Eimco Corp. v. Sims

Decision Date03 August 1979
Docket NumberNo. 12768,12768
Parties, 27 UCC Rep.Serv. 823 The EIMCO CORPORATION, a division of Envirotech Corporation, Plaintiff, Respondent and Cross-Appellant, v. Sandy SIMS, Executor of the Estate of James Howard Sims, Deceased, and Estate of James Howard Sims, Defendants, Appellants and Cross-Respondents.
CourtIdaho Supreme Court

Barry Marcus, of Marcus & Marcus, Boise, for appellant.

H. N. Jewell, Twin Falls, for respondent.

DONALDSON, Chief Justice.

The estate of James Howard Sims (Sims), defendant-appellant, brings this appeal from an adverse jury verdict in an action originally filed by plaintiff-respondent, the Eimco Corporation (Eimco), against Sims for rent allegedly due under a "rental lease and agreement" signed by J. Howard Sims, deceased.

Sims, of Salmon, Idaho, and Eimco, a Utah based corporation, entered a "rental lease and agreement" on or about June 29, 1970 for the rental of a model 911 Load-Haul-Dump (LHD) machine for use in mining. The agreement provided for an advance payment of one month's rent, monthly rent in the sum of $2,034.24 including 3% Nevada sales or use tax and a guaranteed minimum monthly rental period of three months. The agreement also provided that the lessor could re-lease the equipment upon five days notice after the minimum guaranteed rental period had expired. As part of the agreement, but in a separate letter dated June 29, 1970, Eimco granted Sims an option to purchase the machine for $21,500. The option provided that upon its exercise "by written notice at anytime during the continuance of the rental agreement," Eimco would apply 90% Of the rental payments made during the twelve months preceding Sims' exercise of the option to the purchase price.

The agreement provided for delivery of the LHD via commercial carrier to the Rawhide Mine in which Sims apparently had a business interest, near Bernice Canyon, Nevada. Subsequent to that delivery on July 16, 1970, Sims made only one rent payment on the machine, bringing the total amount which he paid pursuant to the agreement to $4,068.50.

By letter, dated November 16, 1970, Sims notified Eimco that he "turned the mucker contract over to the boys in Nevada, Rawhide M & D Co." The record is unclear as to who "the boys" are, but Sandy Sims, executor of his father's estate, testified that he thought they were partners with his father in the Rawhide Mining venture. On November 20, 1970, Eimco notified Sims by letter that he was "seriously past due" on two monthly payments for the LHD. The letter informed Sims that since Eimco had received no payments or communications from the Rawhide M & D Co. and since the rental agreement was in Sims' name, Eimco would look to him for payment. Eimco wrote another letter to Sims on December 7, 1970 informing him that he was then in arrears on three months rent and that a collection action was imminent. Sims never responded to either of Eimco's letters.

Sims died in a plane crash on January 10, 1971. Eimco retook possession of the machine on February 27, 1971, 1 and filed this action for rent due under the agreement on August 30, 1971 praying for judgment in the principal sum of $10,948.26, statutory interest, attorney fees and costs. After a trial on the merits in March of 1976, the jury returned a verdict for Eimco in the amount of $4,506.48. The district judge in signing the judgment in the amount of the jury verdict struck the provisions for Eimco's costs, attorney fees and statutory interest. 2 The district judge, in an order dated May 27, 1977, also denied each party's subsequent motion for judgment notwithstanding the verdict on the sole ground that they were untimely filed under I.R.C.P. 58(a). Sims then brought this appeal. Eimco cross appeals the district court's striking of its prejudgment interest, costs and attorney fees and the court's disallowance of Eimco's memorandum of costs without a hearing.

The first question which we address is whether the trial court erred in denying Sims' motion for judgment n. o. v. on the ground that it was untimely filed. The relevant facts which gave rise to this question are as follows.

The jury rendered its verdict in this case on March 17, 1976. The formal judgment was filed on April 19, 1976, which was the same day that the appellant filed his motion for judgment n. o. v. Eimco filed its motion for judgment n. o. v. on April 20, 1976. Judge Burton heard these motions almost a year later on April 25, 1977. He issued his decision with respect to both motions on May 27, 1977 (filed June 3, 1977) in a document entitled "Motions Denied." In that order the court ruled only that neither party had complied with the ten day requirement of I.R.C.P. 50(b) because the ten days began to run against the filing of the motions on the date that the verdict was rendered (March 17, 1976), rather than the date when the formal judgment was entered (April 19, 1976). 3

I.R.C.P. 50(b), motion for judgment notwithstanding the verdict, is specifically worded in terms of "entry of judgment" where the jury has returned a verdict:

"Any party aggrieved by a verdict, whether or not he has previously moved for a directed verdict, may move within ten (10) days after the entry of judgment to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with his motion; or if a verdict was not returned, such party, within ten (10) days after the jury has been discharged, may move for judgment . . . ."

Thus, I.R.C.P. 50(b) by its own language distinguishes between the running of the ten day period in the situation where, as in this case, the jury has returned a verdict as opposed to the situation where the jury had not returned a verdict. In the former, the ten day rule runs from the day of entry of the judgment. I.R.C.P. 58(a), Entry of Judgment, provides:

"Unless the court otherwise directs and subject to the provisions of Rule 54(b), judgment upon the verdict of a jury shall be entered forthwith by the clerk. . . . The deposit of a judgment as provided in Rule 79(b) constitutes the entry of the judgment; and The judgment is not effective before such entry . . . ." (emphasis ours)

I.R.C.P. 79(b) requires the clerk of the district court to maintain a "Judgment Book" in which is kept correct copies of final judgments.

The judgment entered in this case contains the clerk's filing information showing that it was copied into Book G of Judgments, page 25, on April 19, 1976. Clearly then the judgment in this case was properly entered pursuant to Rule 58(a) on April 19, 1976, and therefore that judgment could not be effective prior to that date. Appellant Sims filed his motion for judgment n. o. v. on the same day that the judgment was entered. Sims' filing of that motion was within the ten day rule and was, as a consequence, timely. The trial court erred in denying his motion solely on the ground of untimeliness. This finding of error does not conclude our review however, for under I.R.C.P. 50(c)(1), "(a)n appeal from a judgment granting or denying a motion for judgment notwithstanding the verdict presents for review all reviewable error against either the appellant or appellee." We turn then to appellant Sims' principal contention on appeal: that as a matter of law the "rental lease and agreement" upon which Eimco brought this suit for rent due is a security agreement under I.C. § 28-1-201(37). Sims argues that this was a question of law for the trial court, not a factual issue for the jury.

Sims points out that if this agreement constituted a security agreement under Chapter 9, Title 28 of the Idaho Code (Art. 9 of the Uniform Commercial Code), then Eimco's suit for rent due is in fact a suit for deficiency. That being the case Sims contends that by virtue of Eimco's subsequent lease of the LHD to W. L. Hailey Company and finally Eimco's sale of the machine in March 1972, there was no deficiency which Eimco could recover from Sims. I.C. § 28-9-504(2); B & M Wholesale Co., Inc. v. Anchor Ranch, Inc., 96 Idaho 518, 531 P.2d 1163 (1975).

Idaho Code § 28-1-201(37) defines "security interest" to mean:

"an interest in personal property or fixtures which secures payment or performance of an obligation . . . .

"Unless a lease or consignment is intended as security, reservation of title thereunder is not a 'security interest'. . . . Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security."

Given the above language, it is necessary to determine whether by the terms of their purchase option, Eimco and Sims intended their agreement as security. Of course, an option to purchase does not by itself make a lease a security agreement, but an agreement which provides that upon compliance with the terms of the lease, the lessee has the option to become the owner of the property for nominal consideration, makes the lease an agreement intended for security regardless of the intent of the parties. See Whitworth v. Krueger, 98 Idaho 65, 558 P.2d 1026 (1976).

It is undisputed here that Eimco granted Sims an option to purchase the LHD. However, there is a question as to whether Sims would have had to pay "no additional consideration" or "nominal consideration" upon exercising that option within the meaning of I.C. § 28-1-201(37). The agreement between the parties provided for a guaranteed minimum rental lease...

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