## Facts

- Thomas C. Hall, a maintenance employee at a Montgomery Ward store, had significant cognitive limitations (IQ 69).
- Hall used the store’s floor scrubber and took cleaning materials to do outside cleaning work; he denied taking other merchandise.
- A corporate security officer and the store manager interrogated Hall in the manager’s office; evidence showed the officer threatened Hall with jail.
- Hall signed four documents produced by the security officer: (1) a written consent to detention and interview for as long as Wards deemed necessary, (2) a list of items allegedly taken, (3) a written confession stating he stole merchandise valued at $5,000, and (4) a $5,000 promissory note payable to Wards.
- Evidence indicated the $5,000 figure substantially exceeded the likely value involved; the manager testified the listed items totaled about $25–$35 and claimed the $5,000 figure came from Hall.
- A psychologist testified Hall could not understand parts of the documents and, under stress, would likely sign papers to end the situation.
- Hall testified he signed because of threats of jail and suffered severe mental distress afterward (recurring dreams and strained family relationships).
- Hall presented no evidence of physical injury or financial loss; he relied on mental-anguish testimony and evidence of his limited possessions.
- The jury awarded Hall $12,500 in actual damages and $50,000 in exemplary damages; Hall had introduced Wards’ financial statements to support exemplary damages.

## Issues

1. Whether violation of a criminal statute prohibiting threatening or coercive conduct can supply a basis for civil liability when the resulting harm is mental anguish.
2. Whether a plaintiff may recover damages for severe mental anguish without accompanying physical injury or financial loss under the circumstances presented.
3. Whether evidence of a defendant’s financial condition is admissible to assist the jury in fixing exemplary damages.
4. Whether the actual and exemplary damage awards were so excessive as to require judicial intervention.

## Decision

- The Iowa Supreme Court reversed the trial court’s order granting a new trial and reinstated the jury verdict.
- The court held Hall could pursue a civil claim based on conduct by Wards’ agent that violated the relevant criminal statute, because the statute established a standard of conduct and Hall suffered the type of harm the statute aimed to prevent.
- The court held the evidence supported recovery for mental anguish despite the absence of physical injury or financial loss.
- The court held Wards’ financial condition evidence was properly admitted for the limited purpose of determining exemplary damages.
- The court held the awards of $12,500 actual and $50,000 exemplary damages were not excessive and did not reflect passion or prejudice.

## Legal Principles

- A criminal statute may support civil liability when (1) the statute is designed to protect a class of persons that includes the plaintiff, (2) the plaintiff’s injury is the type the statute seeks to prevent, and (3) the statutory violation proximately causes the injury.
- Severe mental anguish may be compensable as actual damages, even without physical injury or financial loss, when proximately caused by intentional wrongful conduct or a statutory violation.
- In assessing exemplary damages, a defendant’s financial condition is relevant and admissible so the punishment is meaningfully proportionate to the defendant’s ability to pay.
- A trial court should not order a new trial based solely on admission of wealth evidence when the record supports its use for exemplary-damages assessment and does not show misuse to inflame the jury.
- Appellate courts will not disturb damage awards absent a showing they fall outside permissible bounds or result from passion or prejudice.

## Conclusion

The Iowa Supreme Court reinstated a jury verdict awarding actual and exemplary damages to an employee coerced during an employer interrogation, holding that a statutory violation could support civil recovery for mental anguish without physical injury and that evidence of the defendant’s wealth was properly admitted to set exemplary damages.


Hall v. Montgomery Ward & Co., 252 N.W.2d 421 (Iowa 1977)