Airstream, Inc. v. CIT Financial Services, Inc., 16857

• Citation: 768 P.2d 1302,115 Idaho 569
• Decision Date: 20 December 1988
• Docket Number: No. 16857,16857
• Parties: AIRSTREAM, INC., Plaintiff-Respondent. v. CIT FINANCIAL SERVICES, INC., Defendant-Appellant.
• Court: United States State Supreme Court of Idaho

Page 1302

768 P.2d 1302

115 Idaho 569

AIRSTREAM, INC., Plaintiff-Respondent. v. CIT FINANCIAL SERVICES, INC., Defendant-Appellant.

No. 16857.

Supreme Court of Idaho.

Dec. 20, 1988.

Clemons, Cosho & Humphrey, Boise, for defendant-appellant. David M. Penny argued.

Moffatt, Thomas, Barrett & Blanton, Boise, for plaintiff-respondent. Phillip S. Oberrecht argued.

BISTLINE, Judge.

Most of the facts giving rise to this controversy are well set out in Airstream, Inc. v. CIT Financial Services, Inc., 111 Idaho 307, 723 P.2d 851 (1986) (Airstream I ), which reversed a district court judgment in favor of Airstream, and remanded for a finding to ascertain CIT's intent in the endorsement by one of its clerical employees (Kristin Haustveit) of a check delivered to it by the Boise Airstream dealer (Shuler), and also for findings relating to the usages of the trade and course of dealings be

                [115 Idaho 570] tween Airstream and Shuler.  Airstream I, 111 Idaho at 313, 723 P.2d at 857.   Following remittitur the parties provided the district court with additional briefing, oral argument, proposed findings and objections thereto.  No additional testimony was taken and no additional exhibits were introduced at a district court hearing whereat counsel for both parties were fully heard from and engaged the Court in a lengthy colloquy.  Thereafter the trial court's decision was to enter new findings and conclusions as directed.  Judgment was again entered in favor of Airstream, and CIT again appealed
                

I. LACK OF EVIDENCE TO SUSTAIN THE COURT'S CONCLUSION OF CIT'S LIABILITY AS AN ACCOMMODATION PARTY

No additional evidence having been heard or offered by either party, we find ourselves hard-pressed to find, in the identical evidentiary record which was previously before us, any evidence to sustain the supplemental finding that CIT's intent in endorsing the Shuler check was to do so as an accommodation party. Where the parties plaintiff and defendant had no further evidence to introduce on the issues of Kristin Haustveit's intent in stamping CIT and signing her name as an apparent endorsement on the Kirk Shuler checks made out to Airstream, it is self-evident that the record in that respect is no more informative now than it was when we made out first review in Airstream I. There our unanimous opinion cited to the Pierstorff Rule, for the thoroughly entrenched proposition:

... that courts must accept as true the positive uncontradicted testimony of credible witnesses, unless inherently improbable or rendered so by facts and circumstances disclosed at the trial. Curtis v. DeAtley, 104 Idaho 787, 663 P.2d 1089 (1983); Dinneen v. Finch, 100 Idaho 620, 603 P.2d 575 (1979); Pierstorff v. Gray's Auto Shop, 58 Idaho 438, 74 P.2d 171 (1937).

Airstream I, 111 Idaho at 312, 723 P.2d at 856.

Our opinion in that case pointed to the testimony of John Buzan which was relative to the check endorsement issue. Discussing only pre-sold units, Justice Bakes noted Buzan's testimony that pre-sold trailers:

... were generally paid for either with dealers' checks made payable solely to the manufacturer or by checks payable jointly to CIT and the manufacturer, in which case CIT would merely endorse the check and forward it to the manufacturer. He stated that he believed the dealers made some checks payable to both CIT and the manufacturer in order to keep their records straight. He also stated that CIT never endorsed such checks with the intent of guaranteeing payment on the check.

Airstream I, supra, at 310, 723 P.2d at 854. The testimony of Kristin Haustveit relative to the endorsement was also summed up:

Kristin Haustveit was also employed by the Boise office of CIT at the time of these transactions. Kristin admitted that she had stamped the CIT endorsement on the back of the checks. Although she did not recall the specific of either transaction, she testified that it was her signature which appeared under the CIT endorsement. She testified that she believed that the endorsement was a clerical error since she could not recall ever being instructed to place CIT's endorsement on any check on which CIT was not listed as a payee. She stated that she only had authority to place CIT's endorsement on dealers' checks which were made out to both CIT and the manufacturer before transmitting the check to the manufacturer.

Airstream I, supra, at 310, 723 P.2d at 854.

Carl Ramga was the Airstream executive in charge of accounts receivable. The following Finally, Carl Ramga, Sharon's Airstream supervisor at the time of the transactions, testified that Airstream's standard operating procedure was to get a verbal commitment for financing before shipping a unit to a dealer. He identified the Airstream invoices sent to CIT as floor plan billings. He stated that while it was unusual to receive Wheels Unlimited's check rather than CIT's check in a floored transaction, he recalled seeing CIT's endorsement on the back of the check and had assumed the endorsement made CIT a party to the transaction. Ramga testified that he had never received a dealer's check made out to both Airstream and a finance company. Ramga also testified that he had not seen the CIT confirmations which Buzan testified that he mailed to Airstream which contained the notations 'pre-sold' and 'not to be floored.'

[115 Idaho 571] is the summation of his testimony as reported in Airstream I:

Airstream I, supra, at 311, 723 P.2d at 855 (emphasis added).

The district court in its second review of the evidence in making a new set of Amended Findings and Conclusions of Law After Remand, made the following findings on the check endorsement issue:

13. After the delivery of the two travel trailers to Wheels Unlimited, Kirk Shuler drew two checks to the order of Airstream in the amounts of $15,704.84 and $21,961.50.

14. Prior to deliver of these checks, CIT, by and through its agent, Kristin Haustveit, placed its endorsement in blank on the reverse of the checks.

15. When Kristin Haustveit placed the CIT endorsement in blank on the reverse of the checks, CIT intended that the checks would pay Airstream for the units purchased by CIT from Airstream for delivery to Wheels Unlimited and that CIT intended to lend its credit to the Wheels unlimited checks in payment of CIT's obligations to Airstream. The Court is not persuaded that Kristin Haustveit's placement of the CIT endorsement in blank on the reverse of the checks was by mistake.

16. On or about June 4, 1979, Airstream presented the checks to the Idaho First National Bank, West State Office, Boise, Idaho, for payment and acceptance. Payment was demanded but was refused by the bank and the checks were dishonored. Timely notice of dishonor was given to CIT on or about June 19, 1979, and again on or about August 1, 1980.

(Emphasis supplied). It is to be noted that the district court did not find that the testimony of Kristin Haustveit and John Buzan was in any way contradicted; the court did not find that the testimony of either witness was incredible. Neither witness was then in the employ of CIT, and both in fact had held other employment for a number of years. The district court made no mention of the Pierstorff Rule, and no attempt was made to explain away the nonapplication of the rule. The court said only that "the court is not persuaded that Kristin Haustveit's placement of the CIT endorsement in blank on the reverse of the checks was by mistake." The court did not make a direct evidentiary-based finding as to CIT's intent in endorsing the Shuler checks. The court as a conclusion of law stated only this: "CIT became an accommodation party to the two checks issued by Kirk Shuler. Idaho Code § 28-3-415."

Fatally missing is any finding of fact to sustain that conclusion. For the court to say as it did that it was not persuaded that the endorsing of the checks was a clerical mistake does not amount to a finding that the testimony of both Kristin Haustveit and John Buzan was incredible and not worthy of belief. Both were apparently uninvolved and disinterested witnesses. The Pierstorff Rule as quoted in Dinneen, supra, teaches in part that: "neither the trial court nor a jury may arbitrarily or capriciously disregard the testimony of a witness unimpeached by any of the modes Such uncontradicted testimony may only be disregarded if the testimony's falsity is apparent 'without any resort to inferences or deductions,' Curtis v. DeAtley, supra, 104 Idaho at 790, 663 P.2d at 1092, quoting Dinneen v. Finch, 100 Idaho 620, 627, 603 P.2d 575, 582 (1979).

                [115 Idaho 572] known to the law, if such testimony does not exceed probability."  Dinneen, 100 Idaho at 627, 603 P.2d at 582.   A second part of the Pierstorff Rule found also in Dinneen at the pages cited, but more importantly found also in Airstream I is that
                

Airstream I, 111 Idaho at 312, 723 P.2d at 856.

On the evidentiary record before it, the trial court could not disregard the testimony of the witnesses Haustveit and Buzan. Moreover the trial court did not consider, and hence disregarded, the testimony of Airstream's Mr. Ramga as recounted in Airstream I, "Ramga testified that he had never received a dealers' check made out to both Airstream and a finance company." Airstream I, supra, at 311, 723 P.2d at 855. Also, Ramga stated that "he recalled seeing CIT's endorsement on the back of the check and had assumed the endorsement made CIT a party to the transaction." Id., at 311, 723 P.2d at 855.

Not mentioned in Airstream I, but brought to the trial court's attention was Mr. Ramga's obvious difficulty in explaining why he pursued Shuler rather than CIT when the two Wheels Unlimited checks bounced:

Q. You indicated a moment ago that you expected to receive a payment from C.I.T. on these two units.

A. These two.

Q. Why is it then you called Shuler when the check did not clear rather than calling C.I.T.?

A. He signed the check. He was the maker on it.

Q. A moment ago, though, you said...