NO. 88-3-77
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
MONTANA BANK OF RED LODGE, N.A.,
Plaintiff and Appellant,
-vs-
AILEEN LIGHTFIELD, a/k/a MARY AILEEN
LIGHTFIELD,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Carbon,
The Honorable Diane G. Barz, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Bruce E. Lee, Billings, Montana
For Respondent:
W. Corbin Howard, Billings, Montana
Submitted on Briefs: Nov. 17, 1988
Decided: April 6 , 1989
Mr. Justice William E. Hunt, Sr. delivered the Opinion of the
Court.
The Montana Bank of Red Lodge, the plaintiff, appeals
the decision by the District Court of the Thirteenth Judicial
District, Carbon County, denying its two motions for judgment
nothwithstanding the verdict, one regarding whether a part-
nership existed between defendant Aileen Lightfield and her
son, Lee J. Lightfield, and the other regarding whether
defendant Aileen Lightfield j s liable for up to $40,000 of
.
Lee J. Lightfield's debt because of her signature on a
written guaranty form. The Bank also appeals the District
Court's decision to order a new trial.
The defendant cross-appeals the decision by the District
Court, denying her motion for judgment notwithstanding the
verdict regarding whether she is liable for up to $40,000 of
Lee J. Lightfield's debt as a result of her signature on a
written guaranty form. We affirm the District Court.
The issues raised by the plaintiff on appeal are:
(1) whether the District Court erred in denying plain-
tiff's motion for judgment notwithstanding the verdict upon
plaintiff's assertion that as a matter of law a partnership
existed between defendant Aileen Lightfield and her son, Lee
J. Lightfield, and therefore defendant is liable for debts
incurred bv Lee J. Lightfield, totalling $86,126.91 plus
interest;
(2) whether the District Court erred in denying
plaintiff's motion for judgment notwithstanding the verdict
upon plaintiff's assertion that as a matter of law the defen-
dant is liable for up to $40,000 as a result of her signature
on a written guaranty form;
whether the District Court erred in granting a new
(3)
trial upon the motion of the defendant.
The issue raised on cross-appeal by the defendant is:
(1) whether the District Court erred in denying defen-
dant's motion for judqment notwithstanding the verdict upon
defendant's assertion that she is not liable for up to
$40,000 as a result of her signature on a written guaranty
form.
On March 25, 1982, Lee J. Lightfield established a line
of credit for $40,000 with the Montana Bank of Red Lodge
(Bank) to finance used automobiles for the purpose of resell-
ing the automobiles at a car lot in Billings. Before allow-
ing Lee to establish this line of credit, the Bank required
that Lee's parents, Aileen and Gilbert Lightfield, pledge a
$10,000 certificate of deposit by assignment and sign a
guaranty form for up to $40,000 plus interest. Both Aileen
and Gilbert Liqhtfield pledged the $10,000 certificate of
deposit and signed the guaranty form.
On April 23, 1982, after Lee pledged a $20,000
certificate of deposit, the Bank increased Lee's line of
credit to $80,000. On September 28, 1982 the Bank increased
Lee's line of credit to $130,000. In neither case did the
Rank inform Aileen Lightfield of the increase in Lee's line
of credit.
Gilbert Lightfield was seriously ill throughout this
time and subsequently died on May 9, 1983. Shortly after
Gilbert Lightfield's death, Lee persuaded his mother, Aileen
Lightfield, to enter the used car business. Aileen testified
that she did not necessarily want to get into the car
business, but she also did not want to be alone on the ranch.
She testified that her son promised that he would get her an
apartment near him in Billings, teach her to how to buy cars,
and have her keep the books. Aileen consented to enter the
car business and went with Lee to the Bank on May 16, 1983,
to see whether the Bank would give her a line of credit for
the purpose of buying used automobiles. The Bank
subsequently allowed Aileen to establish a line of credit in
the amount of $150,000 for the purpose of buying used
automobiles. Aileen mortgaged her ranch land, located in the
Lambert area, as collateral.
In July, 1983, Aileen Lightfield realized that her son
was not fulfilling his promise of teaching her about the car
business and informed her son to sell all of her cars because
she was getting out of the business. She informed the Bank
of her decision on August 26, 1983. She arranged a November
10, 1983 meeting with the Bank. Aileen testified that at
this meeting, as well as on the phone approximately a week
earlier, she demanded from the Bank all of the documents that
she had ever signed. After this demand, the Bank simply gave
her a satisfaction of her mortgage on her ranch land at the
November 10 meeting.
In November, 1983, the Bank became concerned when an
inventory of the car lot in Billings showed a few cars of Lee
Lightfield's missing. The Bank met with Lee on January 7,
1984 and eventually discovered that Lee was defrauding the
Bank. Lee subsequently pled guilty to eighteen counts of
theft.
In January, 1984, the Bank called Aileen Lightfield and
asked her to come to the Rank to see if she could help Lee
with his financial problems. When Aileen arrived at the Bank
on January 16, 1984, the Bank asked her to sign a note
promising to pay Lee's debt of $150,000. Aileen refused to
sign the note.
The Bank filed a complaint on April 25, 1984, naming Lee
J. Lightfield, Lee s wife (Sandy Lightfield) , and Aileen
Lightfield as defendants. Lee and Sandy Lightfield were
subsequently dismissed as defendants in this action when they
filed for bankruptcy by way of a joint petition in the United
States Bankruptcy Court, leaving Aileen Lightfield as the
sole defendant. The case was brought to trial on September
21, 1987. Both the plaintiff Bank and defendant Aileen
Lightfield filed motions for directed verdicts asking the
court to determine if a partnership existed between defendant
Lightfield and her son. The court granted Lightfield's
motion, finding that as a matter of law no partnership
existed between her and her son.
Both the Bank and Lightfield also brought motions for
directed verdict regarding defendant Lightfield's liability
as a result of the written guaranty form. The District Court
denied both of these motions and allowed the question to go
to the jury. On September 24, 1987, the jury, by special
verdict, found defendant Lightfield liable to the Bank by
reason of the guaranty, but only awarded the Rank $1.00 in
compensatory damages. The jury also found that the Bank
breached a duty of good faith and fair dealing toward Aileen
Lightfield, but found that the breach did not cause her
injury or damage. The jury then found that the Rank did not
commit actual or constructive fraud by reason of its conduct
toward defendant Lightfield. The jury awarded Lightfield
$1,500 in compensatory damages. The jury found that the Rank
had not acted with fraud, malice or oppression in its
relationship with Lightfield and therefore did not reach the
question of whether to assess the Bank with punitive damages.
The District Court denied the Bank's motion for judgment
notwithstanding the verdict regarding the existence of a
partnership and denied both the Rank's and Lightfield's
motions for judgment notwithstanding the verdict regarding
Lightfield's liability as a result of the written guaranty
form. On March 25, 1988, the District Court granted
Lightfield's motion for a new trial, finding that under 9
25-11-102, MCA, the jury's findings were inconsistent.
The first issue raised on appeal is whether the District
Court erred in denying the Rank's motion for judgment not-
withstanding the verdict upon the Bank's assertion that as a
matter of law a partnership existed between Aileen Liqhtfield
and her son, Lee J. Lightfield, and therefore Aileen
Lightfield is liable for debts incurred by Lee J. Liqhtfield,
totalling $86,126.91 plus interest.
Section 35-10-201, MCA, defines a partnership as "an
association of two or more persons to carry on as co-owners a
business for profit." This Court has consistently held that
in determining whether a partnership exists, it is necessar~
that the parties clearly manifest their intent to associate
themselves in a partnership relationship; that each partner
contributes something that promotes the enterprise; that each
partner has a right of mutual control over the subject matter
of the enterprise; and that the partners have agreed to share
profits. Bender v. Bender (1965), 144 Mont. 470, 480, 39'
P.2d 957, 962. When ascertaining the intent of the parties
absent a written agreement, all the surrounding facts,
circumstances, and conduct of the parties must be considered.
Bender, 144 Mont. at 480, 397 P.2d at 962. Section
35-10-202, MCA, also lists rules that are important in
determining whether a partnership exists.
The Rank argues that the agreement between Lee and
Aileen was to share profits and that under 5 35-10-202 (4),
MCA, the sharing of business profits is prima facie evidence
that a person is a partner in the business. However, 6
35-10-202(4), MCA, also states that no such inference shal-l
be drawn if such profits were received in payment as wages
for an emplovee or as a debt by installments. Section
35-10-202 (4)(a) and (h), MCA. The facts in this case are
uncontroverted. The understanding between Aileen and Lee
provided for an unequal splitting of the profits between Lee
and Aileen from Aileen's line of automobiles only. Neither
profits nor losses were shared between Lee and Aileen from
Lee's line of automobiles. The understanding also provided
that Lee would absorb all the losses. The understanding,
however, also included that Lee would teach Aileen the art of
buying used automobiles, get her an apartment in Billings,
and have her keep the books. Lee never fulfilled this part
of the agreement and therefore after less than two months,
Aileen made her intentions known to Lee that she was gettins
out of the used car business. In light of all the
surrounding facts and circumstances, this understandinq
between Lee and Aileen is more consistent with Ail-een paying
Lee to instruct her in the business of buying used automo-
biles rather than an agreement among partners to share
profits.
The evidence also clearly establishes that Aileen had no
control over the subject matter of the supposed partnership.
Lee took total control of the buying and selling of the
automobiles financed on Aileen's line of credit. Aileen had
no control over her automobiles nor over automobiles financed
from Lee's line of credit. Lee also never allowed Aileen to
keep the books. No written partnership agreement existed
between Lee and Aileen Lightfield and neither Lee nor Aileen
intended to be partners nor did the Rank consider them or
treat them as partners until the deficiency arose. A1 l
parties, including the Bank, understood Lee's and Aileen's
lines of credit. to be separate and the lines in fact were
kept separate.
The record also establishes that the insurance policy
for both Lee's and Aileen's automobiles was in the sole name
of Lee J. Lightfield; that Lee and Aileen, as well as other
third parties, operated under the name of a car lot, Central
Auto, which was owned by a third partv; that both Lee and
Aileen operated under the same business license and bond;
and, that the two shared one bank account for all their
business transactions. As stated previously, however, the
entire surrounding facts, circumstances, and conduct of the
parties must be considered when determining whether the
requisite intent exists to create a partnership in the
absence of an express agreement. This Court has never
held--contrary to what the Bank argues--that intent is not
required in the formation of a partnership. To the contrary,
intent is a major factor. Truck Ins. Exchange v. Industrial
Indemnity Co. (1984), 212 Mont. 297, 300, 688 P.2d 1243,
1244; Bender, 144 Mont. at 480, 397 P.2d at 962.
The burden of proving the existence of a partnership is
on the party seeking to establish its existence. Bender, 144
Mont. at 480, 397 P.2d at 962. In light of all of the
evidence, we hold that the Bank failed to establish the
requisite factors necesary to prove the existence of a
partnership and therefore hold that the District Court
properly found that no partnership existed between Aileen and
Lee as a matter of law.
The second issue raised on appeal and the issue raised
on cross-appeal is whether the District Court erred in deny-
ing the Bank's and Lightfield's motions for judgment notwith-
standing the verdict regarding whether Lightfield is liable
for up to $40,000 as a result of her signature on a written
guaranty form.
The Bank argues that the guaranty should be enforced on
its face and that none of the affirmative defenses set forth
by Lightfield should have gone to the jury. Lightfield
argues that as a matter of law she should be exonerated
because the Bank failed to inform her of facts substantially
increasing her risk of loss and because her obligation under
the guaranty was procured by either fraud or constructive
fraud. We hold that the District Court did not err by
allowing the issues to go to the jury and in denying the
Bank's motions for directed verdict regarding Lightfield's
affirmative defenses.
The Bank argues that Lightfield's allegation of fraud
fails because an essential element--the aggrieved party's
reliance upon the other party's representation--is not
present. Conversely, Lightfield argues that the evidence
indicates that all the elements constituting fraud were
satisfied and therefore the District Court erred in not
granting her motion for judgment notwithstanding the verdict.
We disagree with both the Bank's and Lightfield's assertions.
Typically, a person who fails to take the opportunity to
examine a written form before executing it cannot claim
fraud. Jenkins v. Hillard (1982), 199 Mont. 1, 6, 647 P.2d
354, 357; Hjermstad v. Barkuloo (1954), 128 Mont. 88, 98, 270
P.2d 1112, 1117. As noted by the Rank, however, a person may
claim fraud to a document he signs "where he is prevented
from reading it or having it read to him by some fraud,
trick, artifice, or devise by the other party." 17 Am.Jur.2d
Contracts S 152 (1964).
Actual fraud is always a question of fact. Jenkins, 199
Mont. at 5, 647 P.2d at 357. This Court is not in a position
to weigh the facts. This Court's function is to determine
whether the District Court erred when denying the Bank's
motion for directed verdict. Motions for directed verdict or
for judgments notwithstanding the verdict are proper only
when no evidence exists to warrant submission to the jury.
McGregor v. Momrner (Mont. 1986), 714 P.2d 536, 540, 43
St.Rep. 206, 210; Wilkerson v. School Dist. No. 15 (Mont.
19851, 700 P.2d 617, 622, 42 St.Rep. 745, 750-51. F7e
therefore hold that the District Court properly denied the
Bank's motion for directed verdict on the basis of either
fraud or constructive fraud. Likewise, we uphold the court's
order denying Lightfield's motion for judgment
notwithstanding the verdict on these issues.
The Bank also argues that under the written guarantv
form they were not required to give Lightfield advance notice
that they were increasing Lee J. Lightfield's line of credit.
In Bails v. Gar (1976), 171 Mont. 342, 558 P.2d 458, we held
that " [f]raud vitiates every transaction and all contracts. "
Bails, 171 Mont. at 347, 558 P.2d at 461 (quoting 3 7
Am.Jur.2d Fraud and Deceit S 8 (1968)). A person who
perpetuates fraud by inducing another to enter a contract may
not then immunize himself by relying upon the provisions
within the contract. Jenkins, 199 Mont. at 6, 647 P.2d at
357. In light of the above discussion addressing fraud, we
cannot determine as a matter of law whether Lightfield had
notice of the specifications under the written guaranty form
and whether the Bank needed to inform her of facts which
substantially increased her risk of loss. These are
questions for the jury to decide. As previously noted,
motions for directed verdict or for judgment notwithstanding
the verdict are proper only when no evidence exists to
warrant submission to the jury. McGregor, 714 P.2d at 540,
43 St.Rep. at 210; Wilkerson, 700 P.2d at 622, 42 St.Rep. at
750-51. We therefore hold that the District Court properly
denied the Bank's motion for directed verdict. and
Lightfield's motion for judgment notwithstanding the verdict
on this issue.
The third issue raised on appeal is whether the District
Court erred in granting a new trial upon the motion of the
Rank.
The District Court granted Lightfield's motion for a new
trial on March 25, 1988. The court found that the verdict
form was straightforward and understandable, but after
reviewing the jury's responses, the court was left with the
inescapable impression that the jury was "either hopelessly
confused or disregarded the court's instructions." We agree
that the jury was confused but further determine that the
form itself was terribly confusing and should not be used
again.
The requirements for requesting and ordering a new trial
are set forth in Rule 59, M.R.Ci7r.P. A verdict may be
vacated and a new trial granted on the application of an
aggrieved party if the District Court finds that insufficient
evidence exists to justify the verdict or that it is against
the law. Section 25-11-102(6), MCA. In ordering the new
trial, the District Court found that the jury had determined
that Lightfield was liable to the Bank on the guaranty she
had signed. The court noted that the guaranty was for up to
$40,000, yet the jury awarded the Rank compensatory damages
of only $1.00. The court also found that the jury had
determined that the Bank had breached its duty of good faith
and fair dealing in its actions toward Lightfield, but then
found that Lightfield had not been injured or damaged as a
result. The court noted, however, that the jury nonetheless
awarded Lightfield $1,500 in compensatory damages. The court
also noted that despite its instructions, the jury failed to
account for Lightfield's $10,000 certificate of deposit which
the Bank retained. The court concluded that the jury
findings were inconsistent and that it was too difficult to
speculate as to how the jury arrived at its conclusions. The
court therefore ordered a new trial pursuant to S
25-11--102 6 ) , MCA.
(
The District Court possesses the discretion to either
grant or deny a motion for a new trial. This Court will not
overturn a decision by the District Court absent a showing of
manifest abuse of that discretion. Walter v. Evans Products
Co. (1983), 207 Mont. 26, 30-31, 672 P.2d 613, 616. In light
of the above, we hold that the District Court did not abuse
its discretion by granting Lightfield's motion for a new
trial. We therefore affirm the District Court on this issue.
Affirmed.
We Concur: A
Chief Justice
LJ- Justices
Mr. Justice Fred J. Weber specially conc.ursas follows:
I concur in the granting of a new trial. However, I
dissent to the portion of the majority opinion which affirms
the District Court's granting of a directed verdict on the
partnership issue.
Both parties in this action moved for a directed ver-
dict, asking the court to determine as a matter of law wheth-
er a partnership existed. The lower court granted Ms.
Lightfield's motion, determining as a matter of law, that no
partnership existed. This Court has examined the facts and
affirmed this holding.
The standard for granting a directed verdict is
well-settled and was recently reiterated in Britton v. Farm-
ers Ins. Group (1986), 721 P.2d 303, 317, 43 St.Rep. 641,
656, as follows:
A motion for directed verdict is properly
granted only in the complete absence of any evi-
dence to warrant submission to the jury, and al.1
inferences of fact must be considered in the light
most favorable to the opposing party. Jacques v.
Montana National Guard (1982), 199 Mont. 493, 649
P.2d 1319; if the evidence viewed in a light most
favorable to plaintiff indicates reasonable men
could differ as to the conclusions drawn from the
evidence a directed verdict is not proper. Weber
v. Blue Cross of Montana (1982), 196 Mont. 454, 643
P.2d 198.
In the present case the majority opinion states facts
sufficient to demonstrate that reasonable men might differ as
to whether a partnership existed. This was properly a jury
issue. The District Court analyzed and weighed the evidence.
This is inappropriate on a, motion for a directed verdict,
even when both parties have requested a directed verdict.
Borgmann v. Diehl (1970), 155 Mont. 458, 462-63, 473 P.2d
529, 531.
The majority opinion, in affirming the directed verdict,
has also engaged in weighing the evidence. While it is
possible that a jury would conclude that no partnership
existed, it is not our function to make that determination
where reasonable men could reach a different conclusion. An
inappropriate standard has been used both by the District
Court, and by this Court on appeal. I would vacate the
directed verdict and remand for a jury trial on the partner-
ship issue also.