BIG SKY LIVESTOCK INC v HERZOG

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No. 13224 I N T E SUPREME COURT O THE STATE O MONTANA H F F 1976 B I G S Y LIVESTOCK, INC., K A Montana Corporation, P l a i n t i f f and Respondent, -vs - E. A. HERZOG, Defendant and Appellant. Appeal from: D i s t r i c t Court of t h e Seventeenth J u d i c i a l D i s t r i c t , Honorable Thomas Dignan, Judge p r e s i d i n g . Counsel of Record: For Appellant: Johnson and F o s t e r , Lewistown, Montana Robert L. Johnson argued, Lewistown, Montana For Respondent: Gallagher and Archambeault, Glasgow, Montana F r a n c i s Gallagher argued and Matthew W, Knierim argued, Glasgow, Montana Submitted: Dec ided =C F i l e d : DEC 2 7 October 12, 1976 3 a M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e Court. This appeal by defendant E. A. Herzog i s from a judgment on a j u r y v e r d i c t i n t h e d i s t r i c t c o u r t , Valley County, i n an a c t i o n on an account s t a t e d f o r v e t e r i n a r y drugs used t o t r e a t cattle. Judgment f o r p l a i n t i f f Big Sky Livestock, I n c . was i n t h e amount of $13,500. Herzog a p p e a l s . Four i s s u e s a r e r a i s e d : (1) Whether t h e c o u r t e r r e d i n g r a n t i n g a t t o r n e y f e e s t o p l a i n t i f f without s u p p o r t i n g evidence and n o t i c e t o defendant? (2) Did t h e c o u r t e r r i n awarding 10% p e r annum i n t e r e s t to plaintiff? (3) Did p l a i n t i f f f a l s i f y evidence of account s t a t e d ? (4) Did t h e c o u r t e r r i n s t r i k i n g from t h e r e c o r d and commenting t o t h e j u r y upon d e f e n d a n t ' s proof t h a t p l a i n t i f f f e d poisonous hay t o d e f e n d a n t ' s c a t t l e ? On December 1 7 , 1973 Big Sky and Herzog e n t e r e d i n t o a w r i t t e n c o n t r a c t t o feed c a t t l e belonging t o Herzog. These c a t t l e from t h e n o r t h c e n t r a l p a r t of Montana were purchased f o r Herzog by Ted M i l l e r , a c a t t l e buyer from Lewistown, Montana. The purc h a s e , c o n s i s t i n g of s t e e r and h e i f e r c a l v e s , was made i n l a t e December 1973, and e a r l y January 1974. During t h e p e r i o d t h e s e c a t t l e were being t r a n s p o r t e d t o Glasgow where t h e feed l o t was l o c a t e d , t h e temperatures were extremely c o l d and some of t h e c a t t l e needed medical t r e a t m e n t a f t e r they a r r i v e d . According t o t h e terms of t h e i r c o n t r a c t Herzog was t o pay Big Sky 366 p e r pound of g a i n and Herzog agreed t o pay " f o r a l l d r u g s , v e t e r i n a r y s e r v i c e s and s u p p l i e s , and t h o s e items w i l l be b i l l e d t o owner [Herzog] a t c o s t . " The c o n t r a c t f u r t h e r s t a t e d t h a t Big Sky agreed t o " f e e d , w a t e r , provide h e a l t h c a r e , provide l a b o r and t o o t h e r w i s e c a r e f o r t h e herd i n a good and husbandlike manner a t F e e d e r ' s premisesr1 n e a r Glasgow and t o " v a c c i n a t e and brand l i v e s t o c k w i t h vaccine and brands r e q u i r e d by" Herzog and Big Sky. From t h e time of a r r i v a l of t h e c a t t l e Herzog r e c e i v e d itemized s t a t e m e n t s showing v e t e r i n a r y c h a r g e s , v e t e r i n a r y drug charges and v a c c i n a t i o n charges. On March 5 , 1974. he made a $60,000 payment t o Big Sky and on A p r i l 15, 1974 he made a f u r t h e r payment of $25,000 f o r s e r v i c e s rendered under t h e c o n t r a c t . O May 1, Herzog went t o Glasgow t o remove t h e c a t t l e n from t h e feed l o t . A t t h a t time t h e c a t t l e were weighed s o t h e g a i n could be determined. I He t e s t i f i e d he was s a t i s f i e d w i t h t h e weight t h e c a t t l e d had gained d u r i n g t h e months i n Big Sky's c a r e . they were A t t h a t time Herzog gave Big Sky a check i n t h e amount of $35,790.24, t h e check r e c i t i n g t h e g a i n p o r t i o n was f o r $22,789.40 and t h e drug p o r t i o n of $13,000.84. Both p a r t i e s t e s t i f i e d t h e r e was some d i s c u s s i o n about t h e amount of t h e drug charges. Herzog t r i e d t o g e t t h e charges reduced without s u c c e s s . S e v e r a l days a f t e r t h e c a t t l e had been shipped Herzog stopped payment on t h e charges. check a l l e g i n g something was wrong w i t h t h e drug He then s e n t Big Sky a new check f o r t h e f u l l amount o f t h e weight g a i n , p l u s i n t e r e s t from May 1 s t . T h e r e a f t e r Big Sky f i l e d s u i t f o r t h e d i f f e r e n c e i n t h e two checks. The q u e s t i o n presented i s what c o n s t i t u t e s " a t c o s t 1 ' , when a p p l i e d t o t h e drugs. D r . Martin R. Connell was p r e s i d e n t and manager of Big Sky L i v e s t o c k , Inc. I n a d d i t i o n , he i s t h e s o l e owner of t h e Glasgow V e t e r i n a r y C l i n i c and h e l d 90% of t h e s t o c k i n t h e Glasgow V e t e r i n a r y Supply, a Montana c o r p o r a t i o n . Dr. Connell t e s t i f i e d i n connection w i t h h i s feeding o p e r a t i o n s a t Big Sky, t h a t a l l drugs were purchased by Big Sky from t h e V e t e r i n a r y C l i n i c , n o t from Glasgow V e t e r i n a r y Supply and t h e p r i c e s were a t suggested manfacturers' r e t a i l . He f u r t h e r t e s t i - f i e d t h e V e t e r i n a r y C l i n i c made a p r o f i t on a l l drugs s o l d by i t t o Big Sky, I n c . ; n o t only on Herzog's c a t t l e b u t on a l l c a t t l e t h a t went through t h e feeding o p e r a t i o n s of Big Sky, I n c . Herzog was t r e a t e d no b e t t e r o r worse than any o t h e r u s e r of t h e f a c i l i t i e s . D r . Connell t e s t i f i e d t h e average markup i n t h e drugs and s u p p l i e s used was about 25% and i f discounted t h e c l o s e s t f i g u r e they could g e t from going over t h e books was t h a t t h e drug b i l l came t o $9,846.06. There were a d d i t i o n a l c o s t s f o r branding, s o r t i n g , dehorning and f o r processing t h a t brought t h e c o s t up t o t h e $13,000 f i g u r e . During t h e l i f e of t h e c o n t r a c t Herzog r e c e i v e d s t a t e m e n t s from Big Sky on a l l s e r v i c e s rendered under t h e c o n t r a c t i n c l u d i n g a l l drug c h a r g e s , and t h e only time Herzog o b j e c t e d t o t h e drug charges was a t t h e time of s e t t l i n g up on May 1st. I s s u e (1) i s d i r e c t e d a t t h e $3,000 a t t o r n e y f e e g r a n t e d by t h e d i s t r i c t c o u r t . Herzog argues t h i s was done w i t h o u t n o t i c e t o him and w i t h o u t h i s being p r e s e n t . He f u r t h e r a l l e g e d h e was e n t i t l e d t o n o t i c e of proceedings on t h e i s s u e of a t t o r n e y f e e s under s e c t i o n 93-8505, R.C.M. 1947. However, Herzog i n h i s amended answer claimed a t t o r n e y f e e s i n t h e amount of $3,000 and b o t h p a r t i e s s t i p u l a t e d t o t h e c o u r t t h a t upon completion of t h e c a s e t h e c o u r t would determine t h e reasonable v a l u e of f e e s t o b e awarded. The c o u r t n o t i c e d such a h e a r i n g and made a minute e n t r y a f t e r h e a r i n g Big Sky's evidence a s t o t h e hours worked, Herzog d i d n o t appear although h i s counsel had been n o t i f i e d . no opposing evidence was heard. The c o u r t noted t h a t Herzog d i d n o t oppose t h i s i t e m u n t i l he was heard on p o s t - t r i a l motions. T h i s Court i n S t a t e v. NorLh American Car Corp., 118 Mont. 183, 164 P.2d 161 (and c a s e s c i t e d t h e r e i n ) h e l d t h a t when a c a s e i s t r i e d and submitted on agreed f a c t s , t h e c o u r t i s bound by t h e s t i p u l a t i o n . Here, throughout t h e t r i a l ~ e r z o g ' sp o s i t i o n was c o n s i s t e n t w i t h t h e s t i p u l a t i o n t h a t f e e s would be awarded t h e p r e v a i l i n g p a r t y . W e f i n d no e r r o r i n t h e award of a t t o r n e y f e e s . I s s u e (2) concerns t h e c o u r t ' s i n s t r u c t i o n t o t h e j u r y awarding 10% p e r annum from May 1, 1974. erred. W find the t r i a l court e Big Sky i n i t s b r i e f , and a t t h e time of a r g u i n g t h e c a s e , admitted t h e i n t e r e s t r a t e i s governed by s t a t u t e , s e c t i o n 47-124, R.C.M. 1947, which provides f o r i n t e r e s t a t 6% per annum on an account s t a t e d from t h e d a t e a s c e r t a i n e d . See 5 Am J u r 2d, Appeal and E r r o r § 941; 65 ALR2d 1341,§4[b] ; Norum v. Ohio O i l Company, 83 Mont. 353, 272 P. 534. On I s s u e ( 3 ) Herzog argues t h e r e was no account c r e a t e d i n t h i s c a s e , c i t i n g Blanck v . Pioneer Mining Co., 93 Wash.26, 159 P. 1077; Halverson v. Blue Mountain Prune Growers Co-op, 188 Ore. 661, 214 P.2d 986. These c a s e s hold t h a t i f t h e account rendered by t h e c r e d i t o r i s s p e c i f i c a l l y a t v a r i a n c e w i t h t h e underlying c o n t r a c t , t h e mere r e t e n t i o n of t h e erroneous account by t h e d e b t o r does n o t g i v e r i s e t o a n account s t a t e d . i s not the s i t u a t i o n here. However, t h a t Here, t h e p a r t i e s d e a l t f a c e - t o - f a c e and d i s c u s s e d t h e charges i n s e t t l i n g up t h e account; agreement was reached and Herzog paid t h e f i n a l f i g u r e w i t h h i s check. T h i s Court held in Holmes v. Potts, 132 Mont. 477, 319 P.2d 232, that an "account stated" is a final adjustment of demands and amounts due. In creating an account stated, the minds of all parties thereto must meet and understand that a final adjustment of each upon the other is being made. Nelson v. Montana Iron Mining Co., 140 Mont. 331, 371 P.2d 874. These rules must be applied as of the time of the final transaction between the parties and without reference to any later change of mind. As of May 1, Herzog gave his check for the full amount owing, and in the absence of fraud, mistake or duress, the giving of the check without any reservations created an account stated. The record is clear the parties at the time of discussion and final settlement, culminating in the payment of $35,790.24, were aware they were then determining, fixing and settling the amount due with a view of final adjustment and determination. There was, on the basis of these undisputed facts, positive evidence of an account stated clearly. One who freely pays an account, even though he has expressed dissatisfaction with it, does so with the intent to assent to it and with awareness that it is a final determination of all accounts. All Herzog's allegations of "falsification" of the account were presented to the jury and it found against him. On appeal the role of this Court is to limit its review to whether there is substantial credible evidence to support the verdict. In so doing, we review the evidence in a light most favorable to the prevailing party in the trial court. Bos v. Dolajak, 167 Mont. 1, 534 P.2d 1258, 32 St.Rep. 438, 445. 4 Issue ( ) is directed at the trial court's striking from the record 3 e 9 m g t b s :alleged proof that Big Sky fed poisonous hay to his cattle. W f i n d no e r r o r due t o t h e f a c t Herzog f a i l e d e t o lay a proper foundation i n d i c a t i n g any r e l a t i o n s h i p i n t h e hay fed t o h i s c a t t l e and t h e h e a l t h problems t h a t may have n e c e s s i t a t e d v e t e r i n a r y c a r e o r t o t h e a d m i n i s t r a t i o n of drugs. In t r u t h , the evidence given by Herzog was t h a t t h e c a t t l e were " t h r i f t y 1 ' upon leaving the feed l o t . considered "very good". Too, h i s death l o s s i n t h e s e c a t t l e was The case was t r i e d t o t h e j u r y on t h e theory of an account s t a t e d . None of t h e o f f e r e d evidence dealing with t h e hay r e l a t e d t o t h e question of fraud, mistake o r any o t h e r evidence a v a i l a b l e t o Herzog i n an account s t a t e d case. I n i t s r u l i n g t h e t r i a l c o u r t was performing i t s proper function i n determining t h e a d m i s s i b i l i t y o r nonadmissibility of evidence. The reasons f o r so r u l i n g were s t a t e d and we f i n d no b i a s toward e i t h e r p a r t y . The judgment of t h e d i s t r i c t c o u r t i s affirmed except a s t o t h e award of i n t e r e s t a t 10% per annum. The cause i s remanded t o t h e t r i a l c o u r t with d i r e c t i o n s t o modify t h e judgment t o provide i n t e r e s t a t t h e r a t e of 6% per annum from d a t e of such j udgment / . p i e £ Justice Hon. LeRoy L. McKinnon, D i s t r i c t Judge, s i t t i n g f o r J u s t i c e Wesley Castles. Big Sky L i v e s t o c k v . Herzog I r e s p e c t f u l l y d i s s e n t from t h e f o r e g o i n g o p i n i o n . By r e a s o n of t h e p r e s s of o t h e r m a t t e r s , and t h e f a c t t h a t I d o n o t have c o p i e s of t h e t r a n s c r i p t on appeal a v a i l a b l e , m d i s s e n t i n g y o p i n i o n w i l l be b r i e f and g e n e r a l . A s t o a t t o r n e y f e e s , a t b e s t t h e r e was a misunderstanding which r e s u l t e d i n t h e p l a i n t i f f t s a t t o r n e y having a h e a r i n g w i t h t h e C o u r t o u t of t h e p r e s e n c e of d e f e n d a n t t s a t t o r n e y . Inasmuch a s a s e p a r a t e h e a r i n g was h e l d , fundamental f a i r n e s s would r e q u i r e t h a t b o t h a t t o r n e y s have t h e o p p o r t u n i t y t o be p r e s e n t . A s t o an account s t a t e d , i t a p p e a r s t h a t s e v e r a l of t h e s e r v i c e s c o n t r a c t e d t o be performed under t h e t h i r t y - s i x c e n t s p e r pound of g a i n , were i n c l u d e d a g a i n i n t h e a l l e g e d account s t a t e d . A t b e s t t h i s would amount t o a mistake of f a c t s u f f i c i e n t t o v i t i a t e any attempted account s t a t e d . A s t o t h e i s s u a n c e of poisonous h a y , i t a p p e a r s t o t h i s writer t h a t t h e d e f e n d a n t was p r e v e n t e d from l a y i n g a f o u n d a t i o n f o r any e v i d e n c e on t h e i s s u e . F o r t h e f o r e g o i n g r e a s o n s , I would r e v e r s e and remand f o r a new t r i a l . s i t t i n g u n p i a c e of M r . J u s t i c e Wesley C a s t l e s .

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