Opinion ID: 1673320
Heading Depth: 1
Heading Rank: 6

Heading: Common Scheme Witnesses

Text: Ayres introduced testimony of ten witnesses to whom McWhorter had sold ten annuitiestwo from American Pioneer, and eight from another insurance company. American Pioneer argues that the trial court erred in allowing these witnesses to testify as to the amounts of their losses under the holding of Cartwright v. Braly, 218 Ala. 49, 117 So. 477 (1928). Ayres argues that Cartwright is distinguishable because in that case the testimony as to the amounts lost was not necessary to proof of fraudulent intent, while in this case such testimony was necessary to establish the fraudulent nature of the transaction. In Cartwright the defendant defrauded plaintiff and others by representing that defendant's bank was solvent and its assets were good, thereby inducing purchases of the bank's stock. The bank failed, causing plaintiff and his witnesses to lose money. Ayres points out that because the fact of the failure of the bank was sufficient proof of the fraudulent scheme, this Court held that admission of evidence of amounts lost was prejudicial error. Ayres argues that without the testimony of his witnesses that they in fact lost money due to McWhorter's representations and the sale of annuities to them, there would be no proof that the representations (as to recovery of principal, accumulation of interest, etc.) were false, and thus the testimony would not have tended to prove a common scheme. We think this distinction is sound. The complicated nature of these annuities made it proper for Ayres to present to the jury the common elements of these transactions. The two witnesses who had purchased American Pioneer annuities were retired, elderly persons who invested over $20,000 each into the same type of flexible premium annuities, from which they lost fifty percent of their investment. These transactions took place within two months after Ayres bought his annuity. Lois Johnson testified that she took exception to these and other such sales, to the extent that she requested Equifax investigations into the financial status of some of the applicants. The specifics of the losses were thus an integral part of the proof of the fraudulent scheme and it was not error for the court to allow this testimony. The court instructed the jury that the testimony from the eight other witnesses was relevant to Ayres's action against Lincoln National, but not to the claims against American Pioneer. Ayres had some thirty other witnesses available to testify, but the court cut off this line of testimony.