Wion v. Carl I. Brown & Co.

Decision Date14 May 1991
Docket NumberNo. WD,WD
CourtMissouri Court of Appeals
PartiesMark S. WION and Kelly A. Wion, Appellants, v. CARL I. BROWN & COMPANY, Respondent. 43166.

David P. Hargrave and David J. Weimer, Kansas City, for appellants.

Greg T. Spies and Leonard L. Wagner of Watson, Ess, Marshall & Enggas, Kansas City, for respondent.



The plaintiffs Wion sued the defendant Carl I. Brown and Company for fraud and negligence in the financing of the purchase of a home. The case was submitted on the count for fraud, and the jury returned a $9500 verdict for the plaintiffs. The trial court sustained the motion of defendant Brown and Company for judgment notwithstanding the verdict. The plaintiffs Wion appeal.

The Wions, husband and wife, desired to purchase a home that they could afford, something within the $50,000 to $60,000 range, yet a home that did not require much repair or work. They consulted the listings at Coldwell Banker, viewed them, but found them not suitable. The Wions then set out on their own and were attracted to a residence for sale at 500 Donovan in Lee's Summit, Missouri. Coldwell Banker listed the price of the home as $69,500. It described the property as a three bedroom home with one bath, a woodburning stove, "over a crawl space."

On that same day, March 12, 1988, they toured the home in the company of the Coldwell Banker agent, Diane Vospette. They were pleased with the home and returned to the Coldwell Banker office to discuss the financing. The agent concluded after some analysis that the Wions would have no difficulty qualifying for the loan. The Wions decided to pursue the financing and to make an offer on the house. Mr. Wion remembered then that he had not yet inspected "underneath the house" and wanted to hire a professional inspector for that purpose because he was inexperienced in such things. Diane informed him then that, if "they went FHA," that agency's inspector would examine the home from top to bottom, and they would even get under the crawlspace.

The agent and the Wions returned to 500 Donovan on that same day and went through the property again. Diane said then that "if there was no room for [the FHA inspector] to get under the crawlspace he would not approve the loan." Mr. Wion felt at ease with that and decided to go back to Coldwell Banker after they had looked through the house, and make an offer to purchase the home. The Wions executed a formal Offer to Purchase that afternoon. The sellers made a counteroffer the next day, which the Wions accepted.

On March 15, 1988, two days after the Wions and the sellers agreed to the property transaction, the Wions and their agent met at the Coldwell Banker office with Liz Yancey, an employee of the defendant Brown and Company. The purpose of the meeting was to arrange for financing because financing was a condition of the real estate contract. The Wions received documents that informed them that the purpose of the FHA appraisal was to determine the maximum amount of the loan. The loan application, moreover, specifically instructed the purchasers that HUD did not warrant the value or condition of the property and that the purchasers should satisfy themselves that they were acceptable.

Wion testified that at that meeting he expressed concern that he had not had a professional inspection done "underneath the home," and asked if he "should have to obtain a professional inspection of the home." Wion related: "Liz Yancey told me that I would be wasting my money to get a professional inspection, since I was already paying for it in the service charges, and that the FHA loan had to be approved by an FHA appraiser-inspector." His own professional appraiser "would have no bearing on whether the loan would be approved or not," Liz said. She told him that if the FHA appraisal determined a value less than the purchase price of the home, the contract to purchase would be void. She told him also that if the FHA appraiser-inspector "did not pass the loan because of major damage that the loan would not be okayed." The Wions decided to forgo an independent appraisal-inspection, since it "would have no bearing on whether the loan would be approved or not," and since they were already paying Brown and Company for one.

The FHA appraisal was performed on April 11, 1988, by Jerry Newsome, an employee of the defendant Brown and Company. Newsome testified that as an FHA appraiser, he had a duty to inspect the crawlspace of the home, and that this inspection was a factor in his determination of the value of the home. Newsome did not remember whether or not he inspected the crawlspace of the home. The appraisal report did not note any unusual conditions existing in the crawlspace. The appraisal also indicated that no repairs were necessary. The appraisal estimated the market value of the home at $69,500.

The loan was approved and on May 6, 1988, the Wions conducted a mechanical inspection of the house. They did not inspect the crawlspace then because none of the items in the mechanical inspection report were located there. They did not see or talk to anyone from Brown and Company on that occasion. The sale was closed ten days later, on May 16, 1988. They did not receive the FHA appraisal until several days after the closing. On May 22, 1988, the Wions moved into their new home. A problem developed that required access to the crawlspace. Wion then discovered that the first floor of the home was propped up with railroad ties, cinderblocks, a steel pipe and a jack. There were no footings to support the building. As a result, the floor of the house was sagging.

Newsome testified that his opinion of the value of the house would have been the same whether or not the railroad ties were used to support the floor of the house. There was evidence that Brown and Company terminated its relationship with Newsome in July of 1988 because Brown and Company "lost confidence in the appraisal department's ability to develop timely and accurate appraisals for loan purposes, including Jerry Newsome's ability to provide timely appraisals."

Wion testified that the actual value of the home at the time of purchase was $60,000. That estimation of worth was based on comparable sales. On the basis of that evidence of valuation, the difference between the purchase price of the home and its actual value at purchase was $9500. The jury returned a verdict for the Wions for $9500. The trial court entered judgment for the defendant Brown and Company notwithstanding the verdict.

The appeal contends that the entry of judgment for the defendant notwithstanding the verdict for the plaintiffs was error. That contention presents the question of whether the plaintiffs proved a submissible case of fraud. In that determination the court of appeals views the evidence in the light most favorable to the verdict and disregards all inferences to the contrary. Marti v. Economy Fire & Casualty Co., 761 S.W.2d 254, 255[1, 2] (Mo.App.1988). A judgment notwithstanding the verdict is proper only if upon such a view of the evidence, reasonable minds could not differ as to the proper verdict. Id.

It is evident from the pleading of the petition and the issues joined at the trial, and now on appeal, that the cause of action submitted to the jury and found by verdict in favor of the Wions was for fraudulent misrepresentation. The instruction that submitted the claim for fraud, however, is not a part of the legal file or otherwise present. Thus, the facts of the component propositions that were submitted to the jury for finding and verdict are not known to us. The judgment notwithstanding the verdict, moreover, as entered by the trial court is a general order and does not ascribe the insufficiency of proof to return the verdict to any particular element of the claim.

The elements of common law fraud are 1) a representation, 2) its falsity and, 3) materiality, 4) the speaker's knowledge of its falsity or ignorance of its truth, 5) the speaker's intent that the representation be acted upon by the hearer in a manner reasonably contemplated, 6) the hearer's ignorance of the falsity of the representation, 7) the hearer's reliance on the truth of the representation, 8) the hearer's right to rely thereon, and 9) injury to the hearer proximately caused by that reliance. Sofka v. Thal, 662 S.W.2d 502, 506 (Mo. banc 1983). The motion for judgment was properly granted if one or more of these essential elements of the cause of action were not supported by substantial evidence. School Dist. v. U.S. Gypsum Co., 750 S.W.2d 442, 445 (Mo.App.1988).

In the absence of a verdict director, we turn to the pleadings and to the evidence to find the premises of fact upon which the claim rests. The petition upon which the evidence was received and the verdict rendered pleaded that, on or about May 6, 1988, Brown and Company, through its agent, and with the intent to induce the Wions to buy the residence at 500 Donovan and to finance the purchase through Brown and Company, represented to the Wions that "the said residence had been normally maintained, required no repairs, was worth ... $69,500 and that a proper and full FHA appraisal had been performed by Brown and Company's agent." It was the evidence at the trial, however, that on May 6, 1988, the Wions and Liz Yancey [the Brown and Company agent to whom the fraudulent misrepresentation is ascribed] neither spoke to nor were in the company of the other. Brown and Company contends that lapse of evidence deprived the case of proof of a misrepresentation within the pleadings and, hence, the judgment of validity.

Rule 55.15 requires that a petition for fraud aver the circumstances constituting the fraud with particularity. It is not every circumstance of the fraud, but its essential elements, that must be particularly described for a petition to present a justiciable claim. Hanrahan...

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    ...submissible case, and this court must view the evidence and inferences in a light most favorable to the verdict. Wion v. Carl I. Brown & Co., 808 S.W.2d 950, 953 (Mo.App.1991). Under the applicable verdict director, M.A.I. 10.08, if the jury finds for the plaintiff on the policy, and if it ......
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