Liniado v. Alexander

On Motion for Rehearing.

Liniado contends we interfered with the factfinding powers of the trial court, which found that “what transpired here was not fraud,” and found that the joint venture was effectively ended by the 1983 “buy out” wherein Alexander paid Liniado $20,000 for Liniado’s share of the property, even though Liniado never conveyed his interest to Alexander but continued to appropriate the tax benefits therefrom while charging Alexander for all costs of the venture.

Decided March 5, 1991 Rehearing denied March 25, 1991 Webb & Daniel, Philip S. Coe, Marcia M. Ernst, for appellants. Greenfield, Ellis & Bost, William L. Bost, Jr., for appellee.

The trial court’s finding that “what transpired here was not fraud” was founded upon the legal error of treating Alexander’s claim of fraud as if it were a prayer for specific performance, and for that reason cannot stand. Appellate courts may set aside or vacate a conclusion based on legal error. It is clear that the proceedings became confused, first because of Liniado’s counterclaim asking that he merely be allowed to disgorge a deed, inasmuch as he did nothing wrong in extracting $20,000 while failing to convey his interest and using the benefits of ownership while charging all costs of ownership to Alexander; and secondly because the trial court did not recognize that Alexander could not be forced by Liniado or the court to accept the equitable remedy which Liniado sought to impose upon him. The trial court’s conclusion that what transpired was not fraud is bound up in the idea that it could impose an equitable remedy upon Alexander and thus avoid a finding of fraud.

The most successful fraud, and the most dangerous, is that which even when held up to light can be turned in such a way as to cast a flattering shadow. It is certainly within our purview to determine that a finding by the trial court is without evidence or is so contrary to evidence that the result cannot stand. We did not say Liniado committed a fraud, but we have no hesitation in saying that the underlying facts found by the trial court make out a case for at least constructive fraud, perhaps the more so because it seems so hard to detect.