dissenting. I respectfully dissent from the majority opinion in this case because I believe that the evidence presented by the appellees was insufficient as a matter of law to establish the tort of deceit, and that the trial court should have granted appellants’ motion for directed verdict. While I recognize that it is our responsibility, on review, to view the evidence in the fight most favorable to the appellees, I do not think that our standard of review permits us to embellish the evidence by drawing inferences or conclusions from it that are not supported by it or are, at best, speculative. That is what I believe that the majority has done in straining to affirm the jury’s verdict in this case.
The “facts,” as recited by the majority, attempt to portray a sinister plot by the appellants to steal the appellees’ business by suggesting: (1) that Vera Stine, the trusted manager of the Sanderses’ security and detective company, deliberately let the company’s workers’ compensation insurance lapse so its customers would take their business elsewhere; (2) that Stine and Davis “induced” Sanders’s employees to quit and go to work for them, and prevented Sanders from enforcing non-competition agreements against those employees by taking away the non-competition agreements; (3) that Stine and Davis deceived the Sanderses by not telling them about their romantic involvement; (4) that Davis agreed to pay the Sanderses $120,000 for their business, and since he did not do so and did not let them know that he was not going to do so, he must have intended to deceive them; and (5) that although the alleged purchase agreement was not in writing and, therefore, not enforceable under the statute of frauds, the Sanderses can recover, nonetheless, because the unenforceable agreement was deceitful.
These five bases for the majority decision are discussed below. The problem with the majority’s reasoning is that the facts and the law do not support any of them.
(1) Lapse of Workers’ Compensation Coverage
Regarding the workers’ compensation insurance coverage, the undisputed facts were that a disagreement with the Arkansas workers’ compensation carrier about the amount of the premiums arose prior to August of 1994 because a payroll audit resulted in an attempt by the carrier to charge the company a premium on work being performed in Louisiana. Ms. Stine, as manager of Sanders’s company, and in whom the Sanderses testified they had entrusted full management authority, disputed the attempted premium assessment on Louisiana payroll and undertook to provide information requested by the insurance carrier that would result in a lower premium. When the dispute was apparendy not resolved, the carrier’s agent (Harris Shuffield) sent a cancellation notice to the Sanderses’ company in mid-August (Shuffield said it was either August 14 or 18), informing the company that the policy would lapse in thirty days, or about mid-September 1994, if the premium was not paid. The significance of these dates is that appellant Don Davis had not even made contact with the Sanderses to inquire about their business being for sale at that time. In fact, the testimony of both the Sanderses and Davis was that Davis first came to Hot Springs from Dallas in mid-October 1994. It was not until then, and the weeks that followed, that Davis, with the knowledge and consent of the Sanderses, was provided with unrestricted information about the Sanderses’ business, its clients, its profits, and its extensive tax liabilities.
To attribute some evil motive to Ms. Stine’s handling of the workers’ compensation premium dispute, one would have to assume that she foresaw, prior to August 1994, that Don Davis, of whose existence she was then unaware, would be arriving from Dallas two months later, that the lack of workers’ compensation insurance that she is alleged to have brought about would cause the Sanderses’ clients to change security companies, and that Stine and Davis would hatch a plot to tell the Sanderses that Davis was going to buy their business (presumably to keep anyone else from doing so) in order to give them time to steal away the Sanderses’ customers and employees while the Sanderses’ business crumbled down around them.
To suggest, as the majority opinion does, that Ms. Stine secreted information from the Sanderses about the lapse of their workers’ compensation insurance is simply not supported by anything in the record. The evidence is undisputed that the Sanderses had totally relinquished all control and management of their business to Ms. Stine. In their testimony, both Bucky and Frances Sanders conceded that all aspects of the business were under the absolute control of Ms. Stine, and that they had not, for at least ten years, had anything to do with the management or operation of the business. Neither Mr. nor Mrs. Sanders knew how many employees the business had, who its clients were, or how much money it made, if any. Why, after ten years, would they have expected to receive from Ms. Stine a report about the status of payment of the workers’ compensation insurance premium?
(2) Interference with Enforcement of Non-Competition Agreements
The majority opinion also suggests that Davis and Stine induced Sanderses’ employees to quit, and that they, somehow, prevented the Sanderses from enforcing documents that the employees signed agreeing not to go to work for competing security companies. There is simply no evidence in the record to support this statement by the majority. The only evidence relating to any kind of an agreement signed by Sanders’s employees was the testimony of Frances Sanders who stated that when an employee came to work for Sanders, they signed an agreement that they would not go to work for any of Sanders’s customers. Although Mrs. Sanders testified that “[i]f we would have had the documents that had been taken from the files of the men, then they would not have been able to go to work for Interstate,” she offered no explanation of how an agreement by Sanders’s employees not to go to work for Sanders’s customers would have prevented those employees from going to work for Interstate, which was never a Sanders customer. Not one of more than sixty of Sanders’s former employees was called to verify that they ever signed any agreement not to go to work for competitor security companies. In the absence of any evidence whatsoever, the majority concludes that it was “standard practice” for Sanders Security to have its employees execute an agreement not to work for competing security firms.
There was no evidence of anything that Davis or Stine did to prevent the Sanderses from enforcing whatever agreement they had with their employees. Although there was testimony by Frances Sanders that they had not been able to locate any agreements since Stine left their employment, there was no evidence whatsoever to indicate that Davis or Stine was responsible for the misplacement of any employee records. Although Cora Maglero was observed by the Sanderses’ housekeeper to be making a large number of copies on her computer and removing those copies to her car, there was no evidence suggesting that the employees’ agreements were on the computer or that any of the company’s employee records were taken by Cora Maglero.
(3) Romantic Involvement
Without any evidence to support it, the majority concludes that Davis and Stine became romantically involved during the period that Davis was looking into the possibility of buying the Sanderses’ business, and that they did not inform the Sanderses. The uncontradicted evidence of when Davis and Stine became romantically involved came from Davis himself, who testified that he and Stine started dating in January 1995, two months after Davis’s alleged offer to buy the Sanderses’ business. There is no evidence in the record to contradict Davis on this point. Furthermore, even if the romance had begun earlier, as the majority concludes, I do not see how the failure to disclose the fact of a romance is in any way relevant to prove any of the elements constituting the tort of deceit. No evidence was presented as to anything the Sanderses would have done differently had they known of the romance. No evidence was presented as to what effect the romance had on Davis’s decision to buy or not to buy the business. In short, the existence of a romance between Davis and Stine was nothing more than a red herring giving rise to speculation, unsupported by any evidence, that, because of their romance, they must have conspired to deceive the Sanderses.
(4) Offer to Buy the Business
The majority says that the jury was justified in believing that Davis agreed to buy the business for $120,000. I disagree.1
The only evidence that Davis made an offer to buy the business for any amount came from the mouth of Bucky Sanders. On the other hand, the evidence that Davis made no offer was overwhelming: (1) After the November 4 meeting at which Sanders claimed the agreement was made, Sanders told no one but his wife, Frances; (2) Daughter-in-law Karen Sanders was not told about the agreement even though she owned one-third of the company and was present at the Sanderses’ home (where the office is also located) on the day of the alleged agreement; (3) No effort was made to reduce the terms of the agreement to writing, notwithstanding that Sanderses’ lawyer (who was also his niece’s husband) had been actively involved in their efforts to sell the business; (4) No earnest money was tendered, nor was there any other act or conduct on the part of either party giving rise to an inference that an agreement had been reached; (5) Davis could not legally purchase the business because he did not have an Arkansas investigator’s license and had not resided in Arkansas for two years.
There was no evidence of any motive that Davis would have had to deceive Sanders by telling him that he intended to buy the business when he did not intend to do so. There was no evidence of the existence of any other prospective purchasers of the business besides Davis. That there were no other prospects is corroborated by the testimony of the Sanderses’ lawyer, Marc Honey, who testified that Davis’s purchase of the business was the Sanderses’ last opportunity to avoid bankruptcy, and that when Davis did not buy it, the Sanderses were left with no other alternative but to file for bankruptcy.
(5) Enforceability of the Contract
While it is true, as the majority says, that the jury was entitled to believe the Sanderses’ testimony, this case should never have gotten to the jury for two reasons: (a) the alleged oral contract, being in violation of the Statute of Frauds, was unenforceable; and (b) the alleged promise of purchase, being merely a promise of future conduct, may not form the basis of a fraud claim.
(a) Statute of Frauds
In its effort to avoid the consequence of the statute of frauds, the majority decides that it is the “better rule . . . that the statute of frauds does not abrogate the common-law remedy for fraud merely because the fraudulent misrepresentation was not in writing.” I might agree that this is the better rule where it is undisputed that the representation was, in fact, a fraudulent one. However, this so called “better rule” should not be used in a deceit action as a vehicle to avoid the necessity of proving of the elements of deceit. Under the theory of the majority opinion, an alleged promisor could be held to have falsely promised by virtue of the fact that he did not do what he denies that he ever promised to do. By this circuitous reasoning, the majority holds that, in determining whether Davis made a knowingly false representation to buy Sanders’s business, the jury is permitted to infer that Davis’s promise was false from the fact that Davis did not buy the business. Consequently, Davis and Stine are compelled to pay damages because Davis did not buy a business that he could not have been legally compelled to buy in the first place.
The majority cites Betnar v. Rose, 259 Ark. 820, 536 S.W.2d 719 (1976), and Bolin v. Drainage District No. 17, 206 Ark. 459, 176 S.W.2d 459 (1943), in support of the proposition that the statute of frauds will not be permitted to be used as an instrument of fraud. Those cases, however, are clearly distinguishable from the case at bar. Neither of those cases involved a cause of action for fraud or deceit. In Betnar v. Rose, supra, the plaintiff had made a $2,000 down payment on a house pursuant to an oral promise by its owner, the defendant, to sell it. Being an agreement to convey real property, it was clearly within the statute of frauds. The plaintiff decided not to buy the house and sued to get his $2,000 down payment back, contending that the contract was unenforceable under the statute of frauds. The supreme court disagreed, holding that one who pays money in consideration of an oral contract cannot rescind the contract and recover the money unless the other party insists on the statute of frauds and refuses to perform the contract on his part. In Bolin v. Drainage District No. 17, supra, a tenant took possession of real property pursuant to an oral agreement and remained in possession for more than a year without paying rent. When the landlord sought to dispossess the tenant and recover the unpaid rent, the tenant contended that he did not have to vacate the premises or pay the rent because the statute of frauds prevented enforcement of a contract for the lease of lands for more than a year. The supreme court disagreed, holding that the statute of frauds was not intended, and could not be used, to permit one to enter upon the lands of another, as a tenant, and after occupying it for more than a year, claim that he could not be dispossessed or required to pay rent because of the statute of frauds.
In the case at bar, if Davis had paid any money to the Sanderses in partial payment for Sanders’s security business, I would agree that the principles announced in Betnar and Bolin, supra, would prevent him from relying on the statute of frauds as the basis of an action for the recovery of his down payment. However, I do not agree that Betnar and Bolin render the otherwise unenforceable contract enforceable by Sanders merely because Davis did not do what Sanders said that he promised to do. That is exactly the type of agreement intended to be avoided by the statute of frauds.
(b) Promise of Future Conduct
In citing the cases of Golden Tee, Inc. v. Venture Golf Schools, Inc., 333 Ark. 253, 969 S.W.2d 625 (1998), and Undem v. First National Bank, 46 Ark. App. 158, 879 S.W.2d 451 (1994), the majority recognizes the law in Arkansas to be that a promise of future conduct cannot form the basis for a claim of fraud or deceit unless it is shown that the party making the false promise knew at the time that it would not be kept. Even accepting as true the testimony of Bucky Sanders that Davis agreed to buy his business for $120,000, there is simply no evidence that Davis made that promise knowing that he did not intend to keep it. What possible motive could Davis have had to promise Sanders that he was going to do something that there was absolutely no reason for him to do? As I have already pointed out, there was no evidence of other prospective purchasers standing in line to buy the business. There was no evidence of anything that Davis and Stine had to gain by offering the Sanderses any amount of money for their business.
The majority suggests that an inference of Davis’s intent not to perform could be drawn from the evidence that: (a) Davis agreed on November 4 to buy the business; (b) without notifying the Sanderses, he formed a rival business on November 9; and (c) the Sanderses’ business records were wrongly taken and destroyed to further the formation of the rival business and hinder the Sanderses from taking timely remedial measures. As to the majority’s point (a), I will not further lengthen this opinion except to again point out the complete lack of logic of inferring from an alleged promisor’s failure to perform an act that he says he did not promise, that he did not intend to perform the act. As to point (b), it is just as illogical to infer that Davis made a promise knowing that he did not intend to perform it, from the fact that he did not notify the Sanderses that he would not perform the act that he maintains he never promised to perform. Furthermore, there was no evidence of any advantage gained by Davis during the five days between the date of the alleged promise on November 4 and Davis’s formation of a new security business on November 9. What was there about the formation of a new business that could not have been done had Davis not promised to buy the Sanderses’ business five days earlier? As to the majority’s point (c), as already discussed, there was no evidence offered that either Davis- or Stine took or destroyed any of Sanders’s records; nor was there any evidence of how the displacement of those records prevented the enforcement by Sanders of any corrective measures. There was, however, abundant evidence that if Sanders did not quickly sell his business to someone, it would be out of business by the end of the year; and that is exactly what happened.
For the reasons stated above, I would reverse and dismiss this case.
While I agree with the general principle espoused by the majority that the credibility of witnesses and the weight to be given to their testimony are matters for determination by the jury, I do not agree that that principle insulates the appellate court horn its obligation, where the appellants have raised the issue, to review the trial court’s determination as to whether the evidence was sufficient to submit the issue to the jury in the first place.