## Facts

- Ray and Betty Jean Delzer were ranchers near Bismarck, North Dakota, who sought operating and expansion financing from United Bank of Bismarck (the Bank).
- The Delzers claimed the Bank reached an oral agreement to provide a total of $300,000 in credit if the Delzers pledged their ranch and other assets as collateral.
- The arrangement, as the Delzers understood it, included an initial $150,000 operating advance and an additional $150,000 to buy cattle.
- The Delzers executed a promissory note for $150,000, and the Bank advanced that amount.
- The Bank never advanced the additional $150,000 for cattle.
- The Delzers contended they pledged essentially all of their assets (and their son’s equipment) because they were told the deal was a $300,000 loan, and without the cattle funds they could not generate the income needed to meet their obligations.
- After the additional funds were not provided, the Delzers were unable to pay their debts, lost their ranch when the first mortgage holder foreclosed, and lost other property pledged as security to the Bank.
- The Delzers sued the Bank (filed May 24, 1985), asserting deceit (fraud) and breach of a contract to loan money, and sought exemplary damages.
- The case reached the North Dakota Supreme Court twice before on summary-judgment dismissals, which were reversed and remanded for trial.
- On remand after the second appeal, the trial court bifurcated liability and damages, and a jury returned findings that:
  - the Bank did not make a binding oral contract to lend the additional $150,000 for cattle; but
  - the Bank knowingly deceived the Delzers into giving all their property as security for a $300,000 loan when the Bank knew it was only going to loan $150,000.
- The jury awarded $538,000 in compensatory damages for deceit and $3,000,000 in exemplary damages (later reduced by the trial court).
- The trial court granted the Bank’s motion for judgment notwithstanding the verdict (JNOV) on the deceit claim based on perceived inconsistency in the jury’s findings and conditionally granted a new trial on deceit if the JNOV were reversed.

## Issues

1. Whether the jury’s finding of no binding oral contract for the additional cattle loan was so inconsistent with its finding of deceit that JNOV dismissing the deceit claim was proper.
2. Whether, if JNOV was improper, the trial court properly conditionally granted a new trial on the deceit claim.
3. Whether the Supreme Court should direct entry of judgment on the jury’s compensatory award and on exemplary damages in the reduced amount set by the trial court.

## Decision

- The Supreme Court of North Dakota reversed the JNOV dismissing the deceit claim.
- The court held the jury’s findings were not fatally inconsistent: the jury could reject an enforceable oral contract for the extra $150,000 while still finding the Bank misrepresented the transaction as a $300,000 loan to induce the Delzers to pledge all their property.
- Viewing the evidence and inferences in the light most favorable to the verdict, the court concluded reasonable jurors could find deceit and the trial court was not permitted to reweigh evidence or credibility through JNOV.
- The court reversed the conditional order granting a new trial on the deceit claim.
- The court remanded for entry of judgment for the Delzers on the jury’s compensatory damages verdict and for exemplary damages as reduced by the trial court.

## Legal Principles

- A lack of an enforceable contract does not bar tort recovery for deceit when a party is induced to act by a material misrepresentation or a promise made without intent to perform.
- Verdicts are not inconsistent merely because a jury finds no binding contract yet finds deceit; contract formation and fraud require different elements.
- On JNOV, the court must view the evidence in the light most favorable to the verdict and may not weigh evidence or assess witness credibility; JNOV is improper if reasonable jurors could reach the verdict.
- A deceit claim requires proof of a misrepresentation (or concealment) of a material fact, made with intent to induce reliance, justifiable reliance, and resulting damage.
- Exemplary damages may be awarded for tortious conduct such as deceit, and an appellate court may reinstate exemplary damages in the reduced amount set by the trial court when liability is supported by the verdict.

## Conclusion

The North Dakota Supreme Court held that the jury’s rejection of a binding oral contract for additional cattle financing did not defeat its separate finding that the Bank knowingly deceived the Delzers into pledging all their property as security for what was represented as a $300,000 loan. The court reversed the JNOV and the conditional new-trial order and remanded for entry of judgment awarding the Delzers the jury’s compensatory damages and exemplary damages in the reduced amount fixed by the trial court.


Delzer v. United Bank of Bismarck, 559 N.W.2d 531 (1997)