Opinion
Rehearing Denied Oct. 23, 1975.
Page 92
Delaney & Balcomb, Kenneth Balcomb, John A. Thulson, Glenwood Springs, for plaintiff-appellee.
Milton A. Oman, Salt Lake City, Keith M. Tempel, Meeker, for defendants-appellants.
PIERCE, Judge.
Defendants Vernon and Ellen Wagner appeal from directed verdicts entered on their counterclaims against plaintiff Rifle Production Credit Association (the Association), and from the refusal of the trial court to allow them to amend their pleadings to include an additional counterclaim. We affirm in part and reverse in part. This controversy commenced as a foreclosure action initiated by the Association against certain livestock owned by the Wagners. The subject of the action was a past due promissory note executed by the Wagners. Under a writ of replevin, the Association took possession of approximately 500 head of Hereford cattle. The cattle were removed by truck from the Wagners' ranch and were transported to the Rifle Sales Yard, where they were confined in corrals for approximately two weeks. Thereafter the cattle were returned to the Wagners.
The Wagners filed an answer and two counterclaims: one based on wrongful conversion, the other alleging libel and slander. A third counterclaim, trespass to chattels, was added later by amendment. Subsequently, the Wagners satisfied their indebtedness to the Association, and the Association's complaint was dismissed, leaving only the counterclaim of the Wagners to be tried.
Trial on the counterclaims was to a jury upon the Wagners' request, and they assumed the role of plaintiffs. At the conclusion of their case, and in response to the insistence of the trial court that they elect between the trespass to chattels claim and the conversion claim, the Wagners stipulated that the trespass to chattels claim be stricken. At the same time, however, they sought to amend their pleadings to include a fourth claim for relief, premised on the alleged failure of the Association to exercise reasonable care in the timing and manner of the foreclosure, and in the preservation of the collateral, the cattle. This motion to amend was eventually denied by the trial court on the grounds that it would materially prejudice the rights of the Association. The Association then proceeded to call several witnesses, whose testimony was confined to the issue of the Association's purported right to take the cattle. At the conclusion of the Association's case, their motion for a directed verdict on the remaining counterclaims of conversion and defamation was granted.
I.
The Wagners first assert that the trial court erred in directing a verdict for the Association on the claim of conversion in that issues of fact were presented pertaining to allegations of estoppel and waiver which necessitated submission of the case to the jury.
In support of their claim of estoppel, they assert that a statement made by the president of the Association might be taken as having indicated that the subject indebtedness would be refinanced by the Association for another year and they further claim that they relied on this statement in allowing their promissory note to become overdue. Hence, they argue that the Association was thereby estopped from foreclosing on their cattle and that therefore the seizure of the cattle constituted a wrongful conversion.
The elements of estoppel include a representation of a material fact through words or conduct to another person ignorant of the truth of the matter, which representation induces that other party to act or rely thereon to his detriment. Griffith v. Wright, 6 Colo. 248. Although the elements of estoppel are normally questions of fact to be presented to a jury, International Text-Book Co. v. Pratt Mercantile & Publishing Co., 61 Colo. 571, 158 P. 712, there can be no estoppel as a matter of law where the asserted reliance is not justified. Farmers' Life Insurance Co. v. Hetherington, 85 Colo. 255, 274 P. 926.
Here, the record discloses that Mr. Wagner was fully aware that the president of the Association had neither the power nor the authority to bind the Association to such an undertaking. Where a party asserting estoppel possessed knowledge which precluded any justifiable reliance on the statements of another, a directed verdict is proper. See Guthner v. Union Finance & Loan Co., 110 Colo. 449, 135 P.2d 237. Nor is their claim that the issue of waiver must be submitted to the jury wellfounded. There is no evidence in the record before us supporting an intent on the part of the Association to relinquish its legal rights; a directed verdict on the issue of waiver was therefore proper. See Nettrour v. J. C. Penney Co., 146 Colo. 150, 360 P.2d 964.
II.
The Wagners further argue that the trial court erred in refusing to permit the amendment of their pleadings to include an additional counterclaim based on the alleged negligence of the Association in the custody and preservation of the cattle. They contend that, contrary to the requirements of s 4--9--207(1), C.R.S.1973, the time and manner in which the cattle were seized and held were not commercially reasonable, and the transporting of the cattle to the Rifle Sales Yard for confinement in corrals did not constitute reasonable care in the custody and preservation of the collateral. Their position is that the issue of reasonable care was tried with the implied or express consent of the Association, and that under C.R.C.P. 15(b), the issue should have been treated as if it had been raised in the pleadings. We agree.
The record is replete with support for the Wagners' position. Such being the case, we do not give credence to the argument of the Association that its rights would be prejudiced by amendment of the pleadings to conform to the evidence.
Counsel for the Association not only failed to object to the repeated testimony, thus raising an inference of implied consent, See Toy v. Rogers, 114 Colo. 432, 165 P.2d 1017, but also subjected the witnesses offered by the Wagners to cross-examination on the issue of the reasonableness of the Association's actions. Further, in its pre-trial statement, the Association listed a number of witnesses whose testimony was to be directed solely to the question of the treatment and condition of the cattle while in the possession of the Association, and at one point, counsel for the Association expressly questioned a witness on the specific issue of commercial reasonableness under the Uniform Commercial Code. The active participation of the Association with regard to the issue of reasonable care, coupled with its acquiescence at every juncture to the reception of evidence relevant only to such issue, compels the conclusion that the issue of reasonable care was actually tried with at least the implied, if not the express, consent of the Association.
Cases such as Quandary Land Development Co. v. Porter, 159 Colo. 8, 408 P.2d 978, cited by the Association, are not in point. In that case, and the others cited, the issues to be tried were clearly set out in the pleadings and in the pre-trial order. Such is not the situation on the facts before us. Here, the language of the pretrial order is ambiguous, and as we have noted, the parties themselves, in their pretrial statements and at trial, had not determined with any clarity the precise nature of the issues to be tried and the theories to be considered. Under these circumstances, the refusal of the trial court to allow an amendment to conform to the evidence under C.R.C.P. 15(b) was error. The purpose of that rule is to permit litigation to be determined on the merits rather than on the narrow boundaries of the pleadings. See American National Bank v. Christensen, 28 Colo.App. 501, 476 P.2d 281.
III.
By way of cross-appeal, the Association maintains that because this suit was originally instituted as an equitable proceeding triable to the court, the legal counterclaims of the Wagners could not be tried to a jury. We reject this contention.
Although this action was originally initiated by the Association as an equitable proceeding triable to the court rather than to a jury, Miller v. District Court, 154 Colo. 125, 388 P.2d 763, that claim for relief was dismissed prior to the trial court's determination of the Association's motion to strike the case from the jury calendar. and, once the claim for equitable relief had been dismissed, only the legal issues posed by the counterclaims of the Wagners remained for trial. Accordingly, the counterclaims alleged by the Wagners were properly triable to a jury. Miller v. Carnation Co., 33 Colo.App. 62, 516 P.2d 661; Johnson v. First National Bank, 24 Colo.App. 23, 131 P. 284.
Judgment affirmed in part, reversed in part, and cause remanded with directions to allow the Wagners to amend their complaint in accordance with their motion and for a new trial on the issues raised thereby.
SILVERSTEIN, C.J., and STERNBERG, J., concur.