No. 95-225 IN THESUPREME

COURTOFTHESTATEOFMONTANA 1995

WBARNSHEEP&CATTLECO., INC., aMontana Corporation, jzqf ,*. / ,y:!,;-&< Plaintiff andAppellant, /\\jr; 22i!% v. !<;j $),;f/$ MEATSOFMONTANA,INC., aMontana Corporation, and NORWEST BANKOFBILLINGS, ';J?;:ER% OF, sqw!giyE ‘XpFn grr".TE k;ii- Md!rwk> Defendants and Respondents.

APPEALFROM: District Court of the Thirteenth Judicial District,

In and for the County of Yellowstone, TheHonorable Robert W.Holmstrom, Judge presiding.

COUNSELOFRECORD:

For Appellant: Arnie A. Hove, Attorney at Law, Circle, Montana
For Respondents: Michael B. Anderson, V. AnnLiechty; Gannett, Anderson &Liechty, Billings, Montana

Filed: Submitted on Briefs: August 3, 1995 Decided: August 22, 1995Justice W. William Leaphart delivered the Opinion of the Court.

Appellant, WBar N Sheep &Cattle Company (WBar 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. WBar N appeals from that verdict. Weaffirm. Backqround Wilmer Pawlowski and Nora Pawlowski are shareholders in the appellant corporation WBar N. MOM was engaged in the business of purchasing, slaughtering, and selling processed meat of cattle. The Pawlowskis are also shareholders in MOM andhave been since MOM originated. WhenMOMwas first formed, it sought financing from Norwest Billings. Norwest Billings declined to offer financing to MOMbut suggested that MOMcontact Norwest Business Credit, Inc. (NWBC)asister corporation in Minnesota. NWBCagreed to finance MOMand provide a line of credit upon certain conditions. Accordingly, MOMgranted a security interest to NWBCon 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 MOMentered into a collateral account agreement whereby MOMagreed to deposit all collections receivable and other cash proceeds of the collateral security in the "collateral account." MOMinvoiced its meat sales with payments to
2be sent directly to a "lockbox" from which Norwest Billings wasto

retrieve the funds and deposit them in the collateral account. As MOMpaid its debt to NWBCin 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 MOMcattle 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 andadvised himthat $90,000 hadto be wired to MOM'scattle purchase account by 2:00 p.m. or checks would not be honored by Norwest Billings and the MOMoperation would betaken over. Mr. Meyers further stated to Wilmer Pawlowski that if Pawlowski wired the moneyto MOM'saccount, 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 awriting and nowriting was issued by Norwest Billings bywayof apromise byNorwest Billings to pay for any obligation of MOM. In any event, Wilmer Pawlowski, on behalf of WBar Nwired the $90,000 to MOM'scattle purchase account and Norwest Billings honored the checks in question. MOMdid not reimburse the $90,000 to WBar N and WBar N then filed suit against MOMandagainst Norwest Billings onthe basis of fraud. A default was taken against MOMand appellants proceeded to trial
3against Norwest Billings.

Issues oresented for review: I Did the District Court err in excluding the testimony of Jeanne Marie Charter onthe grounds that the offered testimony was irrelevant? II Did the District Court err in giving court's Jury Instruction No. 13as an accurate statement of law? III Did the District Court properly exclude testimony from Wilmer Pawlowski regarding lost profits onthe 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 onthe 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 andwill not beoverturned except in
cases of manifest abuse of that discretion. Zuggv. Ramage(1989), 239 Mont. 292, 296, 779 P.2d 913, 916. WBar N offered the testimony of aMs. Jeanne Charter, another shareholder of MOM. W Bar Nclaimed that Charter hadbeen involved in asituation similar to that of WBar N, in that, in the summerof 1990, the Charters personally advanced funds to the cattle purchase account onMOM's request. Norwest Billings objected to the Charter testimony onthe 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
4whether or not the bank has made some assurance to [Wilmer

Pawlowskil

. The issue isn't whether something happened with this matter that was some45-days or two months later." Onappeal, 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 androutine practice defined. Ahabit is a person's regular response to a repeated specific situation. A routine practice is a regular course of conduct of agroup 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 aparticular 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 WBar Nwith regard to the Charter testimony. Whatever routine W Bar Nwasattempting to establish would not have been "routine" by the time Wilmer Pawlowski wired funds to MOM'saccount 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. Oneother instance is not sufficient to meet this test. Furthermore, the Charter testimony, at best, would establish a routine by MOMwhich cannot be characterized as aroutine practice by Norwest Billings. Accordingly, wehold that the District Court 5did 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 anoverdraft? 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), 261Mont. 328, 332, 863 P.2d 389, 392. Court's Jury Instruction No. 13 read as follows: Abank maycharge against acustomer'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 anagreement between the customer andthe bank. The above instruction was adapted from § 30-4-401(l), MCA,which provides: Abank may charge against the account of acustomer 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.] WBar Nobjected to the deletion of the underlined statutory language from the jury instruction. WBar N claims that the language "even though the charge creates anoverdraft" is relevant because Herb Kelsey, on behalf of Norwest Billings, had the discretion to honor the checks in the amount of $90,000, thereby
6creating anoverdraft situation for MOM. Wehold that the District

Court did not abuse its discretion in giving Jury Instruction No. 13without the overdraft language included. In presenting its fraud claim against Norwest Billings, WBar Nwas 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. WBar 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 WBar Npreferred.

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 byNorwest Billings, it wasnot necessary to consider the issue of damagesandthe exclusion of damageevidence would, at the most, beharmless error. Meinecke v. Skaggs (1949), 123Mont. 308, 312, 213 P.2d 237, 239. Accordingly, we need not address this issue.Affirmed. Pursuant to Section I, Paragraph 3cc), Montana Supreme Court 1988 Internal Operating Rules, this decision shall not be cited as precedent andshall bepublished by its filing asapublic document

7with the Clerk of the Supreme Court andby a report of its result

to Montana LawWeek, State Reporter and West Publishing Company.

Weconcur:

8