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Vance Pearson, Inc. v. Alexander





APPEAL from the Circuit Court of Vermilion County; the Hon. FRANK J. MEYER, Judge, presiding.


Defendant, Robert D. Alexander, appeals a judgment of the circuit court of Vermilion County entered after a bench trial awarding plaintiff, Vance Pearson, Inc., compensatory damages in the sum of $6,665.56 for breach of contract and punitive damages in an additional sum of $10,000 for fraud and deceit in the inducement for plaintiff's making the contract. We reverse the judgment for compensatory damages and remand the case to the trial court for a new trial only as to the question of the amount of the compensatory damages. We affirm the judgment for punitive damages.

The suit arose from a contract reduced to a written memorandum signed by the parties on August 2, 1977. By its terms defendant agreed to install a set of truck scales on a farm owned by plaintiff and located north of Ridgefarm in Vermilion County. The document stated that the work would be completed by September 15, 1977, but it was not completed until many months later. The original complaint was filed October 11, 1978. The case was tried at bench upon an amended complaint charging the breach of the contract in count I and the fraud and deceit in count II.

Defendant does not dispute that, as alleged in count I, he breached the contract by failure to timely complete the installation. He asserts that the damages awarded were not proved. Count II, which charged fraud and deceit, alleged that defendant made the promise to complete the installation by September 15, 1977, when he "knew, or should have reasonably known that said representation was false and that he would be unable to complete the installation by" that date. Further allegations stated that defendant made the promise intending for it to be relied upon and that plaintiff did so to its detriment. Count II asked only for punitive damages. Defendant maintains that as to count II the court erred in admitting evidence of other transactions in which he had been involved and that the evidence did not prove him guilty of fraud and deceit. The heart of his latter assertion is his contention that a promise made by the promisor without intention that it be performed does not constitute a misrepresentation upon which a determination of fraud may be based. He also maintains that, in any event, an award of punitive damages was improper.

Plaintiff's evidence in support of its claim for compensatory damages concerned those expenses incurred in transporting harvested grain from its various farms to a scale in Ridgefarm for weighing prior to transporting it to a storage facility on the location where the scales were to be installed. Defendant asserts that no such damages were in the contemplation of the parties, but we find the circumstantial evidence presented to be sufficient to show that defendant understood that his failure to install the scales by September 15, 1977, would injure plaintiff. Obviously, plaintiff had a purpose for having the scales installed. Thus defendant must have known that in plaintiff's method of farming it needed to weigh its grain before it was taken to an elevator for sale. Defendant admitted as much when he testified to knowing that plaintiff would have to weigh its grain elsewhere until the scale was installed. It was also obvious that the scales would have to have been installed by about September 15, 1977, for plaintiff to use those scales for weighing both his 1977 soybean and corn harvests. Vance Pearson, principal in the plaintiff corporation bearing his name, testified that he probably explained the extent of plaintiff's substantial farming operation to defendant.

Allowance to plaintiff for expenses incurred in additional trucking of grain resulting from defendant's breach of the contract would be analogous to that which would be recoverable by a buyer for a seller's breach of warranty upon a sale of movable goods under the terms of section 2-715(2)(a) of the Uniform Commercial Code (Ill. Rev. Stat. 1979, ch. 26, par. 2-715(2)(a)), which allows recovery for:

"(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise."

Testimony showed that the scale was to be built at an area three-fourths of a mile north of Ridgefarm on one of plaintiff's farms. Its other farms were east, west or south of Ridgefarm with one being 12 miles to the south. When grain from most of the farms was brought to the storage facility north of Ridgefarm it would have had to be transported through Ridgefarm. The weighing facility used in Ridgefarm was about one-quarter of a mile east of the north-south highway through the town. Thus much of the grain would have been shipped in trucks that would have had to travel only about one-half mile out of the way because of the unavailability of the scale. The grain from the north farm, however, would have had to be transported an additional two miles in order to use the Ridgefarm facility.

As the evidence showed that the scales were unavailable for both the 1977 and 1978 crop years and that some 600 truck loads of grain were taken to the Ridgefarm scale, there was obviously some substantial additional expense incurred by plaintiff because of the contract breach. But we agree with defendant that it was not adequately established to be as much as the $6,665.56 awarded. The evidence presented no breakdown as to how much grain came from each farm. A trucker testified that he charged 5 cents a bushel to haul grain a distance of 2 to 2 1/2 miles, but he did not state that to be the going rate. Vance Pearson testified that in his opinion $2,000 of the salary paid him by plaintiff corporation in 1977 and $4,000 of his salary for 1978 was for performing the additional hauling required because of the contract breach, but the lack of data upon which he based his opinion and the self-serving nature of the testimony give it extremely small probative value as to the amount of plaintiff's damages.

• 1 In reversing the award of $6,665.56 compensatory damages we are not ruling that some actual damages are not recoverable. Rather, we are ruling that at least some damages are recoverable and remanding for a determination of that amount. Accordingly, the award of punitive damages is not vitiated by the rule that actual damages are necessary to support punitive damages. Tonchen v. All-Steel Equipment, Inc. (1973), 13 Ill. App.3d 454, 300 N.E.2d 616.

We, thus, turn our attention to the finding as to count II upon which the punitive damage award was based. The elements of the action for fraud and deceit were set forth by Mr. Justice Mills in Zeilenga v. Stelle Industries, Inc. (1977), 52 Ill. App.3d 753, 757, 367 N.E.2d 1347, 1349, in the following statement:

"In order to prove actual fraud it is incumbent upon plaintiff to establish that defendants' misrepresentation was an untrue statement of material fact, made with knowledge of its falsity for the purpose of influencing the other party who relied upon the statement."

As we have mentioned, plaintiff maintains that defendant's promise to install the scales by September 15, 1977, constituted a misrepresentation under the facts of the case.

Defendant admitted in his testimony that when he agreed to the September 15, 1977, completion date, he knew that a reasonable likelihood that he could not meet that date existed. The trial court could have determined that no unexpected event occurred which prevented defendant from meeting the date. Defendant testified that the existence of some storage facilities at the sight impeded his work, but Vance Pearson's testimony refuted that, and the court could have believed Mr. Pearson. Testimony was also presented by two persons who had made similar contracts with defendant for scale installations in the two years prior to the instant contract. Each testified that their contracts had a definite completion date which defendant grossly missed, and each testified to great difficulty in getting defendant to do the work. There was thus clear and convincing evidence from which the trial court could have concluded that defendant agreed to the completion date knowing that he could not meet it and therefore not intending to comply with it. ...

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