NO. 93-251

IN THE SUPREME COURT OF THE

1993

STATE OF MONTANA

MARK EISSINGER,

Plaintiff

v.

and Appellant,

::

MULLIN TRUCKING, INC., a

corporation, and CLINT MULLIN,

;~~

DEC 22 1993 1

Defendants and Respondents.

APPEAL FROM: District Court of the Seventh Judicial District,

In and for the County of Richland,

The Honorable Richard G. Phillips, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

John J. Cavan, Cavan, Smith & Cavan,

Billings, Montana

For Respondents:

Arnie A. Hove, Attorney at law,

Sidney, Montana

Filed:

Submitted on Briefs: September 23, 1993

Decided: December 22, 1993
Justice William E. Hunt, Sr., delivered the opinion of the Court.

Appellant Mark Eissinger appeals from a judgment of the

Seventh Judicial District Court, Richland County, denying his

request to rescind a sale and transfer of title to a Peterbilt

truck and a refrigerated trailer to respondents Mullin Trucking,

Inc., and Clint Mullin, based on his claim of constructive or

actual fraud, and undue influence.

We affirm.

The issues are as follows:

1 . Did the District Court err when it found that appellant

failed to prove constructive fraud?

2 . Did the District Court err when it found that appellant

failed to prove actual fraud or undue influence?

3 . Did the District Court err when it found that the

consideration paid by respondent closely approximated the value of

the truck and trailer at a distress sale?

Appellant grew up on his parents' farm in Brockway, Montana,

and graduated from high school in 1989. In August 1990, appellant

completed truck driving school and purchased a 1989 Ford truck for

approximately $75,000, without a down payment, after his father

arranged and co-signed for the loan. Appellant's father separately

purchased a dry van truck trailer for $9,000 cash. From

approximately October 1990 to March 1991, appellant leased the

truck and trailer as owner/operator with a Billings truck company

called Ligon.

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In November 1990, appellant and his father paid off the truck

using $40,000 from a trust fund established by the father, and with

additional cash from the father. In January 1991, due to numerous

truck repairs and downtime, appellant sold his 1989 Ford truck for

cash and purchased a new 1991 Peterbilt truck for approximately

$105,000, paying $36,000 in cash and financing the balance through

Commercial Associates of Englewood, Colorado.

Appellant and Clint Mullin (respondent) met in mid-March 1991

at the Northwest Peterbilt dealership in Billings. There,

appellant expressed his dissatisfaction in his employment with

Ligon, and respondent offered to lease his truck. Later,

appellant, his father, and respondent met to discuss the lease

arrangement. At the meeting, respondent informed appellant that he

would require a refrigerated trailer to handle the types of loads

he would haul. In April 1991, appellant traded his dry van trailer

for a refrigerated trailer (reefer trailer) and $4,500 cash. The

parties verbally agreed that appellant would receive 90 percent of

the freight bill for hauling the loads, and respondent would

receive 10 percent because he provided the loads.

In May 1991, appellant, without the knowledge or assistance of

his father, purchased a new Honda motorcycle for approximately

$5,000, and in June he purchased a new pickup for $31,000.

However, with $22,000 owing on the new pickup, in January 1992,

appellant sold the pickup in exchange for approximately $17,000 and

an older pickup.

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Appellant hauled steadily in April and May 1991, but he was

not paid until the end of June or early July 1991. Appellant chose

not to haul loads during June. By mid-July, appellant was

approximately three months in arrears in his truck payments.

On July 16, 1991, appellant transferred title of the truck and

trailer to respondent Mullin Trucking, Inc., by signing a buy/sell

agreement, two bills of sale, and title documents to both truck and

trailer. Mullin Trucking, Inc., assumed the encumbrance on the

truck totaling $56,443.92, which was consideration for the

transfer. Prior to the transfer, respondent told appellant to

inform his father of his financial difficulties, but appellant did

not do so.

Appellant brought this action in the District Court, asking

the court to rescind the July 16, 1991, sale and transfer of title

to the truck and trailer to Mullin Trucking, Inc., alleging the

transfer was induced by constructive or actual fraud, and undue

influence. Appellant alleged that he relied on respondent in

matters concerning the trucking business. Respondent gave specific

financial advice to appellant based on his superior business

experience, knowledge, and mature judgment. Appellant contends

that respondent had influence over him and made promises to him in

return for the truck transfer, without any intention of

performance, and also created a false impression by words and

conduct to respondent's own advantage.

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I .

Did the District Court err when it found that appellant failed

to prove constructive fraud?

Appellant argues that his consent was not real or free because

respondent's conduct amounted to actual or constructive fraud and

undue influence. Section 28-2-1711, MCA, allows a contracting

party to rescind a contract if that party's consent was acquired

through fraud or undue influence.

Section 28-2-406, MCA, defines constructive fraud as:

(1) any breach of duty which, without an actually

fraudulent intent, gains an advantage to the person in

fault or anyone claiming under him by misleading another

to his prejudice or to the prejudice of anyone claiming

under him: or

(2) any such act or omission as the law especially

declares to be fraudulent, without respect to actual

fraud.

Appellant argues that the District Court erred when it

considered whether a fiduciary relationship was present in the

relationship between the parties. This Court has determined that

a plaintiff need not prove a fiduciary relationship existed to

establish constructive fraud. McJunkin v. Kaufman & Broad Home

Systems (1987), 229 Mont. 432, 439-40, 748 P.2d 910, 914-15. This

Court has explained the application of § 28-2-406, MCA, by stating:

By its terms, the statute does not require that the

plaintiff demonstrate a fiduciary relationship. It

merely requires the establishment of a duty. We have

recognized that a sufficient duty can arise in a

commercial transaction such as the one at hand. We find

the defendants had a duty to refrain from intentionally

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or negligently creating a false impression by words or

conduct. [Citations omitted].

McJunkin, 748 P.2d at 915.

In the present case, the District Court considered whether a

fiduciary relationship was present, but also considered the factors

required in the statute to prove constructive fraud and whether

respondent had gained an advantage by misleading appellant to his

prejudice.

Appellant argues that the District Court erred when it failed

to adequately consider all the testimony and evidence before it.

Appellant contends that respondent intentionally or negligently led

appellant to believe respondent would retransfer title to the truck

and trailer to him whenever he requested without any conditions

attached. This Court will not overturn the district court's

findings of fact in a bench trial unless they are clearly

erroneous. In the Matter of the Mental Health of E.P. (1990), 241

Mont. 316, 787 P.2d 322; Rule 52(a), M.R.Civ.P. This Court will

also give due regard to the opportunity of the district court to

determine the credibility of the witnesses. In the Matter of the

Mental Health of R.J.W. (1987), 226 Mont. 419, 736 P.2d 110. See

Weber v. Rivera (1992), 255 Mont. 195, 841 P.2d 534.

In interpreting this rule, this Court has adopted a three-part

test:

First, the Court will review the record to see if the

findings are supported by substantial evidence. Second,

if the findings are supported by substantial evidence, we

will determine if the trial court has misapprehended the

6
effect of [the] evidence. Third, if substantial evidence

exists and the effect of the evidence has not been

misapprehended the Court may still find that "[A] finding

is 'clearly erroneous' when, although there is evidence

to support it, a review of the record leaves the court

with the definite and firm conviction that a mistake has

been committed." [Citation omitted].

Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 323,

820 P.2d 1285, 1287.

In Weber, we held that the resolution of a rescission of

contract depends upon a factual determination about the

conversations between the parties. Weber, 841 P.2d at 536 In the

present case, the District Court made factual determinations of the

conversations between the parties, and respondent's conduct prior

to the truck and trailer transfer. The District Court determined

the credibility of the witnesses and found no evidence to support

a claim for constructive fraud. We hold that the court was not

clearly erroneous.

II.

Did the District Court err when it found that appellant failed

to prove actual fraud or undue influence?

Section 28-2-405, MCA, defines actual fraud as:

[A]ny of the following acts committed by a party to the

contract or with his connivance with intent to deceive

another party thereto or to induce him to enter into the

contract:

(1) the suggestion as a fact of that which is not

true by one who does not believe it to be true;

(2) the positive assertion, in a manner not

warranted by the information of the person making it, of

that which is not true, though he believes it to be true:

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(3) the suppression of that which is true by one

having knowledge or belief of the fact:

(4) a promise made without any intention of

performing it: or

(5) any other act fitted to deceive.

Appellant contends that the District Court failed to consider

testimony that respondent made promises to appellant in return for

the truck and trailer transfer, without any intention of performing

them. Again, the District Court made factual determinations of the

testimony concerning respondent's conduct and conversations prior

to the truck and trailer transfer. The court found appellant

failed to prove the necessary elements of actual fraud for several

reasons. Appellant's admission of having had full control of the

truck and trailer and that he could have been on the road hauling

loads whenever he chose, overshadowed his testimony that he was

dependant upon respondent for loads to haul. Prior to respondent's

purchase, he told appellant to inform his father of the financial

problems, but appellant failed to do so. Appellant's assertion

that respondent agreed to a retransfer of the truck and trailer at

an undetermined future date, without a determined or discussed

manner or amount of payment, without a determined or discussed rate

of interest, and without being in writing, is implausible.

Next, the court considered whether respondent exercised undue

influence over appellant.

Section 28-2-407, MCA, defines undue influence as:

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(1) the use by one in whom a confidence is reposed

by another or who holds a real or apparent authority over

him of such confidence or authority for the purpose of

obtaining an unfair advantage over him:

(2) taking an unfair advantage of another's

weakness of mind; or

(3) taking a grossly oppressive and unfair

advantage of another's necessities or distress.

Appellant contends the District Court failed to consider

testimony that respondent was in a superior position as one

experienced in business, and that appellant was immature and naive

in these matters. The court weighed the evidence whether

respondent was in a position of authority or influence over

appellant sufficient to take unfair advantage of him, and whether

appellant had a weakness of mind. Appellant made several other

arms-length transactions whereby he sold property for less than

what was owed on it. Moreover, appellant admitted that when the

transaction occurred he was old enough to handle his own affairs,

was satisfied with the deal, and felt "in hindsight" he could have

made a better deal. The court found the transfer between appellant

and respondent was an arms-length transaction and that there was no

actual fraud. We agree.

III.

Did the District Court err when it found that the

consideration paid by respondent closely approximated the value of

the truck and trailer at a distress sale?

9
Appellant contends the District Court failed to adequately

consider evidence concerning the value of the truck and trailer to

be nearer to $92,000, and the possibility that appellant's father

would have paid the balance owed if foreclosure was imminent. The

court found that although the trailer and truck may have been worth

substantially more than the consideration paid by respondent, the

consideration very closely approximated the value of the truck and

trailer at a distress sale. Respondent agreed to pay all payments

and delinquencies in the amount of $56,443.92, and to hold

appellant harmless for all future payments. Appellant's transfer

of the truck and trailer for less than fair market value was

similar to, and consistent with, his prior financial transactions.

The District Court found for respondent and reasoned that it

was not for the court to remake the contract between the parties

simply because one may have received the better deal. We affirm

the conclusion of the District Court.

Affirmed.

We concur:

Chief Justice
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