Court Opinion

ID: 9584252
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:45:55.236726+00
Date Added: 2024-06-11T15:07:16.375935
License: Public Domain

BROWN, Justice,
dissenting.
I disagree with the majority’s disposition of this case. The trial court instructed the jury that Ludvik was entitled to rescind the contract with Horseshoe for fraud if all the following were proved.
“a. Any misrepresentation of facts were [sic] made by Horseshoe Creek;
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“c. Ludvik relied on such misrepresentation;
“d. Ludvik’s reliance was justified;
e. Notice of rescission was promptly given upon discovery of the misrepresentation; and
“f. Defendant Ludvik has returned or offered to return all benefits derived from his possession of the ranch.”
The majority approved this instruction citing Schepps v. Howe, Wyo., 665 P.2d 504 (1983), and Hagar v. Mobley, Wyo., 638 P.2d 127 (1981). I have no disagreement with the instruction. However, I do believe that Ludvik failed to prove that fraud existed at the time of the assignment.
Written contracts are not to be treated lightly or interfered with by the courts absent compelling reasons. The presence of fraud in a contract transaction is reason to disturb a written contract. Fraud, however, is never presumed; in fact, there is a legal presumption that every transaction is free from fraud. Smith v. Waterloo, C.F. & N.Ry. Co., 191 Iowa 668, 182 N.W. 890 (1921); 17 C.J.S. Contracts § 154, p. 907 (1963). The burden to overcome this presumption rests upon Ludvik; he must establish clear proof that fraud existed at the time of the assignment.
Ludvik claims the false representation was that “They [representatives of Horseshoe] told me that I would have clear title to that property.” However, Ludvik acknowledged that all representations made by Horseshoe concerned events that were going to happen in the future. Fraud must relate to a present or preexisting fact. Statements or representations regarding future or contingent events, or expectations and probabilities do not constitute fraud. In re Adoption of Hiatt, 69 Wyo. 373, 242 P.2d 214 (1952).
Horseshoe did not make any false representation regarding an existing or preexisting fact. Ludvik has never contended otherwise. The majority, however, say “a promise constitutes a representation of the maker’s present intention to perform, which representation is an assertion of a fact, the maker’s state of mind. If such a promise is made with the intention of not performing, it is a misrepresentation of an existing fact and is generally recognized to *470be actionable.” In support of this premise the majority quotes from Sabo v. Delman, 3 N.Y.2d 155, 164 N.Y.S.2d 714, 143 N.E.2d 906 (1957):
“ * * * If a promise was actually made with a preconceived and undisclosed intention of not performing it, it constitutes a misrepresentation of a ‘material existing fact’ upon which an action for rescission may be predicated. [Citations.]”
The majority reasons that Horseshoe had a preconceived and undisclosed intention not to perform the agreement with Ludvik, which intention existed before and at the time the agreement was entered into. According to the majority the evidence of this state of mind was that “Horseshoe and its representative were in a precarious financial situation and were facing a number of other lawsuits at the time of the transaction with Ludvik.” The majority does not, and cannot point to any other circumstance or evidence indicating that Horseshoe had a preconceived and undisclosed intention not to perform. I submit that a “precarious financial situation” cannot rationally be equated with a preconceived and undisclosed intention not to perform the contract. This is a feeble circumstance upon which to predicate fraud. The majority opinion has seriously eroded the requirements of an action in fraud.
Even if it could be determined that Horseshoe had a preconceived and undisclosed intention not to perform the contract, there is no credible evidence that Ludvik relied upon what Horseshoe told him, or that any purported reliance was justified. In fact, the evidence is to the contrary.
Before Ludvik’s purchase of the ranch from Horseshoe he felt that Horseshoe representatives were the type of people who were likely to withhold material facts. Because of his feelings Ludvik had Horseshoe investigated before he entered into the agreement to purchase the ranch. As a result of this investigation Ludvik believed that he and his attorney knew more about Horseshoe than anyone had ever known before.
Before purchasing the ranch Ludvik also procured a title insurance commitment. The commitment showed the state of title to the ranch and what had to be done before clear title could be given. Mr. Lud-vik’s Wyoming attorney advised him not to get involved in the purchase of the ranch. Notwithstanding Ludvik’s distrust of Horseshoe, his investigation, the title insurance commitment, and the advice of an attorney, he said at trial that he relied on Horseshoe’s representatives. I would hold that this so-called reliance was not justified, that the record clearly shows that Ludvik did not rely on any representations made by Horseshoe but made his own conclusions based upon his independent investigations.
The deficiencies in Ludvik’s proofs are progressively more glaring. One of the elements of a fraud action based on misrepresentation as the court instructed, is that “notice of rescission was promptly given upon discovery of the misrepresentation.” Initially Ludvik said he did not give notice of rescission. The record reflects:
“Q. * * * [H]ave you [Mr. Ludvik] given them notice of rescission, to the best of your knowledge?”
“A. No.”
Later in Ludvik’s testimony an effort was made to rehabilitate him and supply the deficiency in his proof of notice recission. On redirect examination by his attorney Ludvik testified in the manner indicated in the majority opinion. The letter referred to by Ludvik falls far short of notice of rescission. It states that Horseshoe was in default and indicates Ludvik’s willingness to negotiate a settlement of the pending lawsuit. In any event, the so-called notice relied on by Ludvik cannot be characterized as prompt. The majority in effect holds that notice given two or three years after knowledge of the relevant facts is prompt. I disagree.
The idea to rescind the contract was an afterthought that came to Ludvik five days before trial. On February 24, 1982, this *471action was filed. Two months later Ludvik filed his answer, counterclaim and cross-claim. In the cross-claim he alleged breach of contract. Thereafter, for the next fifteen months the parties to this lawsuit, several judges and others jousted with motions and amendments. It was not until May 18, 1983, that Ludvik decided that he had been defrauded and for the first time filed his pleadings alleging rescission because of fraud. The facts upon which the alleged fraud was based took place in 1979 or 1980. Ludvik had full knowledge of these facts when they occurred. This was the time frame during which Ludvik and his lawyer knew more about Horseshoe than anyone had ever known before.
Lastly, there is no evidence in the record that Ludvik returned or offered to return any of the benefits he derived from his possession of the ranch.
This case was presented to the jury on alternate theories for rescission. In addition to misrepresentation Ludvik sought rescission alleging that Horseshoe had breached the contract. The jury returned a general verdict; therefore, we do not know whether they found that Ludvik was entitled to rescind the contract for misrepresentation or for breach of contract. The majority did not address the breach of contract theory, apparently thinking that if the verdict could be sustained on either theory it would be sufficient. I do not disagree; therefore, I will not address the breach of contract theory of rescission. Suffice it to say, Ludvik was not entitled to rescind for breach of contract because he himself had also breached the contract; his breach had never been cured and existed at the time of trial.
In answer to my concerns about this ease it will likely be contended that the Supreme Court cannot second guess the jury on evi-dentiary determinations. However, I would hold, as a matter of law, that there was no evidence of actionable misrepresentation, no evidence that Ludvik justifiably relied on any representation, no prompt notice of rescission, and no evidence that Ludvik returned or offered to return benefits derived from his possession of the ranch. The fraud action should have never gone to the jury or the trial court should have granted appellant’s motion for a judgment notwithstanding the verdict.
The underlying and related problems of this case have been around a long time. This is the fourth time these parties have been before this court. They have been in an Indiana federal district court and a Colorado state district court. Without fear of contradiction I can say that the judiciary is weary of this case. If this court had reversed the present case it would be tried again and no doubt be back before us. By affirming, hopefully, the case is finally over. I almost succumbed to the temptation to vote to affirm as a matter of expedience to finally end the case — but not quite.