Marcoux v. Mid-States Livestock, Inc.

• Decision Date: 21 January 1977
• Docket Number: Civ. No. 73-C-2054-C,C74-3016 and C74-3017.,C74-3013,73-C-2055-C
• Citation: 429 F. Supp. 155
• Parties: Roy "Pat" MARCOUX et al., Plaintiffs, v. MID-STATES LIVESTOCK, INC., an Iowa Corporation, et al., Defendants.
• Court: U.S. District Court — Northern District of Iowa

429 F. Supp. 155

Roy "Pat" MARCOUX et al., Plaintiffs, v. MID-STATES LIVESTOCK, INC., an Iowa Corporation, et al., Defendants.

Civ. Nos. 73-C-2054-C, 73-C-2055-C, C74-3013, C74-3016 and C74-3017.

United States District Court, N. D. Iowa, C. D.

January 21, 1977.

David A. Domina of Jewell, Otte, Gatz & Collins, Norfolk, Neb., Shook, Hardy & Bacon, William K. Waugh, Jr., Kansas City, Mo., Wayne M. Stallard, Onaga, Kan., and G. A. Cady, Raymond P. Drew, Hobson, Cady & Drew, Hampton, Iowa, John T. O'Brien, O'Brien, Galvin & O'Brien, Souix City, Iowa, for plaintiffs.

Donald C. Wilson and Jack A. Hall, Lundy, Butler, Wilson & Hall, Eldora, Iowa, Thomas Flynn, Des Moines, Iowa, for defendant Gordon Reisinger.

Stewart H. M. Lund, Patrick B. Chambers, Webster City, Iowa, for defendant A. J. Jensen.

John P. Whitesell, James P. Walters, Whitesell Law Firm, Iowa Falls, Iowa, for defendant Roger Jensen, Individually, and as President, Secretary to the Board of Directors, and Director of First National Bank of Eldora, Eldora, Iowa.

J. G. Fletcher, Gamble, Riepe, Burt, Webster & Fletcher, Des Moines, Iowa, for defendants Harold E. Marsh, Jerry L. Higgason, Doris Ruppolt, Judy McCarville and Joanne Smith.

Rex J. Ryden, Cartwright, Druker & Ryden, John F. Veldey, Marshalltown, Iowa, for defendants First National Bank of Eldora and Federal Deposit Ins. Corp.

William N. Dunn, Eldora, Iowa, for defendants W. G. Tietz, A. E. Luiken, C. O. Rubow and Claus Janssen.

John H. Neiman, Neiman, Neiman, Stone & Spellman, Eugene Davis, Ronald L. Hersbergen, Des Moines, Iowa, for defendants Dale Van Wyk and Mid-States Livestock, Inc.

John Anderson, Jr., Anderson, Granger & Nagels, Overland Park, Kan., and John H. Mitchell, Mitchell, Mitchell, Murray & Goode, Fort Dodge, Iowa, for defendants Wagner-Huffman & Burlington Livestock Company, Inc., and Jim Hogan.

ORDER ON POST-TRIAL MOTIONS

HANSON, District Judge.

I. INTRODUCTION

The Court herein addresses itself to matters pertaining to a number of diversity cases, cases which were consolidated at trial for the purpose of ascertaining by whom and to what extent certain plaintiffs were damaged in a series of related transactions. Each of the above-named cattle dealers had drawn sight drafts on defendant Mid-States Livestock, Inc., through defendant First National Bank of Eldora, Iowa, for the purchase price of cattle delivered to Mid-States. In late September, 1973, Mid-States became insolvent; and plaintiffs, who had not been paid for their cattle, subsequently commenced five separate actions in this Court. Against the First National Bank and its directors, the plaintiffs alleged negligence for failure to return the unpaid drafts within the requisite midnight deadline. The remaining defendants were sued for fraud. Plaintiffs claimed defendants Mid-States, Dale Van Wyk, an officer and director of that corporation, and Roger Jensen, president of the First National Bank, were liable for the unpaid drafts because they fraudulently misrepresented or concealed Mid-States' financial condition, thereby inducing plaintiffs to deliver their cattle to Mid-States.

The cases were argued before a jury, and the Court submitted five special verdict forms to the jury under Rule 49(a) of the Federal Rules of Civil Procedure. In their October 7, 1976 return of those verdicts, the jury found: (1) that the First National Bank was negligent in its handling of each and every one of plaintiffs' drafts, and (2) that Mid-States, Dale Van Wyk and Roger Jensen were guilty of fraud. The jury, pursuant to the Court's instructions, further set the amount of actual and punitive damages that were to be awarded to the plaintiffs. Following the trial, on November 30, 1976, judgments were entered in favor of the plaintiffs based upon the jury's answers to the special verdicts.

These cases are now before the Court by way of pending post-trial motions. Specifically, these motions are: (1) motion of defendants First National Bank of Eldora and Federal Deposit Insurance Corporation for judgment notwithstanding the verdict and motion for new trial (the insolvent First National Bank has been represented throughout these proceedings by the Federal Deposit Insurance Corporation, as liquidator and receiver); (2) defendant Roger Jensen's motion for judgment notwithstanding the verdict and motion for new trial; (3) defendant Dale Van Wyk's motion for judgment notwithstanding the verdict and motion for new trial; and (4) plaintiffs' motion for new trial as to the directors of the First National Bank of Eldora (the Court directed verdicts for the defendant directors at the close of plaintiffs' evidence).

A hearing on these post-trial motions was held November 23, 1976. In conformity with the Court's predilection, oral argument was directed primarily to the question of whether the First National Bank, even if negligent in its handling of plaintiffs' drafts, had in any way contributed to plaintiffs' damages. Indeed, as the focus of this ruling will further indicate, final determination of these post-trial motions has been deferred because of a lingering concern that the jury's finding of First National's liability might be unwarranted.

Subsequent to the November hearing, in light of counsel's comments, the record and jury verdicts in these cases were again examined. The Court, upon completion of that examination, has concluded that the jury's findings were within its province as trier of fact. Accordingly, for the reasons herein detailed, the jury verdicts will be permitted to stand.

II. POST-TRIAL MOTIONS OF DEFENDANTS FIRST NATIONAL BANK OF ELDORA AND FEDERAL DEPOSIT INSURANCE CORPORATION

As in the cases in question, a motion for a new trial may be joined with an alternative motion for judgment notwithstanding the verdict. See Fed.R.Civ.P. 50(b). Nevertheless, though a party is permitted to join these alternative post-trial motions, they perform wholly distinct functions and are governed by different standards. Montgomery Ward and Co. v. Duncan, 311 U.S. 243, 250, 61 S.Ct. 189, 85 L.Ed. 147 (1940). The Court chooses to delineate those standards with some precision. In a case concededly as close as plaintiffs' action against defendants First National Bank and the Federal Deposit Insurance Corporation (FDIC), presumptions within such standards often prove determinative.

A. MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT

Defendants First National Bank and FDIC contend that there was no evidence in the record to create a fact issue either as to First National's alleged negligence or as to the causation of plaintiffs' damage by that negligence. Sufficiency of evidence being a question of law, defendants' pending motion properly requests the Court to set aside the jury's verdict. See Hover v. MacDonald Engineering Co., 183 F.Supp. 427 (S.D.Iowa 1960), affirmed 290 F.2d 301 (8th Cir. 1961).¹ To rule on this motion, the Court has to determine whether the jury's verdict was based upon "substantial evidence." Duncan v. St. Louis-San Francisco Ry. Co., 480 F.2d 79, 83 (8th Cir. 1973); Iowa R.Civ.P. 344(f)(1); Volkswagen of Iowa City, Inc. v. Scott's Inc., 165 N.W.2d 789, 793 (Iowa 1969).²

The "substantial evidence" test requires that the jury verdict be supported by more than a "scintilla" of evidence. See Small Co. v. Lamborn & Co., 267 U.S. 248, 254, 45 S.Ct. 300, 69 L.Ed. 597 (1924); Petersen v. Farmers Casualty Co., 226 N.W.2d 226 (Iowa 1975). In making that determination, the trial court must examine the record, reviewing the testimony but without assigning credibility or weight to the witnesses and evidence. Simpson v. Skelly Oil Co., 371 F.2d 563, 567 (8th Cir. 1967); Thieman v. Johnson, 257 F.2d 129, 132 (8th Cir. 1958). A trial court cannot substitute its judgment of the facts for that of the jury, and must indeed view the evidence in the light most favorable to the party securing the jury verdict. Tennant v. Peoria and P. U. Ry. Co., 321 U.S. 29, 35, 64 S.Ct. 409, 88 L.Ed. 520 (1944); Bryant v. Rankin, 332 F.Supp. 319, 321 (S.D.Iowa 1971). Hence, motions for judgments notwithstanding the verdict are sparingly granted, and then ". . . only where the evidence points all one way and is susceptible of no reasonable inferences sustaining the position of the nonmoving party." Giordano v. Lee, 434 F.2d 1227, 1231 (9th Cir. 1970), cert. denied, 403 U.S. 931, 91 S.Ct. 2250, 29 L.Ed.2d 709 (1971); see generally, Seven Provinces Ins. Co., Ltd. v. Commerce and Industry Ins. Co., 65 F.R.D. 674 (W.D.Missouri 1975).

With these stringent guidelines as its measure, the Court must review the evidence underlying the jury's finding on the two specific issues challenged by defendants First National Bank and FDIC. The first of these issues, as set forth in defendants' motion for judgment notwithstanding the verdict, is "whether First National Bank of Eldora properly and seasonably handled each of the drafts of the Plaintiffs sent to it for collection from Mid-States Livestock, Inc." Assuming that First National is found to have improperly handled these drafts, the issue then becomes whether the "wrongful conduct of First National Bank of Eldora in the handling of each of Plaintiffs' drafts sent to it for collection from Mid-States Livestock, Inc., was the proximate cause of Plaintiffs' losses or damages."

1. Negligence

With respect to the issue of improper handling of the drafts, or negligence, defendants FDIC and First National Bank, a "collecting bank" in the circumstances now examined, argued at trial that two of the sight drafts — the draft of plaintiff Thompson, dated September 22, 1973, in the amount of $51,248.80, and the draft of plaintiff Emmett Livestock, dated September 29, 1973 in the amount of $23,430.02 — were clearly returned upon nonpayment within the "midnight deadline" as required by law.³

(1) A collecting bank must use ordinary care in . . .

(b) sending notice of dishonor or nonpayment or returning an item . . . to

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