Omaha Bank for Cooperatives v. Siouxland Cattle Co-op.

Decision Date13 May 1981
Docket NumberNos. 65207,65208,s. 65207
Citation305 N.W.2d 458
PartiesOMAHA BANK FOR COOPERATIVES, A federally chartered instrumentality, Appellee, v. SIOUXLAND CATTLE COOPERATIVE, Appellant, Bunger Construction Co., Inc.; Plymouth Ready Mix Concrete Co., Inc.; Charles Neuroth; Plymouth County, Iowa; Godberson-Smith Construction Co.; Carl J. Schulte Construction Co.; Casler Electric Co., Defendants, Robert Zuber, Appellee, and George Weston, Defendant to cross-petition.
CourtIowa Supreme Court

Steven A. Carter of Carter, Sar & Edmonds, Sioux City, for appellant Siouxland.

Gerald P. Laughlin and Robert J. Banta of Baird, Holm, McEachen, Pedersen, Hamann & Haggart, Omaha, Neb., and L. W. Rosebrook of Ahlers, Cooney, Dorweiler, Haynie & Smith, Des Moines, for appellee Omaha Bank.

George F. Madsen of Shull, Marshall & Marks, Sioux City, for appellee Zuber.

Considered by REYNOLDSON, C. J., and LeGRAND, McCORMICK, McGIVERIN, and SCHULTZ, JJ.

McGIVERIN, Justice.

Siouxland Cattle Cooperative (Siouxland) appeals from an adverse judgment on its damage claim in a law action for fraud against Omaha Bank for Cooperatives (Omaha Bank) and Robert Zuber, a bank officer, and from the trial court's order for a sheriff's deed to the bank in a foreclosure action. Siouxland claims that the trial court erred in failing to replace a juror with an alternate, in its instructions to the jury, and in ruling that Siouxland has lost a right of redemption from the foreclosure sale. We reverse in the law action and affirm in the foreclosure action.

This case began in 1976 when Omaha Bank filed a petition in equity to foreclose a mortgage on land owned by Siouxland. In 1977 Siouxland filed a separate action at law against the bank and Robert Zuber claiming that they fraudulently misrepresented that the bank would provide Siouxland with continuing financing to establish a cattle feedlot operation. The fraud claims were consolidated with the equity action to foreclose the mortgage.

The law action for fraud was tried first. The jury returned a verdict in December 1977 for Siouxland of $450,000 in compensatory damages and $250,100 punitive damages. Siouxland then did not contest the foreclosure action and consented to judgment against it in February 1978 on the bank's claim. On February 18, 1980, the bank purchased the real estate at a sheriff's sale and received a sheriff's certificate.

Omaha Bank and Zuber appealed the law judgment against them. The court of appeals decided that the jury had been improperly instructed on Siouxland's fraud claim and remanded for a new trial.

Siouxland's fraud claim was retried beginning in February 1980. During this trial, a juror allegedly engaged in misconduct by purchasing drinks for, and conversing with, the bank's lawyers. Siouxland also claims that the court improperly instructed the jury on the standard of proof on the fraud claim.

The retrial resulted in a jury verdict for the bank and Zuber on Siouxland's claim for fraud. After the verdict, the bank moved for issuance of a sheriff's deed to the real estate upon which it had foreclosed, claiming that Siouxland had lost its right of redemption under section 628.4, The Code (party who has taken appeal or stayed execution loses redemption rights).

On April 24, 1980, the trial court overruled Siouxland's post-trial motions in the law action and granted the bank's motion for a sheriff's deed in the equity action. § 626.95. Siouxland appeals. Other parties in the case defaulted or are not participating in the appeal.

The following issues are presented for review:

1. Did the trial court err in denying Siouxland's request to remove a juror, who had bought drinks for the bank's lawyers during trial, and replace him with an alternate?

2. Did the trial court properly instruct the jury that Siouxland had to prove its claim for damages for fraud by "a preponderance of clear, convincing and satisfactory evidence"?

3. Was the bank entitled to a sheriff's deed to the land purchased at execution sale because Siouxland was not entitled to redeem?

I. Juror misconduct. Siouxland claims that the trial court should have granted its motion to replace a juror with an alternate during the retrial of the law action. Iowa R.Civ.P. 189, The Code 1979. The claim arises from the conduct of juror Adamson. The facts surrounding the misconduct appear in affidavits from the lawyers involved and Adamson. The juror is competent to testify about "external matters improperly brought to bear on the deliberations." State v. Rouse, 290 N.W.2d 911, 916 (Iowa 1980); Harris v. Deere & Co., 263 N.W.2d 727, 729-30 (Iowa 1978); Wright v. Illinois & Mississippi Telegraph Co., 20 Iowa 195, 210 (1866).

After a day at trial on March 3, 1980, Omaha Bank's lawyers, Robert J. Banta and Gerald P. Laughlin, stopped for dinner in Merrill, Iowa. After finishing dinner, they entered the bar portion of the restaurant to pay their bill. Juror Adamson was seated at the bar. He offered to buy the lawyers a drink and they declined. Adamson was insistent and offered again. The lawyers then sat at a booth near the bar and received a drink, courtesy of Adamson. Adamson introduced the lawyers to other patrons and they all conversed about various subjects. There is no evidence that the pending trial was discussed.

On March 6 attorney Laughlin informed the court, in the presence of lawyers for other parties, of the contact with juror Adamson. We do not have a transcript of the meeting but apparently the trial court concluded that nothing improper had occurred.

On March 11 Siouxland's attorney, Steven A. Carter, reported to the court that he had advised his client to move for a mistrial because of the misconduct. Carter also stated that Siouxland did not want a mistrial and wanted to proceed with the jury. Because Siouxland would not follow Carter's advice to move for a mistrial, Carter requested the court, before the case was submitted to the jury, to remove Adamson and replace him with an alternate juror under Iowa R.Civ.P. 189, as then in effect. The trial court denied the request, stating, "I said at the time there was nothing wrong with it and found that, and I do now." The court also indicated that a motion for a mistrial was the only proper procedure to follow.

After the jury returned a verdict for the bank and Zuber, Siouxland moved for a new trial because of misconduct by juror Adamson, who had become foreman of the jury. Iowa R.Civ.P. 244(b). The trial court overruled the motion primarily because Siouxland had not moved for a mistrial during trial.

The juror's offer of drinks and the lawyers' acceptance was clearly misconduct by all of them. Adamson, in speaking to the lawyers and offering and buying them drinks, violated the standard admonition given by the court to refrain from contact with the lawyers involved in the case. The bank's lawyers violated their ethical obligation prohibiting communication with a juror during trial unless it is in the course of official proceedings. Iowa Code of Professional Responsibility DR 7-108(B) and (C). See, e. g., State v. Neville, 227 Iowa 329, 288 N.W. 83 (1939); Henn v. Finley, 201 N.W. 783 (Iowa 1925); Oleson v. Meader, 40 Iowa 662 (1875).

Omaha Bank and Zuber apparently concede that the contact was misconduct but argue that Siouxland has waived any claim for a new trial. The waiver argument is based on Siouxland's refusal to move for a mistrial after discovering the misconduct. A party learning during trial of misconduct by a juror must complain to the trial court rather than wait for the outcome and then move for a new trial after losing. Rudolph v. Iowa Methodist Medical Center, 293 N.W.2d 550, 555 (Iowa 1980); State v. Christiansen, 231 Iowa 525, 1 N.W.2d 623 (1942); Ricker v. Davis, 160 Iowa 37, 139 N.W. 1110 (1913).

Siouxland declined to move for a mistrial during trial. The record does not indicate, however, that Siouxland elected to wait until the adverse verdict before complaining to the court about the misconduct. Rather, before the case was submitted for jury decision, Siouxland requested the court to replace Adamson with an available alternate. Iowa R.Civ.P. 189, The Code 1979. We conclude that Siouxland adequately made its record to the court by requesting that an alternate replace the offending juror.

Rule 189 provided at the time that "alternate jurors shall, in the order they were drawn, replace any juror who becomes unable to act, or is disqualified, before the jury retires." We conclude that the rule may be used to prevent a mistrial by using alternates to replace jurors who engage in misconduct. See United States v. Dominguez, 615 F.2d 1093 (5th Cir. 1980) (comparable federal rule of criminal procedure may be used "whenever the judge becomes convinced that the juror's abilities to perform his duties become impaired"); Anderson v. Dun & Bradstreet, Inc., 543 F.2d 732 (10th Cir. 1976) (juror who danced with employee of defendant replaced); United States v. Cameron, 464 F.2d 333 (3d Cir. 1972) (sleeping juror); Kalianov v. Darland, 252 N.W.2d 732, 736-38 (Iowa 1977); State v. Coffee, 182 N.W.2d 390, 396 (Iowa 1970). We note that rule 189 has been revised since this trial. 1980 Session, 68th G.A., ch. 1207. Effective July 1, 1980, the rule provides for striking jurors who become unable to act or are disqualified rather than replacing them with alternates.

In denying Siouxland's request to replace juror Adamson, the trial court was exercising its discretion. A decision on whether to replace an alternate will not be reversed unless there has been an abuse of discretion. See Dominguez, 615 F.2d at 1095; Hathorn v. Trine, 592 F.2d 463 (8th Cir. 1979) (per curiam). We conclude that, on the facts of this case, the trial court abused its discretion in failing to replace juror Adamson.

As stated above, the contact was clearly misconduct. The question is whether there was an abuse of discretion in failing to replace the juror because of it....

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