Court Opinion

ID: 9547555
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:48:52.027592+00
Date Added: 2024-06-11T15:17:51.334627
License: Public Domain

BAKES, Justice,
dissenting:
I dissent from the majority’s conclusion in Part I that the trial court adequately instructed the jury. A review of the trial court’s instructions reveals the ambiguity, confusion and prejudicial error created by the trial court when submitting the case to the jury on the instructions. The relevant instructions given to the jury were as follows: (3) conversion is the appropriation of another’s personal property; (5) if the reason for retention of the collateral has expired, the retention is wrongful and amounts to conversion; (6) the pledgee may retain the collateral until the purposes of the pledge have been satisfied; (7) there is no conversion if the demand is unreasonable and defendant makes a qualified re*700fusal; (10) if the agreement gives a right to retain the collateral, there cari be no conversion; (11) a contract must be construed as a whole according to its plain meaning; (12) all the ambiguities are to be resolved in favor of the customer; (13) the jury should judge whether the defendant acted “reasonably and justifiably” in interpreting the agreement; (19) surety breaches its covenant of good faith if it unreasonably denies or withholds funds due its customer.
The trial court did not even attempt to interpret and instruct the jury as a matter of law on the meaning of the unambiguous terms of the contract. The majority opinion has .adequately interpreted the contract as a matter of law and focused on the critical factual issue of what was “competent evidence” within the meaning of the security agreement. However, the majority then goes on to attempt to justify the inadequate instructions by stating that:
“[cjlearly, the interpretation of the phrase ‘competent evidence’ was at issue. The requirement that the jury determine whether or not Joe & Martin Trucking submitted ‘competent evidence’, and the legal implication of their factual findings, were implicit in the trial court’s specific contract instructions and in the instructions as a whole.” Ante at 342.
In viewing the substance of the relevant instructions listed above, I fail to see any one instruction or combination of instructions which even arguably instruct the jury to resolve the ambiguous term of “competent evidence” based upon the factual evidence. The trial court should have interpreted the security agreement as a matter of law, leaving the resolution of the ambiguous term “competent evidence” to the jury with a clear instruction to resolve the term based upon the factual evidence of the intentions of the parties.
In addition to the failure to give needed instructions, the given instructions seriously misstated the law. Instruction Numbers 5, 6 and 7, making conversion contingent upon the reason for the retention of the collateral, the purposes of the pledge, and the reasonableness of the demand for return, contradict the statement of law by majority that “[wjhether conversion exists in the present case depends on the interpretation and legal effect of the security agreement.” Ante at 340. Instruction Numbers 5, 6 and 7 would only be proper in a conversion action where the reasons for retention, purposes of the pledge, and basis of a demand for return are not governed by a written instrument. See Nora v. Safeco Insurance Co., 99 Idaho 60, 577 P.2d 347 (1978). Instruction Number 11, which leaves to the jury the interpretation of plain and unambiguous terms, conflicts with the majority’s correct statement of law that “[t]he interpretation and legal effect of an unambiguous contract are questions of law to be resolved by the court rather than the jury. Clark v. St. Paul Property & Liability Ins. Co., 102 Idaho 756, 639 P.2d 454 (1981).” Instruction Number 12, which required that all ambiguities in the contract be automatically resolved in favor of the customer, is also in error. The correct statement of law is that the jury should attempt to resolve the ambiguity based upon the factual evidence relevant to the intentions of the parties, and only if the ambiguity remains should the jury resolve the ambiguity against the maker as a last resort. The Idaho Jury Instructions § 615; Corbin on Contracts, § 559 (1960); Williston on Contracts, §§ 601, 621, 671 (1961).
A further basis for error in the instructions is that they are internally inconsistent. Instruction Numbers 7 and 13 make the alleged conversion contingent upon whether plaintiff’s demand for return of the collateral was reasonable and whether the defendant reasonably interpreted the agreement. The majority interprets the “reasonable” requirements as nothing more than a contractual requirement of good faith. These instructions directly contradict the correct rule of law stated in Instruction Number 10 which makes the conversion contingent upon the contractual right to retain the collateral. No one questions the plaintiff’s good faith in demanding the return of the collateral; however, it is entirely possible that plaintiff could have *701demanded the return in good faith but still not be entitled to the return under the terms of the agreement. Just because good faith is an implied obligation to every contract does not mean that a good faith demand or retention of collateral justifies return or retention under the terms of the contract. The parties could be reasonable and dealing in good faith, but still be dead wrong. The jury could easily have been confused as to whether liability for conversion depended on: (1) the plaintiffs reasonableness or good faith in demanding return; (2) the defendant’s reasonableness or good faith in interpreting the agreement or refusing to return; or (3) the rights to retain or return of the collateral as governed by the terms of the written agreement.
Viewing the instructions as a whole I cannot agree with the majority that the defendants have suffered no prejudicial error. “[Wjhere instructions are given which are contradictory on material matters ... the conflict between them and the resultant ambiguity and uncertainty constitutes prejudicial error and requires reversal.” Yacht Club Sales & Service, Inc. v. First National Bank of North Idaho, 101 Idaho 852, 863, 623 P.2d 464, 475 (1980). In the present case the contradictory instructions combined with the erroneous instructions of the law and the failure to give material instructions also constitute prejudicial error. The case should be remanded for a new trial limited to the issue of liability. In that event I would concur with the majority’s analysis in Parts II and III.