Court Opinion

ID: 9778999
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:31:46.654871+00
Date Added: 2024-06-11T07:33:18.829166
License: Public Domain

On Motion for Rehearing or to Transfer the Cause
BOUR, Commissioner.
Plaintiffs state in their motion and suggestions in support thereof that this court “has entirely overlooked and failed to give effect to the positive evidence in this case that the note itself contained the distinct and positive representation that the interest charged was at the lawful rate, and to the direct and positive testimony of Smith that the interest was 8% per annum”; that it is this court’s view “that plaintiffs could have discovered the fraudulent representations by calculating interest at 8% on $1,663.20 for the period of eighteen months, thereby determining that the amount of $226.80, the interest actually charged by the defendant, was in excess of 8% per annum.” After pointing out that the face amount of the note was $1,890 and that the note recited, parenthetically, that interest to maturity at the highest lawful rate had been deducted, plaintiffs continue: “Except to those who are thoroughly experienced in a loan transaction, such as was the agent of defendant, the language of the note itself would seem to indicate that the interest deducted in advance had been computed upon the face amount of the note. That would be the normal conclusion to be drawn by any person of average intelligence, such as the plaintiffs. * * * Plaintiffs did exactly what the average individual would have done; namely, they regarded the interest to be paid as interest on the face of the *152note. So regarding it, even if they had made the simple calculation they would have determined that interest at 8% on the face amount of the note is, actually, $226.80, the amount of interest actually charged. The oral representations, also, were equally deceptive. Smith told plaintiffs ‘that the interest was 8% per annum.’ ”
Plaintiffs’ contention that they “regarded the interest to be paid as interest on the face (amount) of the note” and that they were justified in doing so was advanced for the first time in theif motion for a rehearing or to transfer and the attached suggestions. -They stated in their original brief that if they “had not trusted to Smith’s honesty and fair dealing they would necessarily * * * have figured the interest * * * at 8% per annum (or % of 1% per month) on' $1663.20" (italics ours). Ordinarily, a point, argument, or theory advanced for the first time in a motion for a rehearing or to transfer will be disregarded. We prefer, however, to discuss the above argument briefly.
Plaintiffs seem to assume in theif argument that their only source of information concerning the interest charge was the recital in the note and Smith’s representation that interest at the rate of 8% per annum “had been included in the note”, and that all of the details of the transaction were peculiarly within the knowledge of Smith— facts about which plaintiffs knew nothing. As stated in our original opinion, it appears from plaintiffs’ testimony that Smith told them that interest on the loan at the rate of 8% per annum had been included in the note as a part of the principal and that such interest amounted to $226.80; that Smith gave them an itemized statement of the various items and amounts included in the principal of the note before they signed it; that plaintiffs knew that the aggregate amount of these items, exclusive of interest, was $1663.20; and that plaintiffs knew that the face amount of the note, $1,890, represented the total amount advánced by defendant,'$1,663.20, plus the sum of $226.80, the interest charged by defendant for making the loan. Having so-testified, plaintiffs are in no position to contend that they “regarded the interest to be paid as interest on the face (amount) of the note” and that they were justified in doing so. There is no evidence in the record tending to show “that the interest deducted in advance had been computed upon the face amount of the note.” Since the interest charged by defendant ($226.80) was included in the principal of the note ($1,890), it is obvious that the interest was not computed upon such principal amount.
Plaintiffs further contend that “the comment of the court in the instant opinion that ‘no relation of confidence or trust existed between plaintiffs and Smith’ seems to indicate that the absence of such a relationship, in the opinion of the court, placed upon plaintiffs the absolute duty to disbelieve the representations and test them by an independent investigation.” They assert that such a “view” is in diréct conflict with the holding in Messina v. Greubel, 358 Mo. 439, 21.5 S.W.2d 456. The statement or “comment” has been quoted out of context. We made that statement in answering plaintiffs’ contention that there was misrepresentation by silence in this case. Our original opinion does not hold that the absence of a confidential relation between plaintiffs and Smith “placed” such a duty upon plaintiffs and the opinion contains no statement to that effect.
In our original opinion we quoted at length from the opinion in Wood v. Robertson, Mo.Sup., 245 S.W.2d 80, 84. Plaintiffs insist that our opinion is in conflict with that case. Their argument in support of this contention is merely a re-argument of questions determined by the original opinion and heed not be considered here. Supreme Court Rule 1.19, 42 V.A. M.S.
Plaintiffs assert that we have overlooked the tendency of modern decisions to condemn the falsehood - of the fraud-feasor rather than the credulity of his victim and as a consequence our original opinion is in conflict with Ashton v. Buchholz, 359 Mo. 296, 221 S.W.2d 496; Bertram v. Kempster, Mo.Sup., 216 S.W.2d 494; Mes*153sina v. Greubel, supra; Aven v. Ellis, 334 Mo. 449, 66 S.W.2d 828, and with the decision of the Springfield Court of Appeals in McBee v. Twin City Fire Ins. Co., Mo. App., 238 S.W.2d 685. Plaintiffs further contend that we have “overlooked 'and failed to apply the established' rule of law that the rule of equal knowledge and opportunity of the parties to know the truth or falsity of a representation has no application where a distinct and specific representation is made to be acted upon”, citing Wright v. Weaver, Mo.App., 231 S.W.2d 857.
In Ashton v. Buchholz, supra, an action to recover damages for alleged fraud in a loan transaction, it appeared that a certain mine was owned by the Mid-Continent Quicksilver Corporation, which had been in bankruptcy since 1935; that the defendant was president of Mid-Continent Producers, Inc.; that in order to induce plaintiff to lend defendant $10,000, defendant fraudulently . represented to plaintiff that “Producers, Inc.”,- owned the mining property and that the $10,000 was to be used to employ additional men and to purchase additional equipment to develop the mine. Plaintiff made the loan and the money was used by the defendant and his associates to pay expenses of the reorganization of the bankrupt “Quicksilver” •company. Plaintiff, a widow sixty-four years of age, lost the entire amount of the loan. She “had only fourth grade schooling and no business or legal experience whatever.” In answering the defendant’s contention that plaintiff “was guilty of such negligence in looking after her own interests as to bar any recovery herein”, the court said, 221 S.W.2d loc. cit. 503: “We <lo not agree. * * * It may be conceded plaintiff did not approach the problem of loaning her money as a lawyer or banker would have approached it, and did not demand title research and other proofs. But the flattery of defendant’s assiduous attention and the whirlwind campaign he made to secure and close the loan were disarming to one in plaintiff’s position. She had been wined and dined for some -days. In view of all the instant circumstances, the care used by defendant to have plaintiff view the physical property before seeking the loan from her, and the concealment of so many material facts in his nine-day campaign to secure this loan, we consider that plaintiff was not negligent in that respect and so rule.”
In Messina v. Greubel, supra, the plaintiff was induced to invest in the capital stock of an insolvent corporation and to lend money to the corporation through false representations as to the financial condition of the corporation made by the defendants, who were officers and. directors of the corporation and knew its financial condition. In affirming a judgment for the plaintiff the Supreme Court said, 215 S.W.2d loc. cit. 458: “It may be that no confidential relation, as commonly understood, existed between the parties, but the knowledge and means of knowledge possessed by defendants as to the affairs of the company were vastly superior to that possessed by plaintiff. * * * Plaintiff was a mechanic who had never owned or operated a business. He was an employee of defendants and had a right to suspect them of some degree of honesty. * * *. Yes, plaintiff could have learned something by an investigation. He could have hired an abstractor to search the records and learn that there were liens on the real estate and part of the equipment which defendants falsely represented to be unencumbered, He could have employed an auditor to check the books * * *. The evidence shows that plaintiff was ignorant of business matters. * * * Under the evidence we hold that plaintiff had a right to rely upon the statements made by the defendants. We are sustained in that holding by our ruling in the case of Monsanto Chemical Works v. American Zinc, Lead & Smelting Co., Mo.Sup., 253 S.W. 1006, 1009.”
In Aven v. Ellis, supra, the Supreme Court held that it was a question for the jury whether the officers of the payee bank obtained the endorser’s signature on a note by fraudulent representations as to the-financial condition of the maker. In Mc-Bee v. Twin City Fire Ins. Co., supra, the *154Springfield Court of Appeals held that a creditor, in. accepting a deed of trust as security, had a right to rely upon the debtor’s representation that a certain building was located upon land described in the deed of trust. The court said that the creditor was not required to employ a surveyor in order to discover the debtor’s fraud, and that fraud will not be condoned merely because the victim displayed some degree of faith in his fellowman. It is clear that the facts in the Ashton, Messina, Aven, and McBee cases distinguish those cases from the case at bar. The same is true of Bertram v. Kempster, supra, where the alleged false representations related to the daily, monthly, and yearly income the defendant had received in his operation of a hotel.
Plaintiffs have pointed out that in the Messina and Aven cases the Supreme Court quoted from 26 C.J., Fraud, sec. 59, p. 1144, as follows: “The tendency of modern decisions is not to extend but to restrict the rule requiring diligence, and similar rules, such as caveat emptor and the rule granting immunity for dealer’s talk, and to condemn the falsehood of the fraud feasor rather than the credulity of his victim.” See also 37 C.J.S., Fraud, § 30. In Conklin v. Missouri Pac. R. Co., 331 Mo. 734, 738, 55 S.W.2d 306, 308, the Supreme Court en banc said: “ * * * this court has in recent years gone a long way in its efforts to protect ‘the foolishly credulous, as against the machinations of the designedly wicked’, as consonant with the administration of pure justice.” The court continued: “But we have never lost sight of the principle that the courts will not protect those who, with full opportunity to do so, will not protect themselves.” The Conk-lin case was cited with approval in the recent case of Wood v. Robertson, supra.
In Wright v. Weaver, supra, we said, 231 S.W.2d loc. cit. 861: “This court in the case of Cantley v. Plattner, 228 Mo.App. 411, 67 S.W.2d 125, uses the following language at loc. cit. 130, 131: ‘Ordinarily, it is true that neither law nor equity will afford relief for false representations where the parties stand upon an equal footing or where the subject-matter in dispute is equally known to both; and if one trusts to representations not calculated to-impress a person of ordinary prudence, or neglects means of information within easy reach, he should suffer the consequences. McCaw v. O’Malley, 298 Mo. 401, 249 S.W. 41, loc. cit. 44. But such rule has no application where a distinct and specific representation is made to be acted upon or for the purpose of inducing action and which has induced action. Same authorities, supra. In the case of Judd v. Walker, supra (215 Mo. 312, 114 S.W. 979) the court said: “We might add here that the general doctrine laid down in the books as elementary, is that the doctrine of notice and means of knowledge has no application where distinct and positive representations of fact have been made, have been relied upon and have induced action.” ’ ” We do not deem it necessary to state the facts in the Wright, Cantley, and Judd cases. It is sufficient to say that the facts in those cases are unlike those in the instant case.
Plaintiffs earnestly contend, however, that the “general doctrine” referred to in the Judd case is applicable here. If this is true our original opinion cannot stand. The statement in the Judd case has been quoted in many opinions, but a careful study of the cases discloses that this “general doctrine” has never been regarded as a hard and fast rule to be applied in all cases “where distinct and positive representations of fact have been made, have been relied upon and have induced action.” The Supreme Court has been careful to point out that each case must be decided upon its own facts. See Messina v. Greubel, supra, 215 S.W.2d loc. cit. 459, where the Supreme Court said that Judd v. Walker and McCaw v. O’Malley, supra, were not inconsistent and that, “Each case of the kind must be determined on its own facts.” See also Orlann v. Laederich, 338 Mo. 783, 92 S.W.2d 190, 196, and Poe v. Illinois Cent. R. Co., 339 Mo. 1025, 99 S.W.2d 82, 88. We have found no case and counsel have cited none in which the facts are like or even similar to those in the instant case.
*155The motion for rehearing or to transfer the cause to the Supreme Court should he overruled. The commissioner so recommends.
SPERRY, C., concurs.
PER CURIAM.
The foregoing opinion of BOUR, C, is adopted as the opinion of the court. The motion for rehearing or to transfer is overruled.
All concur.