Court Opinion

ID: 9673959
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:21:10.601525+00
Date Added: 2024-06-11T12:06:37.984017
License: Public Domain

BOND, Chief Justice
(dissenting).
It will be observed that the judgment of the trial court as to Ted C. O’Connor, a non compos mentis, is not based on contract, but founded in tort. Ted C. O’Con-nor was an incompetent, unable to enter into any contract with the defendants in reference to real estate transactions. The appellants-defendants knew of his incompetence; — hence any contract with him is void ab initio.
“Generally speaking, a person of unsound mind is precluded from enjoying any rights or performing any duties which involve the exercise of reason. * * 24 Tex.Jur., p. 379, sec. 6. Ted C. O’Connor’s cause of action, because of his incompetence, was established independently of contract; and all persons connected therewith in the commission of the tort cannot defend their fraudulent conduct upon contract, thus escaping liability for the incompetent’s damage, actual or exemplary, in absence of showing or ratification or some legal relation sufficient to charge the incompetent.
The right to recover damages for tor-tious conduct by taking advantage of such unfortunate insane or incompetent person may be brought by a representative of such person, either upon contract or in tort, at his option. The statute, Art. 4004, R.S., providing for exemplary damages in a sum not to exceed double the amount of actual damages, applies only where the suit is grounded upon contract involving land transactions. Here, Ted C. O’Connor’s suit, if in fact it may be characterized as either upon contract, or in tort, the judgment of the trial court upon findings of the jury of his incompetency and the fraud incident to the two transactions was, indeed, a judgment in tort concretely and forcibly portrayed in the pleadings and evidence.
The limitation of exemplary damages for such inducing fraud as to Ted C. O’Connor has no application.
It will be seen from the wording of Art. 4004, supra, that damage in regard to transactions in real estate is expressly based upon contract, and that, too, by competent parties; “made as a material inducement * * * to enter into a contract”; and the limitation of exemplary damages “not to exceed double the amount of the actual damages suffered”, does not apply to tor-tious actions instituted by or for an insane or incompetent who at the time was unable to comprehend the legal effect of his action in making the contract, or the consequences of the fraud perpetrated upon him by which he suffered the loss of his property. (Emphasis supplied.)
In a very recent case, Briggs v. Rodriguez, Tex.Civ.App., 236 S.W.2d 510, 514, writ refused, n. r. e., briefly stated, the Rod-riguezs sought rescission of a deed to real estate upon the ground of inducing fraud, and in tort action for damages. On trial to a jury the Rodriguezs were found mentally incompetent to contract (as was found by the jury in the case here), and, the action having been brought upon contract as well as in tort, the trial court entered judgment for actual damages in the sum of $300, and $1,000 exemplary damages against the defendant. The San Antonio Court of Appeals, opinion by Mr. Justice Norvell, says:
“It is a general rule that a recovery of exemplary damages can not be based upon a mere breach of contract. This rule should, however, be restricted to actual contracts and not to fictitious ones. There is a distinction between a case in which A agrees to pay B $20 and then fails to do so, and one in which A at the point of a gun takes $20 from B and then fails to give it back. Any promise that a holdup man makes to return money to his victim is a fiction pure and simple, and it is a bit incongruous to speak of one seeking a return of money thus illegally taken from him as having ‘waived the tort and sued in assumpsit.’ 1 McDonald, Texas Civil Practice, 165. * * *
*480“The rule allowing exemplary damages, where it is shown that a defendant acted wilfully, maliciously or fraudulently, is one of general application. It is recognized by the common law and is not dependent upon statute. 13 Tex.Jur. 236, Damages, § 129. Its effectiveness is in no way dependent upon common law forms or classes of actions which have never been used or recognized in Texas, 2 Gammel’s Laws 262; Walcott v. Hendrick, 6 Tex. 406; 1 Tex. Jur. 610, Actions, § 4, and it seems somewhat academic to now inquire as to whether or not the present action would have been classified as one in assumpsit or an action of trespass on the case at common law. The trial judge and the parties below (as here) treated this as a tort action. The jury found that the elements of fraud and malice were present and should effectively answer appellant’s contention. Stephens County v. H. C. Burt & Co., Tex.Civ.App., 19 S.W.2d 951. * * * ” (Emphasis supplied.)
The judgment of the trial court was affirmed, awarding to the incompetent more than three times the amount of his actual damages sustained.
It is academic that an Appellate Court has no more right to reduce an award for exemplary damages as found by a jury than it has to increase the actual damages found without demanding a remittitur or reversal of the cause. In reviewing this record, an increase in the actual damages sustained by these unfortunate boys would have been more in keeping with the portrayed record evidence. However, be that as it may, if, perchance, it could be said that the suit, both as to Ted C. and to Orval M. O’Con-nor, is determinable under contract and not in tort, then appellee’s counter assignments to the action of the court in not awarding them a rescission of both real estate transactions should be sustained and the cause remanded for trial upon the most advantageous remedy to them by rescission, thus equitably restoring them to their original position.
In Wright v. Matthews, Tex.Civ.App., 144 S.W.2d 367, 370, the appellant Matthews, a non compos mentis, instituted suit by guardian, seeking to set aside a deed and to cancel deeds of trust executed by him during his incompetency. The jury found him incompetent, and that the deed was not executed without fraud or imposition. In keeping with the jury’s findings, the trial court canceled, set aside, and held for nought the deed and deeds of trust in suit; but on the pleadings and findings of the jury, required the guardian tO' refund taxes paid by the grantees to reimburse them as innocent parties to the real estate transactions. The appellant there requested four special issues inquiring whether the grantee in the deed acted (1) in good faith, (2) without fraud or imposition, (3) for a valuable consideration, (4) without notice of the infirmity of the grantor. The court said: “Had these issues been submitted to the jury and answers favorable to appellant returned, they would not have prevented the setting aside of the deed from Mrs. McGinley to Kathryn Hughes, but would have only required that Kathryn Hughes be first equitably restored to her original position.”
Art. 5561a, sec. 7, Vernon’s Rev.Civ.St, provides: “A contract valid on its face, made with, or likewise a conveyance made by a person, who at the time has not been legally adjudged to be of unsound mind, or otherwise incompetent, and who is subsequently shown to have been insane, or otherwise incompetent, at the time of the execution of such contract or conveyance, shall not be set aside or avoided where any such contract or conveyance has been executed in good faith in whole or in part, and was entered into in good faith and without fraud or imposition and for a valuable consideration, without notice of such infirmity, unless the parties to such contract or conveyance shall have been first equitably restored to their original position. * * * ”
Reviewing this record, it will be seen that Ted C. O’Connor, Orval M. O’Connor, and their sister Mary Fuller (joined by her husband Roy Fuller), executed the deed in question to the Carlisle Street property (photograph in the record) to L. W. Klind-worth, reciting a consideration of $3,000; the deed is dated August 2, 1946. On August 7, 1946, the defendant Hexter Title Company, at the instance of the defendants *481Klindworth and the Rodriquezs, drew three checks on its account at Republic National Bank of Dallas, — one check payable to order of Orval M. O’Connor, one to' Ted C. O’Connor, and one to Mary Fuller, each in the sum of $605.91. The checks to Orval and Ted O’Connor were each endorsed “For deposit only,” addressed to Stewart Title & Guaranty 'Company, dated 9-14 — ’46, and were cashed at the Mercantile National Bank of Dallas by said Guaranty Company; whilst the check to* Mary Fuller was not so endorsed, 'but was directly delivered to her. Then, on August 30, 1946 L. W. Klindworth by general warranty deed conveyed the “Carlisle Street Property” to the defendant Sixto Espinosa, reciting a consideration of $6,850, of which $1,350 was purported cash, one vendor’s lien note in the sum of $3,000 payable to the defendant George V. Ba-sham, and another note in the sum of $2,-500 payable to the defendant Klindworth. Espinosa testified that he received the $1,-350 cash consideration mentioned in the deed from Mr. Basham, but could not say that he gave him any security therefor. Thus it will be seen that the capital investment of Klindworth, of $3,000, in this fraudulent transaction was placed in Ba-sham, that he may defend as an innocent lienholder, which he plead in his answer.
Then it will be seen that on September 11, 1946 L. W. Klindworth executed the deed to Ted C. and Orval M. O’Connor to the “McCoy Street property” (photograph in the record), for a recited consideration of $5,750, of which $1,100 was purported cash, $2,500 cash paid by the Guardian Federal Savings & Loan Association to Klind-worth with a vendor’s lien as a first and superior lien on said property, and executed another note in the sum of $2,150, subordinate and inferior to the Association note of $2,500. The record evidence shows that the defendant Klindworth, only a short time before, purchased the “McCoy Street property” for $2,500. Thus, again, in furtherance of his scheme to protect his capital investment of $2,500 in the “McCoy Street property”, he gave ground for Basham to plead innocent lienholder in this suit.
It will be observed that in the two transactions the evidence is that the Guardian Federal Savings & Loan Association and the defendant Basham are apparently innocent purchasers and lienholders to the extent of their notes and the amount that Klindworth paid for the two pieces of property. Klindworth evidently hedging to the extent of his outlay in the two transactions. The jury having found that these transactions were fraudulently made and that the O’Connors entered into such transactions in a state of incompetency, they should be restored to their original position.
Further, the record shows that the O’Connor boys being unable to pay the installments on their deferred notes to Klind-worth secured by deed of trust, the deed of trust was foreclosed, the “McCoy Street property” sold under the powers of deed, and Klindworth purchased the property for $3,000; thus the O’Connors were stripped of all their property by the fraudulent means, as found by the jury.
The record here justified the finding of the jury on the issue of exemplary damages, and the amount of $5,000 is not disproportionate to the amount of actual damages the plaintiff Ted C. O’Connor suffered in the two transactions. 13 Tex.Jur., p. 248, discusses the identical question as here involved, as follows:
“It has been found to be difficult to set any fixed or prescribed limits to the discretion of the jury or in fact to prescribe any rule whatever to' guide them in assessing exemplary damages. The amount to be awarded in any case is measured by the rule of just punishment, rather than that of fair compensation. While the amount should be large enough to command respect for the law and to deter others from similar infractions, it should not be excessive or oppressive. Of course, the plaintiff may not recover exemplary damages in excess of the amount demanded in the complaint. The amount oí exemplary damages should be reasonably proportioned to the actual damages sustained. The ratio in any particular case depends upon the facts; and necessarily much is left to the discretion of the jury.”
In Cotton v. Cooper, Tex.Com.App., 209 S.W. 135, affirming the Court of Civil Ap*482peals, 160 S.W. 597, there was a verdict for $3,500 exemplary damages and $400 actual damages, and the judgment was sustained in both opinions.
In all fairness to this record and the judgment of the trial court, this cause should be affirmed as in our original opinion, which now has become the dissenting opinion of the writer. I respectfully adhere to our former opinion, and, in the alternative if need be, that the cause should be reversed and remanded for new trial.