Opinion
File No. 8528.
Opinion filed November 28, 1942.
1. Trial.
Rule that weight and credibility of books of account is for jury assumes that the evidence as a whole, including the exhibited records, warrants a difference of opinion among reasonable minds as to the verity of the books of account.
2. Trial.
Before there is anything for submission to a jury, the evidence offered as to the ultimate facts must be such that the application of normal intellectual faculties thereto might arrive at different judgments or conclusions.
3. Evidence — Trial.
In action on an account for merchandise sold and delivered, seller's books of account supplied "prima facie evidence" of the delivery of the merchandise and of the value thereof, and in the absence of countervailing evidence such books supplied conclusive proof of the items and the amount of the account and hence submission of the amount and correctness of the account to the jury was error.
4. Corporations.
Buyer of merchandise from corporation, who acts with full knowledge that general manager of corporation is using corporate assets to pay general manager's personal obligation, is chargeable with "knowledge" that the general manager of a corporation has no authority to divert corporate assets to general manager's personal ends.
5. Corporations.
In action on an account for merchandise sold where defendant alleged payment in full and set up a release executed by plaintiff's manager, evidence was insufficient to make a jury question as to corporation's authorization or ratification of the arrangement whereby account would be paid by withholding payments due buyer in a real estate transaction entered into between buyer and manager and applying them to the account.
6. Evidence.
To establish particular theory by circumstantial evidence, facts and circumstances must not only be consistent with such theory, but inconsistent with any other rational theory.
7. Corporations.
To warrant a conclusion that corporation had ratified the unauthorized use of its property by its manager in the payment of an account through the application of the doctrine of "equitable estoppel", a showing was required that the benefits of the transaction were received and retained by the corporation in such circumstances as would render its refusal to recognize release of the account executed by the manager inequitable.
8. Corporations.
Where it did not appear that corporate seller of merchandise had received benefits of real estate transaction entered into by corporation's manager and buyer of merchandise, whereby manager gave buyer seller's receipt in full and agreed to withhold from payments due buyer in the transaction certain amounts and apply the amounts so withheld to merchandise account, evidence of corporation's ratificaton of manager's act, through application of doctrine of "equitable estoppel", was insufficient for jury.
9. Appeal and Error.
In action to recover for merchandise sold with defense of payment through execution of a release by manager of plaintiff, where evidence was insufficient to make a jury question as to corporation's authorization or ratification of the arrangement, and the evidence was not undisputed, judgment would be reversed without directing judgment for defendant.
Appeal from Circuit Court, Pennington County; Hon. A.R. Denu, Judge.
Action by the General Tire and Rubber Company, a corporation, against Claude L. Hamm, to recover on an account for merchandise sold and delivered by plaintiff's assignor, the Rapid City Tire and Tread Company. After the commencement of the action, Claude L. Hamm died and Alice G. Hamm, as administratrix of the estate of Claude L. Hamm, deceased, was substituted as defendant. Judgment for defendant, and plaintiff appeals.
Reversed.
Whiting and Wilson, of Rapid City, for Appellant.
T.B. Thorson and W.A. McCullen, both of Rapid City, for Respondent.
This is an action by an assignee to recover on an account for merchandise sold and delivered to Claude L. Hamm by the Rapid City Tire and Tread Company, a corporation. Subsequent to the commencement of the action the defendant died and the administratrix of his estate was substituted as the party defendant. Verdict and judgment were entered for defendant. The assignments predicate error upon the adverse rulings of the court upon plaintiff's motions for a directed verdict and for judgment n.o.v. and upon certain of the court's instructions. Respondent has not filed an answering brief in this court.
To establish the account plaintiff introduced the original records and a ledger sheet of the vendor. Defendant cross-examined plaintiff's witnesses but introduced no evidence on this phase of the case. So far as we are able to discern, nothing appears on the face of these records, or in the examination or cross-examination of plaintiff's witnesses which seriously challenges the verity of the account as reflected by these records. Nevertheless, the trial court submitted the "amount and correctness" of the account to the jury. Plaintiff asserts that in so doing the trial court erred.
[1-3] It has been said that the weight and credibility to be assigned to books of account is for the jury. 20 Am. Jur. 1064, 1213. We conceive this statement to be premised upon the assumption that the evidence as a whole, including the exhibited records, warrants a difference of opinion among reasonable minds as to the verity of the books. "Before there is anything for submission to a jury, the evidence offered as to the ultimate facts must be such that the application of normal intellectual faculties thereto might by the customary and normal processes of reasoning arrive at different judgments or conclusions." Jerke v. Delmont State Bank, 54 S.D. 446, 223 N.W. 585, 589, 72 A.L.R. 7. The books of account of the Rapid City Tire and Tread Company supplied prima facie evidence of the delivery of the merchandise and of the value thereof. Radtke v. Taylor, 105 Or. 559, 210 P. 863, 27 A.L.R. 1423. And see Newton v. Consolidated Gas Co., 258 U.S. 165, 42 S.Ct. 264, 66 L.Ed. 538; 20 Am. Jur. 1065, § 1213; and 32 C.J.S., Evidence, § 686, p. 567. In the absence of countervailing evidence they supplied conclusive proof of the items and amount of the account. Peters v. Lohr et al., 24 S.D. 605, 124 N.W. 853, and Jerke v. Delmont State Bank, supra.
As a part of the cross-examination of one Alfred Poppert, the former general manager of the vendor corporation, defendant established and introduced an exhibit dated March 15, 1940, a time subsequent to the last item of the account, which exhibit reads as follows: "Received of Claud L. Hamm payment in full of account on tires. Payment assumed by charged to account of Al. Poppert. Rapid City Tire Tread Co. Al Poppert." The circumstances in which this receipt was delivered to Hamm were described by Poppert as follows: "That was a deal whereby Claude Hamm and Del Hamm exchanged land and Claude took the difference that I was to pay Del on the transaction. It was a three-cornered transaction. * * * I would pay a certain amount each month to him on the purchase of this property and that was to be held out of his purchase on tires. * * * That deal was my own personal deal, not a deal of the company." It was also revealed by Poppert's testimony that under somewhat similar circumstances, he had assumed other customers' accounts, and that while the corporation had refused to accept his assumption of this particular account, they had accepted his assumptions of other accounts in amounts not disclosed by the evidence. Poppert further testified that he transferred the land acquired from Del Hamm to a Mr. Crilly, an agent of the General Tire Rubber Company. When asked whether he received money for the land, he replied in substance that the proceeds, in an undisclosed amount, went back to the Rapid City Tire and Tread Company and were credited by it on other customers' accounts Poppert had assumed. Whether the personal liability of these other customers had been theretofore discharged, or was discharged when these proceeds were received is not made clear. Neither does the testimony reveal whether the Rapid City Tire and Tread Company ever learned of the circumstances in which Poppert received title to the land in question from the Hamm brothers.
In submitting the cause to the jury the learned trial court recognized that according to the settled law of this jurisdiction, one in the position of Claude Hamm, who acts with full knowledge, must be held to know that a general manager of a corporation is without authority to divert its assets to his personal ends. See Clow-Schaaf Lumber Company v. Kass et al., 30 S.D. 497, 138 N.W. 1120; Atlas Lumber Company v. Rosenberger, 38 S.D. 302, 161 N.W. 332; and Commercial State Bank v. Iverson, 49 S.D. 466, 207 N.W. 471. The instructions told the jury that the burden was upon defendant to satisfy them that the corporation had either authorized such a use of its property by Poppert, or had subsequently "acquiesced in the making of such a settlement by receiving benefits that flowed or resulted from the making of the settlement." Plaintiff contends, and soundly, we think, that the evidence is insufficient to develop a jury question on either of these propositions.
[5, 6] The tendency of this evidence is to establish the authority of Poppert to assume the account by circumstantial evidence. We are committed to the view that the exhibited circumstances must not only be consistent with the theory sought to be established, but inconsistent with any other rational theory. Erickson v. Todd et al., 62 S.D. 280, 252 N.W. 879. The bare recital that the company did, at some time not fixed, accept Poppert's previous assumption of other customers' accounts in an amount not revealed does not support the desired inference.
[7, 8] To warrant a conclusion that the Rapid City Tire and Tread Company had ratified the unauthorized use of its property by Poppert through application of the doctrine of equitable estoppel, it must be made to appear that the benefits of the transaction were received and retained by the corporation in such circumstances as would render its refusal to recognize the exhibited release inequitable. Federal Land Bank v. Houck, 68 S.D. 449, 4 N.W.2d 213. For ought that is evidenced in this record, the corporation may have been ignorant of the source of the benefits it received, and it may have delivered up full value therefor through the release of the personal liability of other customers. See Quale v. Hazel, 19 S.D. 483, 104 N.W. 215; Jewell Nursery Co. v. State, 8 S.D. 531, 67 N.W. 629; and 2 Am. Jur. 184, § 229.
For these reasons, and pursuant to the policy announced in Froke v. Watertown Gas Co., 68 S.D. 266, 1 N.W.2d 590, the judgment of the trial court is reversed.
All the Judges concur.