Eissinger v. Mullin Trucking, Inc.

NO. 93-251
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
MARK EISSINGER,
Plaintiff and Appellant,
::
v.
MULLIN TRUCKING, INC., a ;``
corporation, and CLINT MULLIN, DEC 2 2 1993 1
Defendants and Respondents.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John J. Cavan, Cavan, Smith & Cavan,
Billings, Montana
For Respondents:
Arnie A. Hove, Attorney at law,
Sidney, Montana
Submitted on Briefs: September 23, 1993
Decided: December 22, 1993
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellant Mark Eissinger appeals from a judgment of the
Seventh Judicial District Court, Richland County, denying his
request to rescind a sale and transfer of title to a Peterbilt
truck and a refrigerated trailer to respondents Mullin Trucking,
Inc., and Clint Mullin, based on his claim of constructive or
actual fraud, and undue influence.
We affirm.
The issues are as follows:
1. Did the District Court err when it found that appellant
failed to prove constructive fraud?
2. Did the District Court err when it found that appellant
failed to prove actual fraud or undue influence?
3. Did the District Court err when it found that the
consideration paid by respondent closely approximated the value of
the truck and trailer at a distress sale?
Appellant grew up on his parents' farm in Brockway, Montana,
and graduated from high school in 1989. In August 1990, appellant
completed truck driving school and purchased a 1989 Ford truck for
approximately $75,000, without a down payment, after his father
arranged and co-signed for the loan. Appellant's father separately
purchased a dry van truck trailer for $9,000 cash. From
approximately October 1990 to March 1991, appellant leased the
truck and trailer as owner/operator with a Billings truck company
called Ligon.
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In November 1990, appellant and his father paid off the truck
using $40,000 from a trust fund established by the father, and with
additional cash from the father. In January 1991, due to numerous
truck repairs and downtime, appellant sold his 1989 Ford truck for
cash and purchased a new 1991 Peterbilt truck for approximately
$105,000, paying $36,000 in cash and financing the balance through
Commercial Associates of Englewood, Colorado.
Appellant and Clint Mullin (respondent) met in mid-March 1991
at the Northwest Peterbilt dealership in Billings. There,
appellant expressed his dissatisfaction in his employment with
Ligon, and respondent offered to lease his truck. Later,
appellant, his father, and respondent met to discuss the lease
arrangement. At the meeting, respondent informed appellant that he
would require a refrigerated trailer to handle the types of loads
he would haul. In April 1991, appellant traded his dry van trailer
for a refrigerated trailer (reefer trailer) and $4,500 cash. The
parties verbally agreed that appellant would receive 90 percent of
the freight bill for hauling the loads, and respondent would
receive 10 percent because he provided the loads.
In May 1991, appellant, without the knowledge or assistance of
his father, purchased a new Honda motorcycle for approximately
$5,000, and in June he purchased a new pickup for $31,000.
However, with $22,000 owing on the new pickup, in January 1992,
appellant sold the pickup in exchange for approximately $17,000 and
an older pickup.
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Appellant hauled steadily in April and May 1991, but he was
not paid until the end of June or early July 1991. Appellant chose
not to haul loads during June. By mid-July, appellant was
approximately three months in arrears in his truck payments.
On July 16, 1991, appellant transferred title of the truck and
trailer to respondent Mullin Trucking, Inc., by signing a buy/sell
agreement, two bills of sale, and title documents to both truck and
trailer. Mullin Trucking, Inc., assumed the encumbrance on the
truck totaling $56,443.92, which was consideration for the
transfer. Prior to the transfer, respondent told appellant to
inform his father of his financial difficulties, but appellant did
not do so.
Appellant brought this action in the District Court, asking
the court to rescind the July 16, 1991, sale and transfer of title
to the truck and trailer to Mullin Trucking, Inc., alleging the
transfer was induced by constructive or actual fraud, and undue
influence. Appellant alleged that he relied on respondent in
matters concerning the trucking business. Respondent gave specific
financial advice to appellant based on his superior business
experience, knowledge, and mature judgment. Appellant contends
that respondent had influence over him and made promises to him in
return for the truck transfer, without any intention of
performance, and also created a false impression by words and
conduct to respondent's own advantage.
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I.
Did the District Court err when it found that appellant failed
to prove constructive fraud?
Appellant argues that his consent was not real or free because
respondent's conduct amounted to actual or constructive fraud and
undue influence. Section 28-2-1711, MCA, allows a contracting
party to rescind a contract if that party's consent was acquired
through fraud or undue influence.
Section 28-2-406, MCA, defines constructive fraud as:
(1) any breach of duty which, without an actually
fraudulent intent, gains an advantage to the person in
fault or anyone claiming under him by misleading another
to his prejudice or to the prejudice of anyone claiming
under him: or
(2) any such act or omission as the law especially
declares to be fraudulent, without respect to actual
fraud.
Appellant argues that the District Court erred when it
considered whether a fiduciary relationship was present in the
relationship between the parties. This Court has determined that
a plaintiff need not prove a fiduciary relationship existed to
establish constructive fraud. McJunkin v. Kaufman & Broad Home
Systems (1987), 229 Mont. 432, 439-40, 748 P.2d 910, 914-15. This
Court has explained the application of § 28-2-406, MCA, by stating:
By its terms, the statute does not require that the
plaintiff demonstrate a fiduciary relationship. It
merely requires the establishment of a duty. We have
recognized that a sufficient duty can arise in a
commercial transaction such as the one at hand. We find
the defendants had a duty to refrain from intentionally
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or negligently creating a false impression by words or
conduct. [Citations omitted].
McJunkin, 748 P.2d at 915.
In the present case, the District Court considered whether a
fiduciary relationship was present, but also considered the factors
required in the statute to prove constructive fraud and whether
respondent had gained an advantage by misleading appellant to his
prejudice.
Appellant argues that the District Court erred when it failed
to adequately consider all the testimony and evidence before it.
Appellant contends that respondent intentionally or negligently led
appellant to believe respondent would retransfer title to the truck
and trailer to him whenever he requested without any conditions
attached. This Court will not overturn the district court's
findings of fact in a bench trial unless they are clearly
erroneous. In the Matter of the Mental Health of E.P. (1990), 241
Mont. 316, 787 P.2d 322; Rule 52(a), M.R.Civ.P. This Court will
also give due regard to the opportunity of the district court to
determine the credibility of the witnesses. In the Matter of the
Mental Health of R.J.W. (1987), 226 Mont. 419, 736 P.2d 110. See
Weber v. Rivera (1992), 255 Mont. 195, 841 P.2d 534.
In interpreting this rule, this Court has adopted a three-part
test:
First, the Court will review the record to see if the
findings are supported by substantial evidence. Second,
if the findings are supported by substantial evidence, we
will determine if the trial court has misapprehended the
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effect of [the] evidence. Third, if substantial evidence
exists and the effect of the evidence has not been
misapprehended the Court may still find that "[A] finding
is 'clearly erroneous' when, although there is evidence
to support it, a review of the record leaves the court
with the definite and firm conviction that a mistake has
been committed." [Citation omitted].
Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 323,
820 P.2d 1285, 1287.
In Weber, we held that the resolution of a rescission of
contract depends upon a factual determination about the
conversations between the parties. Weber, 841 P.2d at 536 In the
present case, the District Court made factual determinations of the
conversations between the parties, and respondent's conduct prior
to the truck and trailer transfer. The District Court determined
the credibility of the witnesses and found no evidence to support
a claim for constructive fraud. We hold that the court was not
clearly erroneous.
II.
Did the District Court err when it found that appellant failed
to prove actual fraud or undue influence?
Section 28-2-405, MCA, defines actual fraud as:
[A]ny of the following acts committed by a party to the
contract or with his connivance with intent to deceive
another party thereto or to induce him to enter into the
contract:
(1) the suggestion as a fact of that which is not
true by one who does not believe it to be true;
(2) the positive assertion, in a manner not
warranted by the information of the person making it, of
that which is not true, though he believes it to be true:
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(3) the suppression of that which is true by one
having knowledge or belief of the fact:
(4) a promise made without any intention of
performing it: or
(5) any other act fitted to deceive.
Appellant contends that the District Court failed to consider
testimony that respondent made promises to appellant in return for
the truck and trailer transfer, without any intention of performing
them. Again, the District Court made factual determinations of the
testimony concerning respondent's conduct and conversations prior
to the truck and trailer transfer. The court found appellant
failed to prove the necessary elements of actual fraud for several
reasons. Appellant's admission of having had full control of the
truck and trailer and that he could have been on the road hauling
loads whenever he chose, overshadowed his testimony that he was
dependant upon respondent for loads to haul. Prior to respondent's
purchase, he told appellant to inform his father of the financial
problems, but appellant failed to do so. Appellant's assertion
that respondent agreed to a retransfer of the truck and trailer at
an undetermined future date, without a determined or discussed
manner or amount of payment, without a determined or discussed rate
of interest, and without being in writing, is implausible.
Next, the court considered whether respondent exercised undue
influence over appellant.
Section 28-2-407, MCA, defines undue influence as:
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(1) the use by one in whom a confidence is reposed
by another or who holds a real or apparent authority over
him of such confidence or authority for the purpose of
obtaining an unfair advantage over him:
(2) taking an unfair advantage of another's
weakness of mind; or
(3) taking a grossly oppressive and unfair
advantage of another's necessities or distress.
Appellant contends the District Court failed to consider
testimony that respondent was in a superior position as one
experienced in business, and that appellant was immature and naive
in these matters. The court weighed the evidence whether
respondent was in a position of authority or influence over
appellant sufficient to take unfair advantage of him, and whether
appellant had a weakness of mind. Appellant made several other
arms-length transactions whereby he sold property for less than
what was owed on it. Moreover, appellant admitted that when the
transaction occurred he was old enough to handle his own affairs,
was satisfied with the deal, and felt "in hindsight" he could have
made a better deal. The court found the transfer between appellant
and respondent was an arms-length transaction and that there was no
actual fraud. We agree.
III.
Did the District Court err when it found that the
consideration paid by respondent closely approximated the value of
the truck and trailer at a distress sale?
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Appellant contends the District Court failed to adequately
consider evidence concerning the value of the truck and trailer to
be nearer to $92,000, and the possibility that appellant's father
would have paid the balance owed if foreclosure was imminent. The
court found that although the trailer and truck may have been worth
substantially more than the consideration paid by respondent, the
consideration very closely approximated the value of the truck and
trailer at a distress sale. Respondent agreed to pay all payments
and delinquencies in the amount of $56,443.92, and to hold
appellant harmless for all future payments. Appellant's transfer
of the truck and trailer for less than fair market value was
similar to, and consistent with, his prior financial transactions.
The District Court found for respondent and reasoned that it
was not for the court to remake the contract between the parties
simply because one may have received the better deal. We affirm
the conclusion of the District Court.
Affirmed.
We concur:
Chief Justice
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