Court Opinion

ID: 9549312
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:16:06.160148+00
Date Added: 2024-06-11T15:20:07.764300
License: Public Domain

WILKINS, Justice
(dissenting):
I respectfully dissent.
While I am aware of the great reluctance of the Court to overturn a jury verdict,1 still, I am of the opinion that there was no jury question presented here, and the District Court erred in denying plaintiff’s motion for a directed verdict and its motion for judgment notwithstanding the verdict. There is, here, insufficient evidence of fraud on the part of plaintiff to present that issue to the jury. In addition, defendants were not, as a matter of law, entitled to rely on the representations made by the Bank’s agents as construed by them.
The majority opinion emphasizes defendants’ testimony that they would never have signed the notes had they thought the bank would collect upon them. The majority opinion states that the loan was made upon the strength of the “co-op’s” assets, ignoring the fact that the evidence shows without contradiction the Bank’s refusal to make the loan secured only by the “co-op’s” assets without defendants’ personal guarantee by way of these notes. The majority opinion, by way of justification of its action today, points out that the defendants did not receive the funds; that their cooperative did. But it is in the nature of a guarantee of a loan that the guarantor does not receive the proceeds.2 And it has never, to *806my knowledge, until this day, been a defense to a guarantor’s liability, that when he signed the guarantee, the said guarantor did not think his debtor would default or that he did not think the assured party would seek to enforce the guarantee.
But here, defendants aver that they were assured that their guarantee was merely a guarantee that they would continue to deliver milk to the cooperative; that the notes were meant to assure the bank of the farmers’ continued participation in the cooperative. To be sure, Rathbone, plaintiff’s vice president, testified that he had, in a general way, stated that the notes were for the purpose of guaranteeing that the farmers would continue to deliver milk to Dairymen. Finney, defendants’ agent, testified that it was his understanding that the notes would be used to keep a farmer delivering milk to Dairymen, which would be accomplished by threatening collection of the promissory note should the farmer sell his milk elsewhere.
How, then, does this representation constitute fraud? If defendants did not agree to guarantee the loan made to Dairymen, but instead agreed to sign the notes as guarantees that they would continue to deliver their milk through Dairymen, then defendants are in default on their contracts, and the notes are due and payable, because defendants are no longer delivering milk to Dairymen. And they agreed to discontinue delivering the milk when they voted at their directors’ meeting to declare Dairymen bankrupt. Plaintiff’s representatives attempted to attend this meeting to present an alternate solution for Dairymen’s financial difficulties, but they were excluded by defendants.
It also must be noted that if by this representation, the Bank promised not to collect the notes as long as defendants were delivering milk to Dairymen, then that promise has been fulfilled by the Bank. For the Bank did not pursue the collection of these notes until after defendants ceased delivering milk. The evidence also shows that the Bank duly exhausted all collateral securing its loan to Dairymen before it brought action against defendants, as guarantors, for the deficiency.
Defendants do not contend that they did not know that the documents they signed were promissory notes, nor do they contend that the signatures thereon are forgeries or were .obtained by trick or device. Their contention is that though they knew they were signing promissory notes, and knew the legal effect of a note, they were led to believe that these notes had no legal efficacy. In Ackerman v. Bramwell Inv. Co., 80 Utah 52, 12 P.2d 623 (1932), this Court held:
The general rule is that misrepresentations of law or of the legal effect of contracts and writings does not constitute remedial fraud .
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It is apparent that what the plaintiff chiefly relied on was the alleged and found representation as to the character and legal effect of the writing given her by the company simultaneously with the purchase and transfer of the note; but, as shown by the authorities, and for the reasons stated by them, the plaintiff in law was not permitted to rely on such representations or opinions, and hence may not be permitted to say she was misled by them. [12 P.2d at 626, 627.]
But instead of relying on Ackerman, the majority opinion cites the case of Johnson v. Allen, 108 Utah 148, 158 P.2d 134 (1945) for a proposition foreign to the holding of this Court in that case. There, defendant, in an effort to avoid the effect of the contract which he had signed, sought to defend on the ground that the plaintiff had misrepresented the terms of the written contract. He did not allege, or prove, that plaintiff had used trick or device to prevent his reading of the contract. In affirming the District Court’s ruling that there was insufficient evidence of fraud to present the question to the jury, this Court said:
It is on the grounds of unjustifiable reliance that courts deny relief to those who, relying on representations as to contents, sign written contracts without reading them. As a general proposition courts have adhered to the theory that *807one sui juris in possession of all his faculties and dealing at arms length is not permitted by the law to rely exclusively upon the representations of the other contracting party as to the contents of a written contract. Courts look for something said or done which would be reasonably calculated to disarm a reasonably prudent person so that he would sign the contract without reading it and in the absence of some act or artifice in inducing the other party to refrain from reading the contract relief from the fraud is often denied. [158 P.2d at 137]
The facts that defendants do not deny that they knew they were signing notes, and also do not deny that plaintiff did nothing to prevent them from reading the note they were signing, are central to this case. But the majority opinion, I submit, ignores these facts, and applies a rule found in a case which deals solely with the issue of fraud in inducing the signing of a contract by trick or device. This Court, in Johnson, also said:
Still when parties undertake to reduce their oral negotiations to writing both must understand that the writing is to express the contract. If one in defense to an action on the contract were to be permitted to say that the other falsely represented that something had been included or excluded therefrom, the writing would be of little value. Every case could present a jury question as to whether the writing correctly expressed the agreement. In Kelley v. Salt Lake Transportation Co., supra [100 Utah 436, 116 P.2d 383, 385], we quoted with approval from Pennsylvania R. Co. v. Shay, 82 Pa. 198, in which it was stated:
“It has been more than once held that it is error to submit a question of fraud to the jury upon slight parol evidence to overturn a written instrument. The evidence of fraud must be clear, precise and indubitable; otherwise it should be withdrawn from the jury.” [158 P.2d at 137-138.]
It is not sound law to hold these guarantor notes void on the ground that the guarantors believed they were not “money notes,” particularly when the guarantors were, as the majority opinion observes, not unsophisticated.
I have dealt, in this dissent, with the allegation of fraud numbered 2 in the majority opinion because I believe that issue to be critical to this case. However, it is also my opinion that the other representations, numbered 1 and 3 in the majority opinion, do not constitute actionable fraud, as they imply misrepresentations by plaintiff of the value and financial condition of defendants’ own corporation (Dairymen) to those defendants. Each defendant was a director of Dairymen at the times pertinent here, and as such, had equal, if not better means than an outsider to the organization would have, of knowing the value of the assets and the financial condition of Dairymen.3 Where the allegedly defrauded party has an equal means of ascertaining the facts, that party will not be heard to say that he relied on misrepresentations of those facts.4
I would reverse this case and remand it to the District Court for entry of judgment in favor of plaintiff in each case in the amount due and unpaid of the respective notes.

. The Court will, however, overturn a jury verdict where that verdict is the product of a biased and prejudiced jury. See Kilpack v. Wignall, Utah, 604 P.2d 462 (1979).

. See generally, General Appliance Corp. v. Haw, Inc., 30 Utah 2d 238, 516 P.2d 346 (1973); Packaging Corp. of America v. Morris, Utah, 561 P.2d 680 (1977); Cessna Finance Corp. v. Meyer, Utah, 575 P.2d 1048 (1978).

. Gay v. Mercantile Inst., 37 Utah 280, 107 P. 237 (1910).

. See 37 Am.Jur., Fraud and Deceit, § 237, and the cases cited therein.