Appeal and cross-appeal from judgments of the United States District Court for the District of Vermont, Billings, J., entered following a jury trial, awarding compensatory and punitive damages upon jury findings of fraud and mutual mistake in the sale of land. Land was sold by mechanism of selling 100 percent of the stock of the corporate owner of the land.
Mansfield, Meskill and Altimari, Circuit Judges.
This is an appeal and cross-appeal from judgments of the United States District Court for the District of Vermont, Billings, J., entered following a jury trial. The initial judgment, filed June 12, 1985, awarded plaintiffs Hubert Alle Schaafsma and Marie Schaafsma $141,000 compensatory damages and $20,000 attorneys' fees against defendants Onno Kamerling and Morin Vermont Corporation jointly and severally, plus $75,000 in punitive damages against Kamerling and $75,000 in punitive damages against Morin Vermont. Judgment was rendered in favor of defendants Roger Morin, Richard Marriner, IMDA, s.a. and IMDA, Ltd. on all claims. An amended judgment, deleting the award of attorneys' fees, was filed on July 22, 1985. Kamerling appeals from both judgments. The Schaafsmas cross-appeal.
We vacate the judgment, reverse in part and remand for further proceedings.
This case involves the purchase of real estate in Troy, Vermont. Before describing the transaction, we introduce the players.
Plaintiffs Hubert Alle Schaafsma and Marie Schaafsma, a married couple, are citizens of the Netherlands and residents of Kent, England, who desired to purchase investment property in Northern Vermont.
Defendant Onno Kamerling is a resident of the Netherlands and a long-time acquaintance of the Schaafsmas. He is an investment consultant who made a practice of representing Dutch people in connection with investments in Vermont real estate.
Defendant Roger Morin is a Vermont real estate broker.
Defendant Morin Vermont Corporation is a Vermont corporation with its principal place of business in Jay, Vermont. Roger Morin owns fifty percent of the corporation's stock and is a director, vice president and secretary of the corporation. The other fifty percent of the stock belongs to defendant Richard Marriner, a Louisiana resident who is a director, president and treasurer of Morin Vermont.
Defendant IMDA, s.a. is a Luxembourg holding corporation owned by Marriner. Kamerling had a power of attorney over its bank account.
Defendant IMDA, Ltd., of which Kamerling is sole director, is an investment company established at Kamerling's suggestion on the Isle of Guernsey, the Channel Islands.
Lamoille Realty Corporation (Lamoille) was incorporated under Vermont law in 1970 and was engaged in the purchase and sale of real estate in Troy, Vermont. Roger Morin was its vice president and secretary. Richard Marriner was its president, treasurer and sole director. Prior to the events at issue here, one hundred percent of Lamoille's capital stock was owned by Morin Vermont Corporation.
In October 1981, at Kamerling's suggestion, the Schaafsmas traveled to Troy, Vermont, for the purpose of inspecting and possibly purchasing land. Kamerling, with some assistance from Morin, showed them several parcels on October 24, including land owned by Lamoille. Kamerling and the Schaafsmas returned to the Lamoille property on October 25. It consisted of two separate parcels. Kamerling told the Schaafsmas that the smaller parcel contained about ten acres, while the larger one contained about ninety acres. Following Kamerling's directions, Mr. Schaafsma walked three of the four boundary lines of the larger parcel, which was roughly rectangular.
Later on October 25, soon after this second viewing of the Lamoille property, Mr. Schaafsma and Kamerling drove to Roger Morin's office in Jay, Vermont. There, Morin gave Schaafsma a brochure, also characterized by some of the parties as a "prospectus," on the letterheads of IMDA, s.a. and IMDA, Ltd., describing the "Lamoille Holdings" and told Schaafsma for the first time that the land was owned by the Lamoille Realty Corporation. A sketched map in the brochure showed a large parcel of eighty-nine acres including a portion marked "Wills" and a small parcel of 11.5 acres, for a total of 100.5 acres. Morin stated that he explained to Schaafsma at this time that the parcel marked "Wills" was not then owned by Lamoille. Schaafsma claims that no such statement was made. The total price quoted to Schaafsma for the Lamoille land was $100,000, although the price quoted by Morin to Kamerling for the same land had been $65,000.
When Schaafsma expressed an interest in buying the Lamoille land, Kamerling and Morin suggested that he buy all of Lamoille Realty Corporation's stock instead, the land being the corporation's sole asset. Kamerling maintains that he told Schaafsma that structuring the purchase of the land as a purchase of the corporation would be advantageous from a tax standpoint. According to Schaafsma, it made no difference to him and his wife whether the purchase was structured as a stock or land transaction, as long as the transaction left them owning the land.
After meeting with Morin and Kamerling, Schaafsma returned to the hotel where he had been staying with his wife. Mr. and Mrs. Schaafsma discussed the Lamoille land and then told Kamerling that they wanted to buy it. Kamerling told them to send a deposit of $10,000 to an account of IMDA, s.a. in Holland. The Schaafsmas returned to Europe where, on November 6, 1981, they transmitted the $10,000 deposit to that account. On December 3, 1981, they sent the $90,000 remainder of the purchase price to the same account.
Morin and Kamerling knew at the time of their October 25 meeting with Mr. Schaafsma that Lamoille did not then own the ten acre parcel marked "Wills" on the Lamoille brochure. That parcel was purchased for Lamoille in early January 1982. Both Kamerling and Morin claim not to have known at the time of the meeting that the Lamoille holdings amounted to only 75.4 acres, although Morin concedes that the actual acreage could easily have been determined. When the Wills parcel ...