196 Conn. 584 | Conn. | 1985
This case is an action brought in two counts (1) to recover monies paid by the plaintiffs to the named defendant, Edward Gerard, obtained by him through fraud and misrepresentation, and (2) to set aside as fraudulent a conveyance of the family real estate by the named defendant to the codefendant, Helen Gerard, his wife. From a judgment granting relief to all the plaintiffs but one
The trial court could reasonably have found the following facts, which are set forth in the memorandum of decision. The defendant, Edward J. Gerard,
At this time, Dolce and Rhinehart owned and were operating two small food co-ops and were renting a small warehouse in connection with the merchandise
In spite of the aforementioned factors, the defendant made unqualified endorsements of Dolce and the phantom investment prospects, telling the plaintiffs that Dolce was a fine, honest man who offered these investment opportunities in order to help the working people. He further represented that Dolce was a genius with great goals, that his deals would pay much higher interest than a bank, and that the investments were stable and perfectly safe. Inducements were paid to investors for procuring new prospects and the defendant continually encouraged the plaintiffs to reinvest, always assuring them that things were going well.
Subsequently, in July, 1974, the entire scheme showed signs of failure. Dolce attempted to placate his investors by issuing dividend checks which were postdated to November 1,1974. The Dolce checks given to the investors in July, 1974, were dishonored in November, 1974, and Dolce declared bankruptcy. The defendant then gratuitously transferred his interest in the family real estate to his wife.
The trial court rendered judgment in favor of all plaintiffs except Frances Maturo to recover money damages as against the defendant Edward while hold
The defendants raise three claims on appeal, alleging that the trial court erred in finding (1) that the defendant Edward Gerard was guilty of fraudulent misrepresentation, (2) that the plaintiffs justifiably relied upon his representation, and (3) that the defendant’s transfer of real estate to his wife was a fraudulent conveyance. We find no error.
I
The defendants’ first claim is that the trial court erred in finding the defendant Edward guilty of fraudulent misrepresentation since he was acting for a disclosed principal and was personally unaware of any fraud.
“The essential elements of an action in fraud, as we have repeatedly held, are: (1) that a false representation was made as a statement of fact; (2) that it was untrue and known to be untrue by the party making it; (3) that it was made to induce the other party to act on it; and (4) that the latter did so act on it to his injury. Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 515, 271 A.2d 69 (1970); Clark v. Haggard, 141 Conn. 668, [673,] 109 A.2d 358 (1954); Helming v. Kashak, 122 Conn. 641, 642, 191 A. 525 (1937); Bradley v. Oviatt, 86 Conn. 63, 67, 84 A. 321 (1912); Barnes v. Starr, 64 Conn. 136, 150, 28 A. 980 (1894).” Miller v. Appleby, 183 Conn. 51, 54-55, 438 A.2d 811 (1981).
“Fraud and misrepresentation cannot be easily defined because they can be accomplished in so many different ways. They present, however, issues of fact.” Hathaway v. Bornmann, 137 Conn. 322, 324, 77 A.2d
II
The defendants’ second claim is that the court erred in finding that the plaintiffs justifiably relied upon misrepresentations of the defendant Edward. They claim that the plaintiffs knew of the speculative nature of the ventures and should have made their own investigation. The plaintiffs were simple working people with limited experience in financial matters. They were not knowledgeable in business transactions. The defendant offered inducements and held out the fact that he had even invested his own personal monies. The plaintiffs were led down the primrose path because of their belief in the truth and veracity of the defendant. He led them like the “Pied Piper” to the tune of his enthusiastic salesmanship into a venture of excitement and profit. As the trial court correctly found, the fact that the plaintiffs were not on equal footing with the defendant, and did not have equal access to the information about the scheme allowed them to rely on the defendant’s representations. Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 409, 456 A.2d 325 (1983).
III
The defendants’ third claim is that the trial court erred in setting aside the conveyance of real estate from the defendant to his wife as being fraudulent. “A person to whom the grantor was indebted and who wishes to avoid the conveyance has the burden of showing either (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligation or (2) that the conveyance was made with a fraudulent intent in which the grantee participated. Zapolsky v. Sacks, 191 Conn. 194, 200,
The underlying facts are clear. The relationship between Edward and Helen was very close and harmonious. She frequently accompanied him when he promoted the pyramid scheme. She was aware that Edward had invested marital assets in the scheme and that the investment was in jeopardy during the summer of 1974. She further knew that postdated checks had been issued to investors and that Dolce was bankrupt. Knowing of Dolce’s bankruptcy and realizing that he was facing potential lawsuits from investors, Edward took steps to protect himself and the family’s joint assets. First, he destroyed all of his business papers relating to the Dolce operation. Helen knew about this action. Second, with Helen’s knowledge, he consulted with a lawyer about transferring his interest in the family residence to Helen to protect himself from potential claims. A short time later, a transfer was made by yet another lawyer to Helen, for which there was no consideration paid. The trial court properly concluded: “No credible explanation was advanced by Edward or Helen Gerard, or by anyone, as to why a transfer of his interest in the realty in issue was made at that particular time when he was faced with potential claims against him, without consideration of any kind.” The court further found that Helen was in full possession of her faculties at all times in her associa
There is no error.
In this opinion the other judges concurred.
The plaintiffs are: Dominie and Frances Maturo, Donald and Adelie Volz, Leo and Claire Bisaillon, Joseph and Henrietta Lemieux, Ronald Apt, and Harold and Madeline Fish. The court found there was no evidence linking the defendant with the plaintiff, Frances Maturo, and thus, found for the defendants on her claims.
Unless otherwise directed, the defendant refers to Edward.