W Bar N Sheep Cattle Co. v. Meats

No. 95-225
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1995
W BAR N SHEEP & CATTLE CO., INC., jzqf
a Montana Corporation, / ,*.
,y: !,;-&<
Plaintiff and Appellant, /\\jr; 2 2 i!%
v.
!<;j $),;f/$
MEATS OF MONTANA, INC., a Montana ';J?;:ER%
OF, sqw!giyE‘XpFn
grr".TE Md!rwk>
k;ii-
Corporation, and NORWEST BANK OF BILLINGS,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Robert W. Holmstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Arnie A. Hove, Attorney at Law, Circle, Montana
For Respondents:
Michael B. Anderson, V. Ann Liechty; Gannett,
Anderson & Liechty, Billings, Montana
Submitted on Briefs: August 3, 1995
Decided: August 22, 1995
Filed:
Justice W. William Leaphart delivered the Opinion of the Court.
Appellant, W Bar N Sheep & Cattle Company (W Bar N), filed
suit against Meats of Montana, I~C. (MOM), and Norwest Bank,
Billings, alleging actual fraud. The matter was tried before a
jury which returned a special verdict finding that Norwest Bank,
Billings was not guilty of fraud. W Bar N appeals from that
verdict. We affirm.
Backqround
Wilmer Pawlowski and Nora Pawlowski are shareholders in the
appellant corporation W Bar N. MOMwas engaged in the business of
purchasing, slaughtering, and selling processed meat of cattle.
The Pawlowskis are also shareholders in MOMand have been since MOM
originated. When MOM was first formed, it sought financing from
Norwest Billings. Norwest Billings declined to offer financing to
MOM but suggested that MOM contact Norwest Business Credit, Inc.
(NWBC) a sister corporation in Minnesota. NWBC agreed to finance
MOM and provide a line of credit upon certain conditions.
Accordingly, MOM granted a security interest to NWBC on all
property, receivables and intangibles in return for a credit
agreement with NWBC.
In October 1990, as part of the financing arrangements,
Norwest Billings and MOM entered into a collateral account
agreement whereby MOM agreed to deposit all collections receivable
and other cash proceeds of the collateral security in the
"collateral account." MOMinvoiced its meat sales with payments to
2
be sent directly to a "lockbox" from which Norwest Billings was to
retrieve the funds and deposit them in the collateral account. As
MOMpaid its debt to NWBCin this fashion, the monies available in
the line of credit were correspondingly increased.
On November 1, 1990, Herb Kelsey of Norwest Billings,
contacted 0. Lee Meyers, secretary of MOM, to inform him that the
MOM cattle purchase account was overdrawn by $90,000 and that the
checks would be returned if they were not covered. 0. Lee Meyers
then contacted Wilmer Pawlowski and advised him that $90,000 had to
be wired to MOM's cattle purchase account by 2:00 p.m. or checks
would not be honored by Norwest Billings and the MOM operation
would be taken over. Mr. Meyers further stated to Wilmer Pawlowski
that if Pawlowski wired the money to MOM's account, Pawlowski would
be repaid from the proceeds of sale of processed meats. Wilmer
Pawlowski spoke with Herb Kelsey and claimed that he demanded a
writing from Kelsey granting assurances that he would be repaid.
Pawlowski testified that Kelsey said he would send something in
writing within ten days to two weeks. Kelsey testified that
Pawlowski did not request a writing and no writing was issued by
Norwest Billings by way of a promise by Norwest Billings to pay for
any obligation of MOM. In any event, Wilmer Pawlowski, on behalf
of W Bar N wired the $90,000 to MOM's cattle purchase account and
Norwest Billings honored the checks in question. MOM did not
reimburse the $90,000 to W Bar N and W Bar N then filed suit
against MOM and against Norwest Billings on the basis of fraud. A
default was taken against MOM and appellants proceeded to trial
3
against Norwest Billings.
Issues oresented for review:
I Did the District Court err in excluding the testimony of
Jeanne Marie Charter on the grounds that the offered testimony was
irrelevant?
II Did the District Court err in giving court's Jury
Instruction No. 13 as an accurate statement of law?
III Did the District Court properly exclude testimony from
Wilmer Pawlowski regarding lost profits on the grounds that it was
improper lay testimony, improper expert testimony and speculative
in nature?
I
Did the District Court err in excluding the testimony of
Jeanne Marie Charter on the grounds that the offered testimony was
irrelevant?
This Court's standard of review in addressing evidentiary
rulings is one of "manifest abuse of discretion." In other words,
questions of admissibility of evidence are left largely to the
discretion of the trial court and will not be overturned except in
cases of manifest abuse of that discretion. Zugg v. Ramage (1989),
239 Mont. 292, 296, 779 P.2d 913, 916. W Bar N offered the
testimony of a Ms. Jeanne Charter, another shareholder of MOM. W
Bar N claimed that Charter had been involved in a situation similar
to that of W Bar N, in that, in the summer of 1990, the Charters
personally advanced funds to the cattle purchase account on MOM's
request. Norwest Billings objected to the Charter testimony on the
grounds of relevancy and on the grounds the Charter transaction
occurred subsequent to the Pawlowski/W Bar N transaction. The
District Court upheld the objection noting that the "issue here is
4
whether or not the bank has made some assurance to [Wilmer
Pawlowskil . The issue isn't whether something happened with this
matter that was some 45-days or two months later." On appeal, W
Bar N contends that the Charter testimony was relevant under
Montana Rules of Evidence, Rule 406, because it demonstrated a
routine practice of Norwest Billings. Rule 406, M.R.Evid.,
provides as follows:
(a) Habit and routine practice defined. A habit is
a person's regular response to a repeated specific
situation. A routine practice is a regular course of
conduct of a group of persons or an organization.
(b) Admissibility. Evidence of habit or of routine
practice, whether corroborated or not, and regardless of
the presence of eyewitnesses, is relevant to prove that
conduct on a particular occasion was in conformity with
the habit or routine practice.
(c) Method of proof. Habit or routine practice may
be proved by testimony in the form of an opinion or by
specific instances of conduct sufficient in number to
warrant a finding that the habit existed or that the
practice was routine.
Rule 406, M.R.Evid., clearly does not work to the benefit of
W Bar N with regard to the Charter testimony. Whatever routine W
Bar N was attempting to establish would not have been "routine" by
the time Wilmer Pawlowski wired funds to MOM's account if the only
similar event (the Charter loan) occurred at a later date. Rule
406(c) requires evidence of specific instances of conduct
sufficient in number to warrant a finding that the practice was
routine. One other instance is not sufficient to meet this test.
Furthermore, the Charter testimony, at best, would establish a
routine by MOMwhich cannot be characterized as a routine practice
by Norwest Billings. Accordingly, we hold that the District Court
5
did not abuse its discretion in excluding the testimony of Jeanne
Charter.
II
Did the District Court err in giving court's Jury Instruction
NO. 13 which sets forth the provisions of § 30-4-401(I), MCA,
allowing a bank to create an overdraft?
It is within the trial court's discretion to decide how to
instruct the jury, taking into account theories of the contending
parties, and the reviewing Court will not overturn the district
court except for abuse of discretion. Hall v. Big Sky Lumber and
Supply, Inc. (1993), 261 Mont. 328, 332, 863 P.2d 389, 392.
Court's Jury Instruction No. 13 read as follows:
A bank may charge against a customer's account only
items which are properly payable. An item is properly
payable if it is authorized by the customer and is in
accordance with an agreement between the customer and the
bank.
The above instruction was adapted from § 30-4-401(l), MCA, which
provides:
A bank may charge against the account of a customer
an item that is properly payable from that account even
thoush the char-se creates an overdraft. An item is
properly payable if it is authorized by the customer and
is in accordance with any agreement between the customer
and the bank. [Emphasis added.]
W Bar N objected to the deletion of the underlined statutory
language from the jury instruction. W Bar N claims that the
language "even though the charge creates an overdraft" is relevant
because Herb Kelsey, on behalf of Norwest Billings, had the
discretion to honor the checks in the amount of $90,000, thereby
6
creating an overdraft situation for MOM. We hold that the District
Court did not abuse its discretion in giving Jury Instruction No.
13 without the overdraft language included.
In presenting its fraud claim against Norwest Billings, W Bar
N was not prejudiced by the exclusion of the overdraft language.
At best, the language in question would have given Mr. Kelsey the
discretion to honor or dishonor the checks. W Bar N, however,
would have no legal basis upon which to fault Kelsey or Norwest
Billings for failure to exercise that discretion in the manner that
W Bar N preferred.
Did the District Court properly exclude testimony from Wilmer
Pawlowski regarding lost profits on the grounds that it was
improper lay testimony, improper expert testimony and speculative
in nature?
Since the jury arrived at a defense verdict finding no
liability by Norwest Billings, it was not necessary to consider the
issue of damages and the exclusion of damage evidence would, at the
most, be harmless error. Meinecke v. Skaggs (1949), 123 Mont. 308,
312, 213 P.2d 237, 239. Accordingly, we need not address this
issue.
Affirmed.
Pursuant to Section I, Paragraph 3 cc), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as
precedent and shall be published by its filing as a public document
7
with the Clerk of the Supreme Court and by a report of its result
to Montana Law Week, State Reporter and West Publishing Company.
We concur:
8