Watkins Products, Inc. v. Stadel

• Decision Date: 26 December 1973
• Docket Number: No. 8891,8891
• Citation: 214 N.W.2d 368
• Parties: WATKINS PRODUCTS, INC., Plaintiff and Appellant, v. Richard STADEL et al., Defendants and Respondents. Civ.
• Court: North Dakota Supreme Court

Page 368

214 N.W.2d 368

WATKINS PRODUCTS, INC., Plaintiff and Appellant, v.Richard STADEL et al., Defendants and Respondents.

Civ. No. 8891.

Supreme Court of North Dakota.

Dec. 26, 1973.

Rehearing Denied Jan. 31, 1974.

Syllabus by the Court

1.Declarations made by the parties to a transaction, or an agent of one of the parties, at the time thereof, which are relevant on the issue of fraud in the transaction, are generally viewed as admissible as part of the res gestae.

2.On an appeal from an order denying a motion for judgment notwithstanding the verdict, the only grounds which will be considered are those which were assigned on the motion for a directed verdict.

3.On review of an order denying a motion for judgment notwithstanding the verdictthe Supreme Court is limited to a consideration of the evidence, and if the record is such that there is some issue of fact for the jury and it rendered a verdict thereon, the order will be affirmed.

4.Our review of the facts is limited to a consideration of whether there is substantial evidence to sustain the verdict; if there is such evidence, we are bound by the verdict.

5.Where the evidence is in conflict and reasonable men might draw different conclusions therefrom, this court on appeal will disturb neither the verdict of the jury based upon such evidence, nor the order of the trial court denying a motion for judgment notwithstanding the verdict or for a new trial on the ground of insufficiency of evidence.

6.In reviewing the sufficiency of the evidence on appeal from the judgment and from an order denying a motion for judgment notwithstanding the verdict or for a new trial, this court will view the evidence in the light most favorable to the verdict.

7.On appeal from an order denying a motion for a new trial on the ground that the evidence is insufficient to support the verdict, the Supreme Court's review is limited to a consideration of whether there is substantial evidence to sustain the verdict.If there is such evidence, the Court is bound by the verdict.

8.The existence of fraud is ordinarily a question of fact to be decided by the trier of the facts.

9.When the jury returns a verdict in favor of a party, it is presumed that all questions of fact within the jury's province have been determined in favor of that party.

10.When dealing with a surety agreement, if the creditor-obligee knows, or has good grounds for believing, that the surety is being deceived or misled, or that he was induced to enter into the surety agreement in ignorance of facts materially increasing the risk beyond that which the surety intends to assume, and the creditorobligee has an opportunity, before accepting the surety agreement, to inform the surety of the facts but fails to so inform the surety, when good faith and fair dealing demand that the surety be so informed, the surety may avoid the surety agreement.

Pearce, Anderson, Pearce, Thames & Pearce, Bismarck, for plaintiff and appellant.

Rausch & Chapman, Bismarck, for defendants and respondents, Richard Stadel and Martha Stadel.

Gordon O. Hoberg, Napoleon, for defendants and respondents, John Pfaff and Elvina Pfaff.

PAULSON, Judge.

This is an appeal from a judgment of the district court dismissing the plaintiff's complaint and from an order of the district court denying a motion by the plaintiff for judgment notwithstanding the verdict or in the alternative for a new trial.

The plaintiff, Watkins Products, Inc.(hereinafter Watkins), had a contract with Donald C. Bieber whereby Bieber agreed to sell the Watkins line of products under certain conditions.The contract between Watkins and Bieber was in writing and immediately following, on the same paper, was a surety agreement.On October 31, 1968, Bieber procured the signatures of the defendants, Richard and Martha Stadel and John and Elvina Pfaff(hereinafter defendants), as sureties.The Pfaffs, however, contend that they did not sign the surety agreement.

On December 30, 1968, Watkins accepted the defendants as sureties and sent such acceptance to them by registered mail, together with the material required by §§ 22--01--06.1 through 22--01--06.4, N.D.C.C..This required statutory material includes information for a surety in order that such surety may withdraw from an agreement within ten days from the receipt of the notice of acceptance, and that a surety will receive monthly statements on the status of the account between the principal and the creditor.In the instant case, each of the defendants signed a registry receipt for this material and none of them made any attempt to withdraw from the surety agreement.Subsequently, Bieber's business failed, he filed a bankruptcy petition, and he was adjudicated a bankrupt.Watkins received nothing from Bieber's bankruptcy proceedings and thereafter notified the defendants of the termination of the contract is had with Bieber.The defendants did not pay the $10,601.73 owed to Watkins by Bieber, and Watkins brings this action against the defendants as sureties for the purpose of collecting said sum.

The case was tried to a jury which returned a verdict in favor of the defendants and against Watkins.In accordance with that verdict, the district court rendered its judgment and, thereafter, denied Watkins' motion for judgment notwithstanding the verdict or in the alternative for a new trial.

Watkins appeals from the judgment and the order denying judgment notwithstanding the verdict or in the alternative for a new trial and charges error on the part of the district court in receiving into evidence over Watkins' objection on hearsay grounds, conversations which occurred between Bieber and the defendants at the time the surety agreement was signed by the defendants; and in denying its motion for judgment notwithstanding the verdict or in the alternative for a new trial.

The statements condemned as hearsay by Watkins were made by Bieber to the defendants at the time he induced them to sign as sureties.It is claimed by the defendant, Richard Stadel, that the statements were fraudulent and calculated to induce him and his wife to sign the agreement as sureties.Richard Stadel testified that Bieber said to him:

'. . . if I signed it I could get that money back that I got credit coming.'

This statement is alleged to be fraudulent because Bieber never told the defendants, Stadel and his wife, that they would be liable for his, Bieber's, debts and because the signing of the surety agreement had no relation to the Stadels' getting a refund for undelivered merchandise bought and paid for by the Stadels.

We believe the alleged fraudulent statement was hearsay; however, we also believe the statement to be admissible under the res gestae exception to the hearsay rule.In 37 Am.Jur.2d, Fraud and Deceit§ 455, at page 628, we find this language:

'Declarations made by the parties to a transaction, or an agent of one of the parties, at the time thereof, which are relevant on the issue of fraud in the transaction, are generally viewed as admissible as part of the res gestae.'

Further, in 2 Jones on Evidence(6th Ed.) § 8:7, at page 175, it is stated:

'Accordingly, where the issue is as to the existence of fraud, the natural and unpremeditated declarations of the parties during the negotiations are held to be admissible 'To be admissible as res gestae the statement which is offered in evidence must be a part of the litigated transaction, occurrence or condition and must tend to describe, illustrate or explain it.'

In the instant case, the statement made by Bieber to the Stadels at the time they signed the surety agreement was a part of the transaction in litigation and tends to illustrate it.As a result it is admissible evidence.

On the question of the propriety of the district court's denying Watkins' motion for judgment notwithstanding the verdict or in the alternative for a new trial, we first refer to Watkins' motion for a directed verdict made at the close of all the evidence at trial, which motion was based on the following grounds:

'1.That the record shows without dispute that Donald Bieber was indebted to Watkins Products, Inc. in the sum prayed for in the complaint in excess of $10,000.

'2.That the defendants either executed--and in the case of the Stadels without controversy--executed the suretyship agreement dated October 31, 1968.

'3.That they were notified of its acceptance by Watkins Products, Inc.

'4.That the plaintiff complied with the statutes of the State of North Dakota in furnishing monthly statements of account.

'5.That none of the defendants ever notified Watkins Products of their withdrawal or desire to cancel the surety agreement.

'6.That even in the event that the 1968 agreement was not executed by the Pfaffs they are estopped from denying that they are bound by it as a matter of law and, therefore, there is no issue for the jury and it resolves itself into a matter of law.'

In Farmers Union Grain Terminal Ass'n v. Briese, 192 N.W.2d 170(N.D.1971), we held in paragraphs 2 and 3 of the syllabus:

'2.On an appeal from an order denying a motion for judgment notwithstanding the verdict, the only grounds which will be considered are those which were assigned on the motion for a directed verdict.

'3.On review of an order denying a motion for judgment notwithstanding the verdictthe Supreme Court is limited to a consideration of the evidence, and if the record is such that there is some issue of fact for the jury and it rendered a verdict thereon, the order will be affirmed.'

The above grounds for Watkins' motion for a directed verdict ignore the fact the there were issues to be decided by the jury on the questions of whether the Pfaffs signed the surety agreement and whether Bieber defrauded the defendants, the Stadels, into signing the surety agreement.By authority of the Briesecase, Supra, we believe there were issues of fact to be decided by the jury and therefore the...