No. 95-225 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1995 

W BAR N SHEEP & CATTLE CO., INC., 

a Montana Corporation, 

jzqf ,*. / ,y: !,;-&< 

Plaintiff and Appellant, /\\jr; 2 2 i!% 

v. !<;j $),;f/$ 

MEATS OF MONTANA, INC., a Montana 

Corporation, and NORWEST BANK OF BILLINGS, 

';J?;:ER% OF,sqw!giyE ‘XpFn grr".TE k;ii- Md!rwk> 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Robert W. Holmstrom, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Arnie A. Hove, Attorney at Law, Circle, Montana 

For Respondents: 

Michael B. Anderson, V. Ann Liechty; Gannett, 

Anderson & Liechty, Billings, Montana 

Filed: 

Submitted on Briefs: August 3, 1995 

Decided: August 22, 1995 
Justice W. William Leaphart delivered the Opinion of the Court. 

Appellant, W Bar N Sheep & Cattle Company (W Bar N), filed 

suit against Meats of Montana, I~C. (MOM), and Norwest Bank, 

Billings, alleging actual fraud. The matter was tried before a 

jury which returned a special verdict finding that Norwest Bank, 

Billings was not guilty of fraud. W Bar N appeals from that 

verdict. We affirm. 

Backqround 

Wilmer Pawlowski and Nora Pawlowski are shareholders in the 

appellant corporation W Bar N. MOM was engaged in the business of 

purchasing, slaughtering, and selling processed meat of cattle. 

The Pawlowskis are also shareholders in MOM and have been since MOM 

originated. When MOM was first formed, it sought financing from 

Norwest Billings. Norwest Billings declined to offer financing to 

MOM but suggested that MOM contact Norwest Business Credit, Inc. 

(NWBC) a sister corporation in Minnesota. NWBC agreed to finance 

MOM and provide a line of credit upon certain conditions. 

Accordingly, MOM granted a security interest to NWBC on all 

property, receivables and intangibles in return for a credit 

agreement with NWBC. 

In October 1990, as part of the financing arrangements, 

Norwest Billings and MOM entered into a collateral account 

agreement whereby MOM agreed to deposit all collections receivable 

and other cash proceeds of the collateral security in the 

"collateral account." MOM invoiced its meat sales with payments to 

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be sent directly to a "lockbox" from which Norwest Billings was to 

retrieve the funds and deposit them in the collateral account. As 

MOM paid its debt to NWBC in this fashion, the monies available in 

the line of credit were correspondingly increased. 

On November 1, 1990, Herb Kelsey of Norwest Billings, 

contacted 0. Lee Meyers, secretary of MOM, to inform him that the 

MOM cattle purchase account was overdrawn by $90,000 and that the 

checks would be returned if they were not covered. 0. Lee Meyers 

then contacted Wilmer Pawlowski and advised him that $90,000 had to 

be wired to MOM's cattle purchase account by 2:00 p.m. or checks 

would not be honored by Norwest Billings and the MOM operation 

would be taken over. Mr. Meyers further stated to Wilmer Pawlowski 

that if Pawlowski wired the money to MOM's account, Pawlowski would 

be repaid from the proceeds of sale of processed meats. Wilmer 

Pawlowski spoke with Herb Kelsey and claimed that he demanded a 

writing from Kelsey granting assurances that he would be repaid. 

Pawlowski testified that Kelsey said he would send something in 

writing within ten days to two weeks. Kelsey testified that 

Pawlowski did not request a writing and no writing was issued by 

Norwest Billings by way of a promise by Norwest Billings to pay for 

any obligation of MOM. In any event, Wilmer Pawlowski, on behalf 

of W Bar N wired the $90,000 to MOM's cattle purchase account and 

Norwest Billings honored the checks in question. MOM did not 

reimburse the $90,000 to W Bar N and W Bar N then filed suit 

against MOM and against Norwest Billings on the basis of fraud. A 

default was taken against MOM and appellants proceeded to trial 

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against Norwest Billings. 

Issues oresented for review: 

I Did the District Court err in excluding the testimony of 

Jeanne Marie Charter on the grounds that the offered testimony was 

irrelevant? 

II Did the District Court err in giving court's Jury 

Instruction No. 13 as an accurate statement of law? 

III Did the District Court properly exclude testimony from 

Wilmer Pawlowski regarding lost profits on the grounds that it was 

improper lay testimony, improper expert testimony and speculative 

in nature? 

I 

Did the District Court err in excluding the testimony of 

Jeanne Marie Charter on the grounds that the offered testimony was 

irrelevant? 

This Court's standard of review in addressing evidentiary 

rulings is one of "manifest abuse of discretion." In other words, 

questions of admissibility of evidence are left largely to the 

discretion of the trial court and will not be overturned except in 

cases of manifest abuse of that discretion. Zugg v. Ramage (1989), 

239 Mont. 292, 296, 779 P.2d 913, 916. W Bar N offered the 

testimony of a Ms. Jeanne Charter, another shareholder of MOM. W 

Bar N claimed that Charter had been involved in a situation similar 

to that of W Bar N, in that, in the summer of 1990, the Charters 

personally advanced funds to the cattle purchase account on MOM's 

request. Norwest Billings objected to the Charter testimony on the 

grounds of relevancy and on the grounds the Charter transaction 

occurred subsequent to the Pawlowski/W Bar N transaction. The 

District Court upheld the objection noting that the "issue here is 

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whether or not the bank has made some assurance to [Wilmer 

Pawlowskil . The issue isn't whether something happened with this 

matter that was some 45-days or two months later." On appeal, W 

Bar N contends that the Charter testimony was relevant under 

Montana Rules of Evidence, Rule 406, because it demonstrated a 

routine practice of Norwest Billings. Rule 406, M.R.Evid., 

provides as follows: 

(a) Habit and routine practice defined. A habit is 

a person's regular response to a repeated specific 

situation. A routine practice is a regular course of 

conduct of a group of persons or an organization. 

(b) Admissibility. Evidence of habit or of routine 

practice, whether corroborated or not, and regardless of 

the presence of eyewitnesses, is relevant to prove that 

conduct on a particular occasion was in conformity with 

the habit or routine practice. 

(c) Method of proof. Habit or routine practice may 

be proved by testimony in the form of an opinion or by 

specific instances of conduct sufficient in number to 

warrant a finding that the habit existed or that the 

practice was routine. 

Rule 406, M.R.Evid., clearly does not work to the benefit of 

W Bar N with regard to the Charter testimony. Whatever routine W 

Bar N was attempting to establish would not have been "routine" by 

the time Wilmer Pawlowski wired funds to MOM's account if the only 

similar event (the Charter loan) occurred at a later date. Rule 

406(c) requires evidence of specific instances of conduct 

sufficient in number to warrant a finding that the practice was 

routine. One other instance is not sufficient to meet this test. 

Furthermore, the Charter testimony, at best, would establish a 

routine by MOM which cannot be characterized as a routine practice 

by Norwest Billings. Accordingly, we hold that the District Court 

5 
did not abuse its discretion in excluding the testimony of Jeanne 

Charter. 

II 

Did the District Court err in giving court's Jury Instruction 

NO. 13 which sets forth the provisions of § 30-4-401(I), MCA, 

allowing a bank to create an overdraft? 

It is within the trial court's discretion to decide how to 

instruct the jury, taking into account theories of the contending 

parties, and the reviewing Court will not overturn the district 

court except for abuse of discretion. Hall v. Big Sky Lumber and 

Supply, Inc. (1993), 261 Mont. 328, 332, 863 P.2d 389, 392. 

Court's Jury Instruction No. 13 read as follows: 

A bank may charge against a customer's account only 

items which are properly payable. An item is properly 

payable if it is authorized by the customer and is in 

accordance with an agreement between the customer and the 

bank. 

The above instruction was adapted from § 30-4-401(l), MCA, which 

provides: 

A bank may charge against the account of a customer 

an item that is properly payable from that account even 

thoush the char-se creates an overdraft. An item is 

properly payable if it is authorized by the customer and 

is in accordance with any agreement between the customer 

and the bank. [Emphasis added.] 

W Bar N objected to the deletion of the underlined statutory 

language from the jury instruction. W Bar N claims that the 

language "even though the charge creates an overdraft" is relevant 

because Herb Kelsey, on behalf of Norwest Billings, had the 

discretion to honor the checks in the amount of $90,000, thereby 

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creating an overdraft situation for MOM. We hold that the District 

Court did not abuse its discretion in giving Jury Instruction No. 

13 without the overdraft language included. 

In presenting its fraud claim against Norwest Billings, W Bar 

N was not prejudiced by the exclusion of the overdraft language. 

At best, the language in question would have given Mr. Kelsey the 

discretion to honor or dishonor the checks. W Bar N, however, 

would have no legal basis upon which to fault Kelsey or Norwest 

Billings for failure to exercise that discretion in the manner that 

W Bar N preferred. 

Did the District Court properly exclude testimony from Wilmer 

Pawlowski regarding lost profits on the grounds that it was 

improper lay testimony, improper expert testimony and speculative 

in nature? 

Since the jury arrived at a defense verdict finding no 

liability by Norwest Billings, it was not necessary to consider the 

issue of damages and the exclusion of damage evidence would, at the 

most, be harmless error. Meinecke v. Skaggs (1949), 123 Mont. 308, 

312, 213 P.2d 237, 239. Accordingly, we need not address this 

issue. 

Affirmed. 

Pursuant to Section I, Paragraph 3 cc), Montana Supreme Court 

1988 Internal Operating Rules, this decision shall not be cited as 

precedent and shall be published by its filing as a public document 

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with the Clerk of the Supreme Court and by a report of its result 

to Montana Law Week, State Reporter and West Publishing Company. 

We concur: 

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