Delzer v. United Bank of Bismarck
Decision Date | 08 February 1995 |
Docket Number | No. 940115,940115 |
Citation | 527 N.W.2d 650 |
Parties | Ray DELZER and Betty Jean Delzer, Plaintiffs and Appellants, v. UNITED BANK OF BISMARCK, Defendant and Appellee. Civ. |
Court | North Dakota Supreme Court |
Sonna M. Anderson (argued) and Harold L. Anderson (appearance), Anderson & Anderson, and Ray H. Walton (appearance), Ray H. Walton, P.C., Bismarck, for plaintiffs and appellants.
Patrick W. Durick (argued) and Larry L. Boschee (appearance), Pearce & Durick, Bismarck, for defendant and appellee.
Ray and Betty Jean Delzer appealed from a district court judgment granting United Bank's motion for judgment notwithstanding the verdict and conditionally granting a new trial. We reverse the judgment notwithstanding the verdict, affirm the grant of a new trial, and remand for a new trial.
The facts underlying this appeal are reported in Delzer v. United Bank of Bismarck, 459 N.W.2d 752 (N.D.1990) [Delzer I ] and Delzer v. United Bank of Bismarck, 484 N.W.2d 502 (N.D.1992) [Delzer II ], and will be repeated only as necessary to resolve the issues raised in this appeal.
In October 1979 Delzers and United discussed two plans for United to extend Delzers a line of credit for their ranching business. Delzers initially requested a $150,000 line of credit to finance their operating expenses, with current hay inventory and future hay sales to secure that loan. According to Delzers, United would not loan them the money without additional security, and Delzers refused to pledge all of their assets as security for the loan unless United assured them of an additional $122,500 to purchase cattle. Delzers then proposed a cattle plan, which provided for a $300,000 line of credit to finance Delzers' operating expenses and their purchase of cattle. According to United's loan comments, the collateral for that proposed loan was a security agreement on Delzers' machinery and equipment, a second mortgage on their land, and a guaranty from their son. On November 1, 1979, Delzers executed a written credit agreement with United and signed a promissory note for $150,000. As collateral for that loan, United obtained security agreements on Delzers' machinery and equipment, a second mortgage on their land, and a guaranty from their son.
United subsequently refused to advance Delzers money beyond the $150,000 loan. Delzers then sued United, alleging that, in conjunction with the written agreement, United breached an oral agreement to lend them an additional $150,000 to purchase cattle. They also contended that United deceived them by promising to fund their cattle purchase when it had no intention of performing that promise. United responded that the written credit agreement constituted the complete and final agreement between the parties.
In Delzer I, we reversed summary judgment in favor of United. We held that the statute of frauds did not bar enforcement of the alleged oral agreement for an additional $150,000 loan, because the alleged agreement was capable of being completed within one year under N.D.C.C. Sec. 9-06-04(1). We also held that the written agreement for a $150,000 line of credit was ambiguous and not clearly integrated, leaving a genuine issue of material fact about whether United agreed to provide Delzers with an additional $150,000 line of credit to purchase cattle. We further held that the record was sufficient to support reasonable inferences about the terms of the alleged oral agreement. We therefore remanded for trial.
In Delzer II, a majority of this court reversed a second summary judgment in favor of United. We held that a letter, which was sent by Ray Delzer to the first mortgagee of the Delzers' land and which was not part of the record in Delzer I, failed to remove all ambiguity about the written agreement. We reiterated that the written agreement was ambiguous and again remanded for trial.
On remand, the trial court bifurcated the issues of liability and damages. After a jury trial on liability, the jury returned a special verdict:
Claiming those answers were inconsistent and there was insufficient evidence to support the deceit verdict, United moved for judgment notwithstanding the verdict on Delzers' deceit claim, and, alternatively, for a new trial. The trial court initially denied United's motion, explaining that a factual basis for the finding of deceit possibly could have been:
The trial court thereafter reconsidered its decision and concluded that there was no factual scenario which would allow the jury to find deceit after not finding an oral contract, reasoning:
The trial court granted United's motion for judgment notwithstanding the verdict on Delzers' deceit claim and also conditionally granted a new trial on that claim in the event of reversal of the judgment notwithstanding the verdict. Delzers appealed.
Delzers argue that the tort of deceit may exist independently of the contract claim and that, under the trial court's instructions on contract and deceit, the verdict is not inconsistent. United responds that the jury's verdict is inconsistent and that the trial court properly granted judgment as a matter of law on the deceit claim, because there was no evidence of deceit independent of the contract claim and there were no damages under Delzers' over-collateralization theory of deceit.
Our analysis of these issues requires a brief explanation of "fraud" and "deceit." Under our statutory definitions of "fraud" and "deceit," the same conduct, a promise made without any intention of performing, can constitute both "deceit" and "fraud." Compare N.D.C.C. Sec. 9-03-08(4) with Sec. 9-10-02(4). See Dewey v. Lutz, 462 N.W.2d 435 (N.D.1990). Although the same conduct can be both deceitful and fraudulent and those terms are often used interchangeably, technically "fraud" under Chapter 9-03, N.D.C.C., applies to parties to a contract, while "deceit" under Chapter 9-10, N.D.C.C., applies where there is no contract between the parties. Dewey v. Lutz, supra; Hellman v. Thiele, 413 N.W.2d 321 (N.D.1987).
Under Chapter 9-03, N.D.C.C., "[a] promise made without any intention of performing it" and with intent to deceive or to induce another to enter into a contract is "actual fraud" for purposes of nullifying apparent free consent to the contract. N.D.C.C. Secs. 9-03-01, 9-03-03, and 9-03-08(4). If there is a contract between the parties and a party's apparent free consent to the contract is obtained by fraud, N.D.C.C. Sec. 9-03-02 authorizes the defrauded party to rescind the contract in the manner prescribed by Chapter 9-09, N.D.C.C. The defrauded party may also affirm the contract and recover damages. Schaff v. Kennelly, 61 N.W.2d 538 (N.D.1953); Beare v. Wright, 14 N.D. 26, 103 N.W. 632 (1905); see Restatement (Second) of Torts Sec. 549 (1977); Calamari and Perillo, Contracts Sec. 9-23 (3rd ed.1987); Dobbs, Remedies Sec. 9.1 et seq. (1973); Prosser and Keeton on Torts Sec. 110 (5th ed.1984); 37 Am.Jur.2d, Fraud and Deceit Sec. 327 (1968).
Under Chapter 9-10, N.D.C.C., if there is no contract between the parties, "[o]ne who willfully deceives another with intent to induce him to alter his position to his injury or risk is liable for any damage which he thereby suffers," and "deceit" is defined as "[a] promise made without any...
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