Carlson v. First Nat. Bank, Hettinger, North Dakota, s. 15665
| Decision Date | 19 February 1988 |
| Docket Number | 15693,Nos. 15665,s. 15665 |
| Citation | 429 N.W.2d 463 |
| Parties | Melfred CARLSON, Kay Carlson and Agnes Carlson, Plaintiffs and Appellees, v. FIRST NATIONAL BANK, HETTINGER, NORTH DAKOTA, a Banking Corporation, Defendant and Appellant, and Arneil Erlenbusch, Defendant. . Considered on Briefs |
| Court | South Dakota Supreme Court |
Charles Wolsky, Vermillion, Dale Morman of Smit, Shepard, Hughes & Wolsky, Sturgis, for plaintiffs and appellees.
Curtis W. Hanks, Lemmon, for defendant and appellant.
Ronald W. Banks and Jerry D. Johnson, Rapid City, for defendant.
Melfred and Kay Carlson (Carlsons) ranched in the Harding County, South Dakota area for many years and had numerous business dealings with First National Bank, Hettinger, North Dakota (Bank) throughout the years. A majority of their ranch financing was negotiated and recommended by Arneil Erlenbusch (Erlenbusch), an experienced Bank officer.
Carlsons had a debt of approximately $200,000 with Bank when they purchased the family ranch owned by Melfred's mother, Agnes Carlson (Agnes). Agnes is also a party to this lawsuit. On the recommendation of Erlenbusch, Carlsons secured a Federal Land Bank loan to reduce their debt with Bank. Carlsons allege that Erlenbusch assured them that if they received the Federal Land Bank loan, Bank would loan them sufficient operating loans for a number of years to make the ranch more profitable.
The Federal Land Bank loan was approved on the condition that Agnes subordinate her position of superior lienholder to Federal Land Bank. She did so, but alleges that her subordination was in reliance to Bank's promise to lend Carlsons sufficient operating funds. The loan, when applied to Carlsons' debt at Bank, lowered the debt to approximately $49,000.
Carlsons never received the substantial operating loans allegedly promised. Carlsons eventually defaulted on both Bank and Federal Land Bank loans. Their collateral was liquidated to satisfy some of the Bank loans, and the ranch mortgage was foreclosed by the Federal Land Bank. See Federal Land Bank v. Carlson, 411 N.W.2d 415 (S.D.1987), on rehearing, 422 N.W.2d 99 (S.D.1988).
Carlsons and Agnes initiated an action against Bank and Erlenbusch claiming a breach of fiduciary relationship, negligent misrepresentation, wrongful removal of permanent fixtures, conversion of a pickup truck, breach of fiduciary duty on the sale of a bull, and two claims of deceit. Bank counterclaimed for debt owed to Bank evidenced by promissory notes, fraudulent misrepresentation of a financial statement, mortgaged collateral, and tortious conduct. All but the first two Bank counterclaims were dismissed on the trial court's motion during settlement of instructions.
The case was tried before a jury. The jury determined that there was no breach of fiduciary relationship, no negligent misrepresentation, and no deceit on the part of Bank and Erlenbusch. The verdict further determined that Bank converted the pickup truck and wrongfully removed feed bunks which were permanent fixtures. Damages were awarded in the amounts of $4,500 against Bank for removal of fixtures, $2,840 against Bank for converting the pickup truck, and $2,840 against Erlenbusch for converting the pickup truck. Carlsons were also awarded punitive damages of $10,000 and $6,000 respectively for the removal of the permanent fixtures and pickup truck. The verdict denied Bank's counterclaim on the unpaid promissory notes and awarded no damages. The jury also found that Carlsons fraudulently misrepresented a financial statement to Bank but awarded no damages. None of the claims made by Agnes against Bank and Erlenbusch were successful.
Bank appeals the trial court's ruling denying its motions for directed verdict and judgment notwithstanding the verdict as to the counterclaim on unpaid promissory notes. Carlsons appeal the trial court's failure to admonish the jury to disregard the evidence relating to the counterclaims that were dismissed. Erlenbusch is not a party to this appeal.
Bank's first counterclaim which the trial court dismissed alleged that Carlsons breached a security agreement by selling mortgaged livestock without permission and failed to pay the proceeds to Bank. The second counterclaim alleged that Carlsons violated the security agreement by trading farm machinery without Bank's permission. In its third counterclaim Bank alleged that Carlsons violated the security agreement by permitting waste, damage, and ruin to the farm machinery. Carlsons claim that the references made to these three issues and certain exhibits relating to these counterclaims prejudiced Carlsons. Therefore, they argue that the trial court should have admonished the jury to disregard the evidence and should not have allowed certain exhibits to go to the jury room. We disagree.
Nowhere in the record did the trial court orally dismiss the counterclaims. Nor was any written order dismissing the counterclaims made a part of the record. It was Carlsons' responsibility to preserve the issue for appeal by making a record. Throughout the course of the trial Carlsons requested dismissal of the counterclaims. After the request was granted, Carlsons now claim they were prejudiced by some of the testimony and exhibits relating to the dismissed counterclaims.
While we agree that there existed some procedural irregularities in the dismissal of the counterclaims, Carlsons proposed no instructions or admonishment to the jury to disregard the evidence relating to the dismissed counterclaims. They made no motion to exclude exhibits. A party requesting the trial court to admonish or instruct the jury must do so in a timely manner. Carlsons admit that the counterclaims were dismissed before instructions were settled; therefore, they cannot now ask this court to review the issue on appeal when they failed to preserve the issue at the lower court level. State v. Mountain, 332 N.W.2d 726 (S.D.1983). SDCL 19-9-3(1) 1 SDCL 15-6-51(b) 2 Even if Carlsons had properly preserved the issue, it would be difficult for them to establish prejudice since the record does not support their conjecture that failure to admonish the jury and exclude certain evidence misled or prejudiced the jury. The award of punitive damages and the jury's failure to find Carlsons liable to Bank on the promissory notes that Carlsons admitted were unpaid strongly denotes an absence of prejudice.
We hold that the trial court did not err in failing to admonish the jury to disregard the evidence or in failing to exclude certain exhibits relating to the dismissed counterclaims.
Bank's third amended counterclaim alleged an unsatisfied debt evidenced by promissory notes executed by Carlsons. In their reply to the third amended counterclaim, Carlsons admitted the execution and amount of the debt. By testimony Carlsons also admitted the obligation throughout the course of the trial. Bank further presented evidence substantiating the amount of the debt to be $75,075.72 with daily interest of $20.35 commencing June 25, 1985. At the conclusion of Bank's case and at the close of all the evidence, the trial court denied oral and written motions for directed verdicts. After the jury returned the verdict against Bank, Bank appropriately moved for judgment notwithstanding the verdict. The trial court also denied this motion. Bank argues that the trial court erred in not granting a directed verdict on its counterclaim for the unpaid promissory notes.
A motion for directed verdict under SDCL 15-6-50(a) questions the legal sufficiency of the evidence to sustain a verdict against the moving party. Nelson v. Schroeder Aerosports, Inc., 280 N.W.2d 107 (S.D.1979). Upon such a motion, the trial court must determine whether there is any substantial credible evidence to sustain the action. Smith v. Halverson, 273 N.W.2d 146 (S.D.1978). The evidence must be...
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