HEFLIN, Chief Justice.
This is an appeal from an order granting a nonsuit entered by the Circuit Court of Jackson County. The plaintiffs-appellants Albert and Helen Ringer (Ringers) bring the appeal because of adverse rulings of the trial court in sustaining demurrers of the defendant-appellee First National Bank of Stevenson (Bank) to each count of the complaint as last amended. The complaint, which contained three counts, is predicated on theories of misrepresentation, fraud, and deceit made actionable by Title 7, Sections 107-112, Code of Alabama, 1940, as amended (Recompiled 1958).
Common allegations appear in all counts of the complaint, which in abbreviated form follow: On May 9, 1966, the Ringers borrowed $20,000 from the Bank with which to purchase a bulldozer and related equipment (all of which may hereinafter be called "equipment") and to secure such loan the Ringers gave the Bank a combination promissory note and chattel mortgage having a due date of November 9, 1966, plus a real estate mortgage on three acres of land upon which the Ringers' home was located. Prior to and following the date of the transaction the Ringers did business with the Bank and, being persons with little experience in banking or financial matters, relied on the Bank for financial advice. A close personal and confidential relationship with the president of the Bank existed. In September of 1966 the Ringers requested the Bank to accept T. K. Stewart as the purchaser of the equipment and, without making an investigation of the credit reputation of Mr. Stewart, the Bank arbitrarily refused to allow him to assume the Ringers' obligations to the Bank, but instead, fraudulently represented to the Ringers that Millard Bowen and Thomas D. Bowen would be better and more dependable buyers for the equipment than would T. K. Stewart and that such representation was false. Relying on this misrepresentation of this material fact by the Bank, the Ringers sold the equipment to the Bowens and allowed the Bowens to assume the Ringers' obligations to the Bank under an assumption agreement by which the Bowens agreed to pay to the Bank not less than $500.00 each month. In accepting the assumption agreement the Bank required that the three acres of the Ringers remain as security for the loan. On numerous occasions after said assumption by the Bowens and before January, 1969, the Ringers were informed by the president of the Bank that the Bowens were making the agreed payments, when, in fact, the Bowens were not making such payments. Such representation of this material fact was fraudulently made to the Ringers. The chattel mortgage on the equipment and the real estate mortgage on the three acres were both foreclosed by the Bank, all to the damage of the Ringers.
Count 2 is essentially the same as Count 1 except that both compensatory and punitive damages are claimed since the misrepresentations were allegedly made "grossly, maliciously, oppressively and with an intent to deceive."
Count 3 differs from Count 1 by alleging a fiduciary relationship between the Bank and the Ringers; the concealment of the fact that no credit-check had been made on the Bowens by the Bank; and that prior to
Each count alleges two acts deemed fraudulent: (1) A misrepresentation by the Bank that the Bowens would be better and more dependable buyers of the equipment than would T. K. Stewart; (2) a misrepresentation of the fact that the Bowens were making regular payments on the assumed note, when they were not.
When fraud is pleaded, either at law or equity, the facts out of which it is supposed to arise must be stated. Crommelin v. Capitol Broadcasting Co., 280 Ala. 472, 195 So.2d 524 (1967). This court has stated that allegations of fraud in a pleading to be sufficient must positively set forth facts constituting the fraud, so that the court can clearly see that fraud has intervened. Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971); Lacey v. Edmunds Motor Co., 269 Ala. 398, 113 So.2d 507 (1959).
The first issue that needs to be resolved is whether the Ringers properly alleged a representation as to the Bowens' financial condition and, if so, whether it is an actionable misrepresentation or merely an expression of opinion which is not actionable. The pertinent allegations follow:
The Bank asserts the representation that the Bowens would be better and more dependable buyers does not constitute actionable fraud since the representation was not that the Bowens were financially sound, but merely that they were better and more dependable. The Bank ignores the fact that "better and more dependable" describes the Bowens as "buyers," and that the allegation also states, "would be better and more dependable buyers ... than would said T. K. Stewart," a buyer alleged by the Ringers as having an excellent credit reputation. The Bank overlooks the allegation that the defendant arbitrarily refused to allow Stewart, a man with substantial assets, to assume the plaintiffs' obligations under the promissory note. The comparison in this instance doesn't detract from a representation of financial soundness but rather enhances it. In the context of the alleged situation, where the Ringers produced a buyer alleged to be credit-worthy, a representation that another is a "better and more dependable buyer" (thus a better person to assume the obligation to the Bank than a person with substantial assets and an excellent credit reputation—T. K. Stewart) can be looked upon from a pleading viewpoint as sufficient for a jury submission on this issue of whether a representation
Assuming that "better and more dependable buyer" refers to the Bowens' financial status, is it a representation such that, if false, it would give rise to an actionable fraud? The general rule is stated in 37 Am.Jur.2d, § 137, at 187:
See also Annotation: Misrepresentations as to financial condition or credit of third persons as actionable by one extending credit in reliance thereon. 32 A.L.R.2d 184.
Under Alabama law a misrepresentation of financial condition can be actionable. The controlling Alabama case is Einstein, Hirsch & Co. v. Marshall & Conley, 58 Ala. 153 (1877). In that case, the defendant-appellant firm of Einstein, Hirsch & Co. provided one Heller a letter which stated in part: "He is good for all he buys, and you may safely sell him a bill [bill meaning a bill of groceries]." Based on this representation, Marshall & Conley extended credit to Heller, who subsequently died leaving the bill unpaid and leaving no property with which to satisfy his debts. Although a judgment for Marshall & Conley was reversed on other grounds, the court found that a good cause of action was stated. Referring to the requisites of such a cause, the court stated:
As this court stated in Einstein, "[m]uch must depend on the circumstances of the particular case," but it seems clear that under the proper circumstances a third party can be held liable for misrepresenting another party's financial condition. But the rule is not without qualification. There is the limitation that the statement must be reasonably certain and definite and more than mere expressions of opinions or prophecy or statements to eventuate in the future. See 37 Am.Jur.2d, § 137, at 188-189; 37 C.J.S. Fraud § 48, at 301 and 48 A.L.R. 546-549.
The Bank here claims that "would be better and more dependable buyers" was a mere expression of opinion or prophecy. The following language from 51 A.L.R. 63 is quoted with approval in Shepherd v.
In the case of Scholz Homes, Inc. v. Hooper, 287 Ala. 628, 254 So.2d 328 (1971), this court held that under some conditions, a representation of an opinion or a prediction of a future event can be an actionable fraud, but such opinions or predictions are not actionable unless "there are circumstances tending to show an actual fraudulent intent at the time of the promise or representation" is made.
While inferences could be drawn from the allegations of each count that the Bank also relied on the opinion that the Bowens were dependable buyers (thus possibly indicating an absence of fraudulent intent), there are allegations in each count to satisfy the requirement that the expression of opinion was made with an actual fraudulent intent at the time the prediction of future financial dependability was made. Allegations follow the language of the involved statutes. Counts 1 and 3 allege that the misrepresentations were made wilfully to deceive and Count 2 contains the allegation of an intent to deceive, as well as that the misrepresentations were made grossly, maliciously, and oppressively.
In connection with the second allegation of fraud, the essential allegations are as follows:
In contending that the Bank president's conduct in making the misrepresentation
Clearly, proof of the facts alleged by the Ringers regarding a misrepresentation by the Bank president that payments were being made when, in fact, they were not, would permit a recovery under the fraud and deceit statutes of this state.
The third major point argued to this court concerns the allegation of damages. It is well settled that damage is an essential element of an action for fraud and deceit. Maring-Crawford Motor Co. v. Smith, 285 Ala. 477, 233 So.2d 484 (1970). In a recent case this court summarized the subject of damages in a fraud and deceit action:
"The rules in Alabama appear to be as follows:
Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971)
In each count the Ringers claim compensatory damages as a proximate result of the alleged fraud, and in Count 2 the Ringers claim punitive damages after alleging that the fraudulent misrepresentations were made "grossly, maliciously, oppressively, and with an intent to deceive ...." It appears that more than nominal damages are alleged. If the representations of the Bank had been true, the Ringers' position is that they would not have suffered the financial losses they allege. They contend there would have been no foreclosure or loss to them; but there can be little doubt that the Ringers were obligated to pay considerable more interest than they would have been if the delay of 29 months had not occurred during which time it is alleged the Bank was falsely misrepresenting to them that payments were being made by the Bowens.
Finally with respect to damages a demurrer was not the proper method of attacking the plaintiff's allegation of damages since the complaint states a cause of action. It is well settled that demurrer is not the proper method to test its sufficiency with respect to measures or elements of damage claimed, the remedy being by motion to strike, objection to evidence or request for instructions to the jury. Dalrymple v. Alabama Farm Bureau Mutual Ins. Co., 267 Ala. 416, 103 So.2d 711 (1958); Lurie v. Kegan-Grace Co., 209 Ala. 339, 96 So. 344 (1923).
The Bank further argues "that the basic concept of a fraud involves violation of a legal or equitable duty," and the Ringers do not allege facts "which would support
The counts allege business transactions, and one of the counts alleges a fiduciary relationship between the Bank and the Ringers. The contention that the Bank had no duty toward the Ringers is without merit.
Each count of the complaint endeavors to allege two separate torts on the part of the defendant: (1) A fraudulent misrepresentation of the financial condition of the Bowens; and (2) a fraudulent misrepresentation of the fact that payments were being made by the Bowens when, in fact, they were not. None of the grounds of the demurrer raises the issue of duplicity, therefore, this court sees no point in discussing that problem. However, it would be appropriate to comment that this technicality of common law pleading is eliminated by the new Alabama Rules of Civil Procedure.
This court finds the counts of the complaint are sufficient to withstand the attack of the grounds of the demurrer interposed and that the cause should be returned to the trial court for further proceedings.
Reversed and remanded.
MERRILL, HARWOOD, BLOODWORTH and MADDOX, JJ., concur.
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