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GAULTNEY et al. v. WINDHAM.
37566.
Action for damages. Macon City Court. Before Judge Baldwin. December 2, 1958.
FELTON, Chief Judge.
1. The assignments of error on the overruling of the special demurrers to the petition as finally amended are treated as abandoned, 2. An affirmative action in tort for deceit must be predicated upon actual fraud; and, where in a suit based upon such theory, it is nowhere alleged in the petition that the plaintiff was ignorant of the true condition of the premises purchased by him or was ignorant of the falsity of the representations made by the defendants as to the condition of such premises, or was either deceived or defrauded by such representations, no cause of action for deceit is set forth and the petition is subject to general demurrer.
3. A petition, based on the theory of an affirmative action for fraud and deceit, which sets forth no facts showing that the plaintiff suffered any damages, is subject to general demurrer.
On April 15, 1958, Walter Windham filed a suit for damages in the City Court of Macon against E. T. Gaultney, Jr., a resident of Bibb County, and Dependable Lumber Company, a corporation with its principal office and place of business in Bibb County. The material allegations of the petition as amended are substantially as follows: (3) The defendants have injured and damaged the plaintiff in the sum of $3,000 as will hereinafter more fully appear. (4) On February 10, 1955, the plaintiff purchased from the Dependable Lumber Company certain described property consisting of a house and lot in Bibb County, Georgia, known as 377 Overlook Road for a consideration of approximately $12,000. (5) Shortly prior to the date of the purchase of the house on February 10, 1955; the plaintiff discussed the purchase of the house with E. T. Gaultney, Jr. The exact date of these discussions is unknown to the plaintiff, but they occurred within two months prior to the purchase. At the time Gaultney was agent of and acting on behalf of the defendant corporation in the course of his employment as vice-president of the corporation. (6) The plaintiff was apprehensive about the condition of the foundation of the house and specifically questioned Gaultney whether or not the foundations were on solid ground. The plaintiff requested this information to enable him to determine whether or not he wished to purchase the house. (7) Gaultney told the plaintiff that he had nothing to worry about with regard to the foundations and further informed the plaintiff that all of the foundations of the house were on solid ground and not upon fill dirt. (8) From a close inspection of the house it was impossible to determine whether or not the foundations were constructed upon fill dirt or upon solid ground. (9) The plaintiff relied upon Gaultney's representations in agreeing to purchase the house at the aforesaid price. (10) The foundations of the house were not constructed on solid ground but were constructed on fill dirt from one to four feet in depth. (11) As a result of the foundations' being constructed on fill dirt, which is merely loosely packed, filled-in dirt, the foundations of the house sank. The sinking of the foundations was a gradual process, and for this reason the plaintiff cannot allege the exact dates of the sinking of the foundations, but the plaintiff says that all of the sinking occurred after the purchase of the house. Such construction caused certain damages: the front and right side walls sank, the rear brick wall sank, the tile in the bathroom cracked, and the walls in the living room, three bedrooms, and the kitchen, cracked. (12) As a result of the false statement made by the defendant Gaultney, acting as the agent of the defendant corporation, which statement Gaultney knew to be false and which he made with the intention to deceive and injure the plaintiff, both the defendants have injured and damaged the plaintiff in the amount of $3,000. (13) As a result of the house's being built on fill dirt, the damages enumerated in paragraph 11 ensued, and the market value of the house diminished by $1,500. The fair market value of the house at the time of purchase before the damages occurred was $12,000 and thereafter was $10,500. (14) The plaintiff is further entitled to the sum of $1,500 as punitive damages to deter the defendants from such wrongdoing in the future.
The defendants filed separate but identical answers admitting residency in Bibb County but denying all other paragraphs of the petition. For further answer each of the defendants alleged that before the sale of the property to the plaintiff, the plaintiff made a thorough inspection of the house to ascertain the stability of its construction and the plaintiff did not rely upon any representation made to him by the defendant Gaultney. No discussion was had between the plaintiff and the defendant Gaultney concerning the foundations of the house, and as a matter of fact the foundations of the house were not placed upon fill dirt, but were built, as is customary in the area, upon solid, substantial, clay foundation.
On the trial and at the conclusion of all the evidence the defendants moved for a directed verdict which was overruled; and, upon the court's submission of the case to the jury, a verdict was returned for the plaintiff in these words: "We, the jury find for the plaintiff $2,000, $1,500 damages 'repair,' $500 punitive damages."
The defendants assign error here on the trial court's denying their motion for judgment non obstante veredicto, and on the trial court's denying their motion for a new trial, which was based upon the usual general and four special grounds.
1. Where, in a consolidated bill of exceptions, each of the two defendants in the court below assigns error on the trial court's action in overruling his special demurrers to the plaintiff's petition as finally amended, but this assignment of error is not argued in this court either orally or in the brief of counsel for the defendants, who are plaintiffs in error here, and upon which there is no general insistence, such assignment of error will be treated as abandoned. Evergreen Memory Gardens v. Blythe, 92 Ga. App. 413 (88 S. E. 2d 528).
2. Under the view which we take of the petition, the plaintiff has endeavored to frame an independent affirmative action in tort based on fraudulent misrepresentations; that is to say, an independent action in tort for deceit to recover enumerated damages thus allegedly occasioned. Counsel for the plaintiff insists here that such was indeed the theory and nature of the action which he instituted in reliance on the authority of Southern v. Floyd, 89 Ga. App. 602 (80 S. E. 2d 490), and Griffin v. Butler, 45 Ga. App. 771 (166 S. E. 60).
The gist or gravamen of an action for damages in tort based on the falsity of representations is that they must have involved actual moral guilt. Dundee Land Co. v. Simmons, 204 Ga. 248, 249 (1) (49 S. E. 2d 488); Wooten v. Calahan, 32 Ga. 382, 386; Penn. Mutual Life Ins. Co. v. Taggart, 38 Ga. App. 509, 511 (1b) (144 S. E. 400).
In the Taggart case many of the doubts, misapprehensions, and much of the confusion concerning actions of deceit were resolved and set at rest by our esteemed Chief Justice Emeritus Jenkins, who served with such distinction upon the bench of both this court and of our Supreme Court. In that case it is tersely, concisely, and succinctly stated: "Fraud is either actual or constructive. Either constitutes legal fraud. Actual fraud 'consists of any kind of artifice by which another is deceived.' It involves moral guilt; since there must be an intentional purpose to deceive. Constructive fraud 'consists in any act of omission or commission, contrary to legal or equitable duty, trust, or confidence justly reposed, which is contrary to good conscience.' It does not involve moral guilt, since it is the act itself, as taken in connection with the relationship of the parties, and not the guilty purpose or intent, which constitutes constructive fraud . . . [Code 37-702.]
"(a) Either actual or constructive fraud may consist in the misrepresentation of a material fact. Whether the fraud is actual depends on whether the false representation was made with the purpose and intent to deceive.
"(b) A material misrepresentation constituting actual fraud may give rise to an independent action in tort for deceit, to recover for damage thus occasioned. In such a suit it is necessary to show not only that a material misrepresentation was made for the purpose of inducing the plaintiff to act, that he had a right to act, and that he did act thereon to his injury, but it must be shown that such representation was wilfully and knowingly false, or what the law regards as the equivalent of knowledge, a reckless or fraudulent representation about that which the party pretends to know, but about which he knows that he does not know, and by which false pretense his purpose and intent is to deceive. Thus, in any suit sounding in tort for damages on account of actual fraud, the gist of the action is the purpose and design to deceive . . . [Code 105-302, and citing numerous cases].
"(c) Constructive fraud, as limited and defined by . . . [Code 37-702], and made to 'consist in any act of omission or commission contrary to legal or equitable duty, trust or confidence justly reposed, which is contrary to good conscience,' is broadened, so far as it relates to misrepresentations of a material fact, by the succeeding . . . [Code 37-703], since the latter section specifically provides that innocently made misrepresentations, if acted on by the opposite party, constitute fraud, without reference to any limitation being fixed upon the relationship occupied by the parties to whom and by whom such representations are made. Consequently, an innocently made material misrepresentation which the opposite party has a right to act on and does in fact act on to his injury is made to constitute fraud by . . . [Code 37-703]; but the fact that the opposite party may occupy one of the relationships mentioned by the preceding section defining constructive fraud does not operate to change that which would otherwise be mere constructive fraud, on account of lack of the element of guilty intent, into actual intentional fraud. It follows that whatever may be the rule in certain foreign jurisdictions with reference to innocent misrepresentations when made by one charged with a special duty to the opposite party to know and to impart the truth (see, in this connection, 12 R. C. L., 334, 91-93), under the statutes and decisions of this State such misrepresentations can not amount to anything more than constructive fraud, and, as such, are not creative of any independent right of action for damages in tort in favor of the injured party; but they may support an action in equity to rescind a contract so induced . . . [citing cases and Code 96-302]. Or they may be pleaded in defense to a suit on a contract thus procured . . . [citing cases]. Or they may, it might seem, under the doctrine of estoppel, be employed in support of an action founded on the contract itself . . . [citing numerous cases]."
To recapitulate, in an independent affirmative action for fraud and deceit, which must be predicated upon actual fraud, the plaintiff must allege and prove the following essential ingredients: (1) the defendant made the representations; (2) at the time he knew they were false (or what the law regards as the equivalent of knowledge, a fraudulent or reckless representation of facts as true, which the party may not know to be false, if intended to deceive, Code 105-302) ; (3) the defendant made the representations with the intention and purpose of deceiving the plaintiff; (4) the plaintiff relied upon such representations; (5) the plaintiff sustained the alleged loss and damage as the proximate result of their having been made; and (6) an element frequently omitted in the cases enumerating the essentials, "want of knowledge by the party alleged to have been deceived that the representation was false. Cheney v. Powell, 88 Ga. 629 (15 S. E. 750)." Jackson v. Smith, 92 Ga. App. 677, 679 (89 S. E. 2d 526). See also Bankers Health & Ins. Co. v. Givens, 43 Ga. App. 43 (157 S. E. 906); Lynch Enterprise Finance Corp. v. Realty Constr. Co., 176 Ga. 700 (168 S. E. 782). It is essential that the plaintiff was deceived (5 Am. & Eng. Enc. of Law, 318, 327; 1 Bigelow, Fraud, 466) and there can be no deceit if the plaintiff knows that the representations upon which he is alleged to have acted were false. Lynch Enterprise Finance Corp. v. Realty Constr. Co., supra.
Properly construed, as against general demurrer, that is to say, accepting all well pleaded allegations, together with all reasonable inferences to be drawn therefrom, as true, and construing the pleading most strongly against the pleader, the petition is defective as an affirmative action in tort for deceit as it is nowhere alleged nor is it inferable from the facts alleged, that the plaintiff was ignorant of the condition of the subsoil upon which the foundations of the house were constructed, nor is it alleged, nor is it inferable from the facts alleged, that the plaintiff was defrauded or deceived by the defendant agent's representations. See in this connection Arthur v. Brawner, 174 Ga. 477 (163 S. E. 604), where it is held that general allegations that false and fraudulent representations made by the defendant and relied upon by the plaintiff fail to charge actual fraud under the rules stated in Emlen v. Roper, 133 Ga. 726 (66 S. E. 934), and Mangham v. Cobb, 160 Ga. 182 (127 S. E. 408); and see Clark v. Adams, 29 Ga. App. 496 (116 S. E. 122).
It is nowhere alleged that the plaintiff inspected the premises or that the representation of the defendant agent deterred an inspection of the premises by the plaintiff. While it is alleged that "from a close inspection of said house it was impossible to determine whether or not said foundations were constructed on fill dirt or solid ground," this allegation, without more, amounts to nothing more than a conclusion of the pleader.
The Southern and the Floyd cases, supra, upon which the plaintiff relies are clearly distinguishable from the present one in that in those cases the plaintiff's ignorance of defective conditions is expressly averred, as was the inability of the plaintiffs in those cases to ascertain the true condition of the premises purchased, and the falsity of the representations made.
3. Assuming arguendo that all the requisites of an action for deceit are alleged or are all inferable from the facts alleged, neither of which do we concede, it is axiomatic, as Mr. Justice Little has so cogently and succinctly phrased the rule, that "fraud without damage, or damage without fraud, gives no cause of action," for deceit. Brooke v. Cole, 108 Ga. 251, 252 (33 S. E. 849). If the allegations of the petition be gauged by the proper measure of damages in such actions, which is to say, the difference between the fair market value at the time of the sale and what would have been its value if the allegedly false representations had been true (McCrary v. Pritchard, 119 Ga. 876 (7), 47 S. E. 341; Briesenick v. Diamond, 35 Ga. App. 668 (6), 134 S. E. 350), it appears from the face of the petition, properly construed, that the plaintiff suffered no damage as the result of the allegedly false representations, for it is alleged that the fair market value of the house, at the time of purchase and prior to the damages which later ensued, was $12,000, the plaintiff paid approximately $12,000 for the property, and it is then alleged that the market value diminished to $10,500, damaging the defendant in the sum of $1,500. If the fair market value of the house, though built upon fill dirt instead of solid ground, was $12,000, as the plaintiff alleges, and that was the sum which he paid for the house, as he alleges, it can not be said that he was damaged. This is to say that even if we assume that the plaintiff has alleged fraud and deceit, insofar as he attempts to allege an affirmative action for deceit, his petition, properly construed, merely alleges damnum absque injuria. See in this connection Johnson v. Giles, 69 Ga. 652, and citations.
The petition failed to set forth a cause of action for deceit as the plaintiff failed to allege all the requisites of actual fraud, and the trial court erred in overruling the general demurrer thereto. All further proceedings were, consequently, nugatory.
Judgment reversed. Quillian and Nichols, JJ., concur.
Martin, Snow, Grant & Napier, contra.
Byrd & Quillian, Othniel W. McGhee, George E. Saliba, for plaintiffs in error.
DECIDED JUNE 15, 1959 -- REHEARING DENIED JULY 9, 1959.
Saturday May 23 00:40 EDT


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