Scotland Vet Supply v. ABA Recovery Service, Inc., No. 20228

• Court: Supreme Court of South Dakota
• Writing for the Court: PER CURIAM
• Citation: 1998 SD 103,583 N.W.2d 834
• Parties: SCOTLAND VET SUPPLY, Plaintiff and Appellant, v. ABA RECOVERY SERVICE, INC., a Nebraska corporation, Defendant and Appellee. . Considered on Briefs
• Docket Number: No. 20228
• Decision Date: 29 April 1998

Page 834

583 N.W.2d 834 1998 SD 103 SCOTLAND VET SUPPLY, Plaintiff and Appellant,
v.
ABA RECOVERY SERVICE, INC., a Nebraska corporation,
Defendant and Appellee. No. 20228. Supreme Court of South Dakota. Considered on Briefs April 29, 1998.
Decided Sept. 2, 1998.

William A. Moore, Scotland, for plaintiff and appellant.

Denis R. Eckert, Elk Point, for defendant and appellee.

PER CURIAM.

¶1 Scotland Vet Supply (Scotland) appeals a judgment awarding ABA Recovery Service (ABA) moneys due for account collection services. We affirm in part, reverse in part and remand.

FACTS

¶2 Scotland sells veterinary supplies and maintains charge accounts with its customers. In May 1992, Scotland contracted with ABA to collect some overdue accounts. The contract provided in pertinent part:

(1) Client [i.e., Scotland] agrees to pay Collector [i.e., ABA] a non-refundable retainer fee of $10.00/Per ¹sic ] and thereafter an annual fee of $__________. The parties agree that the retainer fee, or any unpaid part thereof, may be withheld from collections by Collector.

* * *

(3) That payment of said retainer entitles Client to collection services of 25 accts accounts [sic ] during the course of the Agreement, so long as said accounts are assigned by Client to Collector during the term of said Agreement.

* * *

(10) Client agrees that when Collector has had the account for sixty (60) days, or an attorney is retained, or if court action is instituted, to pay to Collector, in addition to the retainer agreement, the sum of 50% of all amounts collected, less interest, which interest is retained in full by Collector ... Clients agrees [sic ] to pay the fee on all accounts regardless whether debtor pays Client or Collector, or how the account is collected ... It is also understood ... that if Client terminates the Agreement, those accounts which have been assigned for collection will remain with the Collector under the terms of this Agreement until either collection efforts are concluded or the account is returned to Client as uncollectible. (footnote added).

¶3 Pursuant to the contract, Scotland paid ABA $250 to collect twenty-five accounts, but assigned only three accounts for collection. Two accounts were collected within sixty days and, therefore, Scotland incurred no additional liability to ABA under subdivision (10) of the contract. The third

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account proved to be more difficult. The debtor, William Heisinger, failed to follow through with promises to pay and ABA's asset searches and credit reports revealed most of Heisinger's assets were encumbered.

¶4 ABA obtained a judgment against Heisinger in Scotland's name in July 1993, but its efforts to collect on the judgment were fruitless. Scotland became increasingly dissatisfied with ABA's performance as ABA inexplicably began billing Scotland twenty-five dollars a month for its services. ² Ultimately, Scotland instructed its counsel to notify ABA that it was terminating its contract. ABA replied by advising of its intention to continue its collection efforts against Heisinger.

¶5 In February 1995, counsel for Scotland advised ABA of his collection of $5,634.67 from Heisinger. This was the entire amount due plus costs and interest. Counsel for ABA notified counsel for Scotland of ABA's intention to enforce it's contract by seeking fifty percent of the amount collected from Heisinger. Scotland then commenced a declaratory judgment action against ABA to determine the parties' obligations under the contract. A court trial was held in May 1997 and the trial court subsequently entered findings of fact, conclusions of law and a judgment for ABA for fifty percent of the amount collected from Heisinger plus interest. Scotland appeals.

ISSUE 1

¶6 Did the trial court err in determining there was a valid contract between the parties?

¶7 Scotland argues the trial court erred in determining it had a valid contract with ABA because the contract was void on the grounds of mistake, fraud, unconscionability and/or lack of consideration. " 'The existence of a valid express contract is a question of law to be determined by the court, not a jury[.]' As such we review the issue de novo.' " Lane v. Travelers Indem. Co., 1997 SD 58, p 12, 563 N.W.2d 423, 425 (citations omitted).

¶8 Scotland's claims of mistake and fraud are premised on testimony from its owner, veterinarian Kenneth Custis, that, during the contract negotiations, ABA's representative told him the flat fee for collection of twenty-five accounts was $250. Dr. Custis further testified ABA's representative told him nothing about subdivision (10) of the contract and its additional terms regarding compensation and fees.

¶9 The fee provisions were plainly and unambiguously set forth in the contract in the same size print as all other parts of the document and Dr. Custis also testified he did not read the contract before signing it. We have previously recognized that:

"To permit a party, when sued on a written contract, to admit that he signed it but to deny that it expresses the agreement he made or to allow him to admit that he signed it but did not read it or know its stipulations would absolutely destroy the value of all contracts."

... Any mistake regarding the meaning of this unambiguous written agreement stemmed from [plaintiff's] neglect of his legal duty to read and understand the clear import of the ten-year option.

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The basic premise in the law is that when the parties reduce an agreement to writing and sign it, that written agreement is entitled to enforcement. In this case, the trial court did not find fraud on the part of the [defendant] but only mistake on the part of [the plaintiff]. To allow reformation of this unambiguous contract would open the flood gates for all dissatisfied contractees to claim mistake when more revenue is desired. This was the final and total agreement between the parties. [Plaintiff] signed it, therefore the agreement is binding.

LPN Trust v. Farrar Outdoor Advertising, 1996 SD 97, pp 13-15, 552 N.W.2d 796,...