Weinreis v. Hill

2006 ND 170, 719 N.W.2d 354, 2006 N.D. LEXIS 173, 2006 WL 2074727
CourtNorth Dakota Supreme Court
DecidedJuly 27, 2006
Docket20060026
StatusPublished

This text of 2006 ND 170 (Weinreis v. Hill) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weinreis v. Hill, 2006 ND 170, 719 N.W.2d 354, 2006 N.D. LEXIS 173, 2006 WL 2074727 (N.D. 2006).

Opinion

*356 MAKING, Justice.

[¶ 1] AeroLease of America, Inc. (“AeroLease”) appealed from a district court judgment ordering AeroLease to re-convey an airplane and two engines to Badlands Flight Group, Inc. (“Badlands”), and awarding damages. The district court concluded that although Steven W. Hill had ostensible authority as an agent of Badlands, AeroLease did not act in good faith and was negligent in an airplane sale-lease back transaction. Because we conclude the district court did not clearly err in finding AeroLease was negligent, we affirm.

I

[¶ 2] The facts in this case were set forth in Weinreis v. Hill, 2005 ND 127, 700 N.W.2d 692, and we will not repeat them here except as necessary to assist in resolving the issues raised in this appeal.

[¶ 3] In December 2001, Gene Wein-reis, Donnell Michels, and Hill formed Badlands, and shortly after incorporation, Badlands purchased a Beechcraft airplane for $147,500. AeroLease provides financing for financially stressed borrowers by buying airplanes and leasing them back to borrowers. AeroLease’s president is Stanley Shaw. In May 2002, Hill applied to AeroLease for financing. AeroLease agreed to acquire title to the plane, and Badlands, through Hill, was to maintain physical control of the plane and lease it from AeroLease. As part of the transaction, Badlands was to receive a single cash payment of $65,000 and continued use of the plane during a twelve-month lease in exchange for transferring the plane’s title and making monthly lease payments of $1,415 to AeroLease. Badlands had the right to reacquire title to the plane by paying $70,887, representing the initial loan balance plus certain additional fees.

[¶4] AeroLease paid Hill $65,000 for the airplane. Hill made the first three monthly lease payments, but thereafter defaulted. AeroLease then unsuccessfully attempted to repossess the airplane. Weinreis and Michels asserted they had no knowledge of Hill’s transaction with Aero-Lease and had not authorized Hill to enter into the arrangement on behalf of Badlands.

[¶ 5] Following a bench trial, the district court found AeroLease was not a good faith purchaser and would be unjustly enriched if the contract were enforced. In Weinreis, 2005 ND 127, ¶¶ 11-13, 700 N.W.2d 692, we reversed and remanded to the district court for further consideration of whether Hill acted with apparent or ostensible authority to bind Badlands with respect to the transaction with AeroLease.

[¶ 6] In Weinreis, 2005 ND 127, ¶ 14, 700 N.W.2d 692, this Court declined to address issues relating to the applicability of the Uniform Commercial Code, as adopted in North Dakota, because such issues had not previously been raised in the district court. We did, however, invite the district court to consider the U.C.C. on remand, if necessary. Id. Instead, the district court declined to consider U.C.C. applicability, resolving the dispute solely by applying N.D.C.C. § 3-03-03 after finding Hill acted with ostensible authority. Based upon the issues and arguments made to the trial court, we, therefore, again do not address any U.C.C. issues in this appeal.

[¶ 7] On remand, the district court made additional findings and concluded that Hill was indeed cloaked with ostensible authority to act for Badlands. The district court found that Hill had been given secretarial and bookkeeping responsibilities for Badlands, but all major decisions were made jointly by all three principals. The court found Weinreis and *357 Michels were not aware Hill represented himself as the president of Badlands and did not authorize that representation. The court also found Weinreis and Mi-chels first became aware of the arrangement with AeroLease when AeroLease attempted to repossess the plane in December 2002. The district court, however, concluded that even though Hill had ostensible authority, Badlands was not bound by Hill’s actions because Aero-Lease did not act in good faith and was negligent in the sale-lease back transaction. The district court entered judgment requiring AeroLease to reconvey the airplane and engines to Badlands, granting Weinreis, Michels, and Badlands judgment against Hill for $23,828.08 for damages, and granting AeroLease judgment against Hill for $103,309, the value of the plane. AeroLease appealed.

II

[¶ 8] AeroLease argues the district court erred as a matter of law in failing to apply a subjective test in determining Aer-oLease’s good faith, and even under an objective standard of good faith, Aero-Lease acted in good faith. AeroLease also claims the district court clearly erred finding negligence.

[¶ 9] Under N.D.C.C. § 3-03-03, Aero-Lease must have acted with good faith and without ordinary negligence in order to bind Badlands for Hill’s actions under mere ostensible authority. Section 3-03-03, N.D.C.C., states, “A principal is bound by acts of his agent under a merely ostensible authority to those persons only who in good faith and without ordinary negligence have incurred a liability or parted with value upon the faith thereof.” (Emphasis added.) “[Ojrdinary negligence, [shall consist] in the want of ordinary care and diligence.... ” N.D.C.C. § 1-01-17. Further, N.D.C.C. § 1-01-15 provides, “Ordinary care or diligence means such as a person usually exercises about his own affairs of ordinary importance.”

[¶ 10] A district court’s determination of negligence is a finding of fact which will not be set aside on appeal unless it is clearly erroneous under N.D.R.Civ.P. 52(a). Layman v. Braunschweigische Maschinenbauanstalt, Inc., 343 N.W.2d 334, 339 (N.D.1983) (issues of negligence are questions of fact for the trier of fact); F-M Potatoes, Inc. v. Suda, 259 N.W.2d 487, 492 (N.D.1977) (ample evidence in the record supported trial court’s negligence finding). See Miller v. Diamond Res., Inc., 2005 ND 150, ¶ 8, 703 N.W.2d 316 (negligence questions raised genuine issues of material fact precluding summary judgment). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support it, or if the reviewing court, on the entire record, is left with a definite and firm conviction a mistake has been made. Fischer v. Berger, 2006 ND 48, ¶ 8, 710 N.W.2d 886; Albrecht v. Metro Area Ambulance, 2001 ND 61, ¶ 6, 623 N.W.2d 367.

[¶ 11] The district court here, after concluding Hill had acted with ostensible authority, decided AeroLease was negligent based on problems with the documentation AeroLease had received, together with AeroLease paying all consideration to Hill, and not to Badlands. Specifically, the district court made the following findings and conclusion considering AeroLease’s negligence in dealing with Hill:

14. Hill did represent himself to Stan Shaw as the President of Badlands Flight Group, Inc. AeroLease changed the documents to show Hill as president. Weinreis and Michels were not aware that the Bill of Sale filed with FAA listed Hill as the president.

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Related

Albrecht v. Metro Area Ambulance
2001 ND 61 (North Dakota Supreme Court, 2001)
Weinreis v. Hill
2005 ND 127 (North Dakota Supreme Court, 2005)
Miller v. Diamond Resources, Inc.
2005 ND 150 (North Dakota Supreme Court, 2005)
Fischer v. Berger
2006 ND 48 (North Dakota Supreme Court, 2006)
F-M Potatoes, Inc. v. Suda
259 N.W.2d 487 (North Dakota Supreme Court, 1977)
Layman v. Braunschweigische Maschinenbauanstalt, Inc.
343 N.W.2d 334 (North Dakota Supreme Court, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
2006 ND 170, 719 N.W.2d 354, 2006 N.D. LEXIS 173, 2006 WL 2074727, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weinreis-v-hill-nd-2006.