Graham v. Clarks Fork National Bank

No. 80-349
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981

DEAN GRAHAM,
Plaintiff and Appellant,

CLARKS FORK NATIONAL BANK, a Montana
Corporation, and RAYMOND L. MIRABAL,
Defendant and Respondent.

Appeal from: District Court of the Thirteenth Judicial District,
In and for the County of Carbon.
Honorable William J. Speare, Judge presiding.
Counsel of Record:
For Appellant:
Swandal, Douglass & Swandal, Livingston, Montana
Kent Douglass argued, Livingston, Montana
For Respondent:
Joseph E. Mudd argued, Bridger, Montana

Submitted: June 18, 1981
Decided: July 22, 1981

Filed: JuL 2 2 1988

(-L a

Clerk
Mr. J u s t i c e F r a n k B. M o r r i s o n , J r . , d e l i v e r e d t h e O p i n i o n of
t h e Court.

T h i s i s a n a p p e a l from a n o r d e r of t h e D i s t r i c t C o u r t

which s e t a s i d e a j u r y award a s e x c e s s i v e and g r a n t e d a new

t r i a l l i m i t e d t o t h e i s s u e o f damages a r i s i n g from t h e

w r o n g f u l c o n v e r s i o n o f cows b e l o n g i n g t o t h e a p p e l l a n t , Dean

Graham.

I n t h e s p r i n g o f 1978, Graham was t h e owner of 19

r e g i s t e r e d a n g u s cows which h e p l a n n e d t o b r e e d by a r t i f i c i a l

insemination. They w e r e p a s t u r e d w i t h cows b e l o n g i n g t o o n e

Marvin Heyd. Graham, a f u l l - t i m e employee o f a t e l e p h o n e

company, a n d Heyd, a n e x p e r i e n c e d r a n c h e r and b r e e d i n g

s p e c i a l i s t , had e a r l i e r a g r e e d t h a t Heyd would manage t h e

c a r e and a r t i f i c i a l i n s e m i n a t i o n of Graham's cows i n e x c h a n g e

f o r p a s t u r e f e e s o r a p o r t i o n of t h e c a l v e s produced. Fourteen

o f Graham's cows b o r e h i s r e g i s t e r e d b r a n d . The r e m a i n i n g f i v e

w e r e with c a l f and r e t a i n e d a n o t h e r b r a n d of a p r e v i o u s

owner. During t h i s p e r i o d , t h e r e s p o n d e n t , C l a r k s Fork

N a t i o n a l Bank (Bank) h e l d a s e c u r i t y i n t e r e s t i n H e y d ' s

cattle. The Bank was n o t aware t h a t Graham's cows were i n

t h e same p a s t u r e .

On J u n e 1 5 , 1978, t h e Bank s e n t n o t i c e t o Heyd o f t h e i r

i n t e n t i o n t o s e i z e t h e s e c u r e d cows. The f o l l o w i n g morning

t h e B a n k ' s a g e n t s w e n t t o t h e p a s t u r e and l o a d e d t h e cows,

i n c l u d i n g t h o s e b e l o n g i n g t o Graham. They were t a k e n by

t r u c k t o a p a s t u r e 30 m i l e s away. Several days l a t e r t h e

Bank r a n a b r a n d c h e c k and d i s c o v e r e d t h e y had Graham's

COWS.

Graham f i r s t l e a r n e d o f t h e s e i z u r e s e v e r a l d a y s l a t e r

a n d i m m e d i a t e l y demanded t h e i r r e t u r n . The Bank r e f u s e d t o

r e t u r n them w i t h o u t f u r t h e r evidence of o w n e r s h i p o r t o
i n f o r m him of t h e i r l o c a t i o n . Heyd and t h e Bank s u b s e q u e n t l y

r e n e g o t i a t e d t h e i r s e c u r i t y agreement and a f ter a d d i t i o n a l

t i t l e documents w e r e produced, a l l t h e cows w e r e r e t u r n e d on

J u n e 29, 1978, t o a second r a n c h l e a s e d by Heyd. Although

Graham t o l d t h e Bank h e s h o u l d be c o n s u l t e d r e g a r d i n g t h e

r e t u r n of h i s cows, he was n o t n o t i f i e d p r i o r t o t h e i r

return.

When Graham examined h i s cows on J u l y 1, he found s i x

b u l l s i n t h e same p a s t u r e . H e d e t e r m i n e d h i s planned a r t i -

f i c i a l i n s e m i n a t i o n program f o r 1978-1979 had been d e s t r o y e d .

The cows remained i n t h e p a s t u r e t h r o u g h t h e summer and f a l l

of 1978.

S e v e r a l months a f t e r t h e cows were r e t u r n e d , Heyd

d e f a u l t e d on t h e r e n e g o t i a t e d agreement w i t h t h e Bank. The

Bank's a g e n t s r e t u r n e d t o t h e p a s t u r e on October 5, 1978,

and d r o v e a l l t h e cows t o a c o r r a l a p p r o x i m a t e l y 300 y a r d s

away. Graham's cows w e r e s e p a r a t e d from t h e h e r d and r e t u r n e d

t o the pasture.

Graham s u b s e q u e n t l y i n s t i t u t e d a s u i t i n c o n v e r s i o n and

s o u g h t compensation f o r damages a s f o l l o w s :

1. Wrongful t r e s p a s s and c o n v e r s i o n f o r t h e f i r s t

removal i n t h e amount of $20,175.

2. F u t u r e l o s s e s r e s u l t i n g from t h e d e s t r u c t i o n of

h i s a r t i f i c i a l i n s e m i n a t i o n program i n t h e amount of $133,200.

3 . Exemplary damages of $50,000.

4 . G e n e r a l damages f o r t h e second c o n v e r s i o n i n t h e

amount of $2,000.

During t r i a l , t h e c o u r t s u s t a i n e d t h e Bank's o b j e c t i o n

t o e x p e r t t e s t i m o n y o f f e r e d t o p r o v e t h e v a l u e of a hypo-

a
t h e t i c a l p u r e b r e d angus c a l f c r o p and g r a n t e d t h e ~ a n k

d i r e c t e d v e r d i c t on t h e c l a i m f o r f u t u r e damages. The c o u r t

f u r t h e r g r a n t e d t h e Bank's motion f o r a d i r e c t e d v e r d i c t on
exemplary damages. By s p e c i a l v e r d i c t t h e j u r y found a l l

cows t a k e n had been r e t u r n e d , b u t t h a t a r e d u c t i o n i n v a l u e

between J u n e 16 and J u n e 2 9 had o c c u r r e d i n t h e t o t a l amount

of $1,425. The j u r y f u r t h e r found t h a t Graham s u f f e r e d

g e n e r a l damages a s t h e r e s u l t of t h e Bank's second s e i z u r e

of t h e cows i n t h e amount of $1,000 and found t h a t Graham

was e n t i t l e d t o r e c o v e r $1,050 a s a r e a s o n a b l e amount i n

r e g a i n i n g p o s s e s s i o n of t h e c a t t l e . The j u r y a l s o r e t u r n e d

a g e n e r a l v e r d i c t f o r $50,000, a l t h o u g h f u t u r e c a l f c r o p

l o s s e s and exemplary damages had been removed from t h e i r

consideration.

T h i s a p p e a l p r e s e n t s t h r e e i s s u e s f o r review. First,

whether t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d a new t r i a l on

damages. Second, whether t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g

a d i r e c t e d v e r d i c t on t h e i s s u e of f u t u r e c a l f c r o p l o s s e s .

T h i r d , whether t h e d i r e c t e d v e r d i c t on p u n i t i v e damages was

error. W e h o l d t h e g r a n t i n g of a new t r i a l was p r o p e r ,

however, on r e t r i a l , Graham should be a l l o w e d t o p r e s e n t h i s

e x p e r t t e s t i m o n y on f u t u r e c a l f c r o p l o s s e s and t h e c l a i m of

exemplary damages s h o u l d be s u b m i t t e d t o t h e j u r y .

The s t a t u t o r y damages f o r c o n v e r s i o n a r e s t a t e d i n

s e c t i o n 27-1-320, MCA.

" (1) The d e t r i m e n t c a u s e d by t h e wrongful c o n v e r s i o n
of p e r s o n a l p r o p e r t y i s presumed t o be:

" ( a ) t h e v a l u e of t h e p r o p e r t y a t t h e time of i t s
c o n v e r s i o n w i t h t h e i n t e r e s t from t h a t t i m e o r , when
t h e a c t i o n h a s been p r o s e c u t e d w i t h r e a s o n a b l e
d i l i g e n c e , t h e h i g h e s t market v a l u e of t h e p r o p e r t y
a t any time between t h e c o n v e r s i o n and t h e v e r d i c t
w i t h o u t i n t e r e s t , a t t h e o p t i o n of t h e i n j u r e d p a r t y ;
and

" ( b ) a f a i r compensation f o r t h e t i m e and money
p r o p e r l y expended i n p u r s u i t of t h e p r o p e r t y .

" ( 2 ) The presumption d e c l a r e d by s u b s e c t i o n (1)
c a n n o t be r e p e l l e d i n f a v o r of one whose p o s s e s s i o n
was wrongful from t h e b e g i n n i n g by h i s subsequent
a p p l i c a t i o n of t h e p r o p e r t y t o t h e b e n e f i t of t h e
owner w i t h o u t such o w n e r ' s c o n s e n t . "
 The D i s t r i c t C o u r t d i s a l l o w e d any e l e m e n t s of damage

n o t e x p r e s s l y provided f o r under t h e s t a t u t e . I n F e r r a t v.

Adamson e t a l . ( 1 9 1 7 ) , 53 Mont. 1 7 2 , 1 8 1 , 1 6 3 P. 1 1 2 , t h i s

Court i n t e r p r e t e d t h e s t a t u t e ' s language :

". . . The p r e s u m p t i o n announced i s a d i s p u t a b l e o n e ,
and may b e overcome by e v i d e n c e t h a t by r e a s o n o f t h e
p e c u l i a r circumstances surrounding t h e property
g r e a t e r o r l e s s i n j u r y r e s u l t s from i t s w r o n g f u l
conversion than t h e s t a t u t e contemplates ; b u t i n t h e
absence of proof of such s p e c i a l circumstances t h e
s t a t u t o r y r u l e s govern ... "
The D i s t r i c t C o u r t s u s t a i n e d t h e B a n k ' s o b j e c t i o n s t o

e x p e r t t e s t i m o n y r e g a r d i n g t h e v a l u e of a h y p o t h e t i c a l

purebred angus c a l f crop. The o s t e n s i b l e r e a s o n g i v e n was

t h e t e s t i m o n y l a c k e d f o u n d a t i o n and was t o o s p e c u l a t i v e .

This w a s error. S u f f i c i e n t f o u n d a t i o n was l a i d f o r t h e ex-

p e r t ' s testimony regarding f u t u r e c a l f crop l o s s e s . This

k i n d o f t e s t i m o n y i s n e c e s s a r i l y s p e c u l a t i v e t o some d e g r e e ,

b u t t h i s C o u r t h a s r e c o g n i z e d and s a n c t i o n e d s u c h t e s t i m o n y

although speculative i n nature. S e e F r i s n e g g e r v . Gibson

(1979)r -Mont. , 598 P.2d 574, 582, 36 S t . R e p . 1335.

". . . S e c t i o n 27-1-203, MCA ( f o r m e r l y s e c t i o n 17-
203, R.C.M. 1 9 4 7 ) p r o v i d e s t h a t damages may b e
awarded i n a j u d i c i a l p r o c e e d i n g f o r d e t r i m e n t re-
s u l t i n g a f t e r t h e commencement t h e r e o f ' o r c e r t a i n
to r e s u l t i n the future.' While no c a s e i n Montana
h a s c o n s t r u e d t h i s s t a t u t e , i t h a s a l w a y s been t h e
p r a c t i c e i n Montana t o i n s t r u c t j u r i e s t h a t f u t u r e
damages --- y be r e a s o n a b l y c e r t a i n , - -
need o n l and n o t
a b s o l u t e l y c e r t a i n - -e s t a t u t e seems t o i m p l y .
as th
I n h o l d i n g , as w e d o , t h a t f u t u r e d a m a g e s n e e d o n l y
be r e a s o n a b l y c e r t a i n u n d e r t h e e v i d e n c e , i t m u s t
b e g r a n t e d t h a t i n d e t e r m i n i n g a n award f o r f u t u r e
damages, a j u r y , or an e x p e r t t e s t i f y i n g on -e
- th
s u b j e c t , m u s t t-some d e g r e e e n g a g e i n c o n j e c t u r e
-- o
and s p e c u l a t i o n . When t h e c o n j e c t u r e a n d s p e c u l a t i o n
i s b a s e d upon r e a s o n a b l y c e r t a i n human e x p e r i e n c e
a s t o f u t u r e e v e n t s , t h e jury o r trier of f a c t i s
e n t i t l e d t o r e l y on t h a t d e g r e e of r e a s o n a b l e
c e r t a i n t y i n f i x i n g and a w a r d i n g f u t u r e damages.
From t h a t v i e w p o i n t , s i n c e no man h a s t h e g i f t o f
knowledge of t h e f u t u r e , i t i s p o s s i b l y l e s s con-
f u s i n g t o a j u r y , given t h e t a s k of determining
f u t u r e damages, t o b e i n s t r u c t e d t h a t i t may n o t r e l y
' s o l e l y ' o n s p e c u l a t i o n o r c o n j e c t u r e , b u t may
u t i l i z e t h e reasonable c e r t a i n t y t h e evidence pre-
s e n t s w i t h r e s p e c t t o t h o s e damages. W e do n o t
 read i n t o the instruction a s given t h a t the jury
c o u l d b a s e i t s award ' p a r t i a l l y ' on s p e c u l a t i o n o r
conjecture; rather the instruction f a i r l y plainly
t e l l s t h e j u r y t h a t i t s h o u l d compensate t h e p l a i n -
t i f f f o r l o s s o r harm which i s ' r e a s o n a b l y c e r t a i n '
t o be s u f f e r e d by him i n t h e f u t u r e . W e do n o t
see t h a t a j u r y c o u l d h e a r t h o s e words w i t h o u t
r e a l i z i n g t h a t i t was t o l o o k t o t h e e v i d e n c e
f o r r e a s o n a b l e c e r t a i n t y on t h e s u b j e c t . W e find
no e r r o r i n t h e i n s t r u c t i o n a s g i v e n . " (Emphasis
added. 1

The f i n a l i s s u e i s w h e t h e r t h e e v i d e n c e s u p p o r t e d a
under
j u r y i s s u e o n p u n i t i v e d a m a g e s , / s e c t i o n 27-1-221, MCA. We

have c a r e f u l l y r e v i e w e d t h e r e c o r d and f i n d s u f f i c i e n t

evidence t o j u s t i f y submission of t h e i s s u e of p u n i t i v e

damages t o t h e j u r y . I n K l i n d v. V a l l e y County Bank ( 1 9 2 4 ) ,

6 9 Mont. 386, 399, 222 P. 439, 4 4 4 , w e s t a t e d t h e g e n e r a l

r u l e r e s p e c t i n g p u n i t i v e awards:

" ' T o w a r r a n t t h e r e c o v e r y o f s u c h damages t h e a c t
c o m p l a i n e d o f must n o t o n l y be u n l a w f u l , b u t must
a l s o p a r t a k e somewhat o f a c r i m i n a l o r wanton n a t u r e .
And i t i s a n a l m o s t u n i v e r s a l l y r e c o g n i z e d r u l e t h a t
s u c h damages may b e r e c o v e r e d i n cases, and o n l y i n
s u c h c a s e s , where t h e w r o n g f u l a c t c o m p l a i n e d o f i s
c h a r a c t e r i z e d by some s u c h c i r c u m s t a n c e s of a g g r a -
v a t i o n a s w i l l f u l n e s s , wantonness, malice, oppres-
sion, brutality, i n s u l t , recklessness, gross negli-
g e n c e , o r g r o s s f r a u d on t h e p a r t of t h e d e f e n d a n t .
( 8 R.C.L. 585, 586.) ' "

W e f i n d the following f a c t s i n evidence j u s t i f i e d t h e

s u b m i s s i o n o f p u n i t i v e damages t o t h e j u r y u n d e r t h e " r e c k -

l e s s n e s s " s t a n d a r d o f K l i n d and s e c t i o n 27-1-221, MCA. The

Bank s e i z e d Graham's cows which c a r r i e d b r a n d s e s t a b l i s h i n g

p r i m a f a c i e o w n e r s h i p i n someone o t h e r t h a n t h e B a n k ' s

d e b t o r and moved them 30 m i l e s away. When Graham a t t e m p t e d

t o r e c o v e r h i s cows, t h e Bank a d a m a n t l y r e f u s e d t o d i v u l g e

t h e i r l o c a t i o n and r e t u r n e d h i s cows t o a p a s t u r e w i t h s i x

unregistered bulls. I n o u r o p i n i o n t h e r e was s u f f i c i e n t

evidence t o r a i s e an i s s u e f o r t h e j u r y ' s consideration.

T h i s c a u s e i s h e r e b y remanded f o r a new t r i a l i n a c -
W e concur:

'
.
/chief Justice
n

Justices