Bundy v. Century Equipment Co., Inc., 18270

• Citation: 692 P.2d 754
• Decision Date: 02 November 1984
• Docket Number: No. 18270,18270
• Parties: Claude BUNDY and Lori Bundy, Plaintiffs, Respondents and Cross-Appellants, v. CENTURY EQUIPMENT COMPANY, INC., a Utah corporation, and Rex Howell, Defendants, Appellants and Cross-Respondents.
• Court: Supreme Court of Utah

Page 754

692 P.2d 754

Claude BUNDY and Lori Bundy, Plaintiffs, Respondents and Cross-Appellants, v. CENTURY EQUIPMENT COMPANY, INC., a Utah corporation, and Rex Howell, Defendants, Appellants and Cross-Respondents.

No. 18270.

Supreme Court of Utah.

Nov. 2, 1984.

Randall E. Grant, Salt Lake City, for defendants, appellants and cross-respondents.

Joseph H. Bottum, Ogden, for plaintiffs, respondents and cross-appellants.

HALL, Chief Justice:

This appeal and cross-appeal involve the propriety of the money judgment entered against defendant on plaintiffs' allegation of fraud.

On January 22, 1977, defendant Century Equipment Company, Inc. (hereinafter "Century") sold an excavator to Continental Excavating (hereinafter "Continental") for $80,500 plus tax. Continental's president, Clifford Heber, individually guaranteed payment of the total purchase price. Financing was arranged through Northwest Acceptance Corporation (hereinafter "Northwest") of Denver, Colorado, upon a purchase money security agreement and retail installment contract. Payments under the contract were to be $2,133 per month over a term of four years.

Following a very poor payment history, Heber and Continental finally defaulted on the contract. Their default prompted Northwest to invoke the recourse provision in the security agreement that required defendant to act as a collection agent for Northwest.

As a result, defendant entered into a supplemental agreement with Heber and Continental on September 9, 1977, that contained the following terms, in addition to those set forth in the original financing agreement: (1) payments were to be made to defendant in cash or by cashier's check; (2) payment by personal check would only be accepted if tendered one month in advance; and (3) the payment schedule was to be observed strictly. Despite the new agreement, however, Heber continued to be delinquent in making payments to Continental.

Finally, on or about March 15, 1978, Heber assigned Continental's interest in the excavator to plaintiffs Claude and Lori Bundy. Heber had come into contact with plaintiffs by responding to a newspaper ad wherein plaintiffs had offered to assume payments on a backhoe. The assumption was made by verbal agreement and upon Heber's representation that payments were current on the contract with defendant. Defendant was not given any notice of the agreement.

Plaintiffs took possession of the excavator and had operated it only two days when it broke down. It was then taken, apparently by Heber, to defendant's shop for repairs. Upon completion of the needed repairs, defendant, still unaware of the assignment to plaintiffs, refused to release the excavator to Heber since Heber and Continental owed defendant $7,802.12. That amount represented three monthly payments on the backhoe of $2,133 apiece and amounts owed on other purchases and repairs charged to Heber's open account.

After some negotiation, Heber made an agreement with defendant's president, James Maxedon, whereby Heber could secure the release of the excavator upon the tender of a $4,266 payment (representing two of the three delinquent monthly payments).

The evidence presented at trial with respect to the events that occurred following the agreement for release of the excavator was largely conflicting. Plaintiffs testified that on the morning of March 21, 1978, they were informed by Heber that the excavator had been repaired at defendant's shop and that a sum of $2,133 would be required to pay for the repairs and get the machine released. Plaintiffs further testified that upon receiving that information from Heber they each called the defendant company to inquire as to the nature of the repairs and to verify the amount quoted by Heber. Plaintiffs claimed they spoke with the company's treasurer, Rex Howell, and that he verified that the machine would be released upon payment of $2,133 for repairs to the "belly of the hoe." According to plaintiffs, nothing was mentioned by either Heber or Howell concerning delinquent payments or any other costs related to the excavator other than the cost of repairs.

Although defendant could not controvert plaintiffs' testimony as to the representations made to them by Heber, inasmuch as Heber could not be located and was therefore not available to testify at trial, defendant did attempt to controvert plaintiffs' testimony regarding communications with Howell and statements allegedly made by him. Defendant called upon Howell to testify regarding those alleged statements. Howell denied having made the statements attributed to him and added that he had never had a conversation by telephone or otherwise with either of the plaintiffs.

Mr. Bundy also testified that on the basis of the representations allegedly made to both him and his wife by Howell, he issued a check to defendant in the sum of $2,133, which he then delivered to Heber. He claimed that on the following morning March 22, Heber informed him that defendant, while accepting the $2,133 payment, had refused to release the excavator and was demanding an additional sum of money.

Defendant's evidence showed that Heber's tender of the $2,133 check on the morning of March 22 was accepted by Maxedon, but since it represented only one half of the amount previously agreed to by Heber and Maxedon for the release of the excavator (i.e., $4,266), Maxedon refused to give up possession of the excavator until the balance was paid. According to Maxedon's testimony, Heber agreed to bring the balance in later that day. Maxedon also testified that, while he was aware the check was drawn on the account of Bundy Excavating, he did not consider that fact to be of any significance since Heber had on previous occasions made payments with checks drawn on accounts other than his own, all his dealings had been with Heber, and he had not been informed of the agreement between Heber and plaintiffs.

Upon receiving word from Heber that defendant refused to release the excavator but had accepted and kept the $2,133 check, plaintiffs testified that Mrs. Bundy went immediately to Walker Bank to stop payment on the check and that Mr. Bundy went to defendant's office to get the check back. Mrs. Bundy testified that she arrived at the bank at approximately 9:30 a.m. on March 22 and while there was informed by Dorothy Stone, Walker Bank's employee, that payment on the check could not be stopped because a cashier's check had already been issued that morning to defendant. Mrs. Stone affirmed Mrs. Bundy's statements in her testimony and added that she thought her conversation with Mrs. Bundy had taken place at approximately 10:00 or 10:30 a.m. ¹

Mr. Bundy testified that after his wife left for the bank he went directly to defendant's office and requested that Mr. Howell return the check. His request was purportedly denied, and he was invited to sue.

The only aspect of plaintiffs' evidence regarding the cashing of the check disputed by defendant is with respect to the exact time it occurred. Maxedon and Howell each testified that the check was not cashed until around noon on March 22.

As to Mr. Bundy's alleged conversation with Howell in defendant's office, Maxedon testified that it was he who had that conversation with Mr. Bundy, not Howell. Maxedon further claimed that Mr. Bundy did not ask for his money back; rather, Bundy demanded the release of the equipment.

Plaintiffs claim that they would never have issued the check to defendant or released it to Heber if they had known it was going to be applied to Heber's delinquent payments, of which they were entirely unaware, rather than toward repairs as had been represented by both defendant and Heber. Because they were thus misled, plaintiffs brought this action against Century and Rex Howell, alleging fraud and conversion.

The trial court directed a verdict of no cause of action as to Rex Howell. The case was submitted to the jury as to Century. The jury returned a verdict against Century on the allegations of fraud in the amount of $2,133 general damages and $75,000 punitive damages. The jury found no loss of anticipated profits and no cause of action as to the claim for conversion.

Defendant moved the court for judgment notwithstanding the verdict or, in the alternative, for a new trial, as well as for remittitur or, in the alternative, a new trial. The court entered judgment against defendant for $2,133 general damages, but granted defendant's motion for remittitur and ordered that the $75,000 punitive damages award be reduced to $25,000 as a condition of denying defendant's motion for a new trial. This condition was accepted by plaintiffs. The judgment was accordingly entered on January 25, 1982, in the amount of $2,133 general damages and $25,000 punitive damages. Defendant appeals the judgment of the court granting the damages as set forth above. Plaintiffs have cross-appealed for a reinstatement of the original punitive damages verdict.

Defendant assigns the following as error: (1) the verdict is not supported by the evidence and is contrary to the law; (2) the issue of fraudulent misrepresentation should not have been submitted to the jury; (3) the issue of punitive damages should not have gone to the jury; (4) the court failed to apply appropriate equitable principles in submitting the case to the jury; and (5) the judgment for punitive damages in the amount of $25,000 was excessive.

We dispose of the first four of these assignments of error by adhering to well-established principles of appellate review. The first such principle is that this Court will upset a jury verdict, "only upon a showing that the evidence so clearly preponderates in favor of the appellant that reasonable people would not differ on the outcome of the case." ²

Although in conflict, there is substantial, credible evidence in the record that supports the jury's determination that defendant committed fraud upon plaintiffs. As was its prerogative to do, the jury...