Court Opinion

ID: 9704290
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:29:54.236601+00
Date Added: 2024-06-11T18:21:59.769549
License: Public Domain

SIMONETT, Justice
(concurring specially):
The majority opinion, as I read it, holds that (1) comparative negligence does not apply to an intentional tort; (2) plaintiffs failed to prove intentional fraud as a matter of law; and (3) while negligent misrepresentation was proven, comparative negligence applies, and the jury’s verdict putting 62.5% negligence on plaintiff precludes plaintiffs’ recovery. I join in the result reached by the majority and in its essential *177holdings, but because the subject is important, with consequences yet to be seen, and because my approach differs in some respects, I take this occasion to write. The majority opinion, prudently, leaves to another day a further formulation of the concept of intentional misrepresentation. Yet, it seems to me, that formulation is very much implicated here and it might be useful to say something more, if not to provide a solution, at least to point out where the problems lie.
Plaintiffs’ complaint alleged false misrepresentations, and the case was submitted to the jury on the definition of fraudulent misrepresentation given in Davis v. Re-Trac Manufacturing Corp., 276 Minn. 116, 117, 149 N.W.2d 37, 38 (1967), wherein “fraudulent intent” has a double meaning, i.e., either the representer “must know it [the representation] to be false, or in the alternative, must assert it as of his own knowledge without knowing whether it is true or false.” The second definition permits a finding of fraudulent misrepresentation where there is no intent to deceive. Thus we have said the term fraudulent intent “is used in a highly technical sense, quite different from its ordinary, literal meaning.” Hollerman v. F.H. Peavey & Co., 269 Minn. 221, 230, 130 N.W.2d 534, 541 (1964) (footnote omitted).
If we now accept, as we do, the proposition that comparative negligence does not apply to intentional torts, then the question arises: When is a fraudulent misrepresentation deemed to be intentional for the purpose of determining whether comparative negligence or fault applies? If there is an intent to deceive, plainly we have an intentional tort to which comparative responsibility is inapplicable. But what if the defendant asserts a fact as of his own knowledge without knowing whether it is true or false? I read the majority opinion to say this would not be an intentional tort, and with this I agree.
It seems to me that under the broad category of fraud we have three types of actionable misrepresentations: the first is deceit;1 the second, for want of a better name, I will call reckless misrepresentation; 2 and the third is negligent misrepresentation.3 The first two types have always been combined under the Davis v. Re-Trac formulation, but now, because of the enactment of Minn.Stat. § 604.01 and today’s holding, they must be separated at least for the purpose of determining whether comparative negligence or fault applies.4
In my view, comparative responsibility would apply to both reckless and negligent misrepresentation but not to deceit. The dividing line is the “intent to deceive” which distinguishes deceit from the other two torts and which makes deceit a true, not a fictional, intentional tort. Reckless and negligent misrepresentations are alike in that they both judge the representer’s state of mind by an objective standard of due care and, therefore, the conduct of the representer and the conduct of the person to whom the representation is made lend *178themselves to comparison.5 As the majority opinion points out, a deceiver’s conduct is different in kind from the reckless or negligent misrepresentation, more reprehensible, and it would be “bad policy” to let the deceiver ameliorate his deception by urging that his victim should share the harm which the deceiver alone chose to create. At 175, footnote 7. The same policy arguments against applying comparable responsibility do not apply to reckless and negligent misrepresentations. I suppose there will be some instances of misrepresentations made so recklessly that one might argue they should be lumped with intentional misrepresentations to which comparative fault does not apply. This argument, however, ignores that the reckless misrepresenter’s fault, no matter the degree, is still different in kind from that of the deceiver. As a practical matter, a jury can easily handle these cases, either by finding deceit or by finding a reckless misrepresentation with 100% of the fault on the representer. In either case, there is no discount for comparative fault.
In Davis v. Re-Trac, 276 Minn, at 118-19, 149 N.W.2d at 39, this court, citing Greear v. Paust, 192 Minn. 287, 256 N.W. 190 (1934), said, “But where, as here, a party to whom a representation has been made has not made an investigation adequate to disclose the falsity of the representation, the party whose misstatements have induced the act cannot escape liability by claiming that the other party ought not to have trusted him.” The actual statement in Greear, however, is, “[0]ne who has intentionally deceived another to his injury cannot make the defense that such other party ought not to have trusted him.” Id., 192 Minn. at 294, 256 N.W. at 193 (emphasis added). See also Maxfield v. Schwartz, 45 Minn. 150, 151, 47 N.W. 448, 449 (1890) (cited in Greear) (“While in the ordinary business transactions of life men are expected to exercise reasonable prudence, and not to rely upon others, with whom they deal, to care for and protect their interests, this requirement is not to be carried so far that the law shall ignore or protect positive, intentional fraud successfully practised upon the simple-minded or unwary.” (Emphasis added.)). It seems clear that before Davis v. Re-Trac this court had excused a fraud victim from any duty to investigate a representer’s statements only in cases of intentional fraud. Davis v. Re-Trac seems to extend this rule to unintentional fraud. Now that comparative responsibility has softened the harshness of the old contributory negligence rule, I would limit any instruction about a plaintiff not having a duty to investigate a representation to cases of deceit where it was originally intended only to apply.6
One other comment. Although using “intent to deceive” as the test for distin*179guishing between intentional and unintentional fraud gives us a bright line, the line may not be as bright as we would like. As the majority opinion observes, we must distinguish between an intent to deceive and proof of this intent. Proof of an intent to deceive is usually indirect and circumstantial. Proof that may directly establish a reckless (nonintentional) misrepresentation may also indirectly establish the requisite state of mind for a deceiver, depending on how the trier of fact weighs the evidence. One might have the situation — indeed, we have it in this case — where, on the same evidence, plaintiff claims the fraud was intentional while the defendant claims it was unintentional. In our case here, we are able to hold as a matter of law there was no intent to deceive, but in other cases there may be a jury issue.
In future cases where both deceit and reckless misrepresentation are submitted to the jury, I assume the trial court, in submitting the 11 elements of misrepresentation listed in Davis v. Re-Trac, may wish to separate the element of “fraudulent intent” into two questions, namely: (1) Did defendant know the representation to be false? and, if not, then (2) Did defendant assert the representation as of his own knowledge without knowing whether it was true or false? See 175, footnote 5. Only if the second question is answered yes would comparative negligence apply.

. I would define deceit as a purely intentional tort, with its ‘‘ordinary, literal meaning,” Le., where the representer knows his representation is false. In other words, I would limit intentional misrepresentations to those cases where there is an intent to deceive, where, to put it plainly, the representer is lying. I do not find the three- or four- part definition of fraudulent intent in Restatement (Second) of Torts § 526 (1977) (see slip op. at 8) helpful because, like the Davis v. Re-Trac formulation, it includes both intentional and unintentional conduct. Like Davis v. Re-Trac, the Restatement formulation was drafted before comparative responsibility and without consideration of the consequences of applying comparative responsibility to unintentional misrepresentations.

. A reckless misrepresentation occurs when the representer asserts a fact as of his own knowledge without knowing whether it is true or false.

. A negligent misrepresentation is the kind described in Bonhiver v. Graff, 311 Minn. 111, 122, 248 N.W.2d 291, 298-99 (1976). See Restatement (Second) of Torts § 552 (1977).

. Although this case does not involve comparative fault, under Minn.Stat. § 604.01, subd. la (1984), "fault” now includes "acts or omissions that are in any measure negligent or reckless."

. Negligent misrepresentation deals with the failure to exercise reasonable care or competence in supplying correct information resulting in pecuniary loss, and is confined to a business and professional consultant setting. Restatement (Second) of Torts § 552 (1977). A reckless misrepresentation deals with a false representation made recklessly or carelessly without regard for whether it is true or false. Thus the scope of liability for these two types of misrepresentation are different but the standard of care involved is the same or differs only in degree. The Florenzano claim, as the majority opinion points out, is really a claim for negligent misrepresentation. Plaintiffs, however, elected not to present a negligent misrepresentation claim, but, it seems to me, their claim was fairly enough presented under the trial court’s instructions on reckless misrepresentation and standard negligence.

. In this case, the jury was instructed, "It is no defense that the party defrauded might have learned the truth by seeking information from other available sources, but the party defrauded is not justified in relying upon its truth if its falsity is obvious.” The jury was subsequently also given the standard negligence instruction on exercising ordinary care in the management of one’s affairs. This, I think, explains how the jury could find Mrs. Florenzano was justified in acting on defendant’s false representation and at the same time could find Mrs. Florenzano negligent in exercising her social security options.
Here the trial court, uncertain how the undecided issue of the applicability of comparative negligence would eventually be resolved, quite properly submitted the case on both the intentional and unintentional theories of recovery.