Opinion ID: 405374
Heading Depth: 2
Heading Rank: 2

Heading: Deere As De Facto Trustee

Text: 26 The only other cause of action submitted to the jury was labelled by Carter as Breach of Trust and Deliberate and/or In (sic) Negligent Depletion of Reserve Account. The reserve account arose from a mechanism for financing sales of Deere equipment. Basically, Carter's customers could finance the purchase of equipment with Deere. The Carter reserve account was a repository in which Deere deposited a portion of the money Carter normally would have received from payments by the customers to Deere for the purchased equipment. If a customer defaulted, Deere would repossess the equipment and, in some instances, sell it to someone else. Deere then would charge any losses it suffered against the reserve account. 27 The record indicates that, from some time around November 1977 until the month prior to trial, $105,836.35 had been charged by Deere against Carter's reserve account. Carter sought this amount in damages for Deere's alleged mishandling of the reserve account. In this regard, the district court charged the jury: 28 You are further instructed that under the law the defendant John Deere Industrial Equipment Company may be under a duty of trustee-in-fact, with respect to the Carter Equipment Company Repossession Reserve Account, if it were such a trustee that it had the duty to handle all repossessions prudently and properly to prevent or minimize loss to the Reserve Account. You are further instructed that the defendant, John Deere Industrial Equipment Company had a duty not to breach this trust, if any, and to either deliberately or negligently mishandle repossessions of equipment sold by Carter Equipment Company so as to unnecessarily cause losses to and to deplete the Carter Equipment Company Repossession Reserve Account. 29 The jury apparently found Deere was a trustee in fact and had breached its trust, since it returned a general verdict FOR THE PLAINTIFF. Deere argues the resulting judgment of the district court should be reversed. Initially, Deere argues the district court should have directed a verdict against Carter on the Reserve Account cause of action. This Court, in the case of Maxey v. Freightliner Corp., 665 F.2d 1367 (5th Cir. 1982) (en banc), recently re-emphasized the standard by which this Court and district courts in this Circuit determine whether there is sufficient evidence to submit a case to the jury in connection with motions for directed verdict. In Maxey, this Court relied upon the definitive case in this regard, Boeing Company v. Shipman, 411 F.2d 365 (5th Cir. 1969) (en banc). 30 Under the standard established in Boeing, a motion for directed verdict or for judgment n. o. v. should be granted only when the facts and inferences point so strongly and overwhelmingly in favor of the moving party that reasonable persons could not arrive at a contrary verdict. The court should consider all of the evidence-not just that evidence which supports the nonmovant's case-but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If there is substantial evidence opposed to the motion, that is, evidence of such quality and weight that reasonable and fairminded persons in the exercise of impartial judgment might reach different conclusions, the motion should be denied, and the case submitted to the jury. 31 Maxey at 1371, citing Boeing Company v. Shipman. 32 In the case sub judice, the district court properly refused to grant a directed verdict on the reserve account cause of action. This Court finds there was substantial evidence opposed to the motion, that is, evidence of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach the conclusion Deere had acted imprudently with regard to the Reserve Account. 16 Indeed, the jury did reach just such a conclusion. 33 Deere argues alternatively that the district court improperly instructed the jury by allowing it to decide whether Deere was a de facto trustee of a constructive trust. The foundation of this issue is the assertion that Mississippi law recognizes the creation of a constructive trust if there is an abuse of another's funds in a fiduciary relationship. Sojourner v. Sojourner, 247 Miss. 342, 153 So.2d 803, 807-08 (1963); Russell v. Douglas, 243 Miss. 497, 138 So.2d 730 (1962) affirmed in part, reversed in part on other grounds, 246 Miss. 771, 151 So.2d 197 (1963). See also DeTenorio v. McGowan, 510 F.2d at 103 (Godbold, J. dissenting). If a constructive trust is created, the trustee must handle the res prudently and properly. 34 On the other hand, if Deere and Carter were not fiduciaries, a constructive trust would not have been created. In such a case, the terms of the contract and the provisions of Mississippi's Uniform Commercial Code would control the handling of the res; Deere would be required to handle the res in a commercially reasonable manner. Miss.Code 1972, § 75-9-502(2). 35 The district court erred in its handling of the fiduciary relationship issue. It necessarily follows that it erred in its handling of the de facto trustee issue, since the existence of a constructive trust, in Mississippi, is dependent, at least in part, upon the existence of a fiduciary relationship. Consequently, this Court also remands the issue of whether a constructive trust existed in the case sub judice in order to assure the appropriate standard is applied to Deere's handling of the reserve account. If the jury finds no fiduciary relationship existed between the parties, then Deere should have handled the reserve account in compliance with the U.C.C. and the terms of the contracts. On the other hand, if a fiduciary relationship did exist, together with the other factors necessary to give rise to a constructive trust in Mississippi, Deere was obligated to handle the funds in the manner described in the district court's charge.