Opinion ID: 1813384
Heading Depth: 1
Heading Rank: 8

Heading: Stamper's judgment against Chapman.

Text: Chapman asserts that the court erred in awarding Stamper a judgment against Chapman for $2,000.00 in addition to the $6,000.00 which Chapman had paid into court. Stamper asserts that the court erred in limiting Stamper's additional judgment against Chapman to $2,000.00 because Rivers is insolvent and the judgment awarded to Stamper against Rivers for $2,444.27 is worthless. Stamper says the total amount due it for its work under its contract with Rivers is $8,426.00, which the court found to be the amount due; that Stamper is awarded only $3,981.73 out of the fund in court ($6,000.00 less the $2,018.27 awarded to Hughes); and that Stamper's additional judgment against Chapman for only $2,000.00 ought to be $4,444.27 ($8,426.00 less $3,981.73), so as to make Stamper whole. We must first decide whether Stamper is entitled to recover any judgment against Chapman in addition to the $6,000.00 paid into court. Title 7, § 109, Code 1940, recites: Suppression of a material fact, which the party is under an obligation to communicate, constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties, or from the particular circumstances of the case. § 109 is declaratory of the common law. In dealings between persons standing in confidential relations, the law imposes an obligation on one party to safeguard the interests of the other party with the same fidelity with which he safeguards his own. Withholding facts, material to be known, is a breach of such legal duty, regardless of intent to deceive, and is a legal fraud. When the circumstances of the particular case impose a like duty, the same rule obtains. So reads the statute. In the absence of confidential relations, or special circumstances imposing a like duty, the rule seems settled that nondisclosure of facts to be fraudulent must be for purposes of deceit. Metropolitan Life Ins. Co. v. James, 238 Ala. 337, 341 [1, 2] [3], 191 So. 352. No confidential relation existed between Chapman and Stamper. Any legal obligation on Chapman, to disclose to Stamper the fact that Chapman had been served with a garnishment founded on Watson's judgment against Rivers, must arise from the particular circumstances of this case. The question for decision is whether the evidence supports a finding that such legal duty did arise from such circumstances. If Rivers and Stamper had entered into their contract without consultation with Chapman, and Chapman had not had any communication or contact with Stamper, directly or indirectly, Chapman certainly would not owe any duty to seek Stamper out and tell him of the existence of Watson's judgment against Rivers or of the garnishment. The court could find from the evidence, however, that Chapman did have communication and contact with Stamper. William Chapman, one of the partners, testified that Possibly he had actually received the first garnishment before Stamper ever came on the job. The record shows the sheriff's return which recites that Watson's garnishment writ was served on the other partner, George Chapman, on February 18, 1966. William Chapman testified that: Any garnishment whatsoever sets up a signal in my brain. Horace Thacker, business agent of Iron Workers Local Union No. 92, testified that he had a conversation on the telephone with George Chapman who told Thacker of the attempts to erect the tower; that George Chapman . . . . was seeking help in getting it erected . . . .; that Thacker visited the tower site; that Thacker did inform Cecil Stamper, president of Stamper, the corporation, that . . . . there was a tower to be erected in Birmingham that we had been having trouble with, and if he would go and check with Mr. Chapman I felt sure he might get the job. George Chapman testified that the first time he saw Cecil Stamper was around the middle of March, that he met Cecil Stamper on Red Mountain, and further: Q What conversation was had there by you, by Mr. Stamper or by Mr. Willis in your presence, as you recall it? A I was talking to Mr. Stamper, I believe, before Mr. Willis came down we were kind of at the bottom of the hill. I believe I was talking to Mr. Stamper. We were discussing the situation. Mr. Stamper said he could put the tower up. I don't believe at that time I discussed any price or anything with Mr. Stamper. I think that he, in turn, had talked to Mr. Willis, I believe the same day, the best I remember. I was on the way down the hill, and Mr. Stamperwe stopped right after going out of the site, out of sight of their vision, and I believe he said what it would cost. It don't remember the figure. I believe it was around seven or eight thousand dollars. I explained that I had a contract with Mr. Willis and unless I could get out of it I would not be able to do it. Q Did you tell him you were dissatisfied with the way Mr. Willis was doing the job? A Yes. I think I told him that when he was up there. . . . . . . . . . . Q. Actually, Mr. Chapman, you had been served with a writ of garnishment directing you to pay any money you might have up to a certain amount due by you to Mr. Willis or to the Rivers Construction into court before you ever saw Mr. Stamper, had you not? A I believe the first garnishment was in. I don't recall about the second one. It might have been, from your dates. Q Before you had met Mr. Stamper up there at the site of the tower? A I am not positive of that. Cecil Stamper testified that in late February or early March, he was informed of the Chapman job by Thacker, who asked Stamper to come down and look at the tower and see what he could do; that Stamper did come to Birmingham and had met Willis and Chapman on top of the mountain and had then come down the mountain some distance and there had a conversation with George Chapman. Stamper testified: Q Tell us what conversation you had with him at that point? A At the time before we came down the hill I think I made the statement I really was not interested in doing the work. Like I said, he asked about approximately what length of time it would take to do the job. Then there was, I think, one time that Willis mentioned approximately what would be the cost. I hold him I didn't know, I would have to figure that out. So, when we got down to the bottom of the hill Mr. Chapman asked me the same thing, roughly, what it would take to finish erecting the tower. I told him in the neighborhood of, just a rough estimate, from seven to nine thousand dollars, I would have to figure the man hours on it. `Well,' he says, I have got myself in trouble.' He says, `I have a contract with Willis. I can't run him off the job. He doesn't have a completion date on it, but,' he says, `If he doesn't do something in the next two or three days maybe there is some way you and him can get together and maybe we can work something out on it.' I told him, `Fine.' That was about the extent of the conversation then. A few days later, Stamper entered into the contract with Rivers to construct the tower. We are not advised of any decision by any court involving the circumstances of the instant case. In a treatise by an eminent writer we find the following: In general mere silence, a mere failure to apprise the party with whom one is dealing of facts important for him to know for the protection of his own interest in the particular transaction, is no fraud. Caveat emptor is the motto of commercial law, and in other dealings, as well as in sales, every person is expected to look after his own interest, and is not at liberty to rely upon the other party to protect him against the consequences of his own blunders or heedlessness. Therefore, where the sources of information are equally open to both parties to any dealings, and the one obtains an advantage of the other without resort to any trick or artifice of concealment calculated to throw the other off his guard, or to any false presentation of facts, the advantage he gains is deemed legitimate, and the losing party must bear such loss as has resulted from his own want of vigilance or prudence. Nor is this the rule as regards merely the quality or value of that which is the subject of negotiation, but it extends to all those facts and circumstances which would be likely to influence the minds of the contracting party if they were known to him when the contract was entered into. Therefore, if one who is insolvent buys goods of another without disclosing his circumstances to his vendor, who is ignorant of them, but makes no inquiries, and is not deceived by misrepresentation or artifice, there is in law no fraud, although the vendor when he sold, fully believed the vendee to be responsible and entitled to credit. But there is a strong dissent from this doctrine which is ably expressed by the Supreme Court of Alabama as follows: `One who comes to buy goods on credit impliedly represents that he is or will be able to pay for them, and that he intends to pay for them, and he impliedly promises to pay for them; and he knows that the seller parts with them on the faith of these implied representations and this implied promise. If in fact he intends not to pay for them, or if he has no reasonable expectation of paying for them, and is insolvent or in failing circumstances, so that payment cannot be coerced, he deceives the seller and practices a fraud upon him in the very act of purchasing his property. The purchase itself being a representation that the buyer intends to pay the price, to so represent or profess by the act of purchasing, when in truth he intends to do the contrary, is as clear a cases of misrepresentation and of fraud as could be made. Obviously there need be no misrepresentation by word of mouth, and no affirmative concealment, so to speak, of the purchaser's insolvent condition, or of his intention not to pay, or of his want of reasonable expectation of being able to pay. If these facts exist, and are not disclosed, the seller, proceeding, and known by the purchaser to be proceeding, on the assumption of their nonexistence, or, in other words, on the assumption that the purchaser is solvent and intends and reasonably expects to pay, is deceived and defrauded.. . . .' Cooley on Torts, Vol. 2, at pages 556, 557, and 558. Cooley cites Maxwell v. Brown Shoe Co., 114 Ala. 304, 308, 309, 21 So. 1009, and other Alabama cases. In the instant case, we think the evidence supports the court's finding that Chapman induced Stamper to enter into the contract with Rivers; that, prior to the making of such contract and at the time George Chapman talked with Cecil Stamper, Chapman had knowledge of the Watson judgment against Rivers and the ensuing garnishment writ; that the fact of service of that writ was a fact material to be known by Stamper; that Chapman had superior knowledge of the fact that the garnishment had been served on Chapman; and that Chapman owed a duty to Stamper to inform Stamper of the existence of the judgment and garnishment. We do not think it necessary to find that Chapman was guilty of actual intent to defraud. Chapman, was however, in the position of having superior knowledge. Chapman did tell Stamper that Chapman had a contract with Rivers, and Chapman did suggest that `. . . . maybe there is some way you (Stamper) and him (Rivers) can get together and maybe we can work something out on it.' Having affirmed the existence of the contract with Rivers; and, having knowledge that Rivers' right to collect on the contract and Stamper's derivative right as subcontractor to collect on the contract, might be impaired or diminished by the Watson judgment, Chapman was under obligation to communicate to Stamper the fact of the existence of the Watson judgment because Chapman induced Stamper to rely on Chapman's contract with Rivers and knew that Stamper was relying on the contract. The result of our holding is that Stamper is entitled to the entire $6,000.00 fund, less costs in the trial court. The taxation of the costs in the trial court against the fund is not assigned for error and will stand. The court found that Stamper was due $8,426.00. This finding is not contested. When Stamper receives the $6,000.00, Stamper will still be entitled to an additional $2,426.00 under the following rule: . . . . For there is another well-settled rule pertaining to the measure of damages resulting from fraudulent conduct or representations, to the effect that such damages will be fixed by an amount which would place the defrauded person in the position he would occupy if the representations had been true. . . . . Fogleman v. National Surety Co., 222 Ala. 265, 268, 132 So. 317, 320. We hold that Stamper's judgment against Chapman should be for $2,426.00, instead of $2,000.00. The judgment in favor of Stamper against Rivers should be $2,426.00 and should remain in full force and effect for that amount. Stamper is entitled, however, to only one recovery of the $2,426.00. Rivers is primarily liable for that amount. Any amount collected from Rivers ought to be credited to Chapman so as to reduce Stamper's $2,426.00 judgment against Chapman by the amount, if any, that is collected from Rivers.