Title: BIG SKY LIVESTOCK INC v HERZOG

State: montana

Issuer: Montana Supreme Court

Document:

No. 13224 I N T H E S U P R E M E COURT O F THE STATE O F MONTANA 1976 B I G S K Y LIVESTOCK, INC., A Montana Corporation, P l a i n t i f f and Respondent, -vs - E. A. HERZOG, Defendant and Appellant. Appeal from: D i s t r i c t Court of the Seventeenth J u d i c i a l D i s t r i c t , Honorable Thomas Dignan, Judge presiding. Counsel of Record: For Appellant: Johnson and Foster, Lewistown, Montana Robert L. Johnson argued, Lewistown, Montana For Respondent: Gallagher and Archambeault, Glasgow, Montana Francis Gallagher argued and Matthew W, Knierim argued, Glasgow, Montana Submitted: October 12, 1976 Dec ided =C 3 a Filed : DEC 2 7 M r . J u s t i c e John Conway Harrison delivered the Opinion of the Court. This appeal by defendant E. A. Herzog i s from a judgment on a jury verdict i n the d i s t r i c t court, Valley County, i n an action on an account s t a t e d f o r veterinary drugs used t o t r e a t c a t t l e . Judgment f o r p l a i n t i f f Big Sky Livestock, Inc. was i n the amount of $13,500. Herzog appeals. Four issues a r e raised: (1) Whether the court erred i n granting attorney fees t o p l a i n t i f f without supporting evidence and notice t o defendant? (2) Did the court e r r i n awarding 10% per annum i n t e r e s t t o p l a i n t i f f ? (3) Did p l a i n t i f f f a l s i f y evidence of account s t a t e d ? (4) Did the court e r r i n s t r i k i n g from the record and commenting t o the jury upon defendant's proof t h a t p l a i n t i f f fed poisonous hay t o defendant's c a t t l e ? O n December 17, 1973 Big Sky and Herzog entered i n t o a w r i t t e n contract t o feed c a t t l e belonging t o Herzog. These c a t t l e from the north c e n t r a l part of Montana were purchased f o r Herzog by Ted Miller, a c a t t l e buyer from Lewistown, Montana. The pur- chase, consisting of s t e e r and h e i f e r calves, was made i n l a t e December 1973, and e a r l y January 1974. During the period these c a t t l e were being transported t o Glasgow where the feed l o t was located, the temperatures were extremely cold and some of t h e c a t t l e needed medical treatment a f t e r they arrived. According t o the terms of t h e i r contract Herzog was t o pay Big Sky 366 per pound of gain and Herzog agreed t o pay "for a l l drugs, veterinary services and supplies, and those items w i l l be b i l l e d t o owner [Herzog] a t cost." The contract further s t a t e d t h a t Big Sky agreed t o "feed, water, provide health care, provide labor and t o otherwise care f o r the herd i n a good and husbandlike manner a t Feeder's premisesr1 near Glasgow and t o "vaccinate and brand livestock with vaccine and brands required by" Herzog and Big Sky. From the time of a r r i v a l of t h e c a t t l e Herzog received itemized statements showing veterinary charges, veterinary drug charges and vaccination charges. O n March 5, 1974. he made a $60,000 payment t o Big Sky and on April 15, 1974 he made a further payment of $25,000 f o r services rendered under the contract. O n May 1, Herzog went t o Glasgow t o remove the c a t t l e from the feed l o t . A t t h a t time the c a t t l e were weighed so t h e gain could be determined. He t e s t i f i e d he was s a t i s f i e d with I t h e weight the c a t t l e d had gained during the months they were i n Big Sky's care. A t t h a t time Herzog gave Big Sky a check i n the amount of $35,790.24, the check r e c i t i n g the gain portion was f o r $22,789.40 and t h e drug portion of $13,000.84. Both p a r t i e s t e s t i f i e d there was some discussion about the amount of the drug charges. Herzog t r i e d t o g e t the charges reduced without success. Several days a f t e r t h e c a t t l e had been shipped Herzog stopped payment on the check alleging something was wrong with the drug charges. He then sent Big Sky a new check f o r the f u l l amount of t h e weight gain, plus i n t e r e s t from May 1st. Thereafter Big Sky f i l e d s u i t f o r the difference i n the two checks. The question presented i s what c o n s t i t u t e s "at cost1', when applied t o the drugs. D r . Martin R. Connell was president and manager of Big Sky Livestock, Inc. I n addition, he i s the s o l e owner of t h e Glasgow Veterinary Clinic and held 90% of the stock i n the Glasgow Veterinary Supply, a Montana corporation. D r . Connell t e s t i f i e d i n connection with h i s feeding operations a t Big Sky, t h a t a l l drugs were purchased by Big Sky from the Veterinary Clinic, n o t from Glasgow Veterinary Supply and the prices were a t suggested manfacturers' r e t a i l . He f u r t h e r t e s t i - f i e d the Veterinary Clinic made a p r o f i t on a l l drugs sold by it t o Big Sky, Inc.; not only on Herzog's c a t t l e but on a l l c a t t l e t h a t went through the feeding operations of Big Sky, Inc. Herzog was treated no b e t t e r o r worse than any other user of the f a c i l i t i e s . D r . Connell t e s t i f i e d the average markup i n the drugs and supplies used was about 25% and i f discounted the c l o s e s t figure they could g e t from going over the books was t h a t the drug b i l l came t o $9,846.06. There were additional costs f o r branding, sorting, dehorning and f o r processing t h a t brought the cost up t o the $13,000 figure. During t h e l i f e of the contract Herzog received statements from Big Sky on a l l services rendered under the contract including a l l drug charges, and the only time Herzog objected t o the drug charges was a t the time of s e t t l i n g up on May 1st. Issue (1) i s directed a t the $3,000 attorney f e e granted by the d i s t r i c t court. Herzog argues t h i s was done without notice t o him and without h i s being present. He f u r t h e r alleged he was e n t i t l e d t o notice of proceedings on the issue of attorney fees under section 93-8505, R.C.M. 1947. However, Herzog i n h i s amended answer claimed attorney fees i n the amount of $3,000 and both p a r t i e s stipulated t o the court t h a t upon completion of t h e case the court would determine the reasonable value of fees t o be awarded. The court noticed such a hearing and made a minute entry a f t e r hearing Big Sky's evidence a s t o t h e hours worked, Herzog did not appear although h i s counsel had been n o t i f i e d . The court noted t h a t no opposing evidence was heard. Herzog did not oppose t h i s item u n t i l he was heard on p o s t - t r i a l motions. This Court i n S t a t e v. NorLh American Car Corp., 118 Mont. 183, 164 P.2d 161 (and cases c i t e d therein) held t h a t when a case i s t r i e d and submitted on agreed f a c t s , the court i s bound by the s t i p u l a t i o n . Here, throughout the t r i a l ~ e r z o g ' s position was consistent with the s t i p u l a t i o n t h a t fees would be awarded t h e prevailing party. W e find no e r r o r i n t h e award of attorney fees. Issue (2) concerns the c o u r t ' s instruction t o the jury awarding 10% per annum from May 1, 1974. W e find t h e t r i a l court erred. Big Sky i n i t s b r i e f , and a t the time of arguing t h e case, admitted t h e i n t e r e s t r a t e i s governed by s t a t u t e , section 47-124, R.C.M. 1947, which provides f o r i n t e r e s t a t 6% per annum on an account s t a t e d from the date ascertained. See 5 Am J u r 2d, Appeal and Error § 941; 65 ALR2d 1341,§4[b] ; Norum v. Ohio O i l Company, 83 Mont. 353, 272 P. 534. O n Issue (3) Herzog argues there was no account created i n t h i s case, c i t i n g Blanck v. Pioneer Mining Co., 93 Wash.26, 159 P. 1077; Halverson v. Blue Mountain Prune Growers Co-op, 188 Ore. 661, 214 P.2d 986. These cases hold t h a t i f t h e account rendered by t h e c r e d i t o r is s p e c i f i c a l l y a t variance with the underlying contract, t h e mere retention of t h e erroneous account by the debtor does not give r i s e t o an account stated. However, t h a t i s not the s i t u a t i o n here. Here, t h e p a r t i e s dealt face-to-face and discussed the charges i n s e t t l i n g up the account; agreement was reached and Herzog paid t h e f i n a l figure with h i s check. This Court held in Holmes v. Potts, 132 Mont. 477, 319 P.2d 232, that an "account stated" is a final adjustment of demands and amounts due. In creating an account stated, the minds of all parties thereto must meet and understand that a final adjustment of each upon the other is being made. Nelson v. Montana Iron Mining Co., 140 Mont. 331, 371 P.2d 874. These rules must be applied as of the time of the final transaction between the parties and without reference to any later change of mind. As of May 1, Herzog gave his check for the full amount owing, and in the absence of fraud, mistake or duress, the giving of the check without any reservations created an account stated. The record is clear the parties at the time of discussion and final settlement, culminating in the payment of $35,790.24, were aware they were then determining, fixing and settling the amount due with a view of final adjustment and determination. There was, on the basis of these undisputed facts, positive evidence of an account stated clearly. One who freely pays an account, even though he has expressed dissatisfaction with it, does so with the intent to assent to it and with awareness that it is a final determination of all accounts. All Herzog's allegations of "falsification" of the account were presented to the jury and it found against him. On appeal the role of this Court is to limit its review to whether there is substantial credible evidence to support the verdict. In so doing, we review the evidence in a light most favorable to the prevailing party in the trial court. Bos v. Dolajak, 167 Mont. 1, 534 P.2d 1258, 32 St.Rep. 438, 445. Issue ( 4 ) is directed at the trial court's striking from the record 3e9mgtbs: alleged proof that Big Sky fed poisonous hay t o h i s c a t t l e . W e find no error due t o the fact Herzog failed t o lay a proper foundation indicating any relationship i n the hay fed t o h i s c a t t l e and the health problems that may have necessitated veterinary care or t o the administration of drugs. In truth, the evidence given by Herzog was that the c a t t l e were "thrifty1' upon leaving the feed l o t . Too, h i s death loss i n these c a t t l e was considered "very good". The case was t r i e d t o the jury on the theory of an account stated. None of the offered evidence dealing with the hay related t o the question of fraud, mistake or any other evidence available t o Herzog i n an account stated case. In i t s ruling the t r i a l court was performing i t s proper function i n determining the admissibility or nonadmissibility of evidence. The reasons for so ruling were stated and we find no bias toward either party. The judgment of the d i s t r i c t court i s affirmed except as t o the award of interest a t 10% per annum. The cause i s remanded t o the t r i a l court with directions t o modify the judgment t o provide interest a t the r a t e of 6% per annum from date of such j udgment . / p i e £ Justice Hon. LeRoy L. McKinnon, District Judge, s i t t i n g for Justice Wesley Castles. Big Sky Livestock v. Herzog I r e s p e c t f u l l y d i s s e n t from the foregoing opinion. B y reason of the press of other matters, and the f a c t t h a t I do not have copies of the t r a n s c r i p t on appeal available, m y dissenting opinion w i l l be brief and general. A s t o attorney f e e s , a t b e s t t h e r e was a misunderstanding which resulted i n the p l a i n t i f f t s attorney having a hearing with the Court out of the presence of defendantt s attorney. Inasmuch as a separate hearing was held, fundamental f a i r n e s s would require t h a t both attorneys have the opportunity t o be present. A s t o an account s t a t e d , it appears t h a t several of the services contracted t o be performed under the t h i r t y - s i x cents per pound of gain, were included again i n the alleged account stated. A t best t h i s would amount t o a mistake of f a c t s u f f i c i e n t t o v i t i a t e any attempted account s t a t e d . A s t o the issuance of poisonous hay, it appears t o t h i s writer t h a t the defendant was prevented from laying a foundation f o r any evidence on the issue. For the foregoing reasons, I would reverse and remand f o r a new t r i a l . s i t t i n g u n piace of M r . J u s t i c e Wesley Castles.