Chaires v. North Florida Nat. Bank
432 So. 2d 183 (1983)
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Rule of Law:
A tort claim for fraud and deceit is not barred by the statute of frauds merely because one of the alleged fraudulent acts was an oral promise that, if sued upon as a contract, would be unenforceable. A complaint is sufficient to survive a motion to dismiss if it alleges facts which, taken as true, are sufficient to state a cause of action.
Facts:
- Harry Chaires, Ellen Chaires, and their business, Chaires Circle C. Beef and Farm, Inc., (the Chaires) maintained a business account with North Florida National Bank (the Bank).
- The Bank allegedly made an oral promise to the Chaires to provide them with 'long term, low interest financing.'
- The Chaires alleged this promise was part of a larger, fraudulent scheme perpetrated by the Bank against them.
- The Bank paid out funds from the Chaires' account on certain bank drafts and a cashier's check.
- These instruments were allegedly not properly endorsed before the Bank paid them.
- The Bank deducted the funds used to pay these instruments from the Chaires' business account.
Procedural Posture:
- Harry Chaires, Ellen Chaires, and Chaires Circle C. Beef and Farm, Inc. filed a Third Amended Complaint against North Florida National Bank in a Florida trial court.
- The Bank filed a motion to dismiss for failure to state a cause of action.
- The trial court granted the motion, dismissing Counts II (theft), III (fraud), and V (wrongful payment) with prejudice, while allowing Count IV (negligence) to proceed.
- The Chaires (appellants) appealed the trial court's dismissal of these counts to the District Court of Appeal of Florida, First District.
- The Bank was the appellee in the appeal.
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Issue:
Does the statute of frauds bar a cause of action for fraud and deceit when one of the alleged fraudulent acts involves an oral promise to provide long-term financing that could not be performed within one year?
Opinions:
Majority - Nimmons, Judge
No. The statute of frauds does not bar a cause of action for fraud and deceit under these circumstances. The court reasoned that the Chaires' claim for fraud is a tort action, not an action based directly or indirectly on a breach of contract. The alleged unenforceable oral promise was only one component of a series of acts that together constituted the alleged fraudulent scheme. Therefore, the statute of frauds, which applies to the enforceability of certain contracts, cannot be used as a defense to a tort claim of fraud. The court also held that the other counts, including the claim for wrongful payment of improperly endorsed instruments, were sufficiently pleaded to state a valid cause of action because, on a motion to dismiss, all allegations in the complaint must be accepted as true.
Analysis:
This decision reinforces the important distinction between contract law and tort law, particularly concerning the statute of frauds. It prevents the statute, which is intended to prevent fraud in contractual settings, from being used as a shield to protect a party from liability for a broader fraudulent scheme. The ruling clarifies that the unenforceability of one component of a fraudulent scheme under contract law does not invalidate a tort claim based on the scheme as a whole. This preserves a vital avenue for relief for victims of fraud where an oral promise is part of the inducement, upholding the principle that a court's initial review of a complaint must be narrow and deferential to the plaintiff's allegations.
