Schechinger v. Swain Construction

IN THE NEBRASKA COURT OF APPEALS
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
(Memorandum Web Opinion)
SCHECHINGER V. SWAIN CONSTRUCTION
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
DANIEL SCHECHINGER, APPELLEE,
V.
SWAIN CONSTRUCTION, INC., APPELLANT.
Filed August 11, 2020. No. A-19-689.
Appeal from the District Court for Douglas County, MARLON A. POLK, Judge, on appeal
thereto from the County Court for Douglas County, CRAIG Q. MCDERMOTT, Judge. Judgment of
District Court affirmed.
Damien J. Wright and Natalie M. Hein, of Welch Law Firm, P.C., for appellant.
Daniel Schechinger, pro se.
MOORE, Chief Judge, and PIRTLE and BISHOP, Judges.
BISHOP, Judge.
INTRODUCTION
After Daniel Schechinger bought a skid loader from Swain Construction, Inc. (Swain), he
filed a claim against the corporation and its principal, Greg Armstrong, alleging misrepresentation
of the actual hours that the machine had been in use. The county court for Douglas County, sitting
as a small claims court, entered a judgment of $2,686, plus interest and costs, in Schechinger’s
favor against Swain. Armstrong was personally dismissed from the case. On Swain’s appeal to the
Douglas County District Court, the order of the small claims court was affirmed. Swain now
appeals to this court, contending that a disclaimer in the terms of sale precluded reliance on any
parol evidence and that the calculation of damages was incorrect. We affirm.
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BACKGROUND
Swain is a corporation with a place of business in Omaha, Nebraska. For several years,
Swain owned a particular “2003 Case 90XT” skid loader, and sometime before or around February
2019, Swain listed it for sale on a website as part of an online auction. Armstrong indicated that
the terms for the sale provided that the skid loader was to be sold “‘as is.’” Schechinger did not
dispute that. The description for the skid loader included that it had “206 Hrs Showing.”
Schechinger, a farmer, and his son saw the skid loader and its description on the auction
website. They noted the description that said “206 hours.” Schechinger’s son said that on February
2, 2019, he telephoned Swain and asked one of its employees, “‘Can those hours actually be
true?’” The employee responded affirmatively and added, “‘We didn’t use it.’” Regarding the call,
Schechinger said the employee was “just sure that [the skid loader] had 206 hours.” The rest of
Schechinger’s dealings with Swain were through that same employee.
On February 6, 2019, Schechinger and his son went to Swain’s place of business and test
drove the skid loader in the presence of Swain’s employee. Schechinger implied the test drive was
limited due to it being “rough to drive.” His son remembered that the employee had said the
following about the skid loader: “‘This thing’s got 206 hours on it. We never use it. It’s been sitting
back here since I’ve worked here for seven or eight years and we rarely move it.’” Schechinger
and his son both said they questioned the appearance of the skid loader. Schechinger’s son believed
it did not look like a 200-hour machine, especially considering its “bucket”; the employee had
relayed that the bucket was “‘probably from a different machine.’” Schechinger remembered that
when he asked about the skid loader’s appearance, the employee answered that it “sat around a lot,
because it had some odd tires on it.” Schechinger said he asked about the skid loader’s bucket; the
employee indicated that the bucket was not the original but was “brand new” and acquired from a
transaction made “a while back.” Schechinger’s son said they were reassured “several times” that
the skid loader was a 206-hour machine. Schechinger recalled that the employee was “sure” that
the skid loader “sat back there and only had 206 hours.”
The next day, on February 7, 2019, Schechinger was the successful bidder of the skid loader
for a total of $18,551. On February 9, he went to pick up the skid loader from Swain. During that
time, Swain’s employee gave Schechinger the service records for the skid loader. According to
Schechinger, the employee told him that he did not have to service the skid loader (right away)
because it “‘only’” had “‘188 hours on it.’” The first page of the service records shows the most
recent entry regarding service performed was in April 2014, when it reflected 188 hours of use.
After Schechinger left Swain, he noticed a second page in the service records which
revealed more hours of use on the skid loader than he was told it had. Schechinger returned to
Swain at some point and showed the employee what he had discovered. Schechinger said that the
employee responded saying he must had given Schechinger the “‘wrong file.’” But Schechinger
had pointed out that the service records he had matched his skid loader; the invoice for the sale
and service records given to Schechinger both refer to a skid loader of the same serial number. The
employee then said he had told “‘everybody’” that the skid loader only had “‘206 hours on there.’”
The second page of service records shows service performed dating back to 2004. When
the skid loader was serviced on April 26, 2010, it had 1,343 hours on its hour meter. However, on
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May 17, the skid loader’s hour meter read “000” after its “instrument cluster” was replaced that
day. From that point until April 2014, the number of hours on the hour meter steadily increased to
the last entry on the service records of 188 hours.
Armstrong confirmed that Swain’s employee’s communications with Schechinger
happened before the purchase occurred. Armstrong thought that the employee made a “simple
mistake” in saying that the skid loader “had 206 hours” from looking at the front page of the service
records. The employee did not realize there was a second page but “probably -- maybe” should
have looked at it. Armstrong asserted that the description of the skid loader was in regard to how
many hours were “showing” rather than the “actual” hours which the skid loader had been in use.
However, Schechinger testified that Swain’s employee told him and his son over the cell phone
that “it was actual hours.” Schechinger felt that if he had known the amount of hours on the skid
loader, he would not have been interested in it. If he would not have been reassured “so many
times,” that the skid loader had 206 hours on it despite its condition, Schechinger would not have
placed a bid for it. He believed that each additional hour that the loader had been used, beyond 206
hours, devalued the skid loader by $2.
On February 20, 2019, Schechinger commenced this action in the small claims court
against Swain and Armstrong, alleging that the defendants “misrepresented” the amount of hours
on the skid loader. Schechinger claimed that he was assured that the hour meter on the machine he
purchased showing 206 hours was correct, but that the service records he received upon picking
up the machine indicated “1,550+ hours.” He sought a judgment in his favor in the sum of $3,000,
plus costs. An evidentiary hearing took place on March 13. Later that same day, the small claims
court entered a judgment in favor of Schechinger against Swain in the amount of $2,686, plus
interest and costs. Armstrong, in his personal capacity, was dismissed from the case with prejudice.
On April 10, Swain appealed the judgment to the district court.
A hearing before the district court took place on June 18, 2019, at which Schechinger
appeared pro se and Swain appeared with counsel. The bill of exceptions of the hearing in the
small claims court was received in evidence. After hearing argument from each party, the district
court took the matter under advisement. The next day, the district court issued an order in which
it found that based on its review of the record the decision of the small claims court conformed to
law and was supported by competent evidence. Therefore, the district court affirmed the judgment
of the small claims court.
Swain timely appeals from the order of the district court.
ASSIGNMENTS OF ERROR
Swain claims that the small claims court erred (1) by failing to conclude that the “as is”
terms of the sale precluded reliance on parol evidence of statements made prior to the sale and (2)
in its calculation of damages.
STANDARD OF REVIEW
The district court and higher appellate courts generally review judgments from a small
claims court for error appearing on the record. See, Neb. Rev. Stat. §§ 25-2733 and 25-2807
(Reissue 2016); Hara v. Reichert, 287 Neb. 577, 843 N.W.2d 812 (2014). When reviewing a
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judgment for errors appearing on the record, the inquiry is whether the decision conforms to the
law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.
First Nat. Bank of Unadilla v. Betts, 275 Neb. 665, 748 N.W.2d 76 (2008). However, in instances
when an appellate court is required to review cases for error appearing on the record, questions of
law are nonetheless reviewed de novo on the record. Id.In a bench trial of a law action, the trial court’s factual findings have the effect of a jury
verdict, which an appellate court will not disturb on appeal unless clearly wrong. And an appellate
court does not reweigh the evidence but considers the judgment in the light most favorable to the
successful party and resolves evidentiary conflicts in favor of the successful party. Griffith v.
Drew’s LLC, 290 Neb. 508, 860 N.W.2d 749 (2015).
ANALYSIS
PAROL EVIDENCE
Swain claims that the disclaimer in the terms of the sale selling the skid loader “as is”
should have been found to preclude reliance on parol evidence of statements made before the sale.
Swain argues that under the facts of this case, the disclaimer is controlling and Schechinger cannot
assert a claim under the sale contract based on “pre-sale statements” made by Swain’s employee.
Brief for appellant at 9. Swain argues that due to the disclaimer, Schechinger bore the “risk of
mistake” as to the skid loader’s hour meter and could have readily reviewed the service records
prior to the sale to satisfy himself on that matter. Id. Swain also argues that Schechinger has no
remedy in tort either, contending that there was no evidence that its employee intended to deceive
Schechinger. Swain disputes the existence of any intentional fraud under the evidence presented
in this case, saying that its employee was “simply mistaken in his belief that the hours shown on
the meter were accurate.” Id. at 12.
Historically, a warranty is an undertaking or assertion by the seller that the thing sold is as
represented. Wilke v. Woodhouse Ford, 278 Neb. 800, 774 N.W.2d 370 (2009). Under the
Nebraska Uniform Commercial Code (U.C.C.), warranties related to goods sold can be either
express or implied. Neb. U.C.C. §§ 2-313 through 2-315 (Reissue 2001). “[U]nless the
circumstances indicate otherwise, all implied warranties are excluded by expressions like ‘as is’
. . . or other language which in common understanding calls the buyer’s attention to the exclusion
of warranties and makes plain that there is no implied warranty.” Neb. U.C.C. § 2-316(3)(a)
(Reissue 2001).
Where a contract, after preliminary negotiations and oral conversations, is reduced to
writing that is clear and unambiguous, there is a conclusive presumption that the parties have
reduced their entire engagement to writing, and that any parol agreement is merged in the written
contract, and that testimony of prior or contemporaneous conversations to alter, contradict, or
explain such writing is incompetent to vary the terms of the written instrument. See Donahoo v.
Home of the Good Shepherd of Omaha, Inc., 193 Neb. 586, 228 N.W.2d 287 (1975). Stated more
succinctly, the parol evidence rule renders ineffective proof of a prior or contemporaneous oral
agreement which alters, varies, or contradicts the terms of a written agreement. Sack Bros. v.
Tri-Valley Co-op, 260 Neb. 312, 616 N.W.2d 786 (2000). Unless a contract is ambiguous, parol
evidence cannot be used to vary its terms. Id.-4-
Notwithstanding the foregoing, parol evidence is generally admissible when it is offered
for the purpose of explaining and showing the true nature of the transaction between the parties.
See Olds v. Jamison, 195 Neb. 388, 238 N.W.2d 459 (1976). The parol evidence rule is ordinarily
applied only in the absence of fraud, mistake, or ambiguity. Id. A written instrument is open to
explanation by parol evidence when its terms are susceptible to two constructions or where the
language employed is vague or ambiguous. Id. As stated in 3 A. Corbin, Corbin on Contracts § 573
at 358-60 (1960) (statement referred to with approval, or quoted in, Olds v. Jamison, supra, and
Central Constr. Co. v. Osbahr, 186 Neb. 1, 180 N.W.2d 139 (1970)):
The use of such a name [the parol evidence rule] for this rule has had unfortunate
consequences, principally by distracting the attention from the real issues that are involved.
These issues may be any one or more of the following: (1) Have the parties made a
contract? (2) Is that contract void or voidable because of illegality, fraud, mistake, or any
other reason? (3) Did the parties assent to a particular writing as the complete and accurate
“integration” of that contract?
In determining these issues, or any one of them, there is no “parol evidence rule”
to be applied. On these issues, no relevant evidence, whether parol or otherwise, is
excluded. No written document is sufficient, standing alone, to determine any one of them,
however long and detailed it may be, however formal, and however many may be the seals
and signatures and assertions. No one of these issues can be determined by mere inspection
of the written document.
See, also, Johnson v. Stover, 218 Neb. 250, 354 N.W.2d 142 (1984) (relying on same authority).
The U.C.C. does not preclude an action for fraud or misrepresentation. See Neb. U.C.C.
§ 1-103(b) (Cum. Supp. 2018) (unless displaced by particular provisions of U.C.C., the principles
of law and equity, including law merchant and law relative to capacity to contract, principal and
agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other
validating or invalidating cause supplement U.C.C. provisions). It is well established that parol
evidence is always admissible to show, for the purpose of invalidating a written instrument, that
its execution was procured by fraud, or that, by reason of fraud, it does not express the true
intentions of the parties. See Central Constr. Co. v. Osbahr, supra.Before addressing the specifics of Swain’s argument, it is useful to point out that the small
claims court did not include in its order entering the judgment in Schechinger’s favor or otherwise
state on the record any factual finding or analysis underpinning its final decision. Similarly, the
district court did not include in its order of affirmance any factual findings or a discussion of how
the governing law applied to the facts of this case. The district court summarily stated that based
on its review of the record, the judgment conformed to the law and was supported by competent
evidence. The district court did not state on the record the basis on which it found that the judgment
should be affirmed. Nevertheless, we can infer from its judgment in Schechinger’s favor that the
small claims court relied on parol evidence to some extent in reaching its decision. The inquiry
before us is whether reliance on parol evidence under the circumstances of this case conforms to
the law and is supported by competent evidence.
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If the contract itself governing the sale of the skid loader between Schechinger and Swain
was ambiguous, then consideration of and reliance upon parol evidence would have been
appropriate. See Sack Bros. v. Tri-Valley Co-op, supra (if contract is ambiguous, parol evidence
can be used to vary its terms). No contract was offered or received in evidence here; we thus
consider any terms contained in the invoice for sale. We note that the description of the skid loader,
including that it had “206 Hrs Showing,” was reflected on Schechinger’s invoice for the sale. Our
understanding of the terms for the sale of the skid loader is limited solely to Armstrong’s testimony
indicating that the terms provided that the skid loader was to be sold “‘as is.’” Schechinger did not
dispute that evidence. In interpreting a contract, a court must first determine, as a matter of law,
whether the contract is ambiguous. Id. A determination as to whether ambiguity exists in a contract
is to be made on an objective basis, not by the subjective contentions of the parties; thus, the fact
that the parties have suggested opposite meanings of a disputed instrument does not necessarily
compel the conclusion that the instrument is ambiguous. Id.
Section 2-316(3)(a) expressly mandates that, unless the circumstances indicate otherwise,
the use of the expression “as is” is language that in common understanding calls the buyer’s
attention to the exclusion of warranties and makes plain that there is no implied warranty. Without
yet considering any other circumstances other than the invoice itself, we find that the undisputed
language in the terms for the sale at issue providing that the skid loader was to be sold “as is” had
an unambiguous meaning. Under the U.C.C., the language was an effective disclaimer regarding
the skid loader’s hour meter or actual hours of use. See § 2-316(3)(a). Because the record does not
show that the written terms for the sale of the skid loader were ambiguous, we cannot find on this
record that the invoice itself would have permitted reliance on parol evidence to vary its “as is”
term. See Sack Bros. v. Tri-Valley Co-op, supra. Therefore, the small claims court could not have
relied on parol evidence under that basis.
The remaining question is whether parol evidence could have been relied upon by the small
claims court for the reason that the transaction was the result of fraud. As stated previously, parol
evidence is always admissible to show, for the purpose of invalidating a written instrument, that
its execution was procured by fraud, or that, by reason of fraud, it does not express the true
intentions of the parties. See Central Constr. Co. v. Osbahr, supra. Schechinger’s claim, as set
forth in his initial filing, was not a breach of contract claim but one essentially asserting that the
sale was procured by fraudulent misrepresentation. A purchaser is not limited to the contract when
bringing claims against the seller, but may also bring a claim for fraudulent misrepresentation. See
Gibb v. Citicorp Mortgage, Inc., 246 Neb. 355, 518 N.W.2d 910 (1994). An “‘as is’” clause does
not necessarily bar a purchaser’s fraud-based claim. Id. at 364, 518 N.W.2d at 918.
To state a claim for fraudulent misrepresentation, a plaintiff must allege (1) that a
representation was made; (2) that the representation was false; (3) that when made, the
representation was known to be false or made recklessly without knowledge of its truth and as a
positive assertion; (4) that the representation was made with the intention that the plaintiff should
rely on it; (5) that the plaintiff did so rely on it; and (6) that the plaintiff suffered damage as a
result. Knights of Columbus Council 3152 v. KFS BD, Inc., 280 Neb. 904, 791 N.W.2d 317 (2010).
Mere silence cannot constitute a misrepresentation absent a duty to disclose information.
See id. No consideration of whether a defendant owed fiduciary duties to a plaintiff is necessary
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in a case in which fraudulent misrepresentation is due to a half-truth. Id. When a party makes a
partial or fragmentary statement that is materially misleading because of the party’s failure to state
additional or qualifying facts, the statement is fraudulent. Id. Fraudulent misrepresentations may
consist of half-truths calculated to deceive, and a representation literally true is fraudulent if used
to create an impression substantially false. See id. To reveal some information on a subject triggers
the duty to reveal all known material facts. Id. An ambiguous statement is fraudulent if made with
the intent that it be understood in its false sense or with reckless disregard as to how it will be
understood. Id. See, also, Restatement (Second) of Torts § 526, comment e. (1977) (fraud is proved
if it is shown that false representation has been made without belief in its truth or recklessly,
careless of whether it is true or false). Fraud generally must relate to a present or preexisting fact
and may be proved by inferences which may reasonably be drawn from intrinsic evidence
respecting the transaction itself, such as inadequacy of consideration, or extrinsic circumstances
surrounding the transaction. See Central Constr. Co. v. Osbahr, supra.According to Schechinger’s testimony, Swain’s employee represented that the skid loader
had 206 actual hours of use. Schechinger and his son both said they questioned the appearance of
the skid loader on the day of the test drive at Swain’s place of business. Schechinger’s son recalled
that the employee said the following about the skid loader: “‘This thing’s got 206 hours on it. We
never use it. It’s been sitting back here since I’ve worked here for seven or eight years and we
rarely move it.’” Schechinger and his son were reassured “several times” that the skid loader was
a 206-hour machine. Schechinger recalled that the employee was “sure” that the skid loader “sat
back there and only had 206 hours.” When Schechinger test drove the skid loader, he presumably
would have been able to see the hours displayed on its hour meter. His evidence shows that he was
interested to know if the displayed hours on the hour meter were actually true given the skid
loader’s visible condition. The employee’s reassurances with references to how sparingly the
machine had been used continued to communicate the representation that its hours of use were
actually 206 hours. That representation was later shown by the service records to be false.
The record reflects that the employee should have known from dealing with Schechinger
and his son for this transaction that they were concerned with the skid loader’s actual hours of use,
not merely the hours shown on the hour meter. The employee’s statements about the skid loader
having only “‘206 hours on it’” were materially misleading to the extent that they were meant to
be constrained to the hours showing on the hour meter at the time of the test drive. Because the
employee’s statements did not include a qualifier to that effect, they could have reasonably created
a substantially false impression in Schechinger’s mind that the skid loader had 206 hours of actual
use. A finder of fact could also reasonably deduce from the same that Swain’s employee made the
false representation at least in a reckless manner as to how it would be understood. Even if the
employee did not have personal knowledge of the actual hours of use of the skid loader, the
employee’s answers were nevertheless given as positive assertions that he did have such
knowledge. Given the presale context in which the representation was made, a finder of fact could
reasonably conclude that the employee intended that Schechinger rely on the representation and
bid on the skid loader during the upcoming online auction.
Schechinger must have also justifiably relied on the false representation to have a viable
claim for fraudulent misrepresentation. In a fraudulent misrepresentation case, whether the
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plaintiff exercised ordinary prudence is relevant to whether the plaintiff justifiably relied on the
misrepresentation when the means of discovering the truth was in the plaintiff’s hands. See Lucky 7
v. THT Realty, 278 Neb. 997, 775 N.W.2d 671 (2009). A plaintiff is justified in relying upon a
positive statement of fact if an investigation would be required to discover the truth; but the
Nebraska Supreme Court has never held that an investigation includes an inspection of the
property. Id. The Nebraska Supreme Court has rejected misrepresentation claims when the truth
of the property’s condition was obviously apparent to a potential buyer upon inspection. Id. In
other cases, it has concluded that the buyer reasonably relied on a seller’s misrepresentation only
after concluding that an inspection could have been fruitless or that the seller interfered with the
buyer’s ability to inspect. Id. But in another case, a buyer’s reliance on a seller’s statements was
reasonable when the buyer would not have discovered the needed information by inspection of the
property. Id. See, also, Cao v. Nguyen, 258 Neb. 1027, 607 N.W.2d 528 (2000) (buyer’s reliance
on sellers’ misrepresentations that property was duplex rentable to two families was reasonable
when buyers would have had to contact city, research public records, and compare building code
to actual home structure to prove representations were false); Foxley Cattle Co. v. Bank of Mead,
196 Neb. 1, 241 N.W.2d 495 (1976) (generally, fraud may be predicated on false representations
although truth could have been ascertained by examination of public records).
Justifiable reliance must be decided on a case-by-case basis. See Lucky 7 v. THT Realty,
supra. In determining whether an individual reasonably relied on a misrepresentation, courts
consider the totality of the circumstances, including the nature of the transaction; the form and
materiality of the representation; the relationship of the parties; the respective intelligence,
experience, age, and mental and physical condition of the parties; and their respective knowledge
and means of knowledge. Id. A clause that an article is taken in the condition in which it is, or in
other words, “as is,” is relevant in determining whether a claimant relied on a false representation
concerning the condition of the article, but it is not controlling. See Gibb v. Citicorp Mortgage,
Inc., supra.
As a farmer, Schechinger understood from buying “tractors, or combines, or anything,”
that the value of that machinery was due in part to “more hours” equating to “less value.” Swain
had owned the skid loader in question for years; its employee worked there for at least 7 or 8 years
at the time of talking with Schechinger about the skid loader. Armstrong described the employee
as Swain’s “contact person.” Schechinger and Swain and its employee all appear to have had
experience in buying or selling farm machinery. The skid loader being sold “as is” has little to no
relevance to whether Schechinger justifiably relied on the false representation that it had 206 actual
hours of use, because there was no proof that the condition of the skid loader or its hour meter
would have revealed the falsity. In fact, Armstrong said that “206 hours” was “what was on the
hour meter” so that “all” of Swain’s “shop people knew -- [including the employee who dealt with
Schechinger] . . . what was on the hour meter.” There was nothing showing that Schechinger could
know from an inspection of the skid loader that its hour meter had been replaced before so as to
indicate that the actual hours of use were higher than suggested.
Swain argues that Schechinger had the burden to request the service records prior to the
sale. But the standard imposed by law is only one of ordinary prudence, and a buyer’s reliance on
a seller’s statements may be reasonable when the buyer would not have discovered the needed
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information by inspection of the property. See, Lucky 7 v. THT Realty, supra; Cao v. Nguyen,
supra. Our record indicates that the service records were in Swain’s possession prior to the sale.
Schechinger’s son testified that on the day of the test drive at Swain’s place of business, Swain’s
employee said “the service records were across the road.” It might have been prudent for
Schechinger to ask to see the service records at that time. Nevertheless, we cannot say that ordinary
prudence absolutely required such a request when there was also evidence that the employee came
across as confident about the information he provided. For example, Schechinger had the sense
that the employee was “sure” that the skid loader “only had 206 hours” and according to
Schechinger’s son they were “reassured several times” that it was a 206-hour machine.
Schechinger first saw the service records after the sale at the time he went to Swain’s place
of business to pick up the skid loader. The service records were not equally accessible to both
parties in that they were in Swain’s “hands.” See Lucky 7 v. THT Realty, 278 Neb. at 1003, 775
N.W.2d at 676. See, also, Gibb v. Citicorp Mortgage, Inc., 246 Neb. 355, 518 N.W.2d 910 (1994)
(as between vendor and purchaser, where material facts and information are equally accessible to
both, and nothing is said or done which tends to impose on purchaser or to mislead him or her,
failure of vendor to disclose such facts does not amount to actionable fraud). Under the totality of
circumstances, a finder of fact could conclude that Schechinger justifiably relied on the false
misrepresentation that the skid loader had 206 hours of actual use. And, it is clear that Schechinger
suffered damage as a result in that he purchased a skid loader of less value than he understood it
to possess.
Schechinger pled and offered sufficient evidence to state a claim for fraudulent
misrepresentation by Swain’s employee. See Knights of Columbus Council 3152 v. KFS BD, Inc.,
280 Neb. 904, 791 N.W.2d 317 (2010) (elements of fraudulent misrepresentation). Swain does not
contend that it cannot be liable for its employee’s actions or inactions by reason of the employee
having lacked authority related to the sale of the skid loader. Our analysis would be incomplete,
however, without determining if the employee’s fraudulent misrepresentation could bind Swain.
Generally, whether an agency relationship exists presents a factual question. Koricic v.
Beverly Enters. - Neb., 278 Neb. 713, 773 N.W.2d 145 (2009). The scope of an agent’s authority
also is a question of fact. Id. An agent is a person authorized by the principal to act on the
principal’s behalf and under the principal’s control. See id. For an agency relationship to arise, the
principal manifests assent to the agent that the agent will act on the principal’s behalf and subject
to the principal’s control. Id. And the agent manifests assent or otherwise consents so to act. Id.An agency relationship may be implied from the words and conduct of the parties and the
circumstances of the case evidencing an intention to create the relationship irrespective of the
words and terminology used by the parties to characterize or describe their relationship. Koricic v.
Beverly Enters. - Neb., supra.
Actual authority is authority that the principal expressly grants to the agent or authority to
which the principal consents. RM Campbell Indus. v. Midwest Renewable Energy, 294 Neb. 326,
886 N.W.2d 240 (2016). A subcategory of actual authority is implied authority, which courts
typically use to denote actual authority either to (1) do what is necessary to accomplish the agent’s
express responsibilities or (2) act in a manner that the agent reasonably believes the principal
wishes the agent to act, in light of the principal’s objectives and manifestations. Id. When a
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principal delegates authority to an agent to accomplish a task without specific directions, the grant
of authority includes the agent’s ability to exercise his or her discretion and make reasonable
determinations concerning the details of how the agent will exercise that authority. Id.A principal may be liable for the fraudulent actions of its agent. See Gibb v. Citicorp
Mortgage, Inc., supra. Under common-law principles, a principal is liable for the deceit of its agent
committed in the very business he or she was appointed to carry out; this is true even though the
agent’s specific conduct was carried on without knowledge of the principal. See Draemel v.
Rufenacht, Bromagen & Hertz, Inc., 223 Neb. 645, 392 N.W.2d 759 (1986).
The evidence does not include the terms of employment between Swain and its employee
who dealt with Schechinger for the sale of the skid loader. According to Armstrong, that employee
worked for Swain as its “contact person”; Armstrong also indicated that the employee was one of
Swain’s “shop people.” Under the agreement between Swain and the company which hosted the
online auction, Armstrong, on behalf of Swain, named that same employee as the person to contact
at Swain. The description of the skid loader on Schechinger’s invoice listed the employee as the
“Seller’s Contact” next to what appears to be the telephone number at which to reach Swain; the
same telephone number was attributed to Swain’s business address and the employee’s name. All
of Schechinger’s direct dealings with Swain contained in the record were through that same
employee. Armstrong testified that Schechinger talked to the employee “because we [(Swain)] had
to show him which skid loader he was interested in.”
The evidence indicates that the employee was tasked with communicating with the online
auction company and potential bidders for Swain’s auction items, including the skid loader
eventually purchased by Schechinger. The employee also had authority to show the skid loader to
interested bidders. Thus, the employee had the actual authority to communicate with and show the
skid loader to Schechinger prior to the auction. The record supports that in exercising that
authority, the employee could answer Schechinger’s questions about the skid loader. A finder of
fact could find that it was reasonable for the employee to do so to secure actual bidders for the skid
loader and a profitable sale of the item for the benefit of Swain. In absence of specific directions,
the employee was able to exercise his discretion in determining how best to answer Schechinger’s
questions about the skid loader. See RM Campbell Indus. v. Midwest Renewable Energy, supra.Swain could be liable for the employee’s fraudulent misrepresentation committed while acting in
the scope of his actual and implied authority to act for Swain. See Draemel v. Rufenacht, Bromagen
& Hertz, Inc., supra. Swain’s knowledge of the employee’s specific communication with
Schechinger that created the fraudulent impression about the skid loader’s actual hours of use is
irrelevant to the liability created out of the principal-agent relationship. Id.
Upon our consideration of the judgment in the light most favorable to Schechinger, we
conclude that the small claims court must have relied on parol evidence in light of its relevance to
Schechinger’s claim of fraudulent misrepresentation, which claim is supported by competent
evidence in the record. As illustrated in our analysis, parol evidence of the prior oral assurances
by Swain’s employee which created a false impression that the skid loader had only 206 hours of
actual use was necessary to resolve Schechinger’s claim. See Central Constr. Co. v. Osbahr, 186
Neb. 1, 180 N.W.2d 139 (1970) (fraud cannot be determined by mere inspection of written
document; parol evidence is always admissible to show that execution of written instrument was
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procured by fraud, or that, by reason of fraud, it does not express true intentions of parties).
Accordingly, we reject Swain’s assertion that the small claims court should have disregarded
evidence of statements made prior to the sale in light of the disclaimer under the terms for the sale.
Our review of the judgment for errors appearing on the record reveals none.
CALCULATION OF DAMAGES
Swain contends, alternatively, that “[a]ssuming Schechinger’s action is legally viable, his
calculation of hours was in error.” Brief for appellant at 12. Since the small claims court relied
upon Schechinger’s calculations, Swain argues that the small claims court erred in its
determination of damages.
Damages, like any other element of the plaintiff’s case, must be pled and proved, and the
burden is on the plaintiff to offer evidence sufficient to prove the plaintiff’s alleged damages. See
Pan v. IOC Realty Specialist, 301 Neb. 256, 918 N.W.2d 273 (2018). Evidence of damages must
be sufficient to enable the trier of fact to estimate actual damages with a reasonable degree of
certainty and exactness. Id. Proof of damages to a mathematical certainty is not required; however,
a plaintiff’s burden of offering evidence sufficient to prove damages cannot be sustained by
evidence which is speculative and conjectural. Id. The opinion of a personal property owner is
competent evidence of its value, solely because of his or her status as owner. See id.Schechinger’s claim was that his skid loader had about 1,550 hours of actual use rather
than 206 hours. During the hearing before the small claims court, it was Schechinger’s position
that the skid loader had 1,343 additional hours of use (1,549 less 206 hours). As stated previously,
the service records show that in 2010, the skid loader went from having 1,343 hours on its hour
meter to “000” hours after its “instrument cluster” was replaced. Thereafter, the hours increased
steadily. Schechinger’s evidence was that the employee told him the skid loader had 206 actual
hours on it as of February 2019. Schechinger’s position was each additional hour of use devalued
the skid loader by $2. Schechinger opined that the rate at $2 per hour was “pretty lenient” and
“really cheap”; he took into account that the skid loader was an “older machine.” It is apparent that
the small claims court relied upon Schechinger’s testimony to reach its judgment amount of $2,686
(1,343 additional hours of use multiplied by $2 of value per hour).
Swain contends the skid loader had less hours of additional use than 1,343 hours based on
its interpretation of the service records that the hour meter was replaced not only in 2010, but also
in 2006. Under its interpretation, Swain contends Schechinger’s damages should have been lower,
specifically, that the additional hours on the equipment only totaled 467 hours, not 1,343 hours.
Swain argues that in April 2005, the hour meter was at 235 hours, but that in February 2006, work
done on the skid loader included the following: “Switched brain from another skid loader.
Serviced.” Swain claims that at that time “[a]n hour meter from another skid loader was inserted
that began at 1,102 hours.” Brief for appellant at 13. From that point, the skid loader was used for
another 232 hours, resulting in an hour meter reading of 1,343 hours. A new meter was
subsequently “inserted that started as 0,” id., and the skid loader was then used for 206 hours, as
reflected on the meter at the time of sale.
Swain argues that the 2006 service, referring to switching a “brain,” means that a used hour
meter showing 1,102 hours was installed into Schechinger’s skid loader at that time such that those
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hours cannot be attributed to the actual use hours of Schechinger’s skid loader. However, the small
claims court had this evidence before it and elected to not adopt Swain’s interpretation of the
service records. Rather, the small claims court evidently relied on Schechinger’s claimed number
of the additional hours, which is supported by a different interpretation of the service records. The
amount of the judgment entered by the small claims court is supported by competent evidence and
is neither arbitrary, capricious, nor unreasonable.
CONCLUSION
The order of the district court affirming the judgment of the small claims court is affirmed.
AFFIRMED.
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