Title: Holcomb v. Hoffschneider
Citation: 297 N.W.2d 210
Docket Number: 63753
State: Iowa
Issuer: Iowa Supreme Court
Date: October 15, 1980

297 N.W.2d 210 (1980) James R. HOLCOMB and Jacquelyn Holcomb, Appellees, v. Dorothea A. HOFFSCHNEIDER, John Hoffschneider, and C. B. Property Sales, Appellants. No. 63753. Supreme Court of Iowa. October 15, 1980. *211 James A. Pratt of Heithoff, Pratt &amp; Heithoff, Council Bluffs, for appellant C. B. Property Sales. James A. Pugh of Pogge, Root &amp; Steege, Council Bluffs, for appellees. Considered en banc. UHLENHOPP, Justice. This appeal involves a claim of fraudulent misrepresentations by a realtor regarding the number of acres in irregularly shaped real estate it sold, and an issue of punitive damages. A jury awarded the purchasers $6000 actual damages. The realtor appealed and the purchasers cross appealed. The realtor contends in this appeal that the purchasers did not rely on any representations as to the size of the property and that because the purchasers knew the actual boundaries of the property they bought, they did not sustain damages. The purchasers cross appeal from the trial court's refusal to submit their demand for punitive damages to the jury. They assert that proof of fraud alone generates a jury question on such damages. We view the evidence in the light most favorable to the purchasers who prevailed before the jury. Briggs Transportation Co. v. Starr Sales Co., 262 N.W.2d 805, 808 (Iowa 1978). I. Reliance. Dorothea A. and John Hoffschneider listed their house and lots for sale with defendant C. B. Property Sales. The price was $65,000 and the size of the lots, numbers 6 and 7, was stated as 6.8 acres. Dean Olson, a salesman for C. B. Property, placed advertisements in two local newspapers on several days in May through July 1975. The ads stated the property contained six acres. The purchasers, plaintiffs James R. and Jacquelyn Holcomb, first saw the property in July 1975. They attended an open house of the property hosted by Olson. Subsequently Olson walked the boundaries of the property with them. He also showed them the listing before they made their offer to buy, and stated at various times prior to the sale that he would guarantee the property contained at least 6.6 acres. Actually it contained 4.6 acres. The parties dispute whether the Holcombs saw the newspaper ads before they offered to buy. Without question the Holcombs saw the listing contract prior to their offer. James R. Holcomb testified on direct examination: Q. Was it brought up by you or how? A. By me because it just didn't appear to me that there was that much ground there and he says we sell 90% of the *212 acreages out here and Mr. Herzberg used to live in this house and there is a plat on our wall down in the office and I know that there is that much ground there. So, I took his word for it. Holcomb reasserted on cross-examination that Olson represented the property contained 6.6 acres and that the Holcombs relied on those statements: Herzberg was president of C. B. Property and also the general contractor who constructed the house in question. He lived in the house prior to its sale to Hoffschneiders. The Holcombs eventually offered $54,000 for the house and lots, and purchased the property for that price. As to C. B. Property's contention that the Holcombs did not rely on the misrepresentations, the evidence does show that the Holcombs examined the property. This court has said, however, that a buyer cannot generally be held to be able to judge the contents of a parcel of land by the eye. Boddy v. Henry, 126 Iowa 31, 42, 101 N.W. 447, 451 (1904). Even though a buyer examines land before purchasing, he may normally rely upon the representations of the seller as to measurement. Id. at 42, 101 N.W. at 450-51. C. B. Property argues that if the Holcombs really wanted to know the exact acreage, they should have obtained a survey. On cross-examination Holcomb had this to say on that subject: This court stated in McGibbons v. Wilder, 78 Iowa 531, 535, 43 N.W. 520, 522 (1889): Under the testimony and these pronouncements, we hold the Holcombs generated a jury issue on reliance. The jury could say that although the Holcombs doubted the representations as to acreage were right, after Olson's repeated assurances they took his word. II. Damages. Iowa follows the benefit-of-the-bargain rule, that is, a defrauded purchaser is entitled to the difference between the value the property would have had as represented and the value of the property he actually received. Syester v. Banta, 257 Iowa 613, 626, 133 N.W.2d 666, 669 (1965); Perry Fry Co. v. Gould, 214 Iowa 983, 988, 241 N.W. 666, 669 (1932). In ascertaining the value of property, its owner is a competent witness to testify as to its market value. 31 Am. Jur.2d Expert and Opinion Evidence § 142 (1967). Likewise, he is competent to give his opinion on what the property would have been worth if it had been as represented. Northrup v. Miles Homes, Inc., 204 N.W.2d 850, 856-57 (Iowa 1973); see Reed v. Bunger, 255 Iowa 322, 331, 122 N.W.2d 290, 296 (1963); Slabaugh v. Eldon Miller, Inc., 244 Iowa 29, 38, 55 N.W.2d 528, 532 (1952); Kohl v. Arp, 236 Iowa 31, 35, 17 N.W.2d 824, 826-27 (1945). He may also state his opinion on the difference between the two values. See Christy v. Heil, 255 Iowa 602, 612, 123 N.W.2d 408, 414 (1963) (analogous situation of difference in value of property with or without a good well). Furthermore, in this case the individual who developed the property testified that unimproved lot 8, which adjoined the property purchased by the Holcombs, consisted of 2.2 acres and sold in 1978 for $6000-the amount Holcombs asked in this action and the jury awarded. Holcombs originally brought suit in equity to obtain lot 8, claiming it was a missing parcel in their purchase. Their deed did not cover lot 8, and they recast their petition and asked for $6000 damages. The gist of C. B. Property's argument on damages is that the Holcombs saw the property they bought, from visual inspection they knew its actual size, and they bid and bought that exact tract for $54,000-they were willing to pay that amount for what they saw. C. B. Property urges that the Holcombs got what they paid for and they therefore sustained no damage. Involved in an issue of this kind are two kinds of cases: those in which a purchaser intends to purchase a tract, not a quantity in acres or by dimensions, Hardin v. Hill, 149 Mont. 68, 74, 423 P.2d 309, 312 (1967); Briley v. Hay, 13 S.W.2d 997, 999 (Tex.Civ. App.1929), as distinguished from those in which the purchaser intends to purchase a number of acres or by dimensions. In the latter situation the purchaser is damaged if the seller fraudulently misrepresents the acreage or dimensions. Miller v. Conn, 193 Iowa 458, 461, 186 N.W. 902, 903 (1922); Boddy v. Henry, 126 Iowa 31, 44, 101 N.W. 447, 452 (1904). The jury could reasonably find on the evidence that this case was of the latter sort. C. B. Property makes a cogent jury argument that the case was of the former kind, but the decision was ultimately for the jury. We do not find merit in this claim of error. III. Exemplary damages. Holcombs cross appeal from the trial court's failure to submit the issue of exemplary damages to the jury. The court sustained C. B. Property's motion to withdraw this issue from the jury. We have two questions here. Are exemplary damages recoverable for fraud? Is the evidence sufficient here to permit an award of exemplary damages? A. Fraud is one of the recognized grounds for exemplary damages, and most general statements of the bases for such damages include fraud. Grefe v. Ross, 231 N.W.2d 863, 868 (Iowa 1975); Northrup v. Miles Homes, Inc., 204 N.W.2d 850, 859 (Iowa 1973); Charles v. Epperson &amp; Co., 258 Iowa 409, 431, 137 N.W.2d 605, 618 (1965); Smith v. Peterson, 282 N.W.2d 761, 767 (Iowa App.1979); Bankers Life &amp; Casualty *214 Co. v. Kirtley, 307 F.2d 418, 422-23 (8th Cir. 1962); Amos v. Prom, Inc., 115 F. Supp. 127, 133-34 (N.D.Iowa 1953); see also Stockdale v. Agrico Chemical Co., 340 F. Supp. 244, 261-62 (N.D.Iowa 1972). But the specifics of the cases demonstrate that not every fraud case permits an exemplary damage award; circumstances of aggravation are present in the fraud cases allowing such damages. An illustrative case is Syester v. Banta, 257 Iowa 613, 133 N.W.2d 666 (1965). There the plaintiff was a widow in her late sixties working as a coffee girl in a cafeteria. Through the fraud of the defendants' representatives, the plaintiff was induced to purchase eighteen dance courses amounting to 4057 hours and costing $29,174.30. The defendants' rules for its representatives instructed them to try to keep customers from consulting a banker, lawyer, wife, or friend or from thinking the matter over, to tell them they were graded excellent in rhythm, natural ability, and animation, and to appeal to emotions. The rules contained other strategy. The defendants' fraud, greed, and avariciousness persuaded this court that exemplary damages could be allowed. A similar illustration is Charles v. Epperson &amp; Co., 258 Iowa 409, 137 N.W.2d 605 (1965). There Epperson stood in a fiduciary relationship involving the trust and confidence of his fellow directors of a closely held corporation. He conducted the inner operations of the company, took advantage of his colleagues' trust, and misappropriated assets to his own benefit. The case involved fraudulent conduct plus a fiduciary relationship. Thus the statements on exemplary damages in the fraud field are to the effect that "ordinary" or "simple" fraud alone is not enough for exemplary damages; additional circumstances of aggravation are essential. As stated in 37 Am.Jur.2d Fraud and Deceit § 347, at 466 (1968): As similarly stated in 37 C.J.S. Fraud § 144, at 489 (1943): The statement we have quoted from American Jurisprudence is also found in Annot., 165 A.L.R. 614, 615 (1946). Also, citing three jurisdictions, the annotator states on page 619: The American Law Institute has adopted a section basing exemplary damages in tort on "outrageous" conduct. Restatement (Second) of Torts § 908 (1979). Paragraph 2 of the section states: Punitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless *215 indifference to the rights of others. In assessing punitive damages, the trier of fact can properly consider the character of the defendant's act, the nature and extent of the harm to the plaintiff that the defendant caused or intended to cause and the wealth of the defendant. Regarding outrageousness, the Institute states in Comment b: Regarding exemplary damages generally, the Institute states in Comment f: B. Since we cannot at this time conceive of all the fraudulent practices which may be committed hereafter, we cannot now formulate a detailed rule on exemplary damages to cover all fraud cases. We confine ourselves to this case. The Holcombs made a case for the jury on fraud. They are entitled to their compensatory damages. But their case at best is of the "ordinary" or "simple" fraud variety, unaggravated by circumstances warranting punitive damages. The trial court properly withdrew Holcomb's punitive damage claim from jury consideration. We find no error in the appeal or cross appeal. AFFIRMED. All Justices concur except LARSON, J., who takes no part.