Wheeler Motor Co., Inc. v. Roth

Decision Date13 December 1993
Docket NumberNo. 93-496,93-496
Citation315 Ark. 318,867 S.W.2d 446
PartiesWHEELER MOTOR COMPANY, INC., Appellant, v. Richard ROTH and Carolyn Fontneau, Husband and Wife, Appellees.
CourtArkansas Supreme Court

Truman H. Smith, Fayetteville, for appellant.

James G. Lingle, Ella K. Maxwell, Rogers, for appellees.

CORBIN, Justice.

Appellant, Wheeler Motor Company, Inc., appeals a judgment of the Washington Circuit Court awarding $18,000.00 in damages to appellees, Richard Roth and Carolyn Fontneau. The jury's award included $8,000.00 in damages for rightful revocation, representing payment of the cost of the automobile, and $10,000.00 in punitive damages. For reversal, appellant argues the jury's findings that (1) appellant deceived appellee, (2) appellee rightfully revoked acceptance, and (3) both restitution and punitive damages were warranted are not supported by substantial evidence.

After the jury entered its verdict, appellant filed post-trial motions seeking a new trial or in the alternative judgment notwithstanding the verdict. Appellees filed post-trial motions seeking attorney's fees and prejudgment interest. The trial court denied all these post-trial motions. It is from these rulings that each party appeals. The judgment is affirmed.

Appellees purchased a 1988 Volkswagen Fox GL from appellant on October 2, 1989. The vehicle was the last 1988 model on hand. At purchase, the price was $8,000.00, down from the $9,813.00 sticker price. It is undisputed that appellees were the first owners of the vehicle, but the car had been test driven 590 miles. The key ring submitted into evidence indicated that the car was "new" as did the sales contract. Within the first two weeks after purchase, the right front tire developed an "aneurysm," and the steel belt burst through the tread. Other problems developed during the 23 months appellees drove the car. Each was repaired by appellant. The right front fender was found to have a crack in it, and the right headlight became loose. Noise emitted from the right front suspension. The right speaker blew out. Other mechanical problems existed shortly after buying the car from appellant, and these problems persisted throughout its use. Appellees asserted that they purchased the car believing it was undamaged and that this misrepresentation constituted deceit and breach of warranty.

A copy of the sales order reflected only that a crack in the paint approximately two inches long existed on the tip of the left front fender. This was noted on the sales order after appellees examined the exterior of the car. No other damage is explained or evidenced in this document.

The testimony diverges as to whether appellees were informed of the prior damage to the right front of the car during a demonstration drive prior to purchase. Appellant maintains appellees were made aware of the prior damage to the right front of the vehicle. Appellees denied they were made aware of this fact.

I. DIRECT APPEAL

We observe that a motion for a directed verdict is a condition precedent to moving for a judgment notwithstanding the verdict. ARCP Rule 50(b). A motion for judgment notwithstanding the verdict is technically only a renewal of the motion for directed verdict made at the close of the evidence. Dodson Creek, Inc. v. Fred Walton Realty Co., 2 Ark.App. 128, 620 S.W.2d 947 (1981).

In each of the substantive arguments asserted by appellant, it states the lower court erred in refusing to grant a directed verdict and abused its discretion in not granting a new trial or judgment notwithstanding the verdict asserting lack of substantial evidence with regard to deceit, revocation of acceptance, and the award of punitive damages.

It is a well-settled rule that this court will affirm sufficiency of the evidence cases if there is "any substantial evidence to support a jury's verdict." Boyd v. Reddick, 264 Ark. 671, 675, 573 S.W.2d 634, 637 (1978). In determining whether substantial evidence exists, we have stated that we will rely upon two crucial principles to avoid invading the province of the jury. First, the court will consider only the evidence favorable to the successful party below, and second, the court will defer to the jury's resolution of the issue unless we can say that there is no reasonable probability to support the version of the successful party below. Love v. H.F. Constr. Co., 261 Ark. 831, 552 S.W.2d 15 (1977).

A. Deceit

Appellant argues that there was no false representation and that appellees were aware of the prior damage to the car before they purchased it. Appellant maintains that this was the reason for the lowered selling price. Appellees argue that appellant never mentioned any prior collision.

Deceit consists of five elements which must be proven by a preponderance of the evidence: (1) a false representation of a material fact, (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation, (3) intent to induce action or inaction in reliance upon the representation, (4) justifiable reliance, and (5) damage suffered as a result of that reliance. Nicholson v. Century 21 Ivy Realty Inc., 307 Ark. 161, 818 S.W.2d 254 (1991). In cases of deceit the credibility of the witnesses is vital in determining liability, and the trier of fact is the sole judge of credibility and the weight and value attributed to evidence. Id.

In a case similar to the present one, a car buyer testified as to the salesman's representations and stated that he believed the salesman, relied on his statements, and expressed the importance that there was no damage to the frame in his purchase of the car. Lancaster v. Schilling Motors, Inc., 299 Ark. 365, 772 S.W.2d 349 (1989). This court found sufficient reliance by the buyer in Lancaster to support a claim for deceit.

In this case the jury heard and observed the witnesses, judged their credibility, and weighed the evidence submitted. Appellees testified that they would never have purchased the car had they known it had been wrecked. The jury apparently did not deem appellant's testimony credible. We should state here that when evidence is disputed, a motion for judgment notwithstanding the verdict should be refused. Lancaster, 299 Ark. 365, 772 S.W.2d 349. As the evidence was disputed in the instant case, we could end our discussion here. However, even beyond that statement and considering the evidence presented, we cannot say substantial evidence does not exist to support the judgment finding deceit.

B. Revocation of Acceptance

Appellant argues there was not substantial evidence to support the jury's finding that appellees rightfully revoked acceptance of the car. We must recognize that the attorneys and court below used the terms "revocation" and "rescission" interchangeably. Though rescission of a contract is an equitable remedy, the right of restitution after rescission can be and has been asserted along with allegations of breach of warranty and the tort of deceit under the jurisdiction of circuit court. Smith v. Walt Bennett Ford, Inc., 314 Ark. 591, 864 S.W.2d 817 (1993); Thomas Auto Co. v. Craft, 297 Ark. 492, 763 S.W.2d 651 (1989). An award of restitution for valid revocation in addition to punitive damages is acceptable if the elements of the tort of deceit are proven. "With the contemporary concern chiefly to avoid duplicated remedies, some courts have flatly said that restitution and punitive damages should be permitted." Dan B. Dobbs, Law of Remedies, § 9.4 (2d ed.1993) citing Thomas Auto, 297 Ark. 492, 763 S.W.2d 651.

Ark.Code Ann. § 4-2-608 (1987) explains revocation of acceptance:

(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it:

(a) On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

Appellees drove this car just under two years when on August 16, 1991, they attempted to revoke acceptance of the car and return the vehicle by a letter sent from their attorney to the dealership. This letter was precipitated by appellees' discovering that the paint on the front was not original and subsequently learning that the car had been in a collision. Their discovery came in the summer of 1991 when paint came off after visiting a car wash, revealing primer which was not Volkswagen primer. Appellees testified that this was a substantial impairment to the value of the car since they would not have purchased the car if they had known it had been wrecked. Appellees then contacted their attorney to revoke acceptance and obtain a refund of the purchase price. The pertinent language of the August 16, 1991 letter is as follows:

THIS LETTER IS A SERVICE NOTICE TO YOU THAT THE "RETAIL INSTALLMENT CONTRACT" DATED 02 OCTOBER 1989 BETWEEN MY CLIENTS AND WHEELER MOTOR COMPANY, INC. IS HEREBY RESCINDED.

The 1988 Volkswagen Fox which you sold to them was sold as a new vehicle. The vehicle was not in fact new, and had previously been wrecked and repainted. As you know, they have [had] nothing but trouble with the car since it's [sic] purchase.

They hereby tender the vehicle back to you. They will deliver it to your lot or wherever you request. I ask that you provide me with instructions as to the time and place of delivery. They will make no further payments...

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