Turner Outdoor Advertising, Ltd. v. Fidelity Eastern Financial, Inc.

Citations: 366 S.E.2d 201; 185 Ga. App. 815; 1988 Ga. App. LEXIS 69Docket: 75275

Court: Court of Appeals of Georgia; February 12, 1988; Georgia; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Turner Outdoor Advertising, Ltd. appealed a directed verdict against it in a breach of contract case concerning unpaid rent for an outdoor advertising display leased to Fidelity Eastern Financial, Inc. (Diana's Bakery). Turner entered a twelve-month agreement on July 3, 1985, with a monthly rent of $400, commencing August 24, 1985, after Diana's made a $400 deposit. The contract specified a location that was approved by Diana Goodman, president of Diana's. However, unbeknownst to Turner, the ground lease for the original billboard location had been terminated prior to the contract's execution. 

Despite this, Turner secured a new location with Goodman’s approval, which also became unavailable. A third location was found, priced at $450, but Turner allowed Diana's to continue paying $400. The billboard was erected by the contract deadline. Shortly thereafter, the billboard was mistakenly covered by another advertisement, but Turner rectified this within a day. 

On September 23, Diana's counsel claimed that Turner breached the contract by covering the billboard and sought a refund of the deposit, leading Goodman to express a desire to terminate the relationship. Turner maintained the billboard for the entire contract term but did not receive any further rental payments. Turner initiated a lawsuit for the nine months of unpaid rent, interest, and attorney fees, while Diana's counterclaimed for the deposit refund, interest, and costs.

At trial, Diana's successfully moved for a directed verdict, arguing that Turner's failure to maintain the contractually specified billboard location constituted a breach and that Goodman’s statements amounted to contract rescission. The court ruled that the contract was void due to fraudulent inducement, as Turner had prior knowledge that the specified location was unavailable when the agreement was executed. The court denied relief on Diana's counterclaim, which Diana's accepted.

Turner contends that the court wrongly granted a directed verdict, asserting that the contract was incorrectly deemed void due to alleged inceptive fraud, that there was no valid contract modification regarding location, and that he complied with the contract terms by providing an acceptable alternative and rent credit to prevent rescission. The court evaluated the existence of fraud in the inducement, which requires that fraud must have induced a party to enter into a contract, incorporating specific elements such as false representation and justifiable reliance. The evidence presented did not conclusively demonstrate fraud as a matter of law; while there was an incorrect representation regarding the site's availability, it was shown that the sales agent made this representation innocently. Even if knowledge of the misrepresentation were imputed to the agent, it did not prove intent to induce the contract or establish that the alleged misrepresentation caused damage, especially since the defendant benefited from a year of satisfactory advertising after the initial payment. Turner had complied with contract terms by providing rent credit; thus, any potential fraud would render the contract voidable but not automatically void. The evidence raised questions about whether the contract was ratified by the defendant and whether the defendant acted diligently to rescind it. Diana's claim that the initial site's availability was a condition precedent, which if unmet would void their obligations, also presented a jury question regarding potential waiver of performance. A directed verdict is only appropriate when no material evidence conflicts exist; here, the evidence warranted further consideration. Consequently, the court's directed verdict was deemed erroneous, leading to a reversal of judgment. McMurray, P.J. and Sognier, J. concur.