Court Opinion

ID: 882666
Source: CourtListenerOpinion
Date Created: 2013-06-05 01:42:57.331677+00
Date Added: 2024-06-11T15:35:43.938739
License: Public Domain

NO.    93-251
           IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1993

MARK EISSINGER,
          Plaintiff and Appellant,
                                                 ::
     v.
MULLIN TRUCKING, INC., a                          ;~~
corporation, and CLINT MULLIN,                           DEC 2 2 1993       1
          Defendants and Respondents.

APPEAL FROM:      District Court of the Seventh Judicial District,
                  In and for the County of Richland,
                  The Honorable Richard G. Phillips, Judge presiding.

COUNSEL OF RECORD:
          For Appellant:
                  John J. Cavan, Cavan, Smith & Cavan,
                  Billings, Montana
          For Respondents:
                  Arnie A. Hove, Attorney at law,
                  Sidney, Montana

                            Submitted on Briefs:        September 23, 1993
                                           Decided:     December 22, 1993
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
        Appellant Mark Eissinger appeals     from a judgment of the
Seventh Judicial District Court, Richland County, denying his
request to rescind a sale and transfer of title to a Peterbilt
truck and a refrigerated trailer to respondents Mullin       Trucking,
Inc.,    and Clint Mullin,   based on his claim of constructive or
actual fraud, and undue influence.
        We affirm.
        The issues are as follows:
        1.   Did the District Court err when it found that appellant
failed to prove constructive fraud?
        2.   Did the District Court err when it found that appellant
failed to prove actual fraud or undue influence?
        3.   Did the District Court err when it found that the
consideration paid by respondent closely approximated the value of
the truck and trailer at a distress sale?
        Appellant grew up on his parents' farm in Brockway, Montana,
and graduated from high school in 1989.      In August 1990, appellant
completed truck driving school and purchased a 1989 Ford truck for
approximately    $75,000, without a down payment, after his father
arranged and co-signed for the loan.     Appellant's father separately
purchased a dry van       truck trailer for $9,000       cash.    From

approximately October 1990 to March 1991, appellant leased the
truck and trailer as owner/operator with a Billings truck company
called Ligon.
                                     2
     In November 1990, appellant and his father paid off the truck
using $40,000 from a trust fund established by the father, and with
additional cash from the father.        In January 1991, due to numerous
truck repairs and downtime, appellant sold his 1989 Ford truck for
cash and purchased a new 1991 Peterbilt truck for approximately
$105,000, paying $36,000 in cash and financing the balance through
Commercial Associates of Englewood, Colorado.
     Appellant and Clint Mullin (respondent) met in mid-March 1991
at the Northwest       Peterbilt dealership in       Billings.    There,
appellant expressed his dissatisfaction in his employment with
Ligon,   and    respondent   offered to lease his truck.          Later,
appellant,     his father,   and respondent met to discuss the lease
arrangement.     At the meeting, respondent informed appellant that he
would require a refrigerated trailer to handle the types of loads
he would haul. In April 1991, appellant traded his dry van trailer
for a refrigerated trailer (reefer trailer) and $4,500 cash.         The

parties verbally agreed that appellant would receive 90 percent of
the freight bill for hauling the loads, and respondent would
receive 10 percent because he provided the loads.
     In May 1991, appellant, without the knowledge or assistance of
his father,     purchased a new Honda motorcycle for approximately
$5,000, and      in June he purchased a new pickup for $31,000.
However, with $22,000 owing on the new pickup, in January 1992,
appellant sold the pickup in exchange for approximately $17,000 and
an older pickup.
                                    3
     Appellant hauled steadily in April and May 1991, but he was
not paid until the end of June or early July 1991.                  Appellant    chose
not to haul loads during June.                    By    mid-July,    appellant was
approximately three months in arrears in his truck payments.
     On July 16, 1991, appellant transferred title of the truck and
trailer to respondent Mullin Trucking, Inc., by signing a buy/sell
agreement, two bills of sale, and title documents to both truck and
trailer.      Mullin     Trucking, Inc.,        assumed the encumbrance on the
truck    totaling        $56,443.92,    which     was   consideration      for    the
transfer.         Prior to the transfer,         respondent   told    appellant    to
inform his father of his financial difficulties, but appellant did
not do so.
     Appellant brought this action in the District Court, asking
the court to rescind the July 16, 1991, sale and transfer of title
to the truck and trailer to Mullin                Trucking, Inc., alleging the
transfer was induced by constructive or actual fraud, and undue
influence.         Appellant alleged that he relied on respondent in
matters concerning the trucking business.               Respondent gave specific
financial advice to appellant based on his superior business
experience,       knowledge,   and     mature    judgment.    Appellant    contends
that respondent had influence over him and made promises to him in
return      for    the    truck      transfer,     without    any     intention of
performance,       and also created a false impression by words and
conduct to respondent's own advantage.

                                           4
                                     I.
        Did the District Court err when it found that appellant failed

to prove constructive fraud?

        Appellant argues that his consent was not real or free because
respondent's conduct amounted to actual or constructive fraud and

undue    influence.     Section 28-2-1711, MCA, allows a contracting

party to rescind a contract if that party's consent was acquired

through fraud or undue influence.

        Section 28-2-406, MCA, defines constructive fraud as:

              (1) any breach of duty which, without an actually
        fraudulent intent, gains an advantage to the person in
        fault or anyone claiming under him by misleading another
        to his prejudice or to the prejudice of anyone claiming
        under him: or

             (2)    any such act or omission as the law especially
        declares   to be fraudulent, without respect to actual
        fraud.

        Appellant argues that the District Court erred when it

considered whether a fiduciary relationship was present in the

relationship between the parties.         This Court has determined that

a plaintiff need not prove a fiduciary relationship existed to

establish    constructive   fraud.   McJunkin v.   Kaufman & Broad Home

Systems (1987), 229 Mont. 432, 439-40, 748 P.2d 910, 914-15.         This

Court has explained the application of § 28-2-406, MCA, by stating:

              By its terms, the statute does not require that the
        plaintiff demonstrate a fiduciary relationship. It
        merely requires the establishment of a duty.      We have
        recognized that a sufficient duty can arise in a
        commercial transaction such as the one at hand. We find
        the defendants had a duty to refrain from intentionally

                                     5
        or negligently creating a false impression by words or
        conduct.  [Citations omitted].
McJunkin, 748 P.2d at 915.
        In the present case, the District Court considered whether a
fiduciary relationship was present, but also considered the factors
required in the statute to prove constructive fraud and whether
respondent had gained an advantage by misleading appellant to his
prejudice.
        Appellant argues that the District Court erred when it failed
to adequately consider all the testimony and evidence before it.
Appellant contends that respondent intentionally or negligently led
appellant to believe respondent would retransfer title to the truck
and trailer to him whenever he requested without any conditions
attached.      This Court will not overturn the district court's
findings     of fact in   a bench trial unless they are clearly
erroneous.     In the Matter of the Mental Health of E.P. (1990), 241
Mont. 316, 787 P.2d 322; Rule 52(a), M.R.Civ.P.       This Court will
also give due regard to the opportunity of the district court to
determine the credibility of the witnesses. In the Matter of the
Mental Health of R.J.W. (1987),    226 Mont. 419, 736 P.2d 110. See
Weber v. Rivera (1992), 255 Mont. 195, 841 P.2d 534.
        In interpreting this rule, this Court has adopted a three-part
test:
        First, the Court will review the record to see if the
        findings are supported by substantial evidence. Second,
        if the findings are supported by substantial evidence, we
        will determine if the trial court has misapprehended the
                                    6
        effect of [the] evidence. Third, if substantial evidence
        exists and the effect of the evidence has not been
        misapprehended the Court may still find that "[A] finding
        is 'clearly erroneous' when, although there is evidence
        to support it, a review of the record leaves the court
        with the definite and firm conviction that a mistake has
        been committed." [Citation omitted].

Interstate   Production Credit v. DeSaye (1991),     250 Mont. 320, 323,
820 P.2d 1285, 1287.
         In Weber,    we held that the resolution of a rescission of
contract        depends   upon   a   factual    determination   about   the
conversations between the parties.           Weber, 841 P.2d at 536 In the
present case, the District Court made factual determinations of the
conversations between the parties, and respondent's conduct prior
to the truck and trailer transfer.           The District Court determined
the credibility of the witnesses and found no evidence to support
a claim for constructive fraud.             We hold that the court was not
clearly erroneous.
                                      II.
         Did the District Court err when it found that appellant failed
to prove actual fraud or undue influence?
         Section 28-2-405, MCA, defines actual fraud as:
         [A]ny of the following acts committed by a party to the
         contract or with his connivance with intent to deceive
         another party thereto or to induce him to enter into the
         contract:
              (1) the suggestion as a fact of that which is not
        true by one who does not believe it to be true;
              (2) the positive assertion, in a manner not
        warranted by the information of the person making it, of
        that which is not true, though he believes it to be true:
                                       7
              (3) the suppression of that which is true by one
        having knowledge or belief of the fact:

              (4)  a promise     made    without   any   intention of
        performing it: or

             (5)    any other act fitted to deceive.

        Appellant contends that the District Court failed to consider

testimony that respondent made promises to appellant in return for

the truck and trailer transfer, without any intention of performing

them.    Again, the District Court made factual determinations of the

testimony concerning respondent's conduct and conversations prior

to the truck and trailer transfer.            The court found appellant

failed to prove the necessary elements of actual fraud for several
reasons.     Appellant's admission of having had full control of the

truck and trailer and that he could have been on the road hauling

loads whenever he chose, overshadowed his testimony that he was

dependant upon respondent for loads to haul. Prior to respondent's

purchase, he told appellant to inform his father of the financial

problems,    but appellant failed to do so.          Appellant's   assertion

that respondent agreed to a retransfer of the truck and trailer at
an   undetermined     future   date,   without a determined or discussed

manner or amount of payment, without a determined or discussed rate

of interest, and without being in writing, is implausible.

        Next, the court considered whether respondent exercised undue

influence over appellant.
        Section    28-2-407, MCA, defines undue influence as:

                                        8
           (1) the use by one in whom a confidence is reposed
     by another or who holds a real or apparent authority over
     him of such confidence or authority for the purpose of
     obtaining an unfair advantage over him:

           (2) taking an            unfair           advantage      of     another's
     weakness of mind; or

           (3) taking a grossly oppressive and                                   unfair
     advantage of another's necessities or distress.

     Appellant contends the District Court failed to consider

testimony that respondent was in a superior position as one
experienced in business, and that appellant was immature and naive

in   these     matters.      The    court         weighed     the    evidence        whether

respondent     was    in a position of authority or influence over

appellant sufficient to take unfair advantage of him, and whether

appellant had a weakness of mind.                     Appellant     made    several       other
arms-length    transactions      whereby        he    sold   property      for     less   than

what was owed on it.        Moreover,        appellant admitted that when the

transaction occurred he was old enough to handle his own affairs,

was satisfied with the deal, and felt "in hindsight" he could have

made a better deal.       The court found the transfer between appellant

and respondent was an arms-length transaction and that there was no

actual fraud.        We agree.

                                           III.

     Did      the    District      Court        err    when    it        found     that     the

consideration paid by respondent closely approximated the value of
the truck and trailer at a distress sale?

                                            9
      Appellant   contends   the   District   Court   failed   to   adequately

consider evidence concerning the value of the truck and trailer to

be nearer to $92,000, and the possibility that appellant's father

would have paid the balance owed if foreclosure was imminent.             The

court found that although the trailer and truck may have been worth

substantially more than the consideration paid by respondent, the

consideration very closely approximated the value of the truck and

trailer at a distress sale.        Respondent agreed to pay all payments

and   delinquencies   in     the   amount   of $56,443.92,     and to hold

appellant harmless for all future payments.           Appellant's     transfer

of the truck and trailer for less than fair market value was

similar to, and consistent with, his prior financial transactions.
      The District Court found for respondent and reasoned that it

was not for the court to remake the contract between the parties

simply because one may have received the better deal.               We affirm
the conclusion of the District Court.

      Affirmed.

We concur:

      Chief Justice
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