No. 84-99
I N THE SUPREME COURT O THE STATE O M N A J
F F O T TA
1985
MORRELL TRIBBY,
Plaintiff and R e s p o n d e n t ,
NORTHWESTERN BANK O GREAT
F
FALLS,
D e f e n d a n t and A p p e l l a n t .
APPEAL FROM: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f C a s c a d e ,
The H o n o r a b l e J o h n M. McCarvel, J u d g e p r e s i d i n g .
COUNSEL O RECORD:
F
For Appellant:
Church, H a r r i s , J o h n s o n & W i l l i a m s ; C h a r l e s C. Love11
a r g u e d , G r e a t F a l l s , Montana
F o r Respondent:
Anderson & S t r a u s e ; Howard S t r a u s e a r g u e d , G r e a t F a l l s ,
Montana
S a n d r a R. W a t t s , c o - c o u n s e l , G r e a t F a l l s , Montana
Submitted: F e b r u a r y 2 1 , 1985
Decided : August 5 , 1985
Filed:
Clerk
M r . J u s t i c e L. C. Gulbrandson d e l i v e r e d t h e Opinion o f the
Court.
Morrell Tribby f i l e d s u i t a g a i n s t Northwestern National
Bank of Great F a l l s ( h e r e i n a f t e r Norwest) on December 23,
1980, alleging that it wrongfully honored checks on a
partnership account without Tribby's required approval and
t h a t Norwest r e t a l i a t e d f o r t h e i n i t i a l s u i t by r e f u s i n g t o
make a u t o m a t i c l o a n a d v a n c e s on a p e r s o n a l a c c o u n t . The j u r y
verdict, following a trial in the fall of 1983, awarded
T r i b b y $119,890 c o m p e n s a t o r y and $1,000,000 p u n i t i v e damages
o n t h e f i r s t c l a i m and found f o r Norwest on t h e second c l a i m .
Norwest a p p e a l s t h e t r i a l c o u r t ' s r u l i n g on i t s o b j e c t i o n s t o
the j u r y p a n e l and j u r y s e l e c t i o n p r o c e s s and t h e judgment
and v e r d i c t on t h e f i r s t c l a i m . We affirm in part, reverse
i n p a r t and remand f o r a new t r i a l .
On December 8, 1972, Tribby and his nephew Edward
Anderson opened a checking account t o d e p o s i t monies from
t h e i r p a r t n e r s h i p and o t h e r j o i n t b u s i n e s s , i n t h e name o f
"Tribby-Anderson Land Account" w i t h Norwest. The s i g n a t u r e
card required both Tribby's and A n d e r s o n ' s s i g n a t u r e s on a
check before it would be honored by Morwest. The bank
statements were t o be sent t o an address i n Great Falls.
U n t i l 1 9 7 9 , Norwest o c c a s i o n a l l y honored c h e c k s t h a t d i d n o t
contain Tribby's signature. Tribby complained and as a
r e s u l t t h e s i g n a t u r e c a r d was a n n o t a t e d w i t h "Two S i g n a t u r e s
Required" i n red.
T r i b b y was t h e o n l y limited partner i n a partnership
w i t h Anderson, t h e general partner. The b u s i n e s s engaged i n
s p e c u l a t i o n , s u b d i v i s i o n and s a l e o f l a n d i n Montana. Tribby
and Anderson executed a formal partnership agreement
effective January 1, 1973. This agreement gave Anderson
managerial control, provided that either party could sign
checks on the partnership account and divided profits
equa 1 ly .
Norwest issued a new signature card at Anderson's
request in January 1979. The new card authorized the bank to
honor checks signed by either Anderson or his new wife,
Candy, and to send the statements to an address in Spokane,
Washington. Tribby's signature was not required according to
the new card. Norwest did not notify Tribby or obtain his
authorization to change the signature requirement or the
address. Although the partnership agreement permitted
one-party signatures on checks, the bank employ~eswho issued
the new card were not aware of the agreement or its contents.
In July 1979, when Tribby went to Norwest on another
matter, a vice-president informed him his signature was not
required to authorize withdrawals on the account but did not
tell him about the new card. Tribby disagreed and told the
vice-president that no check should be honored without his
signature. Later in the fall of 1979, Tribby spoke with
another vice-president about checks being honored without his
signature and was informed that Norwest would not change its
policy of honoring checks signed only by Anderson. In
November 1979, Tribby's attorney wrote to Norwest and
instructed them not to honor checks unless signed by Tribby.
Norwest responded by stating the signature card required only
one signature and that it would not be changed unless a
change was requested in writing by both parties. Tribby and
his wife went to the bank in January 1980 and requested a
copy of the signature card. They were told the card was
lost. When they returned later that same day a different
vice-president produced both signature cards. This was
Tribby's first notice that a new card had been issued. At
this time Norwest stopped honoring checks containing only one
signature.
Tribby sued Anderson in March 1980 alleging wrongful
withdrawal of monies from partnership accounts, conversion of
partnership property and fraud in withdrawing the funds and
inducing Norwest to issue a new signature card. Tribby sued
Norwest in December 1980 alleging Norwest failed to exercise
ordinary care in issuing a new signature card, wrongfully
honored checks without Tribby's signature and wrongfully
failed to cease honoring checks after being notified to do
so.
Following Tribby's suit, Norwest affected Tribby's
credit status by placing an outstanding loan to him on a
"watch list." The bank refused to renew a loan that had been
renewed annually for several years. It also cancelled his
ready reserve account which had permitted Tribby and his wife
to write checks exceeding the balance in their account. The
checks would then be covered by the bank as a loan. In a
letter informing Tribby that the account was cancelled,
Norwest stated the account was overextended although, at the
time, the balance on the account had been paid off. In
addition, Norwest refused to pay severa 1 items presented
before Tribby was notified that the account had been
restricted or cancelled.
Norwest answered the complaint and filed a third party
complaint against Anderson and his wife on June 16, 1981.
This complaint alleged that Anderson had directed Norwest to
accept a new signature card in accordance with his authority
contained in the partnership agreement and that the Andersons
were primarily liable for any loss sustained by Tribby.
Norwest also made a motion to dismiss Tribby's complaint and
to consolidate Tribby's suit against Anderson with the suit
against Norwest. Tribby filed a motion to dismiss the third
party claim. Following the submission of briefs and a
hearing, the District Court granted Tribby's motion to
dismiss the third party claim and denied Norwest's motions to
dismiss and consolidate the claims on October 7, 1982.
The case first came to trial on September 26, 1983.
The District Court agreed to Tribby's request to disqualify
for cause any prospective juror who had an account with
Norwest pursuant to section 25-7-224 (3), MCA (1981). When
the judge asked how many of the potential jurors were
customers of the bank, most panel members raised their hands.
He then concluded that a new panel would be required in order
to get a jury and commented that "as the clerks calls the
jurors, I will have to ask them that question, because it
looks like three-quarters of the jurors in this case are
customers of that bank." Later that day the attorneys for
Norwest discovered that effective October 1, 1983, the
statute had been amended so that the debtor-creditor
relationship could no longer be invoked as a challenge for
cause solely because a prospective juror is a depositor of
funds with a bank. The court and opposing counsel were both
notified but the court and the parties had no further
discussions on questioning the jurors.
After the trial had been reset for November 1-4, 1983,
Tribby's attorney advised a deputy clerk that she was to ask
prospective jurors whether they had any business with Norwest
other than a savings or checking account. The clerk checked
with the judge, who told her to follow the procedure set out
in the statute concerning excusing jurors for cause. When
the deputy clerks telephoned prospective jurors they
identified Norwest as a party; asked each prospective juror
whether they had transactions or business other than savings
or checking accounts with Norwest; excused those who said
they had transactions or business with Norwest other than
deposits; excused prospective jurors who claimed to be ill,
infirm or going on vacation; and excused one person who did
n o t h a v e an a c c o u n t a t Norwest b u t s a i d s h e w.~asa f r i e n d o f
t h e bank p r e s i d e n t ' s wife. T h i s was done w i t h o u t n o t i c e t o
o r p a r t i c i p a t i o n by c o u n s e l f o r Norwest. The j u d g e denied
Norwest's objections to the jury panel and jury selection
p r o c e s s and t h e c a s e p r o c e e d e d t o t r i a l on November 1 4 , 1 9 8 3 .
The s e v e n i s s u e s p r e s e n t e d by Norwest on a p p e a l a r e :
(1) Was t h e j u r y p a n e l s e l e c t e d c o n t r a r y t o law and i n
violation of Norwest's right t o t r i a l by a r e p r e s e n t a t i v e ,
f a i r and i m p a r t i a l j u r y ?
( 2 ) Did t h e D i s t r i c t C o u r t e r r i n d e n y i n g Norwest t h e
o p p o r t u n i t y t o p r e s e n t e v i d e n c e on t h e c a u s e and e x t e n t o f
T r i b b y ' s c l a i m e d damages?
(3) Did the District Court err in failing to give
e f f e c t t o t h e Tribby-Anderson p a r t n e r s h i p r e l a t i o n s h i p which
would r e q u i r e d i s m i s s a l o f t h i s a c t i o n ?
( 4 ) Did t h e t r i a l c o u r t e r r i n p e r m i t t i n g t h e j u r y t o
c o n s i d e r r e c o v e r y u n d e r "bad f a i t h " t o r t p r i n c i p l e s ?
( 5 ) Did t h e D i s t r i c t C o u r t i m p r o p e r l y a l l o w T r i b b y t o
amend h i s t h e o r y o f t h e c a s e and damages on t h e e v e o f t r i a l
t o t h e p r e j u d i c e o f Norwest?
(6) Were the damages erroneous, excessive and the
r e s u l t o f p a s s i o n and p r e j u d i c e ?
( 7 ) Was t h e p r e p a r a t i o n of a " C e r t i f i e d Supplemental
Record" by t h e D i s t r i c t C o u r t a n a b u s e o f d i s c r e t i o n ?
The jury panel selection i s s u b j e c t t o two s e p a r a t e
inquiries. The f i r s t , a p r o c e d u r a l i n q u i r y , i s w h e t h e r t h e r e
was a m a t e r i a l d e v i a t i o n o r d e p a r t u r e from t h e s t a t u t e s on
jury selection. The second, a substantive inquiry, is
w h e t h e r t h e p a r t i e s had a t r i a l b e f o r e a f a i r and i m p a r t i a l
jury. R e v e r s i b l e e r r o r c a n o c c u r on e i t h e r q u e s t i o n .
Norwest c o n t e n d s t h a t t h e j u r y p a n e l s e l e c t i o n p r o c e s s
u s e d i n t h i s c a s e m a t e r i a l l y d e v i a t e d from t h r e e s t a t u t e s o r
rules. Rule 47(a) M.R.Civ.P. requires the court to try
c h a l l e n g e s f o r c a u s e and t o p e r m i t e x a m i n a t i o n o f p r o s p e c t i v e
jurors. Subdivision (b) o f that rule requires an initial
p a n e l b e drawn b e f o r e any v o i r d i r e e x a m i n a t i o n o f t h e j u r y .
Here, the clerks examined the prospective jurors using
questions given to them by Tribby's counsel without any
notice to counsel for Norwest. The clerks released
prospective jurors from jury d u t y based on a n s w e r s t o the
questions, thus excusing them for cause without notice to
opposing counsel o r a r u l i n g by t h e court. Finally, this
questioning took p l a c e before an i n i t i a l p a n e l was c a l l e d .
These a c t i o n s m a t e r i a l l y d e v i a t e from R u l e 47 M.R.Civ.P. on
t h e examination o f j u r o r s i n t h a t t h e c l e r k s r a t h e r than t h e
court took these actions and they occurred prior to the
c a l l i n g of an i n i t i a l panel.
Section 3-15-313, MCA, allows the court, or jury
commissioner (here t h e c l e r k ) with t h e approval of t h e c o u r t ,
to excuse prospective jurors if jury s e r v i c e would entail
undue hardship. The record does not indicate, with one
possible exception, which, if any prospective jurors were
excused for undue hardship. The r e c o r d does i n d i c a t e t h e
clerk excused jurors because of their relationship with
Norwest w i t h o u t t h e a p p r o v a l o f the court. This a c t i o n i s
o u t s i d e t h a t p e r m i t t e d by s e c t i o n 3-15-313, MCA.
S e c t i o n 25-7-223, MCA s t a t e s t h a t c h a l l e n g e s f o r c a u s e
may be t a k e n f o r a d e b t o r - c r e d i t o r r e l a t i o n b u t n o t when t h a t
relation arises solely because a prospective juror is a
depositor of funds with a bank or similar financial
institution. The s t a t u t e i s d i s c r e t i o n a r y on i t s f a c e ; it i s
e x e r c i s a b l e o n l y by t h e judge n o t t h e c l e r k . The p a r t i e s may
r a i s e a challenge f o r cause, s e c t i o n 25-7-221, MCA, o r may
w a i v e i t , 47 Am.Jur.2dI J u r y , S328. Thus, even t h e e x i s t e n c e
of t h e debtor-creditor r e l a t i o n does not d i s q u a l i f y a j u r o r
under this statute unless a party raises a challenge for
cause to the court. The court, not a clerk, must then
determine whether the relation is that of a mere depositor of
funds with a bank and not sufficient for a challenge for
cause or whether it is a "non-depositor" relation which
satisfies the requirement. In this case the clerks inquired
about the prospective juror's relation to Norwest and
dismissed them on the basis of their answers, thus
effectively acting without a challenge by a party, outside
the presence of opposing counsel and dismissing jurors for
cause. This alone is a violation of statute. Further, the
questions asked of prospective jurors, whether they had
business or transactions with Norwest, did not address the
proper basis for such a challenge. Numerous types of
non-creditor relations fit within the term "transacting
business," such as escrow, trustee account, safety deposit
box holder, or conducting business for an employer. Jurors
were dismissed for these non-creditor relations as well.
This action is beyond the authority of a clerk acting as a
jury commissioner.
Prior Montana case law indicates statutory violations
of selection. procedures require reversal of tb.e verdict. In
Dvorak v. ,
Huntley Project Irrigation District (3.981) 196
Mont. 167, 639 P.2d 62, this Court reversed a verdict where
the departures from procedures were removal of paper slips
rather than capsules from the box, failure of the clerk to
shake the box before names were drawn, placement of names in
a list not drawn by lot, and drawing names outside the
presence of the district judge. See also Solberg v. County
of Yellowstone (Mont. 1983), 659 P.2d 290, 40 St.Rep. 308.
In Dvorak, 639 P.2d at 64, we cited State v. Fitzpatrick
(1977), 174 Mont. 174, 180, 569 P.2d 383, 389, where the
clerk performed duties delegated to the jury commissioner and
judge without supervision, and stated ll[t]he rule in Montana
is that juries must be selected and drawn in substantial
c o m p l i a n c e w i t h t h e law. " (Citations omitted. ) Even where
t h e o n l y d e v i a t i o n was t h a t some o f t h e numbered s l i p s of
p a p e r w e r e n o t e n c l o s e d i n c a p s u l e s a s r e q u i r e d by s t a t u t e ,
t h i s C o u r t h e l d t h a t s u b s t a n t i a l c o m p l i a n c e w i t h s t a t u t e s was
r e q u i r e d and
"[alny material deviation o r departure is
a d e n i a l o f fundamenta 1 c o n s t i t u t i o n a 1
rights. S t a t e v. Groom, 49 Mont. 354,
359, 4 1 4 Pac. 858; S t a t e v. T i g h e , 27
Mont. 327, 71 Pac. 3.
"It is not t h e r i g h t of t h e individual
necessarily involved, but rather the
e n t i r e jury s y s t e m and t h e s e l e c t i o n
p r o c e d u r e s which must b e p r o t e c t e d , and
when a showing i s t i m e l y b r o u g h t b e f o r e
t h i s c o u r t w e would b e remiss i n o u r
d u t i e s i f we permitted material d e v i a t i o n
o r d e p a r t u r e from t h e p r o c e d u r e s s p e l l e d
o u t by t h e legislature." S t a t e v.
D i s t r i c t C o u r t o f S i l v e r b o w County ( c i t e d
i n Mont.Rpt. a s S t a t e e x r e l . Henningsen
v . D i s t r i c t C o u r t ) ( 1 9 5 9 ) , 136 Mont. 354,
360, 348 P.2d 1 4 3 , 146.
The c a s e s c i t e d by T r i b b y d o n o t support allowing a
verdict to stand when there is a material deviation or
d e p a r t u r e from t h e j u r y s e l e c t i o n p r o c e d u r e s s e t by s t a t u t e .
I n S t a t e v. Coleman ( 1 9 7 8 ) , 177 Mont. 1, 579 P.2d 732, the
d e f e n d a n t c o n t e n d e d t h a t t h e c l e r k e x c u s e d some j u r o r s for
s l i g h t o r t r i v i a l . causes. This Court s t a t e d t h a t t h e record
d i d n o t i n d i c a t e t h e c l e r k had e x c u s e d a n y j u r o r s , and h e l d
that the jury had been selected in substantial compliance
w i t h t h e s t a t u t e s , Coleman 579 P.2d a t 747. The o t h e r c a s e s ,
d i s c u s s e d below, d e a l o n l y w i t h t h e s e c o n d i n q u i r y on t h i s
i s s u e , w h e t h e r a f a i r and i m p a r t i a l j u r y p a n e l was s e l e c t e d ,
and d o n o t d i s c u s s v i o l a t i o n s o r m a t e r i a l d e v i a t i o n s from t h e
statutes.
The purpose of the jury selection statutes is to
p r o v i d e random s e l e c t i o n o f jurors from t h e e n t i r e p a n e l o r
array, Dvorak, 639 P.2d at 64, thus securing a fair and
impartial jury. The jury composition may be found
fundamentally unfair for reasons other than a failure to
comply with the selection statutes, such as purposeful
d i s c r i m i n a t i o n i n s e l e c t i o n because o f r a c e o r p e r m i t t i n g a
j u r o r who h a s a b i a s o r p r e j u d i c e t o h e a r a c a s e . Norwest
c o n t e n d s t h a t t h e j u r y i n t h i s c a s e was n o t i m p a r t i a l b e c a u s e
a s i g n i f i c a n t group, t h o s e having business o r transactions
w i t h Norwest, was e x c l u d e d . However, t h e a u t h o r i t y c i t e d f o r
t h i s proposition, S t a t e v . T a y l o r ( 1 9 7 5 ) , 168 Mont. 1 4 2 , 542
P.2d 100, discusses the s t a t u t e s on selection of the jury
a r r a y a s u n c o n . s t i t u t i o n a 1 because o f d i s c r i m i n a t i o n based on
s o c i a l o r i g i n o r condition. Norwest's c h a l l e n g e i s d i r e c t e d
a t t h e s e l e c t i o n o f t h e j u r y p a n e l r a t h e r t h a n t h e a r r a y and
does not address the constitutionality of any statute.
Further, t h e c l a s s o f people excluded does n o t c o n s t i t u t e a
cognizable group of constitutional dimensions. Thus, the
analysis i n Taylor is not applicable t o t h e present case.
The nature of the relationship between prospective
j u r o r s and Norwest g o e s d i r e c t l y t o w h e t h e r t h e j u r o r may b e
challenged f o r cause. Assuming t h e r e had b e e n no s t a t u t o r y
violations, t h e q u e s t i o n would b e w h e t h e r Norwest had b e e n
prejudiced by the dismissal of jurors because of their
association with Norwest. In Ehni v. Northern Pacific
Railway Co. ( 1 9 6 9 ) , 152 Mont. 373, 450 P.2d 882, w e h e l d t h a t
t h e r e was no p r e j u d i c i a l e r r o r where a judge had d i s m i s s e d
f o u r j u r y members b e c a u s e o f d i r e c t o r i n d i r e c t a s s o c i a t i o n s
with a party. Justice Haswell, writing for the Court
stated:
" L i t i g a n t s a r e n o t e n t i t l e d t o have t h e i r
c a s e s t r i e d b e f o r e any p a r t i c u l a r j u r o r s
s e l e c t e d from t h e p a n e l ; t h e i r r i g h t i s
t o r e j e c t , n o t s e l e c t ; and l i t i g a n t s '
r i g h t s a r e s u f f i c i e n t l y protected i f they
s e c u r e a f a i r and i m p a r t i a l j u r y drawn i n
t h e manner p r o v i d e d by law." (Citations
omitted.) 450 P.2d a t 885.
In this case, Norwest could not argue that the jury selected
was not fair and impartial since they passed the jury for
cause: They could only argue that certain panel. members
should have been on the jury. Montana case law has
consistently held that a party has no right to have a
particular member of a panel sit on a case. State v. Moran
(1963), 142 Mont. 423, 384 P.2d 777 and State v. Huffman
(1931), 89 Mont. 194, 296 P. 789. Thus, without the
statutory violations, there would have been no reversible
error in the jury selection process.
The second issue concerns rulings made by the District
Court on the failure to consolidate Tribby's claims against
Anderson and Norwest and the dismissal of Norwest's third
party complaint against Anderson. Norwest contends that
these actions by the District Court, in addition to the
exclusion of Tribby ' s tax returns and financial statements,
of his refusal to accept an offer of compromise and of his
contributory negligence, prevented the jury from knowing the
true cause and extent of Tribby's damages.
We first address Norwest's contention that Tribby's
claims against Anderson and Norwest should have been
consolidated pursuant to Rule 42 (a), M.R.Civ.P. That Rule
provides that claims involving a common question of law or
fact may be consolidated or any of the issues may be tried
jointly. Consolidation, particularly when denied, rests in
the discretion of the court and will not be overturned absent
a clear abuse of discretion. St. George v. Boucher (1929),
84 Mont. 158, 274 P. 489. Although there were some similar
issues in both cases and consolidation may have been
appropriate, we hold the District Court did not abuse its
discretion by denying the motion to consolidate.
Norwest added the partnership and Anderson as third
party defendants in order to try together those issues where
Tribby claimed the same damages against them. Norwest
a l l e g e d c o n t r a c t u a l indemnity based on t h e l a n g u a g e o f the
signature card as the basis for relief. The trial court
dismissed t h e t h i r d p a r t y complaint without indicating the
reasons for the dismissal. While permitting the third
p a r t i e s t o r e m a i n i n t h i s c a s e would n o t h a v e been e r r o r , t h e
trial court did not abuse i t s d i s c r e t i o n by t h i s a c t i o n .
The D i s t r i c t C o u r t r u l e d t h a t t h e c o n t e n t s o f T r i b b y ' s
tax returns for t h e years 1973-78 and f i n a n c i a l s t a t e m e n t s
f o r t h e y e a r s 1973-79 w e r e n o t r e l e v a n t t o e s t a b l i s h i n g t h e
damages t o T r i b b y . The m a j o r i t y rule, referred t o as the
"collateral source rule," is that "benefits received by a
plaintiff from a s o u r c e w h o l l y i n d e p e n d e n t of and c o l l a t e r a l
to the wrongdoer will not diminish the damages otherwise
recoverable from the wrongdoer." 22 Am.Jur.2d1 Damages,
$206. This Court applied the rule i n Goggans v. Winkley
(1972) , 159 Mont. 85, 495 P. 2d 594, where the defendant
contended that plaintiff's testimony r e g a r d i n g damages was
s p e c u l a t i v e and conjectural. D e f e n d a n t a r g u e d t h a t h e was
prejudiced when t h e c o u r t d i d n o t a d m i t e v i d e n c e r e g a r d i n g
f u t u r e d e v e l o p m e n t n e a r t h e p r o p e r t y i n d i s p u t e which would
i n c r e a s e i t s v a l u e f o r r e s a l e and t h u s m i t i g a t e damages. We
h e l d t h a t t r a n s a c t i o n s between t h e p l a i n t i f f and o t h e r s was
collateral, inadmissible evidence under t h i s r u l e . Tribby's
t a x r e t u r n s and p e r s o n a l financial statements r e f l e c t other
transactions. Tribby's financial gain from t h e s a l e of a
r a n c h and i t s l a t e r r e p o s s e s s i o n shown i n t h o s e documents was
income o r p r o f i t t h a t had no r e l a t i o n t o t h i s c a u s e o f a c t i o n
and t h e c l a i m e d damages. The r e c o r d d o e s n o t show t h a t h i s
i n c r e a s e i n n e t w o r t h was r e l a t e d t o o r d e p e n d e n t on a c t i o n
attributable to Norwest. Profit from a collateral
t r a n s a c t i o n o r an o v e r a l l i n c r e a s e i n T r i b b y ' s n e t w o r t h d o e s
n o t mean h e s u f f e r e d no damage a t t h e h a n d s o f Norwest. We
therefore hold that the District Court properly excluded the
tax returns and financial. statements insofar as they
reflected collateral benefits.
Norwest attempted to introduce evidence showing they
had offered Tribby the amount of the checks drawn by Anderson
plus an additional sum of $4,000 in return for dismissing his
lawsuit. According to Rule 408 M.R.Evid., offers of
compromise are "not admissible to prove liability for or
invalidity of the claim or its amount," but exclusion is not
required if the evidence is offered for another purpose. An
offer to compromise is not admissible when made in an attempt
to effect a settlement. Continental Oil Co. v. Bell (1933),
94 Mont. 123, 21 P.2d 65. Norwest argues the offer is
admissible to show that Tribby failed to mitigate damages and
that Norwest did not seek to act in an oppressive or
retaliatory fashion. We are not persuaded by the contention
that refusing an offer to settle is a failure to mitigate
damages and we find no direct authority for that proposition.
Nor are we persuaded that an offer to compromise shows a
prior intent or lack of intent to act in a particular
fashion. Admitting this evidence would go against the basic
policy of Rule 408 M.R.Evid, which is to encourage
compromises and settlement of disputes. Neither party should
have to fear that what takes place during negotiations will
be used against them at trial. The District Court properly
excluded the offers made to Tribby by Norwest.
The District Court refused to give Norwest's offered
jury instruction on the duty of a depositor to examine
statements and report errors within a reasonable time.
Norwest argues that Tribbyls negligence in not reviewing the
statements was a defense that should have been submitted to
the jury. Section 30-4-406, MCA requires the customer to use
reasonable care to examine statements sent to him and notify
the bank promptly of his unauthorized signature or
alterations. In the case a t bar, the statements w e r e not
sent to Tribby and there was no question as to his
unauthorized signature o r a l t e r a t i o n s . S e c t i o n 30-4-406, MCA
i s n o t a u t h o r i t y f o r t h e o f f e r e d i n s t r u c t i o n and t h e J u d g e
properly refused t o g i v e it. W e t h e r e f o r e do n o t r e a c h t h e
question raised by Norwest of the extent to which the
negligence o f Tribby, i f any, can be a defense t o h i s claim
on t h e t o r t o f b r e a c h o f a d u t y o f good f a i t h .
In the third issue, Norwest contends that Tribby's
action should have been dismissed because the partnership
agreement a u t h o r i z e d Norwest's a c t i o n s , he lacked s t a n d i n g t o
sue s i n c e t h e cause of a c t i o n was a p a r t n e r s h i p a s s e t , and
T r i b b y r e l e a s e d h i s c l a i m a g a i n s t Norwest when h e r e a c h e d a
s e t t l e m e n t w i t h Anderson.
On t h e f i r s t c o n t e n t i o n , Norwest a r g u e s t h e t r i a l c o u r t
erroneously precluded it from presenting evidence that
Anderson represented to Norwest that he had authority to
change t h e s i g n a t u r e c a r d . The t r i a l c o u r t r e f u s e d t o a d m i t
Anderson's testimony, a l e t t e r from him t o Norwest o n t h i s
point and that portion of the partnership agreement
a u t h o r i z i n g Anderson t o w r i t e c h e c k s . This i s similar t o t h e
second i s s u e i n t h a t Norwest was p r e v e n t e d from p r e s e n t i n g t o
the jury its theory on its authority to act and the
reasonableness of its action when confronted with two
disagreeing parties. This evidence was relevant to a
disputed issue of fact at trial, the extent of Norwest's
a u t h o r i t y , and s h o u l d n o t have been e x c l u d e d .
Norwest also asserts that Tribby's complaint should
have been dismissed because the partnership agreement
authorized its action. Dismissal i s proper i f t h e p l a i n t i f f
c a n p r o v e no s e t o f f a c t s t h a t would e n t i t l e him t o r e l i e f .
Rule 4 1 ( b ) , M.R.Civ.P. A j u r y may c h o o s e t o f i n d Norwest d i d
not have authority to act as it did. The trial court
correctly refused to dismiss Tribby's complaint on this
basis.
Tribby's cause of a c t i o n arose, i n p a r t , from N o r w e s t ' s
breach of t h e t e r m s of the signature card of t h e checking
account. T h i s a c c o u n t was opened p r i o r t o t h e t i m e T r i b b y
and Anderson set up their partnership. As noted above,
dismissal i s a p p r o p r i a t e o n l y when no s e t o f f a c t s can be
p r o v e d t h a t would e n t i t l e a p l a i n t i f f to relief, O these
n
facts Tribby could show his cause of action was not a
partnership asset, therefore the District Court properly
r e f u s e d t o d i s m i s s T r i b b y ' s c o m p l a i n t on t h i s b a s i s a s w e l l .
The final contention Norwest raises in this issue
c o n c e r n s w h e t h e r T r i b b y r e l e a s e d h i s c l a i m a g a i n s t Norwest by
reaching a settlement agreement with Anderson. Tribby's
claims a g a i n s t Norwest a r e n o t based e n t i r e l y on t h e same
c o n d u c t a s h i s c l a i m s a g a i n s t Anderson e v e n t h o u g h some of
t h e r e s u l t i n g damages may a r i s e from t r a n s a c t i o n s i n v o l v i n g
both of them. In addition, even assuming Norwest and
Anderson w e r e j o i n t t o r t f e a s o r s , a n y r e l e a s e o f Anderson may
specifically exclude Norwest by its terms. Kussler v.
Burlington Northern, Inc. ( 1 9 8 0 ) , 186 Mont. 8 2 , 606 P.2d 5 2 0 .
Nothing in the record indicates either a release or a
n o n - r e l e a s e o f Norwest.
A t t h e t i m e Norwest f i r s t a r g u e d a g a i n s t e x t e n d i n g bad
f a i t h t o r t p r i n c i p l e s t o t h i s commercial a r e a , t h i s C o u r t had
not decided F i r s t National Bank i n L i b b y v . Twombly (Mont.
1 9 8 4 ) , 689 P.2d 1226, 4 1 St.Rep. 1948. In t h a t case, the
bank c u s t o m e r a l l e g e d t h a t t h e bank a c t e d i n bad f a i t h when
it a c c e l e r a t e d an i n d e b t e d n e s s and o f f s e t t h e amount a g a i n s t
t h e i r checking account. The j u r y found b o t h a b r e a c h o f t h e
b a n k ' s good f a i t h o b l i g a t i o n and f a l s e r e p r e s e n t a t i o n s by t h e
bank t o t h e c u s t o m e r . This Court held t h a t t h e s e f i n d i n g s ,
along with the bank's possible reckless disregard of the
customer's rights, would justify submitting the question of
punitive damages to the jury. This Court also noted that the
bank's relationship to its debtors, in light of its conduct,
could justify an imposition of punitive damages. Although
Twombly presented a "unique fact situation," 689 P.2d at
1230, many of the same factors may be present in the case at
bar that would permit the jury to consider punitive damages.
Here, the jury heard evidence on the bank's conduct that
might support a finding of reckless disregard for Tribby's
rights; the bank stands in the position of superior
bargaining power to its customer that was noted in Twombly;
and the evidence might support a finding that the bank
breached an obligation to Tribby. We are not holding that
every contract or statutorily imposed obligation, alone,
carries with it an implied covenant of good faith and fair
dealing, the breach of which permits recovery in tort. ll
ie
hold only that the District Court, under these circumstances,
did not err when it instructed the jury to consider recovery
under tort principles and, accordingly, punitive damages.
The fifth issue concerns the proposed supplemental jury
instructions Tribby submitted on November 10, 1983, the last
court day before trial began. Norwest objected and moved for
a continuance contending that these were, in effect,
amendments to the pleadings containing new legal theories and
prejudicial to its case. The court ruled there was no
amendment to the pleadings and following the presentations of
both sides, gave the offered instructions on breach of an
implied duty of good faith and emotional damages. The
g r a n t i n g o f a new t r i a l f o r t h e r e a s o n s s t a t e d i n i s s u e ( I ) ,
negates any prejudice to Norwest from unexpected jury
i n s t r u c t i o n s on new t h e o r i e s .
Norwest r e q u e s t e d a new t r i a l on t h e g r o u n d s t h a t t h e
jury v e r d i c t was excessive and the r e s u l t of passion and
prejudice. See s e c t i o n 25-11-lO2(5), MCA. It a l s o asked
that the "Certified Supplemental Record1' p r e p a r e d by the
District C o u r t J u d g e on May 15, 1984 b e removed from t h e
record. W e d e c l i n e t o r u l e on t h e l a s t two i s s u e s f o r t h e
r e a s o n t h a t t h e new t r i a l g r a n t e d on t h e f i r s t i s s u e r e n d e r s
t h e s e q u e s t i o n s moot.
The d e c i s i o n s o f t h e D i s t r i c t C o u r t a r e h e r e b y a f f i r m e d
i n p a r t , r e v e r s e d i n p a r t and t h e c a s e i s remanded f o r a new
--
Justices
Mr. J u s t i c e Frank B. M o r r i s o n , J r . , d i s s e n t i n g :
I respectfully dissent t o the majority's treatment of
the jury selection issue. I would a f f i r m .
The f a c t s s t a t e d i n t h e m a j o r i t y o p i n i o n need a m p l i f i -
cation. A certified supplemental record, consisting of an
a f f i d a v i t from t h e t r i a l j u d g e , sets f o r t h t h e c o r r e c t f a c t s
with respect t o t h e jury selection process. Because I deem
them e s s e n t i a l , I q u o t e t h a t a f f i d a v i t v e r b a t i m :
" I , J O H N M. McCARVEL, J u d g e o f t h e D i s t r i c t C o u r t
of t h e Eighth J u d i c i a l District of t h e S t a t e of
Montana, h e r e b y c e r t i f y t h a t a f t e r t h e j u r y p a n e l
i n t h e a b o v e - e n t i t l e d m a t t e r was e x c u s e d f o r c a u s e
on September 26, 1 9 8 3 , I made c e r t a i n s t a t e m e n t s
c o n c e r n i n g t h e p r o c e d u r e t o be f o l l o w e d by t h e
C l e r k o f C o u r t when a t t e m p t i n g t o a s s e m b l e t h e n e x t
jury panel f o r t h i s cause. I stated t h a t I did not
want t o have t h e same problem a r i s e a g a i n and t h e n
i n s t r u c t e d t h e C l e r k t h a t when s h e a t t e m p t e d t o
telephone t h e prospective j u r o r s a t t h e t i m e of t h e
n e x t t r i a l , s h e was t o i n q u i r e o f t h e p r o s p e c t i v e
j u r o r s a s t o t h e i r r e l a t i o n s h i p , i f any, with t h e
D e f e n d a n t Bank. A t the t i m e I so instructed the
C l e r k , I d i d s o from t h e b e n c h w h i l e a t t o r n e y s f o r
b o t h p a r t i e s , t h e C l e r k o f C o u r t , and t h e C o u r t
R e p o r t e r were s t i l l p r e s e n t . When I g a v e t h a t
i n s t r u c t i o n t o t h e C l e r k , I d i d s o i n a v o i c e loud
enough t o b e h e a r d by a l l t h o s e p r e s e n t i n t h e
Courtroom. A t t h e t i m e I gave t h a t i n s t r u c t i o n t o
t h e C l e r k , none o f t h e a t t o r n e y s p r e s e n t o b j e c t e d
t o the instruction t o quiz t h e prospective jurors
a s t o t h e i r r e l a t i o n s h i p w i t h t h e D e f e n d a n t Rank
n o r d i d any a t t o r n e y e v e r o b j e c t t o t h a t i n s t r u c -
tion. A t no t i m e on September 26, 1983 o r a t any
t i m e t h e r e a f t e r d i d I e v e r t e l l any o f t h e a t t o r -
neys f o r e i t h e r o f t h e p a r t i e s t h a t I intended t o
r e s c i n d my i n s t r u c t i o n t o t h e C l e r k o f C o u r t .
"DATED t h i s 15 d a y o f May, 1984.
J O H N M. McCARVEL
D i s t r i c t Court Judge"
It is true that the statutory change in
5 2 5 - 7 - 2 2 3 ( 3 ) ( b ) , MCA, made it c l e a r t h a t a d e p o s i t o r r e l a -
tionship with Bank did not mandatorily disqualify a juror
from s i t t i n g i n a c a s e i n v o l v i n g Bank. However, t h e d i s t r i c t
judge was s t i l l f r e e t o d e t e r m i n e t h a t t h o s e i n s u c h a c l o s e
r e l a t i o n s h i p w i t h Bank would not be allowed to s i t on t h e
panel. The D i s t r i c t C o u r t h e r e was a c t i n g p r o p e r l y i n i n -
s t r u c t i n g t h e c l e r k t o d i s q u a l i f y s u c h p e o p l e from t h e p a n e l
and, absent a showing o f prejudice by Bank, the remaining
p a n e l would n o t b e o b j e c t i o n a b l e on t h e b a s i s t h a t d e p o s i t o r s
w e r e excluded.
Even if we assume arguendo t h a t t h e r e was some e r r o r
t h a t o c c u r r e d when t h e c l e r k e x c u s e d c e r t a i n j u r o r s , revers-
i b l e e r r o r does n o t r e s u l t , o r a t l e a s t d i d not under p r i o r
r u l i n g s o f t h i s Court.
I n S t a t e v. Moran ( 1 9 6 3 ) , 142 Mont. 423, 384 P.2d 777,
t h i s Court held t h a t t h e a b s e n c e o f c e r t a i n members o f t h e
j u r y panel- a t t h e t i m e v o i r d i r e was c o n d u c t e d and t h e j u r y
selected, did not constitute reversible error. The Court
noted t h a t i f t h e r e was e r r o r , t h e e r r o r had n o t h i n g t o do
with the original acquisition of the panel and therefore
p r e j u d i c e had t o b e shown. The Moran d e c i s i o n c i t e d S t a t e v.
Huffman ( 1 9 3 1 ) , 89 Mont. 1 9 4 , 1 9 8 , 296 P. 789, 790, for t h e
proposition that:
"The r i g h t t o c h a l l e n g e i s t h e r i g h t t o r e j e c t , n o t
t o s e l e c t , a j u r o r ; no p e r s o n c a n a c q u i r e a v e s t e d
r i g h t t o h a v e a n y p a r t i c u l a r member o f a p a n e l s i t
uwon h i s c a s e u n l e s s and u n t i l s u c h member h a s b e e n
a c c e p t e d and sworn. P r e j u d i c e - -t presumed from
is no
error. ... " (Emphasis s u p p l i e d . ) 1 4 2 Mont. a t
447, 384 P.2d a t 790.
Likewise, in Ehni v. Northern Pacific Railway Co.
(1969) , 1 5 2 Mont. 373, 450 P.2d 882, w e h e l d t h a t where a
j u d g e d i s m i s s e d f o u r j u r y members, after voir dire, because
of their a s s o c i a t i o n w i t h one o f the parties, t h e r e was no
prejudicial error absent a showing t h a t t h e r e s u l t a n t jury
was a n y t h i n g b u t f a i r and i m p a r t i a l .
I n t h e c a s e a t b a r t h e m a j o r i t y concedes t h a t a p p e l l a n t
has failed to show t h a t the impaneled j u r y was defective.
Therefore, i n l i n e with p r i o r precedent, no r e v e r s i b l e e r r o r
s h o u l d be found.
Common p r a c t i c e i n Montana h a s been for the jurors to
f i l e i n , t a l k w i t h t h e t r i a l j u d g e and b e e x c u s e d . From t i m e
t o t i m e o b j e c t i o n s t o t h i s p r o c e d u r e h a v e been lodged. The
most recent case concerning this practice is State v. Stroud
(Mont. 1984), 683 P.2d 459, 41 St.Rep. 919. In that case the
trial court, in the absence of counsel and prior to voir dire
examination, excused two prospective jurors. Defendant
claimed error on appeal. Justice Gul brandson, writing for
the majority said:
"In reaching this conclusion, we are not suggesting
that the trial judge's essentially educational
examination should bb adopted by other district
judges. Nor are we suggesting that the judge's
method of examination was the best one. Certainly
a record of any such proceedings should be main-
tained. Here, -we conc-lude only that there is no
credible evidence - nreiudice to the defeydaz
of
Stroud.I' (Emphasis sup41ieh. ) ~ t z u d ,
683 P. 2d at
464, 41 St.Rep. at 924.
In State v. Coleman (1978), 177 Mont. 1, 579 P.2d 732,
200 jurors were drawn according to statute. However, the
District Court clerk was then allowed to inquire by telephone
regarding which of those jurors would be available for trial.
The District Court clerk excused 139 jurors and selected 61
who apparently answered they would be available. There was
no statutory authority for the District Court clerk to so
act. There is no record of why the clerk selected the 61
jurors who eventually were called to the courthouse. While
the majority opinion in Coleman is quite unclear in its
treatment of this issue, the Court apparently found no error
because Coleman was unable to show prejudice.
A case quite analogous to the case at bar is Kinty v.
United Mine Workers of America (4th Cir. 1976), 544 F.2d 706.
In that case the trial judge, approximately two and one-half
weeks prior to trial, advised all parties he was instructing
the clerk to inquire of the prospective jurors whether they
had any "connection with the mining industry" and to remove
from the jury list any who answered in the affirmative.
In commenting on that action, the Fourth Circuit stated:
"Even were the objection not out of time, we are by
no means convinced that the trial judge's ruling
could be assigned as error. Unquestionably the
issues in these cases were matters on which all
persons in the mining industry have strong and
fixed opinions. It is extremely doubtful that
under any circumstances such persons could be
considered impartial and unbiased in considering
and deciding the issues in these cases. Given the
discretion available to the trial judge in deter-
mining the qualification of jurors, it would be
difficult to find a clear abuse of discretion in
the action of the trial judge." (Footnote omit-
-
ted.) Kinty, 544 F.2d at 723.
In State v. Reilly (N.D. 1913), 141 N.W. 720, the North
Dakota Supreme Court noted that a trial court has no right to
arbitrarily discharge regular panel memb~rs without cause.
Nevertheless, the North Dakota Court held such practice was
not reversible error and said:
"[Blut the cases which hold to this proposition
fall far short of holding that error is committed
where a court, for reasons of its own, has dis-
charged a portion of a panel and either provided
for the calling of talesmen or for an additional
panel to fill the vacancies, especially where there
is no proof or suggestion of partiality on the part
of such court, or of any real prejudice to the
defendant. The real thing to be guarded against is
the denial of an impartial jury of one's
peers. . . ."
Reilly, 141 N.W. at 723.
The law in Montana has been that we will only apply a
per se rule requiring reversal without a showing of prejudice
where there is error in selection of the array itself.
Dvorak v. Huntley Project Irrigation District (1981), 196
Mont. 167, 639 P.2d 62. 7: questioned the wisdom of our
decision in Dvorak and corrective legislative action was
subsequently taken. Nevertheless, there arguably is some
justification in applying sanctions for failure to follow
statutory procedures in selection of the array itself. One
can argue that the makeup of a jury panel can be skewed to
eliminate certain elements from the panel and that a rule
calling for per se reversal has a desirable prophylactic
effect. However, if the panel selected is constitutionally
sound, there seems to be no reason for reversal. Perhaps our
decision in Dvorak was unsound.
The majority has here chosen to take a questionable
decision, corrected legislatively, and for the first time
expand the decision to embrace the elimination of prospective
jurors from a panel selected properly. I can only conclude
that the majority wished to reverse a jury verdict with which
they disagreed. This result-oriented appellate decision-
making continues to contribute to a chaotic legal process in
which lawyers, litigants and trial judges find themselves
playing Russian roulette.
I respectfully submit that the verdict for plaintiff,
together with the judgment entered thereon, should be
affirmed.
Mr. Justice William E. Hunt, Sr. dissenting:
I dissent. I believe that the District Court was
correct in its rulings during this trial and should be
affirmed in every respect.
/
Mr. Justice John C. Sheehy, dissenting:
As I read the majority opinion, it reverses the District
Court on two grounds, 1) improper deviation in the selection
of the jury panel, and 2) the District Court excluded
evidence that would prove Norwest's authority to act and the
reasonableness of its actions. I disagree with the majority
on both grounds.
It is of course true that the clerk, instructed by the
Court, deviated from the statutory procedures in getting the
jury panel. What was the result? The clerk excluded those
prospective jurors who had a debtor-creditor or business
relation with Norwest. No reasonable lawyer, and I hope, no
reasonable court, would have expected that depositors or
lenders from Norwest could have been permitted to act on this
case as jurors. The purpose of the statutes on jury
selection, and the objective of courts construing those
statutes, is to provide a fair jury panel. The deviation
from the statutes by the clerk did not in this case deprive
the parties of a fair jury panel. Instead it insured a fair
panel. That fact is evinced in that counsel for Norwest,
after interrogating the members of the panel, passed the jury
for cause. Norwest recognized it had a fair jury at the
outset of the trial. If error occurred here, it was harmless
error.
On the second point, it is irrelevant to the case the
Anderson represented to Norwest that he had authority to
change the signature card that Tribby had originally signed,
outside of Tribby's presence or knowledge that the change had
occurred. That kind of evidence is in the category used by
Eve, when she said, "The serpent made me do it." Norwest had
a contract with Tribby that was contained. on the signature
card. It had no business or right to change ribb by's
contract unilaterally and without his knowledge. Norwest's
dealings with Anderson without Tribby are inexcuseable, and
form no defense to Tribby's suit.
I dissent.