Emerson v. Ham
411 A.2d 687, 1980 Me. LEXIS 519 (1980)
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Rule of Law:
To prevail in an action for common law fraudulent misrepresentation, the plaintiff must prove that the defendant's representation was false and made with knowledge of its falsity or in reckless disregard of its truth or falsity (scienter); circumstantial evidence, such as remote facts, cannot serve as the sole basis for a jury verdict if it amounts to mere scintilla or pure conjecture.
Facts:
- In October 1974, Defendant Ham purchased land and subsequently had a house built, with an artesian well drilled in November 1974 that was reported by the drilling contractor to supply between 2 and 2.5 gallons of water per minute.
- Ham and her three children resided in the house from mid-December 1974 until August 29, 1975, reportedly experiencing no problems with the water supply.
- In January 1975, less than a month after moving in, Ham listed her property for sale, explaining she was a recent divorcee with three children and her financial status was not very good.
- On July 27, 1975, Ham and Defendant Kenniston, her broker, represented to Plaintiffs Emersons that the premises had an existing drilled well that produced potable water at a minimum flow rate of two gallons per minute.
- This representation was repeated by Ham and Kenniston to the Emersons just prior to the closing on August 29, 1975.
- The Emersons took title to the property on August 29, 1975, and moved into the house two days later.
- Four days after the Emersons took title, the well ran dry.
- After the Emersons had lived in the house for some time, they discovered that the float valve arm in the toilet flush tank had been bent to allow less water into the tank.
Procedural Posture:
- Plaintiffs, Emersons, sued Defendant Ham (the seller) and Defendant Kenniston (the seller’s broker) in Superior Court (trial court) in Lincoln County, alleging fraudulent misrepresentation.
- At the close of the presentation of the plaintiffs’ evidence during the jury trial, the presiding justice directed a verdict for the defendants.
- The plaintiffs appealed the directed verdict to the Law Court (Supreme Judicial Court of Maine).
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Issue:
Does evidence that a property seller listed her house for sale soon after moving in and that a toilet's float valve was bent to conserve water, coupled with the well running dry shortly after sale, constitute sufficient evidence for a jury to conclude the seller or broker had knowledge or reckless disregard of the falsity of a representation about well water capacity to support a claim of fraudulent misrepresentation?
Opinions:
Majority - McKusick, Chief Justice
No, the evidence presented by the plaintiffs—the seller listing her property a month after moving in and a bent toilet float valve—does not constitute sufficient evidence to establish that the seller or broker knew of the falsity of the representation about the well's water capacity or acted with reckless disregard for its truth. The court affirmed the directed verdict for the defendants, reiterating that to prevail in an action for fraud or deceit, plaintiffs must prove the defendant's representation was false and made with knowledge of its falsity or in reckless disregard of its truth or falsity (scienter). While the fact that the water supply failed so soon after the representation might be some evidence of its falsity, the circumstantial evidence offered to prove scienter was deemed "too remote" and amounted to a "mere scintilla" or "pure conjecture." The seller had explained her financial reasons for selling, and there was no evidence linking her to the bent float valve. Furthermore, a broker, as an agent, can properly rely on statements from the principal, especially when seemingly confirmed by information from the well driller, and there was no evidence suggesting the broker knew of the alleged water conservation or the seller's motivations. The court also declined to decide on alternative theories of liability under Restatement (Second) of Torts §§ 552C and 552 (innocent or negligent misrepresentation) because these arguments were raised for the first time on appeal, violating a settled rule of appellate practice.
Analysis:
This case significantly clarifies the demanding evidentiary standard for proving scienter in common law fraudulent misrepresentation claims, particularly when relying on circumstantial evidence. It establishes that isolated, remote, or speculative facts, even if cumulatively presented, are insufficient to meet the burden of proof for a defendant's knowledge of falsity or reckless disregard of truth, thereby justifying a directed verdict. The decision also serves as a critical reminder to law students about the procedural necessity of raising all legal arguments at the trial level to preserve them for appellate review, precluding the consideration of new theories like those under the Restatement (Second) of Torts if introduced for the first time on appeal.
