Court Opinion

ID: 9571307
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:30:38.637163+00
Date Added: 2024-06-11T12:26:48.313814
License: Public Domain

CALLISTER, Chief Justice
(concurring in the result) :
The trial court found that Michael Do-man on February 4, 1969, submitted a false financial statement for the purpose of inducing plaintiff to make a loan; that defendant knew that his financial statement materially and substantially misrepresented his financial condition and was made with the intent to deceive plaintiff, to wit: he did not list the following debts: Zions First National Bank, $1376.06; Thomas Dee Memorial Hospital, $604.12; Bloch’s Clothing Store, $193.44; and miscellaneous accounts; and he did not disclose that a substantial amount of the security he offered to plaintiff was already pledged to other creditors.
The foregoing findings were supported by substantial competent evidence in the record.
*409The trial court further found that the plaintiff, through its agent and employee, Gene Fessler, did not rely upon the fraudulent and false financial statement, by reason of a budget analysis, which was unrealistic in that a loan such as that granted plaintiff would not have been requested by defendant unless his financial problems were severe; that the loan was made by Mr. Fessler in order to increase his loan volume; and that the financial statement was made merely as a personal defense of his actions to the plaintiff and as an answer in case of defendant’s future bankruptcy; and that plaintiff knew that numerous small and large debts would be existing.
The facts recited to support the conclusion that plaintiff did not rely on defendant’s false financial statement are not revealed by the evidence adduced at the trial. The finding that the loan was made to increase Mr. Fessler’s loan volume and the recited motives for the financial, statement were not supported by a scintilla cf evidence in the record and appear to be a gratuity for the purpose of bolstering the conclusion that there was no reliance. The court further found that the budget analysis was unrealistic by reason that plaintiff would not have requested the loan unless his financial problems were severe. This finding does not comport with the facts as testified by defendant Michael Do-man.
Michael testified that he owed an indebt edness to American Finance in the sum of $478.25; that he had remained current in his payments; that American Finance, by bookkeeping errors, had notified him that he was in default; that when he had conferred with the manager about the errors the manager was rude; that Michael went to plaintiff and requested an additional loan, in brder to discharge his obligation with American because he wished to terminate his business relationships with that organization; that through consolidating his loan with plaintiff he actually reduced his monthly payments, i. e., previously, he had owed plaintiff monthly payments of $56.36; the consolidated loan increased the payments to $70.66; but his payments to American Finance had been $21 a month, thus his monthly payment actually decreased by $7.
Plaintiff, however, urges that it is not only entitled to have the finding of “no reliance” set aside as a matter of law, but that it is entitled to have judgment entered against Michael Doman. To prevail, plaintiff must sustain its burden of proving the elements of fraud by clear and convincing evidence. The elimination of the factors cited by the trial court to support the conclusion that plaintiff did not rely on the false financial statement does not, however, mean that plaintiff has sustained its affirmative burden of proof.
*410The organization for which Mr. Fessler had previously worked had been recently acquired by plaintiff at the time of the instant transaction. Plaintiff had a policy that a debtor must fill out a financial statement each time a renewal loan or an additional advancement was granted. Over the approximately five-year period in which Mr. Fessler had made loans to defendant, he had never previously required a financial statement. Mr. Fessler was well acquainted with defendant and noted on the security analysis data sheet of plaintiff that Michael Doman had been an excellent account and that he had been doing business for over five years. Although Mr. Fessler testified that he had relied on the financial statement in increasing defendant’s loan, there is considerable evidence in the record to support the inference that the loan was, in fact, granted by reason of Mr. Fessler’s long-standing business relationship with defendant.1 The financial statement emerges as more a formality than as a means of misleading plaintiff’s agent. There is no basis to hold that plaintiff has proven by clear and convincing evidence that plaintiff relied upon the financial statement in granting the consolidation loan.

. See Family Finance Corp. v. Hodges, 63 Misc.2d 74, 311 N.Y.S.2d 222, 225 (1970), wherein the court concluded that a renewal loan was made on the basis of the borrower’s past record of payments and not because of the routine financial statements she was required to fill out with each renewal. Also see Family Finance Corp. v. Secchio, 65 Misc.2d 344, 316 N.Y.S.2d 794, 797 (1970); Friendly Finance Service Mid-City Inc. v. Windham, La.App., 240 So.2d 28 (1970) ; Local 155 UAW Credit Union v. Zalewski, 25 Mich.App. 230, 181 N.W.2d 288 (1970).