Clifton Berglee v. First National Bank, 990 F.2d 1255, 1st Cir. (1993)
Clifton Berglee v. First National Bank, 990 F.2d 1255, 1st Cir. (1993)
Clifton Berglee v. First National Bank, 990 F.2d 1255, 1st Cir. (1993)
2d 1255
South Dakota law does not require a showing of fault in a claim for unjust
enrichment:
It is a general principle of equity that one party shall not be enriched at the
expense of another party. The enriched party may be required to make
restitution of the value of the enrichment unless the enriched party has
innocently changed its position to such a degree restitution would be
inequitable. Enrichment can be unjust if it is a result of money paid by
mistake.
A.G. Edwards & Sons, Inc. v. Northwest Realty Co., 340 N.W.2d 187,
189 (S.D.1983) (citations omitted).
Berglee contends that this difference is of no consequence since the
existence of a contract barred the Bank's unjust enrichment claim. That
argument is without merit. The premise of Berglee's declaratory judgment
action was that the transfer of funds was unauthorized by the contract.
Berglee urges us to accept both this premise and the contention that the
contract's existence precludes the Bank's counterclaim. We reject the
latter. The district court's decision to apply Montana law rather than South
Dakota law was erroneous and affected the outcome of the case.
The Bank also contends that the trial court erred in awarding Berglee a
money judgment in a declaratory judgment action. Berglee did not sue for
a money judgment of $252,000, and did not offer evidence upon which
such a judgment could properly be based. The evidence showed that this
was the amount charged by the Bank against Berglee's note for the feed
purchased from Woehlhaff after Berglee withdrew his authorization from
the Bank for these charges. All this entitled Berglee to was a declaratory
judgment that he did not owe this money to the Bank on the note, and
dismissal of the Bank's claim for recovery of this money on the note. That
seems to be all he sought, except for a relatively small amount of claimed
overpayment he had made, around $16,000.
Since the Bank went to trial on its claim on the note, and then dismissed
the claim after the evidence came in, it would be appropriate to recite in
the judgment that the Bank shall take nothing on the note. The court
should reformulate its judgment as a declaratory judgment, declaring that
the Bank is not entitled to charges against the promissory note for money
paid to Woehlhaff after the advice by Berglee. The district court should
conduct such further proceedings as may be necessary to determine the
extent of restitution appropriate, based upon such unjust enrichment as the
Bank may be able to prove Berglee obtained from the feed paid for by
Honorable David Alan Ezra, United States District Judge for the District of
Hawaii, sitting by designation
**
This disposition is not appropriate for publication and may not be cited to or by
the courts of this circuit except as provided by the Ninth Circuit Rule 36-3
The district court's order stated: "Plaintiff Berglee is entitled to judgment in the
amount of $252,876.71." At oral argument, both parties said that they
understood the order to be a monetary judgment rather than a declaration of
rights, and that subsequent efforts to obtain a clarification to the contrary from
the district court had been unsuccessful. Accordingly, the court treats the
district court's judgment as an award of monetary damages
The text of the choice of law contained in the loan agreement reads: "This Note
shall be governed by the substantive laws of the State named as part of the
Bank's address above (South Dakota)."
Randolph has been subsequently criticized by the Montana Supreme Court. "
[T]his standard [announced in Randolph ] may state an 'overly restrictive view
of the availability of restitution.' " Schweigert v. Fowler, 784 P.2d 405, 410
(Mont.1990) (citing Burnham, Contract Damages in Montana Part II: Reliance
and Restitution, 45 Mont.L.Rev. 1, 12 (1984))