Yost v. Millhouse, C0-85-129
| Decision Date | 03 September 1985 |
| Docket Number | No. C0-85-129,C0-85-129 |
| Citation | 373 N.W.2d 826 |
| Parties | 41 UCC Rep.Serv. 1623, Prod.Liab.Rep. (CCH) P 10,682 Dawn C. YOST, Appellant, v. Lowell MILLHOUSE, Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. Trial court's decision that appellant did not prove an express warranty was in error.
2. Trial court's decision that appellant did not prove the tort of misrepresentation was in error.
3. Trial court erred in failing to award attorney's fees.
4. Evidence supported trial court's decision not to award punitive damages.
James L. Schlichting, Peterson, Hanson, Schlichting & Davies, Albert Lea, for appellant.
Henry J. Savelkoul, Christian, Slen, Savelkoul, Johnson, Broberg & Kohl, Albert Lea, for respondent.
Heard, considered, and decided by RANDALL, P.J., and WOZNIAK and LANSING, JJ.
Appellant Dawn Yost obtained a default judgment in conciliation court against Lowell Millhouse for damages due to breach of express warranty and misrepresentation. Millhouse appealed the judgment to county court. The county court found for Yost and awarded her compensatory damages, attorney's fees, and punitive damages. The district court granted Millhouse's request for a new trial. On retrial, the county court entered judgment for Millhouse, from which Yost appeals. We reverse.
Dawn Yost, appellant, purchased two horses from respondent, Lowell Millhouse, in the fall of 1979. Yost paid $425.00 for "Pandy," a two-year old, and $400.00 for "Andy," a yearling. Pandy was registered and Yost received the registration papers at the time of delivery. Yost later discovered that Andy was not registered.
Yost testified that she would not have paid $400 for Andy had she known he was not registered. Millhouse assumed both horses were registered, and so told Yost. He told Yost that the registration papers for Andy would be arriving but their arrival could be delayed as long as a year. Millhouse pursued Eugene Ebert, from whom he received the horses, for over a year trying to obtain papers for Andy. During this time, he continually assured Yost that the registration papers would be forthcoming. The cost of registering Andy was $60.00 prior to September 1, 1980. After September 1, 1980, the cost rose to $500.00.
Yost sold Pandy for $600.00 after training it. After learning she would not obtain registration papers from Millhouse, she sold Andy for $350.00 in the fall of 1982. Yost also trained Andy.
Yost obtained a conciliation court judgment against Millhouse. Millhouse appealed the conciliation court judgment to county court. On December 19, 1983, the county court found for Yost based on breach of warranty and misrepresentation, and ordered Millhouse to pay her $2,350.00 compensatory damages, attorneys fees of $1,247.00 and $250.00 punitive damages. The compensatory damages were determined by subtracting the amount Yost received for selling Andy ($350.00) from what the court found from Yost's testimony to be Andy's value had he been registered ($2700.00).
The trial court denied Millhouse's motion for amended findings or a new trial. Millhouse appealed to district court for a retrial based on newly discovered evidence and then appealed the district court's decision granting a new trial but contingent on Millhouse paying $700.00 toward Yost's attorney's fees. On October 14, 1983, the District Court Appellate Division removed the attorney fees contingency and simply remanded for a new trial based on affidavits presented by Millhouse citing newly discovered evidence.
On retrial of the matter July 12, 1984, the trial court entered judgment for Millhouse finding, among other things, in its order entered October 18, 1984, that Millhouse's statements that Andy was registered were not an express warranty, that Millhouse did not intentionally misrepresent Andy's registration, that Millhouse's statements were not made with intent to induce Yost to purchase Andy, that registration was not a material fact, that Andy's value was the same whether registered or not, that Yost sustained no damage, and that Millhouse's representations were not willful and malicious.
Yost appeals the trial judge's denial of her motion for amended findings or a new trial and from the October 18, 1984, judgment entered October 22, 1984.
1. Did the trial court err in finding that Millhouse's statements were not an express warranty?
2. Did the trial court err in finding that Millhouse did not commit the tort of misrepresentation?
3. Did the trial court err in failing to award Yost reasonable attorney's fees?
4. Did the trial court err in failing to award Yost punitive damages?
The trial court found that Millhouse's statement that the horse was registered was not an express warranty. This conclusion of law is not binding on this court, and may be stricken if the trial court improperly applied the law to undisputed facts. A.J. Chromy Construction Co. v. Commercial Mechanical Services, Inc., 260 N.W.2d 579, 582 (Minn.1977). The trial court incorrectly applied the law. The facts disclose that Millhouse made an express warranty.
(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
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(2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.
Minn.Stat. Sec. 336.2-313 (1984).
Here, Yost proved, and the trial court found, that Millhouse represented to Yost that the horse was registered. Millhouse does not dispute this finding. The representation was made verbally when Millhouse showed Yost the horse before the sale. Additionally, the November, 1979, advertisement to which Yost responded indicated that the horse was registered. At the time of the sale, Millhouse gave Yost a signed American Quarter Horse Association transfer report. Transfer reports enable the seller to transfer the registration papers to the buyer, but do not indicate registration itself. The report read:
I certify that the horse sold is the horse registered with the Association so described in the Certificate of Registration delivered to the buyer. I authorize the Association to record this transfer of ownership.
Millhouse admitted at trial that there is no reason to provide transfer papers unless a horse is registered. Thus, the fact that the horse was registered was part of the basis of the bargain. None of these facts were in dispute. The requirements of an express warranty were proven, and the trial court erred in finding that no express warranty was created.
Yost claims the trial court erred by not finding Millhouse liable for misrepresentation. The trial court's conclusion of law may be stricken if the court improperly applied the law to undisputed facts. A.J. Chromy, 260 N.W.2d 579. The elements of misrepresentation are as follows:
1. There must be a representation;
2. That representation must be false;
3. It must have to do with a past or present fact;
4. That fact must be material;
5. It must be susceptible of knowledge;
6. The representer must know it to be false, or in the alternative, must assert it as of his own knowledge without knowing whether it is true or false 7. The representer must intend to have the other person induced to act, or justified in acting upon it;
8. That person must be so induced to act or so justified in acting;
9. The person's action must be in reliance upon the representation;
10. That person must suffer damage;
11. That damage must be attributable to the misrepresentation, that is, the statement must be the proximate cause of the injury.
Davis v. Re-Trac Manufacturing, 276 Minn. 116, 117, 149 N.W.2d 37, 38-39 (1967).
As outlined above, Millhouse falsely represented that the horse was registered.
The trial court found that the fact of registration was not material. A statement of fact is material if it would naturally affect the conduct of the party addressed. Griffin v. Farrier, 32 Minn. 474, 21 N.W. 533 (1884). In Swedeen v. Swedeen, 270 Minn. 491, 500, 134 N.W.2d 871, 878 (1965), the Minnesota Supreme Court held that a statement that an insurance policy provided greater coverage than the previous policy was material because it induced the plaintiff to purchase the new policy. Here, Millhouse's statement that the horse was registered similarly induced Yost to buy the horse at the price of $400.00. Yost testified that had she known that the horse was not registered, she would have been willing to pay only $150.00 for the horse. The trial court also erred in evaluating the materiality of the statement in light of its finding that Yost sustained no damage. This conclusion was a premature damage calculation. Materiality is not the same thing as damages. Damages are calculated once the other elements of fraud are proven.
The trial court found that Millhouse did not intentionally misrepresent that Andy was registered. However, under Davis it is sufficient for the representer to assert facts of his own knowledge without knowing whether they are true or false. Knowledge of falsity is not required. Here Millhouse continuously represented that he knew the horse was registered when, in fact, he had no such knowledge. Thus, the trial court erred in finding that Yost failed to prove the sixth Davis element of misrepresentation.
Yost claims that the trial court erred...
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