Royal Jewelers Inc., and GRB Financial Corporation, Plaintiffs and Appellees
Sherri Light, individually, and as Personal Representative of the Estate of Steven Light, Defendant and Appellant
Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Wade L. Webb, Judge.
Jon R. Brakke, Fargo, N.D., for plaintiffs and appellees.
Ronald H. McLean (argued) and Peter W. Zuger (on brief), Fargo, N.D., for defendant and appellant.
Daniel J. Crothers, Lisa Fair McEvers, Dale V. Sandstrom, Todd L. Cresap, D.J., Gerald W. VandeWalle, C.J. Opinion of the Court by Crothers, Justice. The Honorable Todd L. Cresap, D.J., sitting in place of Kapsner, J., disqualified.
[¶1] Sherri Light, individually and as personal representative of the estate of Steven Light, appeals from a judgment entered after a bench trial determining GRB Financial Corporation held a valid and enforceable security interest in a ring purchased from Royal Jewelers, Inc., and authorizing GRB Financial to foreclose its security interest in the ring. We conclude the district court did not clearly err in finding the Lights did not manifest an intent that payments on an open credit account with Royal Jewelers would be applied first to the purchase price of the ring and in finding the Lights did not detrimentally rely on Royal Jewelers' monthly account statements. We further conclude the court did not err in determining GRB Financial had a valid and enforceable security interest in the ring. We affirm the judgment.
[¶2] Royal Jewelers is a jewelry store in Fargo operated by three brothers, Richard, Brent and Gregory Olson. The brothers also own a separate corporation, GRB Financial, which operates as an indirect lender taking assignments of loans from retailers, including Royal Jewelers. Steven Light was a customer of Royal Jewelers for several years. In September 2009, Steven Light owed about $40,000 on his open credit account with Royal Jewelers.
[¶3] Steven and Sherri Light began a romantic relationship in 2008 and planned to marry in 2009. Sherri Light testified she did not want Steven Light to purchase her wedding ring from Royal Jewelers because she knew he had an outstanding debt with the store and GRB Financial. She claimed Steven Light assured her that he made arrangements with Gregory Olson at Royal Jewelers to apply any subsequent payments to first pay off a wedding ring and not to pay for his previous purchases.
[¶4] On October 2, 2009, Steven Light purchased a wedding ring for Sherri Light on his open credit account with Royal Jewelers. Royal Jewelers' charge receipt for the ring identified Steven Light's open credit account number and a purchase price of $55,050 on invoice number 346746. The charge receipt granted Royal Jewelers a security interest in the ring. According to Sherri Light, she accompanied Steven Light to Royal Jewelers on October 2, 2009, and she witnessed him verbally manifest his intent to Gregory Olson that all subsequent payments on his account would be credited toward the ring rather than toward his existing debt with Royal Jewelers. Gregory Olson stated no
agreement or manifestation of intent existed that any payments by Steven Light would first be applied toward the ring.
[¶5] On October 3, 2009, Steven Light issued a $25,500 check to Royal Jewelers, which was applied to the oldest purchases on his account. That check was returned for insufficient funds. According to Gregory Olson, Royal Jewelers' unsophisticated computerized accounting system could not reverse the payment by the NSF check to reflect the correct application of later payments by Steven Light on his account with Royal Jewelers. Gregory Olson claimed that failure resulted in Royal Jewelers' subsequent monthly statements to Steven Light erroneously stating the funds from the NSF check had been applied to Steven Light's oldest purchases and his subsequent payments in 2009 and 2010 were erroneously applied to his most recent purchases, including the ring. Royal Jewelers' monthly statements reflect Steven Light paid about $65,000 on his account from October 2009 through December 2010. Sherri Light stated Steven Light's payments were applied to the invoice number on the charge receipt for the ring and the ring was paid for by December 2010.
[¶6] In December 2010, Royal Jewelers, with Steven Light's consent, assigned Steven Light's debt with Royal Jewelers and the security for that debt to GRB Financial. Steven Light and GRB Financial executed a note modification agreement changing repayment terms, extending the maturity date of a prior note modification agreement between the parties and pledging nine additional items as security for modification, as described in an attached exhibit. The exhibit was not separately signed by Steven Light, but included the ring on a list of nine items.
[¶7] Steven Light died in February 2012. Royal Jewelers and GRB Financial sued Sherri Light, individually and as personal representative of Steven Light's estate, for a determination that GRB Financial had a valid security interest in the ring. After a bench trial, the district court found no stated preference or agreement existed between the Lights and Royal Jewelers that Steven Light's payments would be first applied to the ring. The court found even if an agreement existed, it was unenforceable under the statute of frauds because it was not in writing. The court determined that in the absence of any agreement or designation about how payments would be applied to Steven Light's debt, Royal Jewelers was entitled to apply his payments to first reduce the amount owed on his oldest purchases. The court also determined the evidence did not establish the Lights detrimentally relied on Royal Jewelers' monthly account statements about application of payments to Steven Light's account. The court further concluded Steven Light's gift of the ring to Sherri Light was subject to Royal Jewelers' security interest in the ring and GRB Financial, as an assignee of Royal Jewelers, had a valid and enforceable security interest in the ring.
[¶8] Sherri Light argues the district court clearly erred in determining the Lights did not manifest an intent or desire under N.D.C.C. § 9-12-07(1) that Steven Light's payments on his account to Royal Jewelers would be applied first to pay for the ring. She argues her testimony about Steven Light's assurances that he made arrangements with Royal Jewelers for application of his payments to the ring and about witnessing Steven Light's manifestation of that intent when the ring was purchased ...