, A Treatise on the Law of Contracts § 15 (3d ed. 1957); 1 A. Corbin, Corbin on Contracts § 7 (1963).

On the other hand, for example, one may at the same time proceed on both the theories of contract and quantum meruit, for in either instance the action is premised on the existence of a contract, either express or implied by law. Indeed, in such an instance one must proceed on those two alternative, consistent theories at the same time or forever forgo one theory or the other. Vantage Enterprises, Inc. v. Caldwell, 196 Neb. 671, 244 N.W.2d 678 (1976).

With that background we are prepared to analyze the Tobins' petition. The first alternative theory of recovery alleges that Flynn & Larsen made certain express warranties, the second alleges that the transaction itself implied certain warranties, and the final theory alleges that Flynn & Larsen made certain material misrepresentations upon which the Tobins relied, as a consequence of all of which they were damaged. The petition seeks a monetary recovery for that damage.

As we have seen from the foregoing discussion of the applicable law, there is nothing inconsistent in seeking to recover damages arising by virtue of having been induced to enter into a contract by fraud and seeking to recover damages because express and implied warranties were allegedly breached. All three theories rest upon the premise that a contract came into being which resulted in damages.

The situation would be otherwise had the Tobins sought to rescind the contract based on fraud or alternatively to recover damages for the breach of warranties, for a contract cannot at one and the same time and under the same facts both exist and not exist.

It must be observed that the Tobins created some confusion as to what they were seeking by including in their prayer for relief the gratuitous phrase "and any further relief the Court deems just under the circumstances." We have stated before that a prayer for equitable relief has no place or role in a law action. Doak v. Milbauer, 216 Neb. 331, 343 N.W.2d 751 (1984). The inclusion of a phrase sounding in equitable relief where it does not belong not only may indicate that the pleader is uncertain of his ground but may succeed in confounding a court. In this case, however, each theory of recovery alleged recognizes the existence of a contract. The petition merely seeks a...