Court Opinion

ID: 9448796
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:45:03.382522+00
Date Added: 2024-06-11T17:31:33.353780
License: Public Domain

VOGEL, Circuit Judge
(concurring in part and dissenting in part).
I agree with all of the court’s opinion herein with the exception of that part which holds that the “ * * * exemplary damage verdict is shocking and that it constitutes a miscarriage of justice.” This was an action for fraud. Large amounts were involved. Had Bankers been able to consummate its scheme, it would have acquired 492,500 shares of Automatic worth no less than $1,267,500 at a cost to Bankers of only *427$250,000. [198 F.Supp. 30, 31, 35] Through Bankers’ attempt to bring its fraudulent scheme to full fruition, Automatic was actually damaged to the extent of the difference in value between the 25,000 shares of Bellanca stock and the note and mortgage valued at approximately $65,000 but which eventually brought only $50,000 at a court-approved sale. There is almost the certainty of a mathematical basis for the compensatory damage verdict found by the jury and the court concedes that substantial evidence supports it. Appellants do not even claim here that it is excessive, although it amounts to more than $400,000. Nevertheless, the court finds that an exemplary damage verdict in the amount of $650,000 is shocking and a miscarriage of justice. Twelve jurors and an able and experienced trial judge who listened to the testimony and saw and heard the witnesses thought otherwise. I join them in their thinking.
The purpose of exemplary damages is to punish for misdoing and to deter the defendant from repetition and others from doing likewise. To constitute a punishment, the amount should be measured by the misdeed and tempered by the means of the defendant.1 If the sum is not adjusted to the wrongdoer’s ability to pay, it serves little use as either punishment or deterrent. Here the court finds that there was substantial evidence of a fraudulent scheme to wrongfully obtain over a million dollars and which scheme actually resulted in a loss to Automatic of over $400,000.2 The court also finds that it was not error to submit the issue of exemplary damages to the jury; yet because the jury returned a verdict therein in the amount of $650,-000 the court orders it remitted or grants a new trial. In other words, what the court does today is to tell Bankers that even if it is found on substantial evidence that it was guilty of fraud in raiding the financial pouch of Automatic to the extent of over $400,000, that all it has to do is pay it back and all- will be forgiven. This is not punishment and it is not a deterrent. In fact, it is an invitation for Bankers or any other institution or person so minded to continue to do likewise, feeling secure in the conviction that they will probably escape punishment and there will be no deterring example. In other words, the hand that reaches into the till to pilfer must, if caught, merely drop that which it wrongfully attempted to withdraw. If the wrongdoer succeeds, he will unjustly gain. If he fails, he must only repay his ill-gotten wealth. Such a result would seem to justify the gamble, even encourage it. Here the amount of exemplary damages fixed by the jury bears a fair relationship to the compensatory damages. Its payment would mean a substantial punishment of Bankers for its fraud and it would stand as a strong deterrent to others who are like minded. 1 think the jurors indicated an uncommon amount of good sense and that they exercised the discretion which the law vests in them in an entirely proper and upright manner. I agree fully with the trial judge. This case should be affirmed in its entirety.

. The court says, “The record with respect to Bankers’ financial status is not such as to justify the extremely large award of exemplary damages.” The record indicates that large sums were dealt in by Bankers and the various corporations, subsidiary and otherwise, involved in the scheme. There is every inference that Bankers is of such substantial financial stature as to force the conclusion that only a large amount would satisfy the-requirements of punishment and deterrence.

. Not long thereafter Automatic was forced into bankruptcy. We have no means of knowing whether the action of Bankers in this instance contributed toward that bankruptcy or no.