First Bank of South Dakota (Nat. Ass'n), Miller, S.D. v. VonEye

• Decision Date: 01 June 1988
• Docket Number: No. 15636,15636
• Citation: 425 N.W.2d 630,6 UCCRep.Serv.2d 1382
• Parties: 6 UCC Rep.Serv.2d 1382 FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION), MILLER, SOUTH DAKOTA, a Banking Corporation, Plaintiff and Appellee, v. Barney VonEYE and Evelyn Mae VonEye, Husband and Wife, Defendants and Appellants. and United States of America, acting through the Small Business Administration, Appellee.
• Court: South Dakota Supreme Court

Page 630

425 N.W.2d 630

6 UCC Rep.Serv.2d 1382

FIRST BANK OF SOUTH DAKOTA (NATIONAL ASSOCIATION), MILLER SOUTH DAKOTA, a Banking Corporation, Plaintiff and Appellee, v. Barney VonEYE and Evelyn Mae VonEye, Husband and Wife Defendants and Appellants and United States of America, acting through the Small Business Administration, Appellee.

No. 15636.

Supreme Court of South Dakota.

Argued Sept. 3, 1987.

Decided June 1, 1988.

Bradley G. Zell of Heidepriem, Widmayer & Zell, Miller, for plaintiff and appellee.

Michael J. McGill and Todd C. Miller, Beresford, for defendants and appellants.

Mikal G. Hansen, Asst. U.S. Atty., Pierre, for appellee.

MORGAN, Justice.

First Bank of South Dakota N.A., Miller Branch (Bank), sued Barney VonEye and Evelyn May VonEye (VonEyes) on a promissory note, secured by a security agreement, and filed an ancillary action for claim and delivery to seize farm collateral subject to the security agreement. VonEyes appeal from the final judgment in favor of Bank. We affirm in part, reverse and remand in part.

VonEyes are farmer/ranchers who had transacted business with Bank for twenty-five years, through the spring of 1985. VonEyes had a secured real estate loan with Bank and Bank provided an operating line of credit to VonEyes, secured by a security agreement on VonEyes' livestock, crops, feed, inventory and equipment. VonEyes also had other secured real estate loans with Federal Land Bank (FLB) and Farmers' Home Administration (FmHA). Any other pertinent facts will be commented upon in the analysis of the issues.

In response to Bank's complaints, VonEyes served and filed an answer and counterclaim and an amended counterclaim. The counterclaim alleged three counts: bad faith, breach of contract and commercial unreasonableness of the disposition of the collateral.

We perceive that the half dozen issues enumerated in VonEyes' brief fall into four categories and can be set out as follows:

1. The failure of the trial court to allow jury challenge to all bank customers when raised by pretrial motion and in the course of voir dire.

2. The trial court's error in granting a directed verdict on VonEyes' cause of action for breach of obligation for good faith dealing in commercial transaction per SDCL 57A-1-203.

3. Exclusion by the trial court of evidence of unreasonable trucking fees and insufficiency of the other evidence to support the jury verdict that the disposition of the collateral was in a commercially reasonable manner.

4. The allowance by the trial court of Bank's attorney fees incurred in both enforcement of the security agreement and the claim and delivery action.

We will consider these issues in the order enumerated.

VonEyes contend that the trial court committed reversible error in denying their motion to excuse all of Bank's customers from jury service. Prior to voir dire, defense requested a blanket challenge for cause to all depositors and borrowers of Bank on the theories of principal/agent relationship (SDCL 15-14-6(3)), ¹ or that those potential jurors had an interest in the action (SDCL 15-14-6(5)). ² VonEyes' counsel phrased their concerns as follows:

... Any individual who is banking at First Bank might have the even unknown bias in the back of their mind that if we award a money judgment it could be affecting the safety or status of our depositors at First Bank. By the same token, where you have any potential member of the jury that is currently obtaining, or operating funds at First Bank, we feel there is a real danger of prejudice in that particular juror thinking, my goodness, if I render a verdict in favor of First Bank what's the reaction going to be when I go into the bank six months from now to renew a note. We feel these are items of potential prejudice against my client.

The court denied the challenge at that time, but granted that individual voir dire would be allowed on the issue of bias or prejudice. During voir dire, VonEyes challenged two jurors for cause. The court granted one challenge on the basis of familial relationship. The court denied cause as to Larry Hurd (Hurd). VonEyes had used their three peremptory challenges before Hurd was called.

In their brief, VonEyes complain that of the twelve veniremen selected, five had a business relationship with Bank. Of these five, VonEyes challenged only Hurd for cause. It must be noted at this juncture that South Dakota cases which deal with juror qualification or impartiality are criminal in nature, but we believe the analyses in those cases are equally applicable here. A 1958 case speaks directly to the importance of challenging for cause. State v. Flack, 77 S.D. 176, 89 N.W.2d 30 (1958).

A defendant should not be compelled to use his peremptory challenges upon prospective jurors who should have been excused for cause. Prejudice will be presumed if a disqualified juror is left upon the jury in the face of a proper challenge for cause, so that defendant must either use one of his peremptory challenges or permit the juror to sit.

77 S.D. at 179, 89 N.W.2d at 32 (emphasis added).

VonEyes failed to exercise their right to challenge four of the five veniremen who remained on the panel. Right of appeal has not been preserved as to these jurors. See Bittner v. Miller, 226 Neb. 206, 410 N.W.2d 478 (1987). (A party who fails to challenge prospective jurors for disqualification and passes them for cause waives any objection to their selection as jurors.) Therefore, appeal is preserved only as to VonEyes' challenge for cause to Hurd.

The question remains whether the trial court committed reversible error in denying VonEyes' challenge to Hurd as a potential juror. SDCL 15-14-6(5) provides that a challenge to jurors may be taken on grounds of interest on the part of the juror in the event or in the main question involved in the action. "The ruling of the trial court will not be disturbed, except in the absence of any evidence to support it, in which case it becomes an error at law." Flack, 77 S.D. at 181, 89 N.W.2d at 32. See also State v. Hansen, 407 N.W.2d 217 (S.D.1987); State v. Muetze, 368 N.W.2d 575 (S.D.1985); State v. Volk, 331 N.W.2d 67 (S.D.1983).

A "mere expression of a predetermined opinion ... during voir dire does not disqualify a juror per se." Hansen, 407 N.W.2d at 220, citing Muetze, supra; Flack, supra. A potential juror should be excused for cause if he is unable to set aside preconceptions and render an impartial verdict. Hansen, supra. However, once a potential juror has declared, under oath, "... 'that he can and will, notwithstanding such opinion, act impartially and fairly upon the matters to be submitted to him[,]' " he should not be disqualified as a juror. Flack, 77 S.D. at 181, 89 N.W.2d at 32. Finally, impartiality must be based upon the whole voir dire examination and single isolated responses are not determinative. Hansen, supra; Flack, supra.

We reject VonEyes' contention that the challenge to Hurd should have been sustained based on State v. Thomlinson, 78 S.D. 235, 100 N.W.2d 121 (1960). In that case, we held that the challenge should have been sustained as to jurors who held a membership in a cooperative association. The association had been burglarized by the defendant. The interest of the jurors in this case does not rise to the level of those in Thomlinson. The interest in Thomlinson was akin to an ownership interest where the jurors' pecuniary or financial interests were directly involved. Such is not the case here.

Upon an examination of the record in this case, it is evident that juror Hurd was thoroughly examined as to bias and prejudice. After an examination by counsel for both VonEyes and Bank, the court conducted the following voir dire.

The Court: Larry, in the course of the questions, I detected some reluctance.... and as I have asked before, in the event that you are on this panel, and voted to return a verdict in their favor, would that make you uncomfortable then going into the bank tomorrow or the next day and continue to try to conduct business with them?

Hurd: No.

The Court: Or do you think that would affect your relationship with the bank? Are you concerned about that at all?

Hurd: No I don't think it would affect my relationship. It is very professional.

The Court: Okay. So you have no problem sitting on the case, being fair and impartial to both sides in letting the chips fall where they may based upon the facts as you, the jury, will determine them and apply them to the instructions; is that correct?

Hurd: That's correct.

The Court: And would you weigh the witness' testimony, and I'm going to tell you how you view the testimony of witnesses, you would follow those instructions?

Hurd: Yes.

Thereafter, the court denied cause and seated Mr. Hurd on the jury. When voir dire examination of a juror "... 'is subject to more than one construction, a finding by the trial court either way upon the challenge is conclusive on appeal.' " Flack, 77 S.D. at 181, 89 N.W.2d at 32 (citation omitted). We conclude there was support in the evidence for the trial court's decision and accordingly affirm on this issue.

In order to discuss the remaining issues, it is necessary to establish the posture of the proceedings at the time the trial court ruled. The personal property had been seized, delivered to Bank, and sold at auction. In this action Bank sought a deficiency judgment. By answer, counterclaim, and amended counterclaim, VonEyes had sought recovery against Bank on three counts: bad faith involving the 1985 wheat crop; breach of contract to advance the 1984 FLB payment; and failure to dispose of collateral in a commercially reasonable manner. VonEyes' claim was brought on for trial to jury. At the close of all of the evidence, the trial court directed a verdict in favor of Bank and against VonEyes on the issues of bad faith involving the 1985 wheat crop and the alleged breach of contract to advance the 1984 FLB payment. The jury returned a verdict in...