C. I. T. Corp. v. Hess, 9428

• Citation: 88 Idaho 1,395 P.2d 471
• Decision Date: 22 September 1964
• Docket Number: No. 9428,9428
• Parties: C. I. T. CORPORATION, a corporation, Plaintiff-Respondent, v. Marion J. HESS, Defendant-Appellant.
• Court: United States State Supreme Court of Idaho

Page 471

395 P.2d 471

88 Idaho 1

C. I. T. CORPORATION, a corporation, Plaintiff-Respondent, v. Marion J. HESS, Defendant-Appellant.

No. 9428.

Supreme Court of Idaho.

Sept. 22, 1964.

Racine, Huntley & Olson, Pocatello, for appellant.

Richards, Haga & Eberle, Boise, for respondent.

TAYLOR, Justice.

Plaintiff (respondent) brought this action to recover from defendant (appellant) the balance alleged due upon an 'Equipment Lease' contract, dated September 23, 1959, and assigned to plaintiff September 29, 1959. The material terms of the lease were as follows:

'Lessor hereby leases to Lessee, and Lessee hereby hires and takes from Lessor the following-described personal property (hereinafter, with all replacement parts, additions, repairs and accessories incorporated therein and/or affixed thereto, referred to as 'equipment'): * * *

1-NEW MODEL 38-B BUCYRUS-ERIE SHOVEL--SERIAL NUMBER 118161 UNIT 70 MOUNTING * * *

and Lessor agrees within--AT ONCE--from the date hereof to cause said equipment to be delivered to Lessee, f. o. b. MALAD, IDAHO.

TERM: This lease is for a term of 36 months, beginning SEPTEMBER 23, 1959, and ending SEPTEMBER 23, 1962.

RENTALS: For said term or any portion thereof, Lessee shall pay to Lessor rentals aggregating $81,038.30, of which $5,000.00 is herewith paid in advance and the balance of the rental, $76,038.30, is payable in 35 equal, successive, monthly rental payments of $2,000.00 each, of which the first is due NOVEMBER 15, 1959, and one final payment of $30,038.30, except for the months of Nov., Dec., 1959, which shall be in the amount of $500.00 each and the months of Jan., Feb., Mar., Apr., 1960, 1961, 1962 which shall be $250.00 each. * * *

INSURANCE: Lessee, at its expense, shall keep said equipment insured, for the term of this lease and any renewals or extensions thereof, for the full insurable value thereof, against fire and theft with extended coverage and against such other risks in such amounts as Lessor may specify. Lessee shall on request of Lessor deliver to Lessor the policies or evidence of insurance with a standard long form endorsement attached thereto, showing losses, if any, payable to Lessor, in form satisfactory to Lessor, together with receipts for the premiums thereunder.

TAXES: Lessee shall comply with and conform to all laws, ordinances and regulations relating to the ownership, possession, use or maintenance of the equipment, and save Lessor harmless against actual or asserted violations, and pay all costs and expenses of every character occasioned by or arising out of such use, and pay promptly when due all taxes and other public or private charge against or upon the equipment, as additional rental therefor.

TITLE: All said equipment shall remain personal property, and title thereto shall remain in Lessor exclusively. Lessee shall keep the equipment free from any and all liens and claims, and shall do or permit no act or thing whereby Lessor's title or rights may be encumbered or impaired. Upon expiration or termination hereof, the equipment shall be returned unencumbered to Lessor by Lessee at Lessee's sole expense and in the same condition as when received by Lessee, reasonable wear and tear resulting from proper use thereof alone excepted. Lessee shall pay rent at the said rate until all said equipment arrives at Lessor's premises. * * *

DEFAULT: In the event of Lessee's default hereunder * * *, or if Lessor deems itself insecure, Lessor and/or its agents may without notice or liability or legal process enter into any premises of or under control or jurisdiction of Lessee or any agent of Lessee where said equipment may be or by Lessor is believed to be, and repossess the equipment * * *. Should any legal proceeding be instituted by Lessor to recover any moneys due and to become due hereunder and/or for possession of the equipment, Lessee shall pay a reasonable sum * * * as attorney's fees * * *. * * *

MISCELLANEOUS: * * * This lease is irrevocable for the full term hereof and for the aggregate rental herein reserved, and the rent shall not abate by reason of termination of Lessee's right of possession and/or the taking of possession by Lessor or for any other reason, and delinquent instalments of rental shall bear interest at the highest lawful contract rate. In case of any default by Lessee hereunder, Lessor may sell the equipment * * *. Any proceeds of sale * * * less Lessor's expenses of taking possession, storage, reconditioning and sale * * *, shall be applied on the Lessee's obligations hereunder, and Lessee shall remain liable for the balance of the unpaid aggregate rental set forth above. * * *

PERCHASE OPTION: At any time after OCTOBER 15, 1962, if Lessee has paid in full all rentals owing hereunder and be not then in default hereunder, Lessee shall have the option to purchase said equipment upon giving written notice not less than 30 days prior to expiration of the original term hereof. The purchase price shall be: $1.00. * * *.'

The defendant was a general contractor and had previously leased this equipment from Lang Construction Equipment Company under date of March 8, 1959, and had used it approximately two months on road construction west of Boise. The equipment at that time was new. Upon completion of that construction project, defendant returned the equipment in August, 1959, to Lang Construction Equipment Company at Boise. From that time until February, 1962, the shovel stood idle in Boise and was never delivered to the lessee at Malad, Idaho, as required by the contract.

After making payments aggregating $9,339.46, defendant defaulted and in February, 1962, plaintiff took possession of the equipment and sold it at public sale for $30,500.00. This sum was credited on the contract, and the present action was then brought to recover the unpaid balance of $36,198.84, $1,337.82 paid by plaintiff to Ada county for taxes on the property for the year 1961, $121.20 cost of preparing equipment for sale, and $40.04 cost of publishing notice of sale.

The cause was tried to the court without a jury and judgment was entered in favor of the plaintiff, against the defendant, for $37,697.90, and $1,000.00 for attorney's fee. Defendant brought this appeal from the judgment.

The trial court found that defendant had paid the taxes on the equipment for the year 1960; that plaintiff had paid the taxes for the year 1961 in the amount of $1,337.82, which was properly charged to the account of defendant; that plaintiff had sold the equipment at a fair market value; that the reduced price 'was the result of a generally depressed market for used equipment of this type at the time and place of sale'; and that the parties intended a long term sale of the property, not a lease. This last finding was based upon the provision of the contract giving the lessee, defendant, in the absence of default, the option to purchase the property for $1.00, at the end of the term. Although this finding is assigned as error, defendant does not support the assignment in his brief.

Two propositions are urged by defendant (appellant) for the reversal of the judgment. These are set out in appellant's brief as follows:

'First, was the equipment contract void and unenforceable because it was induced by fraud: Second, assuming arguendo that said contract was valid, did the Appellant ever have any duty to make any payments thereunder when the Lang Company and the Respondent failed to make delivery as required by the contract?'

Fraud was not pleaded by defendant as required by IRCP Rules 8(c) and 9(b), and the trial court made no finding thereon. However, defendant now insists that the issue is properly raised upon this appeal, because evidence of the fraud claimed was admitted upon trial. Defendant relies upon IRCP Rule 15(b), which provides that issues tried by express or implied consent of the parties shall be treated as though raised by the pleadings and that pleadings may be amended to conform to the evidence.

The fraud contended for was that defendant had signed the lease agreement in blank and that the blanks in the printed form had not been filled in by the representative of the Lang company in keeping with the oral agreement had between the parties prior to the execution of the instrument. Defendant testified, as to his conversation with the lessor's representative immediately prior to signing the contract, as follows:

'Our conversation was he wanted to sell me the shovel. I said, 'No, I don't want the shovel. I have no work for it.' He said, 'Well, let's fix up some sort of a rental agreement where you could rent--pay three months' rent on this and we'll hold it until April or May, then if you have work and if you want to purchase it we'll apply the rent you have paid in the past and we'll make a contract out of it.' And I said, 'Well, if that's the case, all right.' I signed the papers and proceeded on to Delta, Utah.'

At the trial plaintiff produced only one witness, a Mr. Francis, an employee of the plaintiff, who had not been in its employ at the time of the execution of the contract and was unable to testify as to the circumstances of its execution. Defendant contends that his testimony, being uncontradicted, establishes the claimed fraud. He relies upon the statement made by this court in Langley v. Deshazer, 78 Idaho 376, 379, 304 P.2d 1104, 1105, 1106 (1956), 'if the trial court should find the ultimate facts contrary to uncontroverted and non-conflicting evidence, then such findings are reversible on appeal.' That rule--dictum, in the Langley case--is not applicable where the uncontradicted testimony flows from a witness who has a personal interest in the action. Adamson v. Mattson, 32 Idaho 493, 185 P. 553 (1919); First Nat'l Bank of Shenandoah, Iowa v. Hall, 31 Idaho 167, 169 P. 936 (1917); Anno. 62 A.L.R.2d 1191 (1958). Fraud is never presumed, but must be established by clear and convincing evidence,...