Kostel Funeral Home, Inc. v. Duke Tufty Co.

• Decision Date: 10 September 1986
• Docket Number: No. 15040,15040
• Citation: 393 N.W.2d 449
• Parties: KOSTEL FUNERAL HOME, INC., d/b/a Kostel Funeral Home, Plaintiff and Appellee, v. DUKE TUFTY COMPANY, and Luther J. Munkvold, Defendants, and Joseph L. Swenson, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 449

393 N.W.2d 449

KOSTEL FUNERAL HOME, INC., d/b/a Kostel Funeral Home Plaintiff and Appellee, v. DUKE TUFTY COMPANY, and Luther J. Munkvold, Defendants and Joseph L. Swenson, Defendant and Appellant.

No. 15040.

Supreme Court of South Dakota.

Argued April 22, 1986.

Decided Sept. 10, 1986.

William J. Klimisch of Goetz, Hirsch & Klimisch, Yankton, for plaintiff and appellee.

Gary P. Thimsen of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendants Duke Tufty Co.

Steven L. Jorgensen, Sioux Falls, for defendant and appellant.

MORGAN, Justice.

Joseph L. Swenson (Swenson), a used-car wholesaler, was found liable by a jury for violation of 15 U.S.C. Sec. 1989, et seq. Swenson appeals the award of civil damages and claims prejudicial error by the trial court. We affirm.

The dispute in this case centers around the sale and purchase of a used 1980 Jeep Wagoneer. The Wagoneer was originally purchased by defendant Luther J. Munkvold (Munkvold) from Tholen Auto Sales of Marshall, Minnesota. The odometer at the time of the purchase from Tholen Auto Sales read 7,798 miles, which indicated the odometer had "turned over." The Wagoneer was in good condition and appeared to have much less mileage. Munkvold was an employee of Swenson and purchased the vehicle on Swenson's behalf. Shortly after the purchase, Munkvold and Swenson set out for Sioux Falls, South Dakota, in anticipation of selling the Wagoneer to Duke Tufty Company (Duke Tufty). Swenson drove the Wagoneer and Munkvold followed in a different vehicle.

Swenson claims that on the way to Sioux Falls the odometer in the Jeep began acting erratically. At that time, he disconnected the odometer cable from the transmission. Swenson informed Munkvold of the problem and told Munkvold to continue to Sioux Falls. Swenson drove the Jeep to a friend's garage in Inwood, Iowa, where he proceeded to dismantle the odometer. Upon inspection, Swenson claims he noticed a retaining clip had apparently fallen from the odometer mechanism. Swenson, a trained and experienced mechanic by his own admission, proceeded to attempt to repair the odometer. He claims that he attempted to reset the odometer to the correct mileage but after some time became frustrated and reassembled the odometer with approximately 62,000 miles registering.

Although the precise dates are somewhat in dispute, Swenson sold the vehicle to Duke Tufty shortly after completing the repair on the odometer. The obligatory odometer mileage statement indicated that the odometer reading should not be relied on. There is some question as to the authenticity of this statement, due to the fact that the November 17 purchase date listed on the statement could not have been accurate. Laddie Kostel, Jr., (Kostel), the president of Kostel Funeral Home, Inc., noticed the Wagoneer in the used car lot at Duke Tufty and became interested in purchasing the Wagoneer.

The sales manager at Duke Tufty had placed a piece of tape over the odometer readout and had written on the tape the words "unknown mileage." Kostel inquired as to the meaning of the tape over the odometer. He claims that Duke Tufty personnel told him that it was merely company policy to place such a notice on all vehicles purchased at an auction sale. Kostel also testified that he inquired as to the name of the previous owner but was told by Duke Tufty personnel that it would be impossible to find the name since the car was purchased at auction. Furthermore, Kostel claims that Duke Tufty sales people represented to him that the mileage was "probably correct" given the condition of the vehicle.

The odometer mileage statement incorporated in the Kostel/Duke Tufty purchase agreement is also surrounded by controversy. The statement has two sections. Each section contains three statements, only one of which is to be marked with a check. Duke Tufty personnel, when filling out the first section, checked statement # 2 which reads: "I hereby certify that to the best of my knowledge the odometer reading as stated above reflects the amount of mileage in excess of designed mechanical odometer limit of 99,999 miles/kilometers of the vehicle described above." This check mark appears to be scratched out and in its place statement # 3, which follows, was checked. "I hereby certify that to the best of my knowledge the odometer reading as stated above is NOT the actual mileage of vehicle described above and should not be relied upon."

In the second section, Duke Tufty personnel checked statement # 2 which states: "I hereby certify that the odometer was altered for repair or replacement purposes while in my possession, and that the mileage registered on the repaired or replacement odometer was identical to that before such service." Later testimony indicated that Duke Tufty did not alter or repair the odometer on the Jeep while it was in their possession. In any event, Kostel claims he relied on the representation of Duke Tufty salesmen that the mileage was "probably correct." Kostel signed the purchase agreement without reading the odometer mileage statement because he was in a hurry.

Shortly after purchasing the vehicle, Kostel incurred substantial repair bills and subsequently discovered the odometer tampering. He brought suit against Duke Tufty, Munkvold, and Swenson under several causes of action, including one for the violation of 15 U.S.C. Sec. 1989, et seq. The jury found no liability on the part of Duke Tufty or Munkvold, but awarded $3,765.36 in actual damages against Swenson. The court assessed an additional $3,715.50 in attorney fees and costs under the statute. The actual damages were tripled as provided by statute and judgment was therefore entered in the amount of $15,011.58.

Swenson, in his initial argument, claims the jury's verdict that Swenson intended to defraud Kostel is not supported by the evidence. While much of the evidence is disputed, it is uncontradicted that the Wagoneer, when purchased from Tholen Auto Sales, had approximately 7800 miles on the odometer. The Minnesota mileage statement indicates that the approximately 7800 miles were in excess of 99,999 miles. It is also uncontradicted that sometime between the purchase of the vehicle in Minnesota and the subsequent sale to Duke Tufty the odometer reading changed from approximately 7800 miles to approximately 62,000 miles. Furthermore, it is not disputed that the sale agreement between Munkvold, who was Swenson's agent, and Duke Tufty indicated that the mileage was unknown. In short, a vehicle...