Farmers Elevator Co. of Horace v. Nagel, 9939

• Decision Date: 25 June 1981
• Docket Number: No. 9939,9939
• Parties: FARMERS ELEVATOR COMPANY OF HORACE, Plaintiff and Appellant, v. Melvin NAGEL and Clayton Runck, Jr., Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 580

307 N.W.2d 580

FARMERS ELEVATOR COMPANY OF HORACE, Plaintiff and Appellant, v. Melvin NAGEL and Clayton Runck, Jr., Defendants and Appellees.

Civ. No. 9939.

Supreme Court of North Dakota.

June 25, 1981.

Ohnstad, Twichell, Breitling, Arntson & Hagen, West Fargo, for plaintiff and appellant; argued by Daniel L. Wentz, West Fargo.

Overboe & Reiten, West Fargo, for defendants and appellees; argued by Nolan Holo, West Fargo.

PAULSON, Justice.

The Farmers Elevator Company of Horace appeals from an order issued by the District Court of Cass County on December 19, 1980, which vacated a judgment entered in the Elevator's favor on May 12, 1980, and set aside a jury verdict in the Elevator's favor. The court granted Clayton Runck, Jr.'s motion for a new trial on the basis of newly discovered evidence and on the basis that the evidence was not sufficient to support the verdict of the jury. The Elevator has also appealed from the district court's order which denied the Elevator's motion for summary judgment and the order of the district court which did not allow the Elevator to use admissions made by Runck as evidence at the trial. We affirm.

On May 3, 1976, Kenneth Hatlestad, the general manager of the Elevator, received a telephone call from someone whom he believed to be Runck's hired man or employee who requested that the Elevator prepare fertilizer for purchase. On or about May 5, the fertilizer was loaded onto a semi-truck and trailer. The driver of the semi-truck informed Hatlestad that the fertilizer and chemicals should be charged to the account of Arlington Growers and Sales, Inc., a corporation organized by Melvin Nagel, who is also its principal shareholder. Uncertain as to who actually was purchasing the fertilizer and chemicals, Hatlestad placed both Runck's name and the corporate name (Arlington Growers and Sales, Inc.) on the sales tickets as "Arlington Grower & Sales, c/o Clayton Runck, Durbin, No. Dak. 58023". A bill and an invoice were sent to Runck which indicated that the cost of the fertilizer and chemicals was $4,022. Hatlestad was aware of the fact that the fertilizer was delivered to Arlington Growers and Sales, Inc. in Minnesota.

Runck appeared at the Elevator in order to pay for the items and presented a check signed by Nagel which was drawn on the Royal Bank of Canada, Belize City, Belize (formerly British Honduras). When questioned as to whether or not the check would be honored, Runck assured Hatlestad that it would be honored and he wrote "U. S. Funds" on the check. The check was later dishonored. ¹ Subsequently, Nagel sent four $1,000 checks to the Elevator in an attempt to pay for the fertilizer but all four checks were dishonored. Hatlestad had requested that Runck urge Nagel to "make good" the checks. ² The Elevator commenced this action on February 16, 1978, against both Nagel and Runck. Because Nagel failed to appear at a deposition scheduled for February 26, 1980, the Elevator presented a motion to compel Nagel to appear at the deposition and an order to this effect was issued by the district court on April 16, 1980. Nagel and Runck were served with interrogatories and requests for admissions, but they initially did not respond. Apparently, Runck did not receive the interrogatories and requests for admissions because his attorney did not send them to the correct address in the Federal penitentiary, where Runck was incarcerated at the time. Runck filed a reply to the requests for admissions on May 1, 1980.

Because Nagel did not respond to the interrogatories or requests for admissions and Runck submitted only a late reply to the requests for admissions, the Elevator presented a motion for summary judgment against Runck and also a motion for sanctions against Nagel for failure to comply with the district court's order compelling discovery proceedings to be conducted. The district court struck Nagel's answer for his failure to comply with the court's order and entered a default judgment against him. The district court denied the motion for summary judgment as to Runck.

A jury trial was scheduled to begin on April 28, 1980, but the court delayed the trial in order to afford counsel for Runck an opportunity to procure the release of Runck from the Federal Penitentiary in Leavenworth, Kansas, in order to allow him to attend the trial. Runck's counsel indicated to the court that the trial could proceed in Runck's absence. The district court did allow Runck to submit a response to the Elevator's requests for admissions on May 1, 1980, which was the second day of the trial, and denied the Elevator's request to use Runck's failure to submit a response to the requests for admissions prior to trial as constituting facts conclusively admitted against Runck.

The jury awarded $4,022 to the Elevator and found Runck liable for the purchase of the fertilizer. The district court allowed costs and disbursements of $184.30 and interest on the judgment in the amount of $945.17, for a total amount of $5,151.47. Judgment was entered on May 12, 1980, against both Nagel and Runck and the court awarded to the Elevator and against Nagel $250 for attorney fees. On August 16, 1980, Runck submitted to the district court a motion for an order setting aside the jury verdict and vacating the judgment, and for a new trial. The basis for the motion was Runck's assertion that newly discovered evidence existed which could not with reasonable diligence have been discovered and produced at the trial. The evidence, which was obtained by taking the post-trial deposition of Nagel, revealed that the debt owed to the Elevator for the fertilizer and chemicals was solely the debt of Arlington Growers and Sales, Inc., and Nagel. On November 28, 1980, the district court denied Runck's motion for judgment notwithstanding the verdict but did grant Runck's motion for a new trial.

Three issues are presented for our consideration:

1. Whether or not the district court abused its discretion in setting aside the verdict of the jury, vacating the judgment in the Elevator's favor, and granting Runck a new trial.

2. Whether or not the district court abused its discretion in denying the Elevator's motion for summary judgment.

3. Whether or not the district court abused its discretion by allowing Runck to submit a response to the Elevator's requests for admissions during the trial.

I

The first issue is concerned with whether or not the district court abused its discretion in setting aside the verdict of the jury, vacating the judgment in the Elevator's favor and granting a new trial to Runck. The district court granted the new trial by relying upon Rules 59 and 60 of the North Dakota Rules of Civil Procedure which provide, in pertinent part:

"RULE 59-NEW TRIALS AMENDMENT OF JUDGMENTS

"(a) ...

"(b) Causes for new trial. The former verdict or other decision may be vacated and a new trial granted on the application of the party aggrieved for any of the following causes materially affecting the substantial rights of such party:

"4. Newly discovered evidence material to the party making the application, which he could not with reasonable diligence have discovered and produced at the trial "6. Insufficiency of the evidence to justify the verdict or other decision, or that it is against law;

"RULE 60 RELIEF FROM JUDGMENT OR ORDER

"(b) Mistakes Inadvertence Excusable neglect Newly Discovered evidence Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment or order in any action or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); ..."

Our review of the district court's action is limited to determining whether or not the district court committed an abuse of discretion. Cook v. Stenslie, 251 N.W.2d 393 (N.D.1977); Hoge v. Hoge, 281 N.W.2d 557 (N.D.1979). An "abuse of discretion" on the part of the trial court in granting or denying a new trial is defined as an unreasonable, arbitrary, or unconscionable attitude on the part of the court. Hoge v. Hoge, supra ; 11 Wright & Miller, Federal Practice and Procedure: Civil §§ 2803, 2818, and 2857. The various grounds asserted by Runck which justify the district court's action include: 1) newly discovered evidence; 2) insufficiency of the evidence; 3) excusable neglect; and 4) lack of attendance by Runck at the trial.

The alleged newly discovered evidence consists of testimony by Nagel that he was solely responsible for the payment on the fertilizer and chemicals sold to Arlington Growers and Sales, Inc., and that Runck was never an agent of Nagel. The district court concluded that the evidence could not with reasonable diligence have been discovered and produced at the trial because Nagel could not be located by Runck.

Although we seriously question whether or not Runck had exercised reasonable diligence in attempting to obtain the new evidence before trial, we conclude that the district court did not abuse its discretion in ordering a new trial because the evidence was insufficient to support the jury's verdict. ³ The only evidence presented by the Elevator which demonstrated that Runck had any connection with the purchase of the fertilizer was Hatlestad's testimony concerning Runck's attempt to pay for the fertilizer with a check signed by Nagel. Runck did not endorse the check and was not an accommodation party on the check. Hatlestad testified that Runck's "hired man" placed the telephone call order but Hatlestad could not identify the party placing the order. In addition, the driver of the semi-truck and trailer gave Hatlestad a note which informed Hatlestad that the purchase should be charged to "Arlington Growers".

The Elevator based its contention on the fact that the district court stated in its memorandum...