No. 13395
I N THE SUPREME COURT OF THE STATE O M N A A
F O T N
1977
BILLINGS LEASING C O . ,
a Montana C o r p o r a t i o n ,
P l a i n t i f f and A p p e l l a n t ,
-vs-
JEROLD PAYNE ,
Defendant and Respondent.
Appeal from: D i s t r i c t Court o f t h e T h i r t e e n t h J u d i c i a l
District
Honorable J a c k D. Shanstrom, Judge p r e s i d i n g .
C o u n s e l o f Record:
For Appellant:
R. P. Ryan a r g u e d , B i l l i n g s , Montana
F o r Respondent:
Brown Bnd Huss, M i l e s C i t y , Montana
George Huss a r g u e d , M i l e s C i t y , Montana
B r a n d t , M i l l e r , Nelson & C h r i s o p h e r s o n , S a l t Lake
C i t y , Utah
R o b e r t W. M i l l e r a r g u e d , S a l t Lake C i t y , Utah
Submitted: September 1 3 , 1977
Decided: hrF( 1: 1978
Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Plaintiff Eillings Leasing Co. appeals from a jury verdict
and judgment in the Yellowstone County District Court denying its
claim and awarding $9,194.25 to defendant Payne on his counterclaim.
As we attempt to unscramble the issues raised on appeal,
we find that neither party had a coherent theory of recovery which
was presented to the jury and covered by jury instructions. For
this reason it is extremely difficult to analyze most of the issues
raised on appeal. However, we do agree with Billings Leasing that
there was a complete failure to instruct the jury on damages with
relation to Payne's counterclaims, and for this reason we must
reverse. Because there were additional errors in the instructions,
we will discuss a few of these matters which hopefully will give
some guidance for the retrial of this cause.
This case arises from a lease agreement between Billings
Leasing and Jerald Payne whereby Payne leased for five years a
new Renworth truck at $750.00 per month for the first 30 months
and $550.00 per month for the second 30 months. Payne fell several
payments behind within a year of the time he leased the truck,
and there were several contacts between him and Billings Leasing
in an effort to bring the payments up-to-date. These contacts
form part of the dispute in this case because Payne alleges that
Billings Leasing extended or waived the time within which he was
to make the payments in dispute, although Payne did not plead
extension or waiver as an affirmative defense.
In any event, satisfactory arrangements were not made,
and Billings Leasing sued Payne in a debt action for back rent on
the truck. Later, in the same debt action, Billings Leasing
obtained a writ of attachment and garnished Payne's wages in the
amount of $2,433.00. This money was deposited with the p ell ow stone
Countyclerk of court pending the outcome of litigation.
Shortly after it filed the debt action, Billings Leasing,
in a separate action, filed a claim and delivery action and obtained
possession of the truck because Payne refused to voluntarily give
up possession of the truck. Billings Leasing claimed it was
entitled to possession under the terms of the leasing agreement.
Without notifying Payne that it intended to sell the truck, Billings
Leasing sold it at a private sale and realized $20,000.00 from the
sale.
Payne filed two counterclaims in each of the actions. In
the debt action he alleged that Billings Leasing had wrongfully
obtained possession of the truck in the claim and delivery action.
He claimed that the truck was repossessed without notice to him
which violated his rights to due process of law. He also alleged
in the same counterclaim that he was damaged in the amount of
$6,OOO.OO because the private sale was not conducted in a com-
mercially reasonable manner. He did not allege that he was also
damaged because it was conducted without notice to him. The
second counterclaim in the debt action alleged that the writ of
attachment garnishing Payne's wages was an unlawful abuse of pro-
cess because it was issued without notice to him and therefore
deprived him of due process of law. He sought damages in the
amount of $2,433.00, which was the amount of the wage garnishment,
and interest on that amount from the date his wages were seized.
Payne's counterclaims in the claim and delivery action were essen-
tially the same as those he filed in the debt action. The debt
and
actiodthe counterclaim were consolidated for trial by jury.
It is not at all clear how Payne was proceeding during
trial on his counterclaims for damages. The claims he now asserts
were not clearly set out in his pleadings; there was no pretrial
conference or order; and he offered no instructions on the damages
that he now is claiming. In his brief, he argues that there were
three separate claims of damages. The first damage claim is that
Payne was damaged in the debt action by the wrongful attachment
in the amount of $2,433.00. Payne did not ask for the return of
the $2,433.00 in his counterclaim; rather, he asked for damages in
that amount in addition to interest from the date of attachment.
The second claim of damages is that he was deprived of a truck
for four months before he could obtain another one and that he
lost $4,000.00 net income as a result of the wrongful repossession.
Payne testified to this without objection from Billings Leasing.
The third claim of damage is that Payne was damaged in the amount
of $3,500.00 by the failure of Billings Leasing to sell the truck
in a commercially reasonable manner, in violation of section 87A-
9-504(3), R.C.M. 1947, which is part of the Uniform Commerical Code
as adopted in this state.
Payne seeks to justify the jury verdict in the amount of
$9,194.25 on the basis that the damages testified to at trial
amounted to more than the jury awarded and therefore the jury was
well within the evidence in returning its verdict. However, the
claim of Billings Leasing is not that the award was excessive. It
is that Payne offered no instructions on the elements of damages
he was seeking, and the trial court refused to instruct the jury
on the elements of damages. We discuss first the misleading and
incomplete instructions covering the issues raised by ~ayne's
counterclaims, and then we discuss the failure to instruct the
jury on damages.
We note at the outset that this was clearly a case calling
for a pretrial conference under Rule 16, M.R.Civ.P., but none was
held. As a result, this case went to trial with neither counsel
for the parties nor the trial judge having a grasp of the legal
issues.
At the close of the trial Billings Leasing moved for judg-
ment as a matter of law on its claim for the back lease installments
for the truck. It was denied. The trial court did rule, however,
that Payne's allegations of unconstitutional attachment and uncon-
stitutional repossession of the truck could not go to the jury,
and he specifically instructed the jury not to consider those claims.
As a result of this ruling, Billings Leasing argues that
the only remaining counterclaim was Payne's contention that he was
damaged in the amount of $6,000.00 because of the failure of Billings
Leasing to conduct the sale of the truck in a commercially reasonable
manner. Payne, on the other hand, argues that other damages are
still in the case because of waiver. Waiver applies, he contends,
because Billings Leasing waived the payment dates on which the install-
ments were due and no new times were set for making the payments;
therefore, the payments were not due at the time Billings Leasing
attached Payne's wages and repossessed his truck. Accordingly,
Payne argues, it was unlawful for Billings Leasing to attach his
wages and to repossess his truck.
Payne did not urge waiver as an affirmative defense to the
action brought by Billings Leasing as required under Rule 8(c),
M.R.Civ.P. Neither did he assert waiver in his counterclaim as a
basis to claim that his wages were unlawfully attached and his
truck unlawfully repossessed. Rather, his claims for unlawful
attachment and unlawful repossession were based solely on denials
of due process, and the District Court dismissed those counterclaims.
Despite these limitations, waiver was considered throughout the trial,
although we are not certain from the record of exactly how it was
urged to apply. The jury was also instructed on the elements of
waiver. Accordingly, we are reluctant to hold that Eillings Leasing
was not aware of the allegations of damages arising from Payne's
claims of waiver.
Billings Leasing also argues that under section 87A-1-107,
R.C.M. 1947, of the Uniform Commercial Code, a waiver can only exist
if it is in writing. But that section does not exclude an oral
waiver. It simply allows a written waiver to be enforced even
though it is not supported by consideration. Moreover, the official
comment to 1 Uniform Laws Annotated, Vol. 1, 51-107, states that
" * * * this Act fully recognizes the effectiveness of waiver and
estoppel." See also United States v. Greenwich Mill & Elevator Co.,
(D.C. Ohio, 1968), 291 F.Supp. 609, 614. Nor has this Court, in
analogous situations to this before the enactment of the Uniform
Commercial Code, required that a waiver be in writing. Hewitt v.
Novak, (1945), 117 Mont. 365, 370-372, 158 P.2d 627.
We next discuss the principle instruction stating the issues
raised by Payne's counterclaims. It was totally inadequate as a
statement of the law and could only have caused jury confusion.
This instruction reads:
"Before you may find in favor of defendant,
JERALD PAYNE, on his counterclaim, you must find
that one of the following propositions is true:
"1. That Plaintiff extended the time for
payments or waived the requirements for timely
payments without notice to Defendant to the
contrary.
"2. That the Lease Agreement was an
agreement to purchase and that:
"(a) Plaintiff failed to send notice to
Defendant about the sale of the tractor;
or I
"(b) Plaintiff did not conduct the sale
in a commercially reasonable manner.
"If you find that either proposition 1 or
2 is true, you may award Defendant such damages
as are allowed under the other instructions herein."
This instruction permitted the jury to award damages to Payne
if they found either proposition 1 or proposition 2 to be true. It
allowed the jury to award "such damages as are allowed under the
other instructions herein." However, the only other instruction
on damages was one simply telling the jury it could award no more
than Payne's prayer for relief in the amount of $9.194.25. There
were no instructions defining the elements of damages for each
claim and there were no instructions limiting the damages for the
separate claims of unlawful attachment, unlawful repossession, and
failure to sell in a commercially reasonable manner. Under these
circumstances, it is not surprising that the jury's verdict was
exactly $9.194.25.
We consider first the matter of waiver or extension of the
installment payments and. how it applied to Payne's separate counter-
claims. A jury finding of waiver of the times for making the install-
ment payments was not necessary for Payne to recover on his counter-
claim of failure to sell the truck in a commercially reasonable
manner. On the other hand, a finding of waiver was essential if
the jury was to find for Payne on his claim of damages because of
wrongful attachment and wrongful repossession of the truck. Obviously,
if Billings Leasing did not waive the time for payment of the truck
installments it would not have been unlawful (being that the con-
stitutional counterclaims concerning due process were dismissed)
for Billings Leasing to attach Payne's wages or to repossess the
truck.
The failure of the instruction in not tying the waiver into
wrongful attachment and wrongful repossession allowed the jury to
award Payne all the damages he alleged. Thus, on this basis, the
jury could well have awarded damages to Payne for his claim of
failure to sell in a commercially reasonable manner. For the in-
struction on waiver to be proper, the jury should have been told
that it related only to Payne's claims of wrongful attachment and
wrongful repossession.
Likewise, the instruction is similarly deficient in para-
graph 2(a) by allowing the jury to award all the damages alleged
if it found that the agreement involved was one to purchase and
that Billings Leasing did not send advance notice to Payne about the
sale of the truck. Clearly, the failure of Billings Leasing to send
notice to Payne
/before the sale does not by itself entitle Payne to damages. ~ailure
to send notice does not in any way establish either a wrongful at-
tachment or wrongful repossession, both of which had already occurred.
Those were two entirely separate counterclaims. Moreover, if there
was a separate claim that Payne was damaged solely because Billings
Leasing failed to give notice to Payne of its intent to sell the
truck, it was not raised in the pleadings. Nor did the evidence at
trial indicate that failure to give notice was a separate claim for
damages.
Under paragraph 2 ( b ) of the instruction, the jury could
award damages to Payne if it found an agreement to purchase coupled
with a failure to sell the truck in a commercially reasonable manner.
Even if the jury could find damages resulting from a failure to
sell in a commercially reasonable manner, the jury could not also
for the same reason award damages for wrongful attachment and wrong-
ful repossession. Again, those were two separate counterclaims
which would arise only upon a finding of waiver and also that Payne
was damaged as a result.
In his brief Payne seeks to justify part of the jury award
as damages for wrongful attachment and another part of the award
as damages for wrongful repossession. Not one instruction defined
attachment or wrongful attachment or attempted to place them within
the issues of the case. The same can be said for the claim of
damages for wrongful repossession of the truck.
As previously indicated, the record is barren of instruc-
tions defining the separate elements of damages which Payne claims
he suffered. At the close of the case and during the settlement
of jury instructions, counsel for Billings Leasing twice emphatically
reminded the court and Payne's counsel that there were no instruc-
tions on damages and stated that the jury should not be allowed to
speculate on the damages with no guidelines. Payne's counsel and
the trial court ignored these warnings, and the case went to the
jury with no guidelines.
The duty of the trial court to instruct the jury has been
generally recognized as one that is necessary and inherent in the
court. An excellent work written for trial judges, McBride, -
The
Art of Instructing the Jury (1969, Anderson Publishing Co.) states
at page 16:
"Today, the law in nearly all states
requires the judge to instruct the jury. Even
in the absence of statute or rule, the duty to
do so without request is not only obvious and
necessary but it is a power inherent in the
court.I'
McBri.de further emphasizes the need for jury instructions by quoting
from California Jury Instructions (Criminal, page 8) at page 17:
" * * * 'In instructing the jurors, we must
assume that they have no knowledge of the rules
of law and that therefore, they must be instructed
on all points of law which, under any reasonable
theory, might be involved in their deliberations,
to the end that their decision will be according
to the law and the evidence and untinged by any
private and possibly false opinion of the law that
they entertain.'"
While the necessity to instruct and to properly instruct is
no doubt greater in a criminal case because of the fundamental con-
stitutional protections, the above statement serves to underline
the importance of the trial judge's function to instruct the jury
in all cases--civil as well as criminal. That duty cannot be
delegated to counsel.
Jury instructions are crucial to a jury's understanding
of the case and, unfortunately, counsel cannot always be relied
upon to provide those instructions. In Wright & Miller, Federal
Practice and Procedure, Civil S2556, the duty of the trial judge
is stated:
"It is the inescapable duty of the trial
judge to instruct the jurors, fully and cor-
rectly, on the applicable law of the case, and
to guide, direct, and assist them toward an
intelligent understanding of the legal and
factual issues involved in their search for
truth. The court must instruct the jury
properly on the controlling issues in the
-
case even though there has been no request for
an instruction or the instruction requested is
- --
~
defective." (Emphasis added.)
Moreover, there is a statutory duty in this state to instruct the
jury, imposed by section 93-5101(6), R.C.M. 1947, which provides:
"When instructions have been passed upon
and settled by the court, and before the argu-
ments of counsel to the jury have begun, the
court shall charge the jury in writing, giving
in such charge only such instructions as are
passed upon and settled at such settlement.
1n charging the jury, the court shall give
to them all matters of law which it thinks
1
verdict. " (Emphasis added. )
In Zanos v. Great Northern Ry. Co., (1921), 60 Mont. 17, 22,
198 P. 138, this Court construed Section 6746, a predecessor to
section 93-5101, and stated there are at least minimum standards
to which a trial judge must adhere when instructing the jury:
" * * * It may be stated as a general rule
that where the instruction, in appropriate
language, calls the attention of the jury to
the subject matter to be considered and fairly
states and presents the questions to be deter-
mined, it is sufficient. - Section 6746, Revised
Codes, does not require more than this of the
court's own motion. If, in such a case, a more
specific instruction than that given is desired
by a party, it is his duty to tender one, or to
tender a modification of the one given. It is
not sufficient merely to demand that the court
do it. * * * n (Emphasis added.)
Nor do we believe that Rule 51, M.R.Civ.P., dilutes these
minimum responsibilities. The rule provides in pertinent part
that " * * * No party may assign as error the failure to instruct
on any point of law unless he offers an instruction thereon." This
rule was designed to place a burden on counsel to present the proper
instructions to the trial court; it was not designed to water-down
the minimum duties of the trial court to instruct the jury.
There are other errors in the instructions, but we feel
those we have mentioned are sufficient to demonstrate that there
was a complete failure to instruct the jury on damages and a failure
to properly instruct the jury on the issues relating to Payne's
counterclaims.
We vacate the judgment of the District Court and remand
for a new trial consistent with this opinion.
We Concur:
Justices
Mr. Chief Justice Frank I. Haswell, specially concurring.
I concur in the result in this case granting a new trial.
~*07norlte, d d m
W
chief Justice