Opinion ID: 2448172
Heading Depth: 1
Heading Rank: 1

Heading: False Representation

Text: We have no trouble in sustaining the circuit judge's finding of misrepresentation. Simply stated, Fidelity agreed to loan $250,000 to Staggers when its net worth totalled less than $50,000. Had there been any hint that Fidelity would act as the broker for the loan or would ask for institutions to participate in the loan, our conclusion would be different. But there was no such intimation in the loan commitment letter signed by Trimble on behalf of Fidelity on September 23. There, he stated clearly and unequivocally under a heading entitled Commitment: Fidelity Mortgage Company of Texas hereby agrees to loan up to $250,000 (new loan) at a rate of 12% per annum. mis naeuty simpiy did not nave tne capability to do. We have noted recently that many courts now construe false representation to include (1) Concealment of material information and (2) Non-disclosure of certain pertinent information. Baskin v. Collins, 305 Ark. 137, 142, 806 S.W.2d 3, 5 (1991). If Fidelity did not have sufficient assets of its own as of September 23 to make the loan, Trimble should have arranged for independent financing from other institutions before writing the loan commitment letter. But he did not do this. Rather, he obligated Fidelity to make the loan while concealing insufficient net worth and knowing full well that Fidelity did not have the capability to make good on its promise. Fidelity argues that it was not obligated to make payments because it never received the $2,500 loan fee from Staggers. In the numerous conversations and letters between Fidelity and Cook during September and October 1988, there was no mention that the fee had not been paid. Yet all during this period Trimble made verbal and written assurances on behalf of Fidelity that Cook would be paid for his work. The trial judge correctly found that this conduct constituted a false representation. b. Scienter