Deason v. Farmers and Merchants Bank of Rogers, 89-14

• Decision Date: 12 June 1989
• Docket Number: No. 89-14,89-14
• Citation: 299 Ark. 167,771 S.W.2d 749
• Parties: Jack DEASON, J.W. Carden and Virginia Ann Kistler, Appellants, v. FARMERS AND MERCHANTS BANK OF ROGERS, ARKANSAS and Harris-McHaney Real Estate Co., Appellees.
• Court: Arkansas Supreme Court

Page 749

771 S.W.2d 749

299 Ark. 167

Jack DEASON, J.W. Carden and Virginia Ann Kistler, Appellants, v. FARMERS AND MERCHANTS BANK OF ROGERS, ARKANSAS and Harris-McHaney Real Estate Co., Appellees.

No. 89-14.

Supreme Court of Arkansas.

June 12, 1989.

Jeff Slaton, Springdale, for appellants.

Hardy W. Croxton, Jr., Rogers, for appellees.

NEWBERN, Justice.

Appellants Jack Deason and Virginia Ann Kistler are the children of Mavis Deason Carden, deceased, and appellant J.W. Carden is her widower. Jack Deason sued appellees Farmers and Merchants Bank of Rogers, Arkansas, and Harris-McHaney Real Estate Co., alleging breach of an obligation to exercise good faith with respect to the sale of property Mavis had mortgaged to the bank. J.W. Carden joined as a plaintiff in that action, alleging the tort of outrage, bad faith, and breach of contract because the bank had improperly withheld a certificate of deposit (CD), in which he had an interest, to assure payment of interest on the note which was secured by Mavis's mortgage. Virginia Kistler brought a separate action, which was later consolidated for trial with the claims of Jack and J.W., alleging the tort of outrage against the bank. All three appellants sought damages for mental anguish caused by the bank's conduct in forcing payment of interest on Mavis's loan during a time when Mavis was dying of cancer and Virginia was handling her business affairs under a power of attorney. It was alleged that the bank and Harris-McHaney had sold the mortgaged property prematurely for less than its value just to assure payment of the note and interest before Mavis's death and to avoid entanglement in probate.

The trial court found that Jack and Virginia lacked standing to sue the bank and Harris-McHaney for outrage resulting from enforcement of a contract to which they were not parties, and summary judgment was granted with respect to those claims. J.W.'s claims went to trial. He amended his complaint to conform to the proof of conversion of the CD, and on that claim the jury awarded J.W. $17,000 compensatory damages and $10,000 punitive damages. The court directed a verdict as to J.W.'s claims of outrage and bad faith. A new trial was granted with respect to the conversion award in favor of J.W.

Jack, J.W., and Virginia appeal from the summary judgment and directed verdict orders. J.W. appeals from the order granting a new trial. We affirm the summary judgment and directed verdict orders because the proof offered in response to the summary judgment motions and during the trial did not demonstrate the tort of outrage or bad faith. We reverse the order granting a new trial because the trial court had lost jurisdiction to award a new trial when the motion was granted.

In 1981 Jack needed to borrow $45,000. Mavis had a long-standing credit relationship with the bank and could borrow the money more easily than Jack. She arranged to borrow $45,000 on her signature alone. A bank officer noted on the margin of the note that Mavis's purpose was to lend the money to her son. The note was payable upon demand or in one year. Prior to the date of the loan Jack conveyed to Mavis a house and lot which she later mortgaged to the bank upon renewal of the note. Jack testified that he and Mavis had an understanding that the house would be sold and any proceeds in excess of the $45,000 he owed her would be his.

Mavis again renewed the note May 17, 1983. Interest on the note had not been paid, and there is a conflict in evidence over whether the bank asked that interest be paid at that point. Mavis died of cancer January 17, 1984. Bank officers testified that during 1983 examiners had questioned the loan because of the lack of payment of principal or interest and had questioned whether the mortgaged property was adequate security despite the appraisal of the property at approximately $70,000.

The bank "flagged" a $15,000 CD owned jointly by Mavis, J.W., and Virginia. A bank employee testified that "flagging" meant that before the money represented by the CD could be withdrawn or any action taken with respect to it, a bank officer would have to be consulted. J.W. attempted to renew the CD when it matured in December, 1983, but the bank refused to allow him access to the funds represented by the CD unless he paid approximately $3,300 in interest due on Mavis's note. Virginia, who was living in Missouri and who was a former employee of the bank, was in Rogers at Christmastime shortly before Mavis's death. She spoke with Mr. Reves, a bank officer, and was told the CD money was being held until the interest on the note was paid. Virginia and J.W. were told that the bank intended to foreclose on the note and hold the CD to assure payment of any shortage which might result.

On January 13, 1984, four days prior to Mavis's death, the bank called J.W. and asked him to come in and pay the interest. When he asked what the bank wanted him to do, he was told $8,000 should handle it. Using the CD money, he paid interest on the loan of $7,373.60 and $629.40 was paid on the principal.

The mortgaged property had been listed with Harris-McHaney. On January 7, 1984, an offer of $55,000, contingent on the buyer selling his present home and obtaining financing in the amount of $40,000, was received. Shirley Yost, a Harris-McHaney employee testified that Virginia rejected the offer. Virginia testified it was not communicated to her. On January 10, 1984, an offer of $46,000, which was roughly the amount remaining due on the loan, was made and accepted by Virginia. It was alleged that Yost knew the amount the bank needed to cover the loan, but she denied having that knowledge.

1. New trial

As Jack's and Virginia's claims had been the subjects of summary judgments, the only claims which went to trial were J.W.'s The jury returned a verdict for J.W. for compensatory damages of $17,000 and $10,000 punitive damages. The judgment was filed May 23, 1988. On June 3, 1988 a motion for judgment notwithstanding the verdict or alternatively a new trial or a reduction in damages was filed by the bank and Harris-McHaney. No basis was asserted for the new trial. The grounds stated for judgment n.o.v. were the "failure to plead and prove facts sufficient to support the case," and the request for reduction in damages was asserted "because the verdict is not based on the facts and is insufficient by the evidence." An amended motion was filed on June 29 which stated the basis for a new trial as "irregularities or defects in the verdict."

On July 21, 1988, an order granting a new trial was entered. The trial court found that the verdict was contrary to the preponderance of the evidence and that the evidence does not support the amount of compensatory damages awarded, even if liability was supportable.

J.W. argues that the court lacked jurisdiction to grant the motion for a new trial. The basis for the argument is that the motion was not ruled on within 30 days of it's filing. That is correct. In Street v. Kurzinski, 290 Ark. 155, 717 S.W.2d 798 (1986), we were presented with a motion for rule on the clerk requiring us to decide which of two notices of appeal was controlling. The appellant sought to overturn the decision of the trial court before a formal judgment had been entered. A second motion for judgment n.o.v. or new trial had been filed and no action was taken on the motion during the 30 days allowed by Ark.R.App.P. 4(c). Consequently, we held, the motion was deemed to have been denied at the expiration of the 30 days after the filing and the court lost jurisdiction to act on the motion. The opinion cited Smith v. Boone, 284 Ark. 183, 680 S.W.2d 709 (1984), where we held it was mandatory that a written record be made of the trial court's action in either taking the motion under advisement or setting a definite date for the motion to be heard. We also held that the making of the record was mandatory in Coking Cole v. Arkoma Coal Corp., 278 Ark. 446, 646 S.W.2d 12 (1983). These cases construed Rule 4 in light of questions of timeliness of the notice of appeal or...