Opinion ID: 380837
Heading Depth: 1
Heading Rank: 3

Heading: Conspiracy and Fraud

Text: 15 First, J-R Grain argues that the district court erred in failing to find that Westin, Leech, FAC and Feaster Foods Co. engaged in a conspiracy to defraud J-R Grain by misrepresenting the financial condition of FAC and by using the misleadingly similar name Feaster Foods Agricultural Co. J-R Grain argues that Westin, Leech and Feaster Foods Co. conspired to use FAC as a corporate shield for their speculation in the then-lucrative fertilizer market. We disagree. 16 In this diversity case the district court applied Nebraska law, which holds that 17 (a) civil conspiracy is a combination of two or more persons to accomplish by concerted action an unlawful or oppressive object, or a lawful object by unlawful or oppressive means. . . . The principal element of conspiracy is an agreement or understanding between two or more persons to inflict a wrong against or injury upon another. It involves some mutual mental action coupled with an intent to commit the act which results in injury. 18 Stillinger & Napier v. Central States Grain Co., 164 Neb. 458, 82 N.W.2d 637, 645 (1957), citing Rettinger v. Pierpont, 145 Neb. 161, 15 N.W.2d 393, 411 (1944). The district court found that there was simply insufficient circumstantial evidence from which to infer Westin, Leech and Feaster Foods Co. entered into an agreement to defraud J-R Grain. We do not find this conclusion to be clearly erroneous. 19 Second, we note that the district court also found no evidence of fraud. 20 The essential elements required to sustain an action for fraud are, generally speaking, that a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; that it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and that he did in fact rely on it and was induced thereby to act to his injury or damage. 21 Bellairs v. Dudden, 194 Neb. 5, 230 N.W.2d 92, 97 (1975), citing Transportation Equipment Rentals, Inc. v. Mauk, 184 Neb. 309, 167 N.W.2d 183, 186 (1969). 10 22 The district court concluded that there was no evidence Westin made any representations to J-R Grain before the execution of the contract. Apparently Leech was the sole contract between FAC and J-R Grain. The district court further found no evidence to establish an agency relationship between Leech and Westin. With regard to Leech's representations 11 to Maher, the district court found that Leech's statements were substantially correct. 23 In addition, the district court, noting that Maher and Dorman were experienced and knowledgeable businessmen, determined that their reliance upon Leech's representations was not justified, especially in view of Leech's failure to produce a FAC financial statement as requested. J-R Grain apparently relied upon the mistaken impression of Mr. Shipporeit, the Cargill representative, and failed to do any independent checking of FAC's corporate structure or financial condition. The general rule is that where ordinary prudence would have prevented the deception, an action for the fraud perpetrated by such deception will not lie. Growney v. C M H Real Estate Co., 195 Neb. 399, 238 N.W.2d 240, 242 (1976), citing Swanson Petroleum Corp. v. Cumberland, 184 Neb. 323, 167 N.W.2d 391, 396 (1969). 24 Finally, the district court concluded that Westin and Feaster Foods Co. did not permit FAC to use the corporate name Feaster Foods Agricultural Co. with an intent to deceive the public. 25 We do not find these findings to be clearly erroneous.