Opinion
Civ. 2368.
April 22, 1981. Rehearing Denied May 27, 1981.
Appeal from the Circuit Court, Mobile County, Elwood L. Hogan, J.
Vincent F. Kilborn, III of Kilborn Gibney, Mobile, for appellant.
Gary D. Porter, Mobile, for appellee.
This is a fraud case involving a truck van.
Debbie Lewis filed a three count complaint against Treadwell Ford seeking damages for willful, reckless, and mistaken misrepresentation in the sale of a truck. After a jury trial and on January 8, 1980, the trial court rendered a judgment for Lewis and against Treadwell Ford for $10,000 on the reckless misrepresentation count. The trial court had previously granted a directed verdict for Treadwell Ford on the willful misrepresentation count.
On January 17, 1980 Treadwell filed a motion for a new trial or, in the alternative, a judgment n.o.v. On April 16, 1980 Treadwell's motion was conditionally granted unless Lewis failed to remit $8,100 within thirty days. On April 21, 1980 Lewis requested the court to reconsider its order of April 16, 1980. This motion was granted on May 23, 1980 and the $10,000 judgment was reinstated. Treadwell then filed notice of appeal to this court.
Treadwell contends here that the trial court should not have submitted the issue of punitive damages to the jury and erred to reversal in not granting the motion for new trial on that ground. We agree and reverse.
The evidence shows that Treadwell Ford bought a Ford van from Wepco Leasing Company as a trade-in on another vehicle sold to Wepco. Wepco told Treadwell that the trade-in was a 1972 model van when, in fact, it was a 1969 van. A 1972 model van and a 1969 model van are identical except for two digits in their serial number. Treadwell had a book in its parts department which could be referred to in order to determine the model year, but Treadwell relied on Wepco's representation instead.
Soon after buying the van from Wepco, Treadwell sold it to Lewis representing it to be a 1972 van. Lewis, in the company of a brother, went to Treadwell seeking a van. They drove the van in question and asked the salesman about the history of it. The salesman informed them of the repairs which had been made to the van and furthermore gave them the name of the former owner. Wepco was then contacted by the brother, and Wepco acknowledged the van was a 1972 model.
Lewis stated that the purchase price of the van was $3,997.50. She further testified she would not have paid more than $2,000 for the truck if she had known it was a 1969 model.
The dispositive issue here is whether there was any evidence before the jury to support a verdict for punitive damages.
In order for the jury to award punitive damages in this case, there must have been evidence from which it could have concluded that the fraud was malicious, oppressive or gross and the statements were made recklessly without regard to their truth and without caring or knowing if they were true or not. Big Three Motor Co. v. Smith, 412 So.2d 1219 (Ala.Civ.App. 1981).
The record is devoid of any evidence which shows Treadwell acted so heedlessly or so recklessly as to authorize the award of punitive damages. The evidence reveals that Treadwell relied on the representations made by Wepco as to the model year of the van. Furthermore, Lewis's brother called Wepco and confirmed that the van was a 1972 model. It is conceded that Treadwell failed to examine the book in its parts department which would have revealed the correct model year. However, we are not persuaded that such an omission amounts to gross, oppressive or malicious conduct so as to warrant the imposition of punitive damages. Proctor Agency, Inc. v. Anderson, Ala., 358 So.2d 164 (1978); Continental Volkswagen, Inc. v. Soutullo, 54 Ala. App. 410, 309 So.2d 119 (1975).
In her brief Lewis relies heavily on Bolton Ford of Mobile, Inc. v. Little, Ala., 344 So.2d 1208 (1977) and Neil Huffman Volkswagen v. Ridolphi, Ala., 378 So.2d 700 (1979). We consider this reliance to be misplaced. These cases involved actual knowledge by the car dealers of the falsity of the representations made. In the case at bar, there is no evidence that Treadwell had actual knowledge of the falsity of the representation made by it to Lewis.
For the reasons above noted, the trial court committed reversible error in failing to grant Treadwell's new trial motion; consequently its judgment is reversed and the cause remanded.
REVERSED AND REMANDED.
WRIGHT, P.J., concurs.
HOLMES, J., dissents.
I respectfully dissent.
The question of when punitive damages may be recovered in an action for fraud brought under § 6-5-101, Code of Ala. 1975, has been before this court and the Alabama Supreme Court on numerous occasions.
After a thorough review of the appropriate cases, I find it advisable to dissent. In all candor there is support for the majority decision in Proctor, supra. However, I find what follows to be a more appropriate view of what the law dictates.
Section 6-5-101 provides:
Misrepresentations of a material fact made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently and acted on by the opposite party, constitute legal fraud.
It is clear that punitive damages may be awarded in cases where the misrepresentation was made willfully to deceive. Spartan Pools v. Royal, Ala., 386 So.2d 421 (1980). It is also clear that punitive damages may not be recovered where the misrepresentation was made innocently by mistake. Winn-Dixie Montgomery, Inc. v. Henderson, Ala., 353 So.2d 1380 (1977). Hall Motor Co. v. Furman, 285 Ala. 499, 234 So.2d 37 (1970); Maring-Crawford Motor Co. v. Smith, 285 Ala. 477, 233 So.2d 484 (1970). However, there remains the question of whether punitive damages may be recovered when the action for fraud is based upon a misrepresentation of a material fact made "recklessly without knowledge."
In Proctor, supra, at page 165, the supreme court stated that:
[I]n misrepresentation cases [punitive damages] are usually restricted to instances where there is not only a knowing misstatement, but where the fraud is also gross, oppressive, or aggravated.
. . . . .
The supreme court then went on to say, at page 166, that:
[I]n those cases essentially covered by section [ 6-5-101],
"punitive damages are only allowed where a material misrepresentation is made knowingly and falsely, was relied on by the injured party, and the fraud was gross, malicious, oppressive and committed with an intent to injure."
See, United States Fidelity Guaranty Co. v. McKinnon, Ala., 356 So.2d 600 (1978); Winn-Dixie Montgomery, Inc. v. Henderson, Ala., 371 So.2d 899 (1979).
The supreme court, however, has held that awards of punitive damages are not limited to cases where the misrepresentation was made knowingly and falsely and that punitive damages may be awarded where the misrepresentation was made "recklessly without knowledge." Ex parte Smith, 412 So.2d 1218 (Ala. 1981); International Resorts, Inc. v. Lambert, Ala., 350 So.2d 391 (1977); Mid-State Homes, Inc. v. Johnson, 294 Ala. 59, 311 So.2d 312 (1975).
In Big Three Motors, Inc. v. Smith, 412 So.2d 1219 (Ala.Civ.App. 1980), reversed and remanded [Ex parte Smith, supra], this court attempted to follow the rule set forth in Proctor, supra, and Winn-Dixie Montgomery, Inc. v. Henderson, Ala., 371 So.2d 899 (1979), and held that punitive damages may not be recovered unless the defendant had actual knowledge of the falsity of the representation. The supreme court reversed, stating "the Court of Civil Appeals failed in its review to apply the correct principle of law to the evidence adduced" at trial. From this I can only conclude that actual knowledge of the falsity of the representation is not a requisite to recovery of punitive damages in cases involving reckless misrepresentations. The supreme court stated that its "opinion in Henderson was not intended to change the law of fraud by eliminating the possibility of a recovery based upon a heedless or reckless misrepresentation." Ex parte Smith, supra.
In Shiloh Construction Co. v. Mercury Construction Corp., Ala., 392 So.2d 809, 814 (1980), the supreme court said that punitive damages may be recovered "where the fraud is malicious, oppressive, or gross and representations are made with knowledge of falsity, or so recklessly made as to amount to the same thing, or made with the purpose of injuring the other party." (Emphasis supplied.) See, Spartan Pools v. Royal, supra; Pettus v. Shafer, 286 Ala. 625, 244 So.2d 573 (1971); Hall Motor Co. v. Furman, supra; Southern Building Loan Ass'n v. Dinsmore, 225 Ala. 550, 144 So. 21 (1932); Caffey v. Alabama Machinery Supply Co., 19 Ala. App. 189, 96 So. 454 (1922), cert. denied, 209 Ala. 466, 96 So. 459 (1923). It would appear that punitive damages may be recovered for a reckless misrepresentation where the fraud is malicious, oppressive, or gross and the misrepresentations are made so recklessly as to amount to knowledge of falsity, or are made with the purpose of injuring the other party.
Turning to the instant case, I find that I must dissent.
The imposition of punitive damages in cases of fraud is discretionary with the jury, acting with regard to enormity of the wrong and the necessity of preventing similar wrongs. Shiloh Construction Co. v. Mercury Construction Corp., supra; Mid-State Homes, Inc. v. Johnson, supra; Loch Ridge Construction Co., Inc. v. Barra, 291 Ala. 312, 280 So.2d 745 (1973). In other words, it is for the jury to determine whether the actions of the defendant are such as to require the imposition of punitive damages.
Further, a jury's verdict is presumed to be correct and will not be reversed on appeal unless the preponderance of the evidence is against the verdict, after allowing all reasonable presumptions in favor of its correctness. Ford Motor Co. v. Tindol, Ala.Civ.App., 380 So.2d 904 (1980).
Viewing the record with the attendant presumptions, the following is found.
A 1969 and a 1972 Ford van are identical except for two digits in their serial numbers. A simple inspection of the vehicle's serial number will not disclose the vehicle's model year. A parts book must be consulted in order to make that determination.
There is evidence indicating that Treadwell was aware of those facts when it represented the vehicle as being a 1972 model. There is also evidence that Treadwell owned the requisite parts book and that it could have ascertained the true model year of the van with little difficulty. Instead, Treadwell chose to rely on the representative of Wepco and chose to repeat that representation to Lewis without first ascertaining its truth.
Stated differently, there is evidence from which the jury could reasonably conclude, and apparently did conclude, that Treadwell knew that the van might not be a 1972 model and that Treadwell, with the knowledge, went ahead and told Lewis that the van was a 1972 model. In short, the jury could conclude that Treadwell acted recklessly by representing the van to be a 1972 model and that the representation was made so recklessly as to amount to knowledge of its falsity.
Further, in light of the relative position of the parties, i.e., a knowledgeable car dealer on the one hand and a relatively unsophisticated buyer on the other; the ease with which Treadwell could have ascertained the true model year; and the apparent difference in value and utility between a 1969 and a 1972 van, the jury could reasonably conclude that Treadwell's conduct was sufficiently malicious, oppressive or gross as to warrant the imposition of punitive damages.
It is for these reasons that I cannot concur in finding that "the record is devoid of any evidence which shows Treadwell acted so heedlessly or so recklessly as to authorize the award of punitive damages." Such a finding is tantamount to holding that as a matter of law punitive damages cannot be recovered under the facts of this case and would, in effect, relieve a seller of the duty to ascertain the truth of his representations.
Punitive damages are for punishment and prevention.
"Courts award exemplary damages to discourage oppression, fraud, or malice by punishing the wrongdoer. * * * Such damages are appropriate in cases like the present one, where restitution would have little or no deterrent effect, for wrongdoers would run no risk of liability to their victims beyond that of returning what they wrongfully obtained. * * *"
Mid-State Homes, Inc. v. Johnson, 294 Ala. at 66, 311 So.2d at 318.
For the reasons stated above, I would affirm the case.