Limpert v. Bail

• Decision Date: 13 October 1988
• Docket Number: No. 16080,16080
• Citation: 447 N.W.2d 48
• Parties: Albert LIMPERT, Plaintiff and Appellee, v. Adolph R. BAIL, Jr., Defendant, Third Party Plaintiff and Appellant, v. Dr. William ROTENBERGER, Third Party Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 48

447 N.W.2d 48

Albert LIMPERT, Plaintiff and Appellee, v. Adolph R. BAIL, Jr., Defendant, Third Party Plaintiff and Appellant, v. Dr. William ROTENBERGER, Third Party Defendant and Appellee.

No. 16080.

Supreme Court of South Dakota.

Considered on Briefs Oct. 13, 1988.

Decided Oct. 4, 1989.

Hermon B. Walker and Daniel L. Pahlke of Rushmore Legal Center, Rapid City, for defendant/third party plaintiff/appellant Bail.

Richard Pluimer of Carl & Pluimer, P.C., Belle Fourche, for plaintiff and appellee Limpert.

Thomas H. Barnes and Gregory G. Strommen of Costello, Porter, Hill, Heisterkamp & Bushnell, Rapid City, for third party defendant and appellee Rotenberger.

SABERS, Justice (on reassignment).

Procedural history and issues.

Albert Limpert (Limpert) filed a complaint alleging that Adolph R. Bail (Bail) breached the terms of an oral contract to purchase 130 head of cattle as specified by Bail, and wrongfully converted the cattle by failing to return the allegedly defective livestock and exercising sole control over them. Bail counterclaimed and filed a third party complaint in negligence against William A. Rotenberger, DVM (Rotenberger), seeking indemnity for any judgment obtained in favor of Limpert and against Bail, and damages for lost profits and injury to reputation. The trial court granted motions for summary judgment in favor of both Limpert and Rotenberger, specifically finding that Bail's wrongful conversion of Limpert's cattle barred his recovery against Rotenberger on the indemnity theory, and that the absence of duty owed by Rotenberger to Bail precluded Bail's claim of negligence. Bail appeals and argues that the trial court erred in the following regards:

1) Summary judgment is inappropriate where plaintiff's theory presents a number of factual questions.

2) Summary judgment is inappropriate where a negligence claim is asserted in a third party complaint.

3) Summary judgment is inappropriate where the factual question(s) of duty and/or misconduct arise(s) in an indemnity claim.

We reverse the summary judgment in favor of Limpert and against Bail. We also reverse the summary judgment in favor of Rotenberger and against Bail on the negligence claim. We vacate, without deciding, summary judgment on the claim of indemnity because it is rendered moot by our holding on issue two.

Facts

In February 1986, Limpert and Bail entered into an oral agreement whereby Bail was to purchase from Limpert 130 cows and another 30 head from Limpert's brother. The cows were to be pregnancy tested, determined to be with calf, bled for brucellosis, have solid mouths, and not be over six years of age. Bail gave Limpert the names of two area veterinarians who were to test the cattle prior to the purchase. Limpert was unsuccessful in arranging such testing, and Bail ultimately contacted Rotenberger to do the work. There is some dispute as to what the veterinarian was enlisted to do; Bail argues that he believed the veterinarian would mouth the livestock as well as test them for pregnancy and brucellosis. The notation on the check issued by Bail to Rotenberger for the work done simply provided, "testing cows."

On February 19, 1986, Rotenberger tested the cattle while Limpert mouthed them. Bail arrived at the Limpert ranch and observed Rotenberger and Limpert working. Bail then issued Limpert a check for $62,870.00 and the livestock were loaded and delivered to Bail's purchaser, Lyle Williams, at Philip, South Dakota. Williams began selling the cows, and at some point discovered that some of them had bad mouths. He refused to pay Bail, and Bail then stopped payment on the check issued to Limpert. During subsequent negotiations between Limpert and Bail, Limpert apparently offered to take back the defective cows, but they had already been sold. Bail issued Limpert a new check which represented either payment for all but the seventeen allegedly defective cows or an accord and satisfaction. Limpert accepted this check.

Limpert then sued Bail for breach of contract and conversion. The trial court found that Limpert demanded return of the cattle or payment therefor and was entitled to the purchase price under the contract, as a matter of law. The trial court also found, as a matter of law, no duty owing Bail from Rotenberger, and thus no actionable negligence, and that Bail's wrongful breach and conversion barred recovery from Rotenberger on the indemnity theory.

1. Summary judgment in favor of Limpert and against Bail on theories of breach of contract and conversion.

Summary judgment is properly awarded only when the moving party clearly shows that he is entitled to judgment as a matter of law because there is no genuine issue as to any material fact. SDCL 15-6-56(c); Groseth Int'l, Inc. v. Tenneco, Inc., 410 N.W.2d 159 (S.D.1987); Bego v. Gordon, 407 N.W.2d 801 (S.D.1987); Hamaker v. Kenwel-Jackson Machine, Inc., 387 N.W.2d 515 (S.D.1986). "The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party." Groseth, supra at 164. See also Wilson v. Great Northern Ry. Co., 83 S.D. 207, 157 N.W.2d 19 (1968). Summary judgment is an extreme remedy and is not intended as a substitute for trial. Bego, supra; Wilson, supra. A belief that the nonmoving party will not prevail at trial is an inappropriate basis for granting summary judgment on issues not shown to be sham, frivolous, or so unsubstantial as to obviate the futility of their litigation. Laber v. Koch, 383 N.W.2d 490 (S.D.1986); American Indian Agricultural Credit Consortium, Inc. v. Fort Pierre Livestock, Inc., 379 N.W.2d 318 (S.D.1985); Wilson, supra. If reasonable persons, upon examining the evidence, might reach different conclusions, a motion for summary judgment should be denied and the case tried on the merits. See Laber, supra.

In support of our conclusion that the motion for summary judgment in favor of Limpert should have been denied, we examine Limpert's claim of conversion. Limpert asserts that because Bail resold the allegedly defective cattle, rather than returning them, he is guilty of conversion for failure to comply with SDCL 57A-2-603, which requires a buyer to follow seller's instructions with respect to the goods after rejection. There is a clear factual dispute as to whether Limpert's remarks regarding the allegedly defective cattle constituted "instructions" to Bail as to the disposition of the defective cattle.

The UCC also provides that on a rightful rejection, a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody, and may hold such goods and resell them. SDCL 57A-2-711. Thus, factual questions exist whether Bail's revocation was justifiable and whether he exercised good faith in reselling the goods. SDCL 57A-1-203.

Limpert's complaint also alleges breach of contract. In light of the above-cited statute providing for buyer's remedy of rejection and resale, the question arises whether a breach did in fact occur by virtue of Bail's resale. If a breach has occurred, the issue of damages will also be in dispute. Further, the claim of breach based on nonpayment for the seventeen head raises the issue whether the issuance of the second check was intended to constitute an accord and satisfaction. Cases involving intent are not usually suited for summary disposition. Ahl v. Arnio, 388 N.W.2d 532 (S.D.1986).

Summary judgment is also improper where defendant's defenses involve questions of fact. See Bahr v. Bahr, 85 S.D. 240, 180 N.W.2d 465 (1970). Here, Bail's defenses of fraud and deceit are questions of fact. See Commercial Credit Equipment Corp. v. Johnson, 87 S.D. 411, 209 N.W.2d 548 (1973). Likewise, whether a party relied on the claimed fraud to its detriment is a question of fact for the jury. Id. Bail's assertion that Limpert misrepresented the condition of the cows and that he, Bail, relied to his detriment on that representation presents a genuine issue of material fact. Accordingly, we conclude that Bail has set forth specific facts showing there are genuine issues for trial as required by SDCL 15-6-56(e). We reverse and remand summary judgment in favor of Limpert and against Bail.

2. Summary judgment in favor of Rotenberger and against Bail on negligence theory.

Summary judgment was also improper on this issue because Rotenberger had a legal duty ^* to both Limpert and Bail to properly test the cattle. Restatement (Second) of Torts § 323 (1977) provides:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other's person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if

(a) his failure to exercise such care increases the risk of such harm, or

(b) the harm is suffered because of the other's reliance upon the undertaking.

Likewise, it is generally recognized that one who undertakes to provide professional services has a duty to the person for whom the services are performed to use such skill and care ordinarily exercised by others in the same profession. City of Eveleth v. Ruble, 302 Minn. 249, 253-54, 225 N.W.2d 521, 524 (1974). As a veterinarian, Rotenberger provided professional services which created a duty to Bail as a recipient of those services. Whether that duty was breached is a genuine issue of material fact.

A duty to use proper care may also arise from a contractual relationship and breach of the resulting duty may give rise to tort liability. Friedhoff v. Engberg, 82 S.D. 522, 527, 149 N.W.2d 759, 762 (1967); accord Champion v. United States Fidelity and Guaranty Co., 399 N.W.2d 320, 322 (S.D.1987); see also Lincoln Grain, Inc. v. Coopers & Lybrand, 216 Neb. 433, 437, 345 N.W.2d 300, 305 (1984) (...