Case Name: Jewel MANESS et al., Appellants, v. Everett REESE et al., Appellees
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1972-10-19
Citations: 489 S.W.2d 660
Docket Number: No. 7280
Parties: Jewel MANESS et al., Appellants, v. Everett REESE et al., Appellees.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 489
Pages: 660–668

Head Matter:
Jewel MANESS et al., Appellants, v. Everett REESE et al., Appellees.
No. 7280.
Court of Civil Appeals of Texas, Beaumont.
Oct. 19, 1972.
Rehearing by Everett Reese, Frances Maness and Jewel Maness Denied Nov. 22, 1972.
Rehearing by Walter Juncker and Don Pace Granted Nov. 22, 1972.
Second Rehearing by Everett Reese, Frances Maness and Jewel Maness Denied Dec. 28, 1972.
John Tucker, Orgain, Bell & Tucker, Beaumont, for Jewel Maness and Frances Maness.
Gilbert Adams, Adams & Browne, Beaumont, for Everett Reese.
George Weller, Weller, Wheelus, Green & Brocato, Beaumont, for Walter Juncker and Don Pace.

Opinion:
DIES, Chief Justice.
For some years, Jewel Maness and his wife were the principal stockholders in Gulf Stores, Inc., a group of retail stores operating in the Gulf Coast area, primarily engaged in the household appliance business. Sometime in 1963 or early 1964, they determined to sell their interest, which meant a change in the active management of the company. After negotiations, on April 4, 1964, this interest was transferred to Everett Reese, who for awhile assumed active management but later designated others to act in his stead.
The purchase was consummated by the payment of cash by Reese and transfer of other property by Reese to Maness plus the redemption by the corporation of the capital stock from Maness for $200,000.
Sometime later, the business failed and Reese sued Maness, Juncker, and Pace because of alleged fraudulent misrepresentations concerning the business. Juncker and Pace were accountants for Gulf Stores, Inc., and participated in some of the negotiations and discussions leading up to the sale on April 4, 1964.
The parties in this opinion will be referred to as below.
The case was submitted to a jury in 196 special issues. For the purpose of this appeal, only some of them need be discussed.
The jury found that defendant Maness represented "as a fact and not as an opinion to Everett Reese, prior to the closing of this purchase and sale, that the withdrawal of the $200,000.00 to be used in redeeming Maness' stock would not impair the operations of the business of Gulf Stores, Inc." It also found that this was false, known by defendant Maness, a material representation, believed by plaintiff Reese, and relied on by him. The jury also found that defendant Maness represented as a fact and not as an opinion to plaintiff that the stock of Gulf Stores, Inc., could be redeemed by taking $200,000 cash and $41,385 in property and there would be reasonably sufficient funds remaining in the business to meet its normal and expected cash requirements without the addition of outside capital during the months of March, April and May of 1964; that this was false; known by defendant Maness to be false; was a material representation, but not believed to be true by plaintiff Reese or relied on by him.
The jury found that defendant Juncker did not represent as a fact that the withdrawal of the $200,000 to be used in redeeming Maness' stock would impair the operations of the business of Gulf Stores, Inc., nor did he represent that this withdrawal would impair the capital structure of the business. It also found defendant Juncker did not represent that after withdrawal of the cash and property there would be reasonably sufficient funds remaining in the business to meet its normal and expected cash requirements without the addition of outside capital during the months of March, April and May of 1964, nor would it impair the capital structure of the business.
As to defendant Pace, the jury found that he represented that the withdrawal of the $200,000 would not impair the operations of the business, that this was false, but unknown by Pace. They also found that defendant Pace represented that the withdrawal of the $200,000 would not impair the capital structure, that this was false, but unknown by Pace. Also, it found that Pace represented that after the withdrawal, there would be reasonably sufficient funds remaining to meet the normal and expected cash requirements without the addition of outside capital during the months of March, April and May of 1964, that this was false, but unknown to Pace. That Pace represented that the stock could be redeemed by taking out the cash and property without impairing the capital structure of the business, which was false, but unknown by Pace.
The jury failed to find that defendant Maness' statement first noted in this opinion was an expression of opinion. The jury failed to find that on April 2, 1964, plaintiff Reese knew there was not sufficient funds to operate the business during the months of March, April and May of 1964. They also found that plaintiff Reese completed the purchase of the Maness stock because of the threat of a civil lawsuit by Maness and that but for this threat, plaintiff Reese would not have completed the purchase. The jury found that the stock purchased by plaintiff Reese had value of $155,743.74 and awarded exemplary damages against defendant Maness of $175,000.
The court entered judgment in plaintiff Reese's favor against defendant Maness for $144,256.26 (purchase price of $300,000 less $155,743.74); interest of $58,405.05 from April 4, 1964 to January 8, 1971; interest of $742.40 from January 8, 1971 (trial date) to February 9, 1971 (judgment date); ordered a remittitur of exemplary damages in the amount of $135,000; ordered that plaintiff Reese take nothing of and from defendants Juncker and Pace; that recovery from Maness exclude his wife; and that no writ of execution issue until all appeals are fully adjudicated.
From this judgment defendant Maness has perfected his appeal. Plaintiff Reese likewise appeals from the judgment discharging defendants Juncker and Pace and Maness' wife.
Vernon's Tex.Codes Ann., Bus. & C., § 27.01, Fraud, defines fraud, in part, as follows :
"(a) Fraud in a transaction involving real estate or stock in a corporation or joint stock company consists of a
"(1) false representation of a past or existing material fact, when the false representation is
"(A) made to a person for the purpose of inducing that person to enter into a contract; and
"(B) relied on by that person in entering into that contract; or
"(2) false promise to do an act, when the false promise is
"(A) material;
"(B) made with the intention of not fulfilling it;
"(C) made to a person for the purpose of inducing that person to enter into a contract; and
"(D) relied on by that person in entering into that contract."
See 25 Tex.Jur.2d, Fraud and Deceit, p. 613, et seq.
Maness has points of error that the trial court erred in submitting the series of issues in reference to the impairment of the operation of the business by the withdrawal of $200,000 on the ground that such issues submitted a non-actionable expression of opinion dependent upon the future operation of the business, and not a past or existing material fact. These points of error are sustained.
The generally accepted rule is that future predictions and opinions do not serve as a basis for actionable fraud. In Griffin v. H. L. Peterson Company, 427 S.W.2d 140, 144 (Tex.Civ.App., Dallas, 1968, no writ), the court held that predictions of the value of a silo in a dairy operation were mere "opinions or prophecies as to future or contingent events. They are not misrepresentations as to material existing facts." See also Dyer v. Caldcleugh & Powers, 392 S.W.2d 523 (Tex.Civ.App., Corpus Christi, 1965, error ref. n. r. e.), discussing commissions and future business earnings; National Newspaper Enterprises v. Chitwood, 68 S.W.2d 264 (Tex.Civ.App., Dallas, 1934, dism.); and Starnes v. Motsinger, 278 S.W. 496 (Tex.Civ.App., El Paso, 1926, no writ).
In Lloyd v. Junkin, 75 S.W.2d 712, 714 (Tex.Civ.App., Dallas, 1934, no writ), these representations were found by the jury to have been made by plaintiff: (a) The experience of Nu-Enamel Paint Company had demonstrated that sales at retail prices averaged at least two quarts per day per rack, (b) In a territory such as plaintiff's, its (Nu-Enamel's) district agents realized a profit in excess of $300 per month on ten racks of products, (c) The merchandise such as being sold plaintiff was being resold at prices exceeding that which he was then paying. The court said, "In order to sustain an action based on false representations, the evidence must show that the alleged representations were representations of fact, and not merely expressions of opinion. Opinion cannot constitute fraud." See also 25 Tex.Jur.2d, Fraud and Deceit, § 42, p. 679 (1961) and authorities cited.
In Moore & Moore Drilling Company v. White, 345 S.W.2d 550, 555 (Tex.Civ.App., Dallas, 1961, error ref. n. r. e.), it is said:
"Actionable fraud has certain fundamental characteristics; (1) there must be a misrepresentation as to material facts, either positive untrue statements, or concealment or failure to disclose facts within the knowledge of the parties sought to be charged, and as to which the law imposed upon such party a duty to disclose; (2) the complaining party must be shown to have relied upon the alleged misrepresentation to his damages ; and (3) the complaining party must, himself, not have failed to exercise reasonable care to protect himself — in other words, in a 'caveat emptor' situation he must not have shut his eyes and ears to matters equally open and available to him upon reasonable inquiry and investigation."
See also Tips v. Barneburg, 276 S.W. 932 (Tex.Civ.App., San Antonio, 1925, dism.); Franklin Life Insurance Company v. Faggard, 296 S.W.2d 335 (Tex.Civ.App., San Antonio, 1956, error ref. n. r. e.); and 37 C.J.S. Fraud § 54 at p. 320 (1943).
The issue on which judgment was granted against Maness — whether the withdrawal of $200,000 from the business to purchase the treasury stock would impair the operations of the business — certainly entailed business acumen, judgment and opinion based on many factors, some incapable of knowledge at the time this transfer was effected. This was a question which plaintiff Reese must satisfy himself about. Nor is it clear from the record that this alone was responsible for the failure of the business. In fact, the record discloses that this reason can only be the result of one's opinion. Such representations calling for opinion and judgment cannot, under the facts of this case, be the basis for actionable fraud.
What we have said concerning the submission of defendant Maness' alleged misrepresentations applies to defendants Juncker and Pace, for this same theory was followed with them.
There is, however, evidence in the record that all three defendants told plaintiff Reese that after withdrawal of the $200,000, there would still be a certain amount left. (Plaintiff testified at one point he was told by defendants that after withdrawal, there would still be $200,000 to $250,000 remaining.) We think this would be proper inquiry for the jury.
Maness has a point of error that the trial court should have granted his motion for instructed verdict because the undisputed evidence established that Reese and his attorney concluded the transaction with knowledge of all material facts and thereby waived the misrepresentations relied upon. While it is true that plaintiff Reese made some inquiry at First Security Bank of Beaumont where the main account of the corporation was kept, there is evidence that the company had other income and funds from a "pipeline" (finance participation, advertising rebates) and it is undisputed that the company had bank accounts in each of the cities where it did business. The point is overruled.
There remains one other question to be disposed of, the discharge of defendant Maness' wife. This was error. This is an action grounded upon fraud and the law of this state is clear that community property is subject to tortious liability of either spouse incurred during marriage. See Section 5.61(d), Family Code. The rule was the same under old Art. 4620, V.A.C.S. Turner v. Turner, 385 S.W.2d 230, 232 (Tex.1965); 12 A.L.R. 1459, 1477 (1921); 10 A.L.R.2d 988 (1950); and 17 Baylor Law Review 177 (1965).
This brings us to questions as to what judgment should be entered by this court. We have found reversible error on the part of the trial court affecting all of the original parties. Our problem is whether to render judgment for the defendants or to order a remand of the cause to the trial court in the interest of justice. The rule and the exception are set out with clarity in Texas Sling Company v. Emanuel, 431 S.W.2d 538, 541 (Tex.1968), as follows:
"Ordinarily, when we hold that a jury's findings relied upon to support a judgment lack support in the evidence as a matter of law, we render judgment rather than remand the case. However, this rule is not invariably applied. Both this court and the Courts of Civil Appeals 'have a wide discretion in determining whether or not a case should be remanded for new trial on reversal.' Yarbrough v. Booher, 141 Tex. 420, 174 S.W.2d 47, 150 A.L.R. 1369 (1943); Scott v. Liebman, 404 S.W.2d 288 (Tex.Sup.1966)."
See also Southwestern Mot. Tr. Co. v. Valley Weathermakers, 427 S.W.2d 597, 605 (Tex.1968) and Sovereign Camp, W. O. W. v. Patton, 117 Tex. 1, 295 S.W. 913, 915 (1927).
Having carefully reviewed this record, we are of the opinion that the cause should be remanded for a new trial in the interest of justice. It is so ordered.
Reversed and remanded.