American Bank Center v. Wiest
2010 ND 251
| N.D. | 2010Background
- Bank seeks rescission of a $250,000 loan and partial repayment of a $200,000 line of credit to Wiest, following Wiest’s default.
- District court found Palmer fraudulently induced Wiest and imputed Palmer’s fraud to the Bank due to agency.
- Court also found Palmer and Burckhardsmeier operated under a scheme involving Glass Blast and related entities.
- Court concluded Palmer, as Bank officer, breached a fiduciary duty to Wiest in the $200,000 advances.
- Equitable rescission under N.D.C.C. § 32-04-21 was granted for the $250,000 loan, and $76,678.65 was ordered repaid on the $200,000 loan.
- Bank appeals the imputation, fiduciary finding, and scope of recovery; Wiest cross-appeals in part seeking full relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Palmer’s fraud can be imputed to the Bank | Bank contends imputation is improper | Wiest contends imputation is proper due to agency | Not clearly erroneous; fraud properly imputed to Bank |
| Whether Palmer had a fiduciary relationship with Wiest | Bank argues no fiduciary duty arose | Wiest asserts fiduciary relationship existed | Not clearly erroneous; fiduciary relationship found |
| Whether Wiest’s equitable rescission of the $250,000 loan was appropriate | Bank claims abuse of discretion | Wiest argues rescission appropriate due to fraud | No abuse of discretion; rescission affirmed |
| What is the proper recovery on the $200,000 line of credit after fiduciary breach | Bank seeks full repayment | Wiest seeks offset/limit recovery | District court’s partial recovery affirmed; $76,678.65 due |
Key Cases Cited
- Dewey v. Lutz, 462 N.W.2d 435 (N.D. 1990) (imputation of agent’s knowledge to principal and related limitations)
- Aetna Indem. Co. v. Schroeder, 95 N.W.436 (N.D. 1903) (adverse interest exception to imputation in limited contexts)
- First Nat. Bank of Nome v. German American Ins. Co., 134 N.W. 873 (N.D. 1911) (adverse interest exception origins in North Dakota law)
- Brakken v. First State Bank, 468 N.W.2d 633 (N.D. 1991) (fiduciary duty arises from special circumstances in bank-customer relations)
- Volk v. Volk, 121 N.W.2d 701 (N.D. 1963) (restoration principles and equity in rescission cases)
- Erickson v. Erickson, 782 N.W.2d 346 (N.D. 2010) (fraud elements and standards for actual/constructive fraud)