Alicia Haliburton, o/b/o Children, petitioner, Respondent, vs. Alex L. Jackson, Appellant, State of Minnesota, Intervenor-Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C6-01-373

 

TranCentral, Inc.,

Respondent,

 

vs.

 

Emery Worldwide Airlines, Inc.,

Appellant.

 

Filed September 25, 2001

Affirmed

G. Barry Anderson, Judge

 

Hennepin County District Court

File No. 001340

 

 

William H. Henney, Law Office of William Henney, 5101 Thimsen Avenue, Suite 200, Minnetonka, MN  55345 (for respondent)

 

Michael C. Glover, Kalina, Wills, Gisvold & Clark, 941 Hillwind Road N.E., Suite 200, Minneapolis, MN  55432 (for appellant)

 

            Considered and decided by G. Barry Anderson, Presiding Judge, Roland C. Amundson, Judge, and Daniel F. Foley, Judge*.

U N P U B L I S H E D  O P I N I O N

G. BARRY ANDERSON, Judge

            Appellant Emery Worldwide Airlines, Inc. ("EWA"), challenges the district court's denial of its motion for amended findings or a new trial, arguing that the district court (1) clearly erred in its findings of fact; (2) erred in concluding that it received proper notice of assignment pursuant to Minn. Stat. § 336.9-318 (1998); and (3) abused its discretion in an evidentiary ruling.  We affirm.

FACTS             Respondent TranCentral, Inc., a Minnesota corporation, is in the business of purchasing business invoices at a discount, primarily from trucking companies, and attempting to collect the invoices in full from the account debtors.  On October 13, 1998, TranCentral entered into a Factoring, Security, and Service Agreement ("the agreement") with Stanley S. West, d/b/a West Brothers Trucking ("West").  Pursuant to the Agreement, West agreed to submit its invoices to TranCentral for review and verification. If the invoices were acceptable, TranCentral would purchase them at a discount, notify the account debtor, and attempt to collect the invoices in full. 

            Appellant Emery Worldwide Airlines, Inc. ("EWA") is an airline in the business of transporting goods by air for its customers.  Emery Air Freight Corporation ("EAFC") is an air-freight forwarding company with terminals in various locations throughout the United States.  EWA and EAFC are separate business entities, but both are subsidiaries of CNF, Inc. ("CNF"), headquartered in Portland, Oregon. 

EWA sometimes uses the services of other transportation companies, and it hired West to transport goods during December 1998 and January 1999.  After completing its work, West generated invoices to EWA for $47,339.20, all purchased by TranCentral.  EWA submitted payment on the invoices to West, not TranCentral, on January 22, 1999 ($37,164.20) and February 1, 1999 ($5,100).

TranCentral commenced an action against EWA for collection of payment for numerous invoices, arguing that EWA erroneously paid West despite West's assignment of the invoices to TranCentral.  The district court conducted a bench trial on November 6, 2000.  In an attempt to prove that it provided reasonable notice of the assignment to EWA, TranCentral employee Glenn Herrig testified that he called EWA on December 8, 1998, one day after TranCentral received its first invoice from West, and spoke with Steve Gibbons, the transportation manager at EWA's Springfield, Massachusetts office.  Herrig testified that he told Gibbons that

[TranCentral is] the factoring company that Stanley West from West Brothers is working with.  I do recall asking him specifically about the information in terms of the addresses that we had and a [facsimile] number that we were going to be sending the notice of assignment information to. 

 

TranCentral's phone records show that a call was placed from TranCentral to EWA on December 8, 1998.  Herrig stated that, after the conversation with Gibbons, he faxed the notice of assignment to the number provided by Gibbons.  The facsimile went to EAFC and, according to Gibbons, was never received by EWA. 

To support Herrig's testimony, TranCentral introduced into evidence Herrig's computer notes referencing the December 8th conversation; TranCentral's long-distance phone log, which listed the .4 minute call from TranCentral to Gibbons; and a facsimile confirmation sheet from Herrig's computer facsimile machine showing that a successful facsimile was sent to EAFC's facsimile machine. 

            Herrig also testified that he called EWA several other times between December 1998 and January 1999 to inquire about collection on the West invoices.  Herrig's computer log book states that he placed calls to Gibbons at EWA on December 15, 1998, December 22, 1998, December 31, 1998, January 8, 1999, and January 13, 1999 to verify that TranCentral owned the invoices.  TranCentral's phone logs show that calls were made from TranCentral to EWA on January 8th and January 13th.  Herrig, however, testified that he sometimes used a toll-free "800 number" to reach EWA, which would not show up on the TranCentral phone logs.

In contrast, Gibbons testified that he never spoke with Herrig, did not provide TranCentral with a facsimile number, and never received a facsimile from TranCentral.  Moreover, EWA accounts-payable employee Linda Fleming, stationed in Ohio, testified that she was not aware of any "800 number" that Herrig could have used to reach Gibbons at the Springfield office.

Herrig also testified that on January 15, 1998, prior to any payment from EWA to West, he called Loretta Sampson, a CNF employee who handles billing matters for EWA in Portland, Oregon.  EWA administers accounts payable first locally and then forwards them to CNF's accounts-payable office in Portland for payment.  Herrig stated that Sampson confirmed that the assignment was "in place" and "okayed" and that payment to TranCentral was coming.  Sampson testified that she did not remember receiving a phone call from Herrig putting her on notice of the assignment.

TranCentral's president and operations manager, Daniel Robbins, testified about the company's general business practice for purchasing invoices and notifying account debtors of the assignment.  Robbins stated that after purchasing invoices, employees would verify the amount of the invoice is correct, separate the originals from the photocopied documents, stamp a notice of assignment on the original invoice, place TranCentral's address sticker over the name and address of its client, send the stamped and stickered original invoices to the account debtor for collection while placing the photocopied documents in the file.  TranCentral employee Christin Johnson testified that she recalled processing and sending out the West invoices because they were handwritten, while most invoices are typed or printed, and because the invoices were full of writing to the extent that there was little room for the rubber stamp.  EWA, however, introduced the West invoices at trial.  They were not stamped or stickered.

At the conclusion of the trial, EWA requested that the district court dismiss TranCentral's action for failure to present proof of its assignment to EWA.  The district court denied the motion.  By order dated November 28, 2000, the district court concluded that TranCentral provided the necessary notice to EWA of its assignment and awarded TranCentral $45,039.20, plus costs and pre-verdict interest.[1]  EWA moved for amended findings or a new trial, arguing that the district court (1) clearly erred in its findings of fact; (2) erred in concluding that EWA received proper notice of assignment required under Minn. Stat. § 336.9-318 (1998); and (3) abused its discretion in an evidentiary ruling.  The district court denied EWA's post-trial motions.  This appeal follows.

D E C I S I O N

I.

Appellant first argues that the district court erred in denying its motion for amended findings.  Findings of fact are not set aside unless clearly erroneous.  Minn. R. Civ. P. 52.01.  A finding is "clearly erroneous" if the reviewing court is "left with the definite and firm conviction that a mistake has been made."  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (citation and quotation omitted).  "The findings must be manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole."  Tonka Tours, Inc. v. Chadima, 372 N.W.2d 723, 726 (Minn. 1985).  When determining whether findings are clearly erroneous, we view the record in the light most favorable to the district court's findings.  Lossing v. Lossing, 403 N.W.2d 688, 690 (Minn. App. 1987).  That the record might support findings other than those made by the district court does not show that the court's findings are defective.  Elliott v. Mitchell, 311 Minn. 533, 535, 249 N.W.2d 172, 174 (1976).

            Appellant challenges the district court's finding that on December 8, 1998, Herrig contacted Gibbons to verify the invoices, the rates, and facsimile number to notify EWA of the assignment.  Appellant argues that Herrig's testimony is implausible when viewing the record as a whole because Gibbons denies ever speaking with Herrig, and the phone logs show that the alleged conversation lasted .4 minutes and did not come from Herrig's phone extension. 

But Gibbons testified that he was very busy at that time of the year.  He received around 20-30 phone calls a day and was familiar with how factoring agreements worked.  A long phone conversation was not necessary.  As for the phone-extension issue, Herrig testified that if his phone "code was not working that day, [he] would have used the code of another account manager." 

The district court, given two different theories of the facts, apparently accepted TranCentral's version of events and rejected EWA's, and this court will defer to such credibility determinations.  See Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (stating appellate courts must defer to district court credibility determinations).  The district court is given broad discretion because it is in the best position to determine which witnesses are credible and to weigh the evidence.  In re Welfare of D.L., 486 N.W.2d 375, 380 (Minn. 1992).  Although the record is this case certainly supports findings other than those made by the district court, viewing the record in the light most favorable to the district court's findings, we conclude that the finding regarding the December 8, 1998 conversation between Herrig and Gibbons is not clearly erroneous.

            Appellant next challenges the district court's finding that Herrig contacted Gibbons on December 15, 1998, to verify the agreement and the procedures to be followed for receiving payment.  Appellant argues that there is nothing in the record, other than the testimony of Glenn Herrig, to support the finding.  But Herrig testified that he sometimes used an "800 number" to contact EWA, which would not appear in the phone log.  EWA counters that accounts-payable employee Fleming testified that there was not an "800 number" at the Springfield office.  But EWA did not introduce any other evidence to support Fleming's testimony.  Thus, once again, the district court, given different testimony by two witnesses, apparently accepted Herrig's version of events and rejected Fleming's.  See Sefkow, 427 N.W.2d at 210 (stating that appellate courts must defer to such credibility determinations).  We conclude that the finding regarding the December 15, 1998, conversation was not clearly erroneous. 

            Finally, appellant argues that the district court clearly erred in finding that EWA previously paid $2,300 to TranCentral for an invoice obligation.  Appellant contends that EAFC paid TranCentral the sum for invoice obligations, and nothing in the record supports the district court's finding.  But Daniel Robins, TranCentral's president and operations officer, when testifying about purchasing invoices from EWA, stated that TranCentral collected on an invoice from "Emery" in the amount of $2,300.  We conclude that the district court's finding was not clearly erroneous.

II.

Appellant next argues that this court should reverse the district court and order a new trial.  The decision to grant a new trial lies within the sound discretion of the district court and will not be disturbed absent a clear abuse of that discretion.  Halla Nursery, Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).  Where the district court exercised no discretion but instead based its order on an error of law, however, a de novo standard of review applies.  Id.  On appeal from a denial of a motion for a new trial, the verdict must stand unless it is "manifestly and palpably contrary to the evidence viewed as a whole and in the light most favorable to the verdict."  Roemer v. Martin, 440 N.W.2d 122, 124 (Minn. 1989) (citation and quotation omitted). 

EWA argues that a de novo standard of review is proper in this case because the district court erred by failing to hold TranCentral to its proper burden of proof to recover under Minn. Stat § 336.9-318(3).  We disagree.  The district court properly placed the burden on TranCentral to prove that it gave EWA proper notice of the assignment, as evidenced in its conclusion of law, which states:

[T]he notices provided by [facsimile] and phone by [TranCentral] to [EWA] concerning [TranCentral's] purchase of the invoices from West were timely and sufficient under Article 9 of the Minnesota Uniformed Commercial Code.

 

Moreover, in its brief, EWA actually argues that TranCentral "failed to meet its burden of proof" and does not frame a legal issue entitled to de novo review. (emphasis added).  The issue before us is whether the district court abused its discretion in denying a new trial and concluding that TranCentral's notices were sufficient.  See Halla, 454 N.W.2d at 910 (stating that the decision to grant a new trial lies within the discretion of the district court and will not be disturbed absent a clear abuse of that discretion).

In determining whether the district court correctly concluded that TranCentral gave EWA notice of its assignment of West's invoices, we look to Minn. Stat. § 336.9-318(3) (1998), which states:

The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee.  A notification which does not reasonably identify the rights assigned is ineffective.  If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor.

 

Id.  Although "notice" and "notification" are not defined in Article 9 of the Minnesota Uniform Commercial Code (UCC), Article 1, which applies generally to the UCC, defines "notice:"

(26) A person "notifies" or "gives" a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it.  A person "receives" a notice or notification when

                                               

             (a) it comes to that person's attention;  or

 

            (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by that person as the place for receipt of such communications.

 

(27) Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to the individual's attention if the organization had exercised due diligence.  An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines.  Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of regular duties or unless the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

 

Minn. Stat. § 336.1-201(26), (27) (1998).

            This court has interpreted the notice-of-assignment statute, stating:

Section 9-318(3) clearly delineates the legal relationship between the account debtor * * * and the assignee * * * once the account debtor receives adequate notification of an assignment.  The account debtor, upon receipt of said notification, is duty-bound to pay the assignee and not the assignor.  Payment to an assignor, after notification of assignment, does not relieve the account debtor of his obligation to pay the assignee unless the assignee consents to such a collection process.  The account debtor's failure to pay the assignee after receiving due notification gives rise to an assignee's claim for wrongful payment.

 

Tradex, Inc. v. Modern Merch., Inc., 386 N.W.2d 800, 802 (Minn. App. 1986) (quoting Ertel v. Radio Corp. of America, 307 N.E.2d 471, 473 (Ind. 1974)) (emphasis omitted).  Thus, "once an account debtor receives notice that an amount owed has been assigned, the debtor loses the authority to pay the assignor."  Nat'l Trade Trust, Inc. v. Merrimac Constr., 524 N.W.2d 14, 16 (Minn. App. 1994).  But "notification of an assignment will not cut off the account debtor's rights to pay his original creditor unless it contains an explicit direction that payment is to be made to the assignee."  Vacura v. Haar's Equip., Inc., 364 N.W.2d 387, 391 (Minn. 1985).

TranCentral employee Herrig testified that he spoke with Gibbons at EWA five different times to inform EWA of the assignment and to direct future invoice payment to TranCentral.  Importantly, in a case that turns on credibility, Herrig testified that he contacted Loretta Sampson, a billing representative for CNF, on January 15, 1999, prior to any payment from EWA to West, to inform her of the assignment and to inquire about payment.  According to Herrig, Sampson confirmed that the assignment was "in place" and "okayed," and that payment to TranCentral was coming.  Herrig's computer-log notes support his testimony.  TranCentral's phone logs show that two calls to Sampson, totaling 14.2 minutes, took place on January 15, 1999.  Although the evidence that TranCentral provided reasonable notice of the assignment to EWA is hardly overwhelming, we conclude that the district court did not abuse its discretion by denying appellant's motion for a new trial given the number of contacts with EWA regarding the assignment.  Cf. Bay Area Factors v. Target Stores, Inc., 987 F. Supp. 734, 738 (D. Minn. 1997) (notice of assignment that misidentified the assignee constituted reasonable notice of assignment); Capital Factors, Inc. v. Caldor, Inc., 182 A.D.2d 532, 532-33 (N.Y. App. Div. 1992) (invoices stamped "payable" to the factoring company were sufficient to put the account debtor on notice that the account had been assigned); Municipal Trust & Sav. Bank v. Grant Park Cmty. Dist. No. 6, 525 N.E.2d 255, 258 (Ill. App. Ct. 1988) (letter informing account debtor of assignment and requesting payment reasonable notice; no "magic words" necessary).

EWA also argues that TranCentral failed to seasonably furnish reasonable proof of its assignment pursuant to Minn. Stat. § 336.9-318(3).  As support, appellant points to computer notes from TranCentral employee Noel Friday, who wrote: 

I spoke with Loretta [Sampson] A/P, re: this account [on February 3, 1999].  * * * I asked if they had our assignment, and she that they have to have each invoice stamped, but I should [sic] send her an assignment anyway.

 

Appellant argues that Friday did not send Sampson the notice of assignment until March 22, 1999, and, as a result, did not provide a timely notice.  Appellant cites Bay Area Factors, 987 F. Supp. at 737, for support.  In that case, the account debtor did not dispute that it received written notice of the assignment, but argued that the proper name of the assignee's company was not in the notice of assignment.  Id.  The federal district court concluded that had the account debtor been confused by any ambiguity, the account debtor should have requested more specific information of the assignment.  Id. at 738. 

            We do not believe that the Bay Area Factors case supports appellant's argument.  First, EWA had already paid West for the invoices at the time of the conversation between Friday and Sampson; there was no need for clarification as to whether the assignment was in place.  Second, Friday testified that he talked to an employee at CNF after his conversation with Sampson and was told that the assignment was "in place."  We conclude that the district court did not abuse its discretion by denying appellant's new-trial motion.

III.

Finally, appellant challenges the district court's decision to admit into evidence Exhibit 21, the facsimile confirmation sheet from TranCentral employee Herrig's computer, over EWA's objection.

Evidentiary rulings are within the discretion of the district court and will not be reversed unless there has been an abuse of discretion.  Jenson v. Touche Ross & Co., 335 N.W.2d 720, 725 (Minn. 1983).  A complaining party must demonstrate prejudicial error in order to obtain a new trial on the grounds of improper evidentiary rulings.  Midway Ctr. Assoc. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975).

Rule 901 of the Minnesota Rules of Evidence requires that if evidence is to be admitted, there must be "evidence sufficient to support a finding that the matter in question is what its proponent claims."  Minn. R. Evid. 901(a).  Appellant's objection at trial was that TranCentral employee Herrig did not have "any competency to test out where this report [the facsimile confirmation sheet] came from."  Herring, however, testified that he contacted Gibbons at EWA and confirmed a facsimile number which to send notice of assignment.  Herrig stated that the transmission sheet came from his computer; his computer also operates as a facsimile machine, and, when a facsimile is sent from his computer, the computer generates a facsimile confirmation sheet.  Herrig confirmed that he sent a facsimile on the date and time specified on the confirmation sheet and that the facsimile number on the confirmation sheet matched the facsimile number given to him by Gibbons.  Herrig confirmed that the facsimile was addressed to "Emer/Chelsea", which he stated was an abbreviation for Emery at Chelsea, Maryland.  Herrig also confirmed that the time the facsimile was sent closely related to the call placed to Gibbons, as evidenced by the long-distance phone logs.  We conclude that the district court did not abuse its discretion by admitting into evidence Exhibit 21 because there was sufficient foundation for the document's admission.

Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

 

[1] The difference between TranCentral's claim ($47,339.20) and the amount of the judgment ($45,039.20) is $2,300, which was paid to TranCentral prior to trial.