Opinion ID: 1924610
Heading Depth: 1
Heading Rank: 1

Heading: crane's appeal

Text: Crane contended the trial court erred in finding that Hall did not act fraudulently in terminating the distributor agreement. Our statutory definition of fraud includes actual fraud and constructive fraud. NDCC § 9-03-07. Actual fraud includes the suppression of that which is true by one having knowledge or belief of the fact; a promise made without any intention of performing it; or any other act fitted to deceive. NDCC § 9-03-08. Constructive fraud includes actions done without fraudulent intent but which are misleading. NDCC § 9-03-09. Crane contended that Hall's actions in exchanging the three refuse trucks for four concrete mixers and requesting correction of the MSO's to reflect that the concrete mixers were 1980 models and not 1979 models, constituted actual or constructive fraud because those actions were done with no intention by Hall to continue the distributorship and, instead, were done to intentionally deceive or mislead Crane so that, upon termination, Hall could receive one hundred percent of the net cost of the current model trucks. [4] The existence of actual fraud is treated as a question of fact to be decided by the trier of fact. Powers v. Martinson, 313 N.W.2d 720 (N.D.1981); Watkins Products, Inc. v. Stadel, 214 N.W.2d 368 (N.D. 1974). Whether or not there have been fraudulent representations depend upon the facts of each case. Gershman v. Engelstad, 160 N.W.2d 80 (N.D.1968). On appeal to this court findings of fact will not be set aside unless they are clearly erroneous and due regard must be given to the trial court to assess the credibility of the witnesses. E.g., Hoge v. Burleigh County Water Management District, 311 N.W.2d 23 (N.D.1981). A finding of fact is clearly erroneous when the reviewing court is left with a definite and firm conviction that a mistake has been made. In re Estate of Elmer, 210 N.W.2d 815 (N.D.1973). Findings of fact made by the trier of fact upon conflicting evidence are not subject to reexamination by this Court. Hoge v. Burleigh County Water Management District, supra . The mere fact that an appellate court might have viewed the facts differently if it had been the initial trier of the case does not entitle it to reverse the lower court. In re Estate of Elmer, supra . The trial court essentially found that Gerald Hall's decision to terminate was made in good faith; that he did not intend to deceive Crane when he agreed to exchange the refuse trucks for the concrete mixers; and that he made no misrepresentations when he requested the change in the model year of the concrete mixers. Additionally, we must keep in mind that Hall was exercising its statutory and contractual right to terminate the distributorship. Crane is charged with knowledge of the laws of the state in which it conducts business and consequently is charged with knowledge of the contents of NDCC Ch. 51-07. Catholic Order of Foresters v. State, 67 N.D. 228, 271 N.W. 670, 109 A.L.R. 979 (1937), cert. denied, 301 U.S. 665, 57 S.Ct. 796, 81 L.Ed. 1331 (1937). Consequently, when Crane corrected the MSO's it did so with an awareness of Hall's right to terminate and, in view of the trial court's findings and the knowledge chargeable to Crane, those actions cannot be characterized as misleading. Although we recognize, as the trial court did, the factual circumstances surrounding Hall's decision to terminate the distributorship and his intention approaches borderline, we also recognize that the evidence and inferences to be drawn from that evidence are as conflicting and it was within the province of the trier of fact to weigh and assess the credibility of witnesses in resolving the conflicting evidence. Accordingly, we conclude that the trial court's finding that Hall's actions did not constitute fraud is not clearly erroneous. Crane also contended that Hall's actions prior to the termination of the distributor agreement fit within the equitable concept of estoppel. Crane contended that Hall engaged in a course of conduct in which it deliberately led Crane to believe that the distributorship would continue and that the four concrete mixers would be accepted and sold by Hall. However, the previously discussed findings of fact relating to fraud, which we have concluded are not clearly erroneous, and the knowledge of the law attributable to Crane do not reflect a course of conduct in which Hall deliberately misled Crane to believe the distributorship would continue. Crane also contended that Hall's actions subsequent to the termination constituted an election of remedies or estoppel because those actions contradicted its position that the distributorship was terminated and that the current inventory was subject to repurchase by Crane. In particular, Crane argued that Hall continued to order parts from Crane after the termination and that Hall left a Crane advertising sign on its premises after the termination. The record reflects that prior to the distributor agreement Hall handled, among other items, parts supplied by Crane. The record also reflects that Crane sold parts to other retailers in the Fargo-Moorhead area who were not distributors of Crane trucks. These factors support the conclusion that Hall's actions in continuing to sell Crane parts after the termination did not constitute an election of remedies or estoppel. Nor did the retention of the advertising sign on Hall's premises constitute an election of remedies or estoppel. Crane also contended that the trial court erred in finding the agreement between Hall and Crane to exchange the three refuse trucks for the four concrete mixers was not an accord and satisfaction by which Hall gave up its right to terminate the distributorship and its rights upon termination. The trial court found that Hall and Crane at no time entered into an accord extinguishing Hall's right to terminate or its rights upon termination. NDCC § 9-13-04 provides that an accord is an agreement to accept in extinction of an obligation something different from or less than that to which the person agreeing to accept is entitled. NDCC § 9-13-05 provides that Acceptance by the creditor of the consideration of an accord extinguishes the obligation and is called satisfaction. An essential element of an accord and satisfaction is mutual assent. Frank v. Daimler-Benz, A.G., Stuttgart, West Germany, 226 N.W.2d 143 (N.D. 1975). The party who pleads accord and satisfaction has the burden of proof. Id. Whether or not there is an accord and satisfaction is basically treated as a question of fact. Id. In this instance no evidence was presented to merit a finding that Hall waived the statutory remedies provided for in NDCC § 51-07-01, nor was there evidence introduced indicating that Crane acted as it did upon any assurance given by Hall that it would not terminate the distributorship. Consequently, we conclude that the trial court's finding that Hall and Crane did not enter into an accord and satisfaction is not clearly erroneous. Crane also contended that NDCC § 51-07-01 was subject to objection on constitutional grounds. Crane contended that the statute was obviously designed to favor a particular class of North Dakota residents and broadly asserted the statute was inconsistent with constitutional standards of interstate commerce, of impairment of contractual obligations, of deprivation of property without due process of law, and of special privileges and immunities. A statute is conclusively presumed to be constitutional unless it is clearly shown that the statute contravenes the state or federal constitution. Dorgan v. Kouba, 274 N.W.2d 167 (N.D.1978). In State v. Knoefler, 279 N.W.2d 658, 662 (N.D.1979), we said: It is now settled that states have power to legislate against what are found to be injurious practices in their internal commercial and business affairs as long as their laws do not run afoul of some specific federal constitutional prohibition or some valid federal law. In determining the constitutionality of statutes regulating commercial affairs under the Equal Protection Clause, courts have required only a rational relationship between the classification and the purpose of the statute. The state has a significant and legitimate interest in providing protection to distributors of vehicles and farm implements because a distributor service is a substantial public need in our economic system. The protection granted to distributors by NDCC Ch. 51-07 is rationally related to the state's interest, and we conclude that those statutory provisions are not in violation of the state and federal constitution. Finally, Crane contended that the trial court erred in awarding, as damages, interest substantially in excess of the statutory rate. Crane asserted that interest on Hall's loan with GMAC was not an appropriate element of damages under the statutory provisions because the statute authorizes only recovery of one hundred percent of the net cost of the trucks. The trial court awarded damages based upon financing costs (interest) actually incurred by Hall on its loan with GMAC for the time period between 60 days after its letter of mutual termination of 22 January 1980 and the sale of each mixer. The rate of interest which Hall paid on its loan with GMAC varied from approximately 12% to 21%. The trial court specifically did not allow prejudgment interest on the damages incurred by Hall. Hall's third amended complaint alleged that it terminated the distributor agreement pursuant to the terms of the agreement and the laws of North Dakota (NDCC Ch. 51-07) and that Crane refused to repay it the sum equal to one hundred percent of the net cost of the current model trucks held by Hall. Hall's complaint further alleged that as a result of Crane's failure to refund the $174,529.00, Hall incurred interest expenses due on its loan with GMAC in the amount of $56,509.24. The distributor agreement provided in substance that if Hall terminated the agreement, Crane had the option to repurchase any or all current model new and unused Crane vehicles. The statutory provisions of NDCC § 51-07-01 contain language to the effect that, in the event either Crane or Hall cancelled or discontinued the distributor agreement, Crane was required to repurchase from Hall the current unused complete trucks for a sum equal to one hundred percent of the net cost. A general principle of contract law is that existing law at the time of the formation of a contract becomes part of the contract. E.g., Storbeck v. Oriska School District No. 13, 277 N.W.2d 130 (N.D.1979). The distributor agreement contained a provision which essentially provided that any provision therein which was contrary to applicable state law was severable from the agreement. Consequently, we conclude that the statutory provisions of NDCC § 51-07-01 must be read into the distributor agreement and any contrary contractual provisions must be severed. Crane's refusal to pay Hall one hundred percent of the net cost of the four concrete mixers was in violation of NDCC § 51-07-01 and, therefore, was a breach of the distributor agreement. Accordingly, we believe Hall was entitled to recover damages for a breach of contract. NDCC § 32-03-09 provides as follows: For the breach of an obligation arising from contract, the measure of damages, except when otherwise expressly provided by the laws of this state, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby or which in the ordinary course of things would be likely to result therefrom. No damages can be recovered for a breach of contract if they are not clearly ascertainable in both their nature and origin. Special damages for the breach of a contract are those which are reasonably within the contemplation of the parties at the time the contract was executed. Bumann v. Maurer, 203 N.W.2d 434 (N.D. 1972). The question of whether or not special damages were reasonably within the contemplation of the parties at the time the contract was executed is treated basically as a question of fact. Id. The district court found that from the time of the distributorship agreement, Crane knew that Hall would be either borrowing money from GMAC Financing, or on a separate credit line with Crane to pay for Hall's inventory of Crane trucks. This finding is not clearly erroneous. The interest paid by Hall to GMAC on its inventory financing was an expense actually incurred by Hall because of the distributor agreement and was a proper element of damages. In this respect the interest was not prejudgment interest as discussed in Hirschkorn v. Severson, 319 N.W.2d 475 (N.D.1982). Consequently, the rule of law announced in that case pertaining to prejudgment interest is inapplicable to this case. Crane alternatively contended that the district court erred in allowing damages in the amount of the interest paid by Hall to GMAC from 60 days after the 22 January 1980 letter of mutual termination until each truck was sold. Crane contended that damages should have been computed from 60 days after the 25 February 1980 letter of unilateral cancellation. As Crane pointed out, the letter dated 22 January 1980 by Hall requested mutual termination which was declined by Crane. The distributor agreement provided for termination by mutual consent of the parties at any time, or by Hall upon not less than sixty days' written notice to Crane. The letter requesting mutual termination was sufficient to put Crane on notice that Hall intended to terminate the distributorship and that any further transactions with Hall should be carefully examined and weighed. But we do not believe the letter satisfied the legal requirements nor did it constitute a unilateral termination of the distributorship so as to trigger the 60-day time period. The distributorship was not legally terminated until the letter of 25 February 1980 unilaterally concluding or terminating the distributorship. Accordingly, we conclude that the district court erred in allowing damages to accrue beginning 60 days after 22 January 1980. The damages may not begin any sooner than 60 days from 25 February 1980 and the judgment is modified accordingly.