C.I.T. Corp. v. Hetland

• Citation: 143 N.W.2d 94
• Decision Date: 27 April 1966
• Docket Number: No. 8288,8288
• Parties: C.I.T. CORPORATION, a New York corporation, Plaintiff and Respondent, v. Julius HETLAND, Defendant and Appellant.
• Court: United States State Supreme Court of North Dakota

Page 94

143 N.W.2d 94

C.I.T. CORPORATION, a New York corporation, Plaintiff and Respondent, v. Julius HETLAND, Defendant and Appellant.

No. 8288.

Supreme Court of North Dakota.

April 27, 1966.

Rehearing Denied June 21, 1966.

Syllabus by the Court

1. Where a buyer of personal property, expressly or by implication, makes known to the seller the purpose for which goods are purchased, there is an implied warranty that the goods will be reasonably fit for that purpose.

2. Where an airplane is sold to a buyer, there is an implied warranty that it will be reasonably fit to be flown. Where buyer alleges that the plane cannot be flown because it fails to meet minimum standards required to secure the necessary Federal Aviation Agency certificate, such allegation states facts showing a breach of implied warranty of the fitness of the plane.

3. A party to a contract may rescind the sme if there is a failure of consideration in any material respect. Sec. 9--09--02(4), N.D.C.C.

4. As a general rule, an assignee of a non-negotiable chose in action acquires no greater rights than those of the assignor, and he simply stands in the shoes of the assignor.

5. In an action by the assignee of a conditional sales contract covering an airplane, which contract provides that if the vendor shall assign the contract the buyer would not set up any claims, defenses, setoffs, or counterclaims he might have against the seller, Held, that such provision in the contract did not estop the buyer from raising the defense of failure of consideration, or from bringing an action to rescind the contract for failure of consideration, in view of Section 51--07--09, North Dakota Century Code.

6. The right to trial by jury in an action at law is a basic and fundamental part of our State and Federal systems of jurisprudence.

7. The right to a trial by jury is determined by the character of the issues as framed by the complaint.

8. A litigant has a constitutional right to have a jury decide disputed questions of fact, where he makes timely demand for a jury trial under the rules for preserving such right.

9. Where the complaint is for moneys due on a conditional sales contract, and alleges that the holder of such contract has the right, under its provisions to seize, take, and sell the property described in the contract in the manner provided by law, the action is essentially one for the foreclosure of a lien. Such action is an equitable action, triable to the court without a jury.

10. Rule of civil procedure that leave to amend pleading shall be freely given when justice so requires, does not guarantee that amendment of pleadings will be permitted in every case. The question of whether amendment shall be permitted is submitted to the informed, careful judgment and discretion of the trial court. Rule 15(a), N.D.R.Civ.P.

11. Where defendant failed to move for amendment of his answer until trial had begun, and more than one year had elapsed between the time of service of the answer and the trial, the trial court did not err in denying his motion to amend.

Nilles, Oehlert & Nilles, Fargo, for plaintiff and respondent.

Wattam, Vogel, Vogel, Bright 3 Peterson, Fargo, for defendant and appellant.

STRUTZ, Judge.

The plaintiff is a New York corporation doing business throughout the United States, including the States of North Dakota and Colorado. It engages in the business of financing.

The defendant lives in Fargo in this State. On August 23, 1962, he purchased an airplane from one Dick Nolan in Greeley, Colorado, where Nolan was engaged in the business of selling and servicing aircraft. The defendant was unable to pay the purchase price of $16,995 in cash, so he made a down-payment of $2,995 and executed a conditional sales contract for the balance of the purchase price of $14,000 plus finance charges on time sale of $4,199.80. This conditional sales contract was on a form furnished to the seller by the plaintiff finance company. It was assigned to the seller on the same day on which the defendant executed the contract.

Within a few days, the defendant flew the plane to his home in Fargo. On August 28, 1962, five days after it had been purchased, the plane was inspected by an inspector for the Federal Aviation Agency in Fargo. His report showed that certain repairs which had been made on the plane did not meet minimum requirements. The notice which was served upon the defendant pursuant to such inspection provided:

'THIS AIRCRAFT SHOULD NOT BE FLOWN EXCEPT ON A SPECIAL FLIGHT AUTHORIZATION (FERRY PERMIT) UNTIL AIRCRAFT FILE IS COMPLETE AND THE REPAIRS AND ALTERATIONS MEET MINIMUM REQUIREMENTS.'

In the trial of the suit by the plaintiff finance company, as assignee of the seller for payments due under the contract, the trial court refused to admit this notice of the plane's condition into evidence and further refused to allow witness A. J. Kundert, a licensed flight instructor authorized to make inspections of aircraft by the Federal Government, to testify as to the results of his examination of the plane. The defendant thereupon made an offer of proof that Kundert, if permitted to testify, would state that the plane was not airworthy. This offer of proof was denied.

Because the results of the examination made it impossible for the defendant to secure a certificate permitting him to operate the plane, it has not been used since it was flown to Fargo on August 23, 1962, shortly after its purchase.

Immediately upon the plane's being pronounced not airworthy, the defendant, on September 10, 1962, by registered mail, notified the seller of his election to rescind the contract upon the ground that the plane had been declared not airworthy and that the buyer had been denied flight authorization because repairs and alterations to the plane did not meet minimum standards prescribed by the Federal Government. The defendant buyer offered to return the airplane in exchange for his down-payment of $2,995. A copy of such notice to rescind was sent to the plaintiff finance company.

While the contract involved in this action is a Colorado contract, both parties agree that the law of North Dakota should apply in its interpretation. The case was tried on that theory.

After the trial had begun, the defendant moved to amend his answer and counterclaim to allege usury. The trial court denied this motion, stating:

'* * * We have started the trial. The issue is joined. The court has discretion.'

The conditional sales contract executed by the defendant for the purchase of the plane in question, which contract was assigned to the plaintiff on the day the contract was executed by the defendant, was endorsed by the seller 'Without recourse.' The contract, as signed by the defendant buyer, had a provision which reads as follows:

'* * * If you assign this contract you shall not be assignee's agent for any purpose; buyer will settle all claims, defenses, set-offs and counterclaims it may have against you, directly with you, and not set up any thereof against your assignee, you hereby agreeing to remain responsible therefor; * * *.'

The trial court found the execution of the installment contract by the defendant, the assignment of such contract by the seller to the plaintiff, and the stipulation waiving any defenses against the assignee in the event of an assignment, all valid. The court further found that, by reason of the execution of the installment contract by the defendant, with the stipulation waiving all defenses as against the assignee, any evidence of want or failure of consideration in the execution of the contract was incompetent, irrelevant, immaterial, and inadmissible by reason of such waiver of defenses as against the assignee, and that therefore the defendant was precluded from raising any such defenses against the plaintiff.

Judgment was entered for the plaintiff for the full unpaid balance due on the contract, together with interest and costs. From this judgment the defendant has taken this appeal, demanding trial de novo.

On appeal from a judgment in an action tried without a jury, where appellant demands a trial de novo, the appellate court tries the case anew, giving appreciable weight to the findings of the trial court. Spielman v. Weber (N.D.), 118 N.W.2d 727; Stark County v. Koch (N.D.), 107 N.W.2d 701; Strobel v. Strobel (N.D.), 102 N.W.2d 4.

This court will not apply the principle that in reviewing a case tried without a jury, it will give appreciable weight to the findings of the trial court in order to relieve it from the necessity of performing its lawful duty to try anew questions of fact in the entire case. On trial de novo, it will find the facts for itself. In addition to trying anew questions of fact, this court will determine whether the trial court committed errors of law in trial of the action.

The first question which confronts us on this appeal is whether the trial court erred in refusing to permit the defendant to introduce evidence tending to prove failure of consideration for the contract by reason of the fact that the plane described in the contract was not airworthy and that no certificate could be secured permitting its use. In other words, was the defendant estopped by the provision in the contract waiving all defenses, as against the assignee, from showing by proper evidence that the consideration for the contract had failed?

Section 51--01--16(1), North Dakota Century Code, provides that where the buyer, expressly or by implication, makes known to the seller the purpose for which the goods are required, there is an implied warranty that the goods will be reasonably fit for that purpose.

An airplane presumably is purchased for the purpose of being flown. This purpose was known to the seller, Nolan, whether the defendant expressly informed him of such purpose or not. The seller knew that the defendant was not spending approximately $20,000 for an airplane that he would not be able to fly. Thus the sale...