This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
Eugene F. Miller,
d/b/a Jim’s Auto Sales,
Affirmed as modified
Scott County District Court
File No. 0109230
Ralph L. Moore, Jonathan R. Fay, Stein & Moore, P.A., 1010 Minnesota Building, 46 East Fourth Street, St. Paul, MN 55101 (for respondent)
R. Gordon Nesvig, 7501 80th Street South, Box 255, Cottage Grove, MN 55016 (for appellant)
Considered and decided by Anderson, Presiding Judge, Stoneburner, Judge, and Hudson, Judge.
Respondent First National Bank of the North sued appellant Eugene F. Miller, d/b/a Jim’s Auto Sales, on two promissory notes. Miller counterclaimed for amounts he claimed the bank took without authorization from his bank accounts. After trial, the district court awarded judgment in part to both parties. On appeal, Miller asserts that the district court erred by finding that he had agreed to reimburse the bank for any losses incurred on retail installment sales contracts purchased by the bank from Miller’s business “without recourse,” erred by amending its findings of fact and conclusions of law based on the bank’s posttrial submissions, erred by failing to direct the bank to satisfy the notes from the dealer reserve account, and erred by failing to find that the interest due on the promissory notes and the dealer reserve account were equal and therefore “cancel each other.” He also argues that he should be granted relief due to the bank’s posttrial transfer of interest-producing accounts. First National Bank of the North filed a notice of review alleging that the district court erred in limiting its setoffs to losses incurred before the date bank stopped dealing with Miller, erred by concluding that bank had to prove damages or losses from breach of warranty under retail installment contracts, and erred by awarding damages to Miller because Miller failed to meet his burden of proof. We affirm but modify the district court’s Amended Findings of Fact, Conclusions of Law, and Order for Judgment to reduce the bank’s award for losses on double-funded vehicles.
Appellant Eugene Miller, d/b/a Jim’s Auto Sales, began a financial relationship with the predecessor of respondent First National Bank of the North (bank), under a “gentlemen’s agreement,” beginning in 1995. Scott Ferrozzo, an employee of Jim’s Auto Sales, helped set up the relationship with then-bank-president, Ronald Ott. The bank bought retail installment sales contracts from Jim’s Auto Sales. Until sometime in 1997, the contracts purchased were marked “with recourse,” but because of the bank’s lending limits, subsequent contracts purchased were not marked “with recourse.” Miller, Ferrozzo, and Ott testified that it was their intent that Jim’s Auto Sales would stand behind all contracts purchased so that the bank would not have any losses, even in the event of a default on a retail installment contract, whether or not the contract was marked “with recourse.”
The difference between the bank’s 9 or 9.5 percent interest rate and the contracts’ 12 or 13 percent interest rate was deposited into dealer reserve accounts the bank opened for Miller. Ferrozzo’s home address was the address on the first dealer reserve account. Every month the balance of the dealer reserve accounts was paid by cashier’s check. Ferrozzo also opened a checking account with the bank for Jim’s Auto Sales. Miller testified that Ferrozzo paid him “what I had coming” from the accounts. If a contract payment was late, or a contract was in default, the bank withdrew money from the checking account or the dealer reserve accounts, to keep the contract current. Miller would repossess and resell the involved car, and sell the new installment sales contract to the bank. The first contract was to be paid off at that time. The cashier’s checks drawn on the dealer reserve accounts do not indicate whether they were sent to Ferrozzo, sent to Miller, or applied to contracts in default. Ott testified that he notified Miller every time that he withdrew funds from the checking account or dealer reserve accounts to apply to contracts in default.
Miller borrowed money from the bank and signed two promissory notes and security agreements, which were routinely renewed. Cars Miller purchased with the money he borrowed secured the notes. If Miller or Ferrozzo sold a car that was part of the bank’s collateral, they would bring the title to an equivalent automobile to the bank and the bank would release the title to the sold car. Miller stipulated at the time of trial that he was liable for the balance of the promissory notes. The notes provided that the bank could setoff amounts due under the notes with funds the bank held for Miller, but the bank never used funds from the dealer reserve accounts or checking accounts to pay the notes.
At some point while he was still employed by Jim’s Auto Sales, Ferrozzo obtained a personal line of credit from the bank for $100,000, which he used to finance cars that he sold at Jim’s Auto Sales. In mid-1999, Ferrozzo left Jim’s Auto Sales, and for a time, his whereabouts were unknown. Ott began to withdraw funds from Miller’s dealer reserve accounts to pay off Ferrozzo’s line of credit. Ferrozzo eventually resurfaced and opened his own used-car dealership. He opened a checking account and his own dealer reserve account at the bank. The bank made withdrawals from both Miller’s dealer reserve accounts and Ferrozzo’s dealer reserve account until Ferrozzo’s line of credit was paid in full. Miller complained about the withdrawals from his account to pay Ferrozzo’s loan, but did nothing to stop the practice and continued doing business with the bank under their agreement. Ott testified that he intended to repay Miller’s account from Ferrozzo’s dealer reserve account once Ferrozzo’s loan was paid. But Ott was terminated from his position with the bank before any repayments were made to Miller’s account. No evidence was presented at trial about the amount of money withdrawn from Miller’s account that was applied to Ferrozzo’s loan.
Ott testified that Miller told him more than once that he would not let the bank lose any money on the contracts. Ott described the terms of the “gentlemen’s agreement” between Miller and the bank as “if a deal went south [Miller] would continue to make the payment or pick it up.” Ott testified that Miller always “performed in the past, so I had no reason to believe that the bank was going to lose money.” Miller testified that he helped repossess cars and resell them even after the contracts were no longer marked “with recourse,” right up until Ott left the bank, and would have kept doing so. He testified that the “bank never lost a nickel . . . .”
The bank stopped buying contracts from Miller in August 2000, except for a few contracts purchased just before Ott’s employment terminated. After December 11, 2000, when the bank terminated Ott’s employment, the bank stopped using Miller to repossess and resell cars. But, over Miller’s objection, the bank continued to withdraw funds from Miller’s accounts to pay contracts in default, so Miller stopped making payments on the notes. The bank sued to collect on the notes. Miller posted a bond so that he could retain possession of the secured collateral and counterclaimed for a setoff to the note balances for checks sent from the dealer reserve accounts to Ferrozzo, amounts withdrawn from Miller’s accounts to pay contracts purchased without recourse, and for repayment of amounts debited from his account to pay Ferrozzo’s loan.
Although the bank had not raised the issue of breach of warranty in pleadings, at trial the bank claimed that it was entitled to recover losses due to Miller’s breach of warranty on several retail installment contracts, and that the bank was entitled to setoff against Miller’s dealer reserve accounts losses from “double funded” loans, in which the same car ended up as collateral for two loans due to failure to pay off the first loan after foreclosure but before the car was resold.
After a court trial, the district court ordered judgment for the bank on the promissory notes and judgment for Miller for $100,000 used to repay Ferrozzo’s loan. The district court concluded that the parties had an agreement that bound Miller to make good on the installment sales contracts so long as he could repossess and resell the cars. The district court concluded that once the bank prevented Miller from repossessing and reselling the cars, the bank was no longer entitled to withdraw funds from his dealer reserve accounts to cover the defaulted contract payments “inasmuch as it has walked away from the deal.” The district court awarded the bank a setoff against Miller’s dealer reserve accounts “for any losses it incurred prior to December 11, 2000, which resulted from defaults in the retail installment contracts it purchased from [Miller],” but denied setoff of any losses incurred after December 11, 2000, and ordered all sums deposited in the dealer reserve account after December 11, 2000, paid to Miller. The district court concluded that the bank had failed to prove claimed warranty breaches for failure to disclose branded titles and failed to prove any losses from Miller’s failure to perfect a security interest in five specific vehicles. The judgment did not address the bank’s claim on “double funded” cars.
The bank moved for amended or additional findings of fact and conclusions of law and submitted a supporting affidavit by its current executive vice-president, Thomas Berg. Berg’s affidavit contained information that was not presented at trial, including the bank’s calculation of the actual amount, including interest, withdrawn from Miller’s account and applied to Ferrozzo’s loan, and documentation on 14 installment contracts that the bank claims were in default for nonpayment as of December 10, 2000, in the amount of $206,033.93, and that were later “charged off” for a loss of $247,296.92. Berg’s affidavit also documented the amount of interest credited to Miller’s dealer reserve account.
Miller opposed the bank’s posttrial motions and moved that the conclusions of law be amended to reflect that the bank have judgment only for the balance of the promissory notes at the date of maturity because Miller’s dealer reserve accounts, which could be setoff against the notes, had sufficient funds to pay the notes when they matured. Miller also requested that he be awarded interest on the funds in his dealer reserve account in an amount equal to the interest that accrued on the notes from their date of execution. Miller also requested that the bond be cancelled and that judgment be entered in his favor for $248,328.06, representing the amount the bank took from his checking account to cover “without recourse” contracts.
Without further hearing, the district court amended the findings of fact, conclusions of law, order for judgment, and judgment to award the bank $154,227.19 for its loss on double-funded vehicles, and to reduce the award to Miller for funds used to pay Ferrozzo’s loan from $100,000 to $90,425.42 (the amount stated in Berg’s affidavit). The district court also ordered Miller to deliver to the bank vehicles that secured the notes. The bank was awarded $5,000 for attorney fees and costs. The amended judgment does not specify the amount of the bank’s setoff for “losses incurred prior to December 11, 2000,” but in the memorandum attached to the amended judgment, the court concluded that the bank relinquished its right to be held harmless for contracts that were in default on December 11, 2002, by not permitting Miller to enforce the contracts. The memorandum also expressed the district court’s intention that any balance owing to the bank after setoffs be satisfied through the “sale of the collateral or bond.” Miller appealed, and the bank filed a notice of review.
I. Gentlemen’s agreement to make good contracts sold without recourse
Miller argues that the district court erred in concluding that the bank could use his funds to make good contracts that were assigned to the bank “without recourse.” The district court found that there was an agreement between Miller and the bank that Miller would “make the bank whole” in the event of defaults on retail installment contracts sold to the bank, whether the contracts were assigned to the bank with or without recourse, so long as Miller was able to enforce the contracts by repossessing and selling the subject vehicles. The district court found that this was the course of conduct followed by the parties until December 11, 2000.
“On appeal, a [district] court’s findings of fact are given great deference, and shall not be set aside unless clearly erroneous. . . . If there is reasonable evidence to support the [district] court’s findings of fact, a reviewing court” will not disturb those findings. Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (citations omitted).
The manifestation of mutual assent may be made wholly or partly by spoken words, by the conduct of the parties, or by other acts of the parties. Bergstedt, Wahlberg, Berquist Assocs., v. Rothchild, 302 Minn. 476, 479, 225 N.W.2d 261, 263 (1975). The record contains ample evidence to support the district court’s findings regarding this “gentlemen’s agreement,” and we will not disturb those findings.
II. Posttrial evidence
Miller argues that the district court erred by amending the judgment based on posttrial evidence submitted by the bank. The three amendments to the judgment granted on the bank’s posttrial motion involved (1) substituting the actual amount of funds withdrawn from Miller’s accounts to pay Ferrozzo’s loan; (2) including an award to the bank for double-funded vehicles; and (3) specifying the amount of deposits to Miller’s dealer reserve account since December 11, 2000.
At trial, Miller failed to establish the amount of money actually taken from his accounts to repay Ferrozzo’s loan, and the district court could have denied any relief on this claim due to Miller’s failure to prove damages with specificity. The bank, however, conceded at oral argument that it is willing to be bound by the court’s determination that Miller was damaged in the amount stated in Berg’s affidavit. And Miller conceded at oral argument that there was no evidence challenging the bank’s calculation. We therefore conclude that the district court did not err by amending the judgment to reflect the bank’s calculation of the actual amount, including interest, due Miller for application of funds from his accounts to repayment of Ferrozzo’s loan.
The bank’s motion and supporting memorandum concerning double-funded vehicles did not include any new evidence. The district court apparently inadvertently failed to address this claim, which was fully litigated, in the original judgment. But the bank’s posttrial memorandum recites inaccurate amounts for loss on double-funded vehicles. The memorandum recites totals from trial exhibits 28 and 29, but those totals were amended by testimony at trial. The final figure, based on the record, for the total of contracts covered by exhibit 28 was $46,202, and the final figure for the contracts covered by exhibit 29, based on the record, was $85,137. Therefore, the award for double-funded vehicles should have been $131,339. Because the district court intended to award recovery based on the record, we modify finding of fact # 20 and conclusion of law # 2, to reflect the accurate figure as testified to at trial for losses on double-funded vehicles: $131,339.
The district court relied on the bank’s posttrial affidavit regarding the amount generated on Miller’s dealer reserve account from December 11, 2000. The trial testimony and original judgment contemplated that the bank would make this calculation. And Miller has not presented any evidence to refute the bank’s figures. We conclude that the district court did not err by incorporating the amount generated by these accounts specified in Berg’s affidavit, in the amended judgment.
The district court properly rejected the bank’s claim for amounts attributable to contracts in default as of December 11, 2000, reiterating in its memorandum that because Miller was denied the opportunity to cure these defaults, the bank relinquished its right to withdraw funds from Miller’s account to cover the defaults (which were not yet losses) as of December 11, 2000.
III. Setoffs from reserve accounts
Miller first argues that because the bank directed Miller to assign retail installment sales contracts without recourse, to avoid the bank’s lending limits, the bank is not entitled to setoff of claimed losses against his dealer reserve account because setoff is equitable relief, and the bank did not come to the district court with clean hands. This argument was not presented to the district court and will not, therefore, be addressed by this court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating appellate court will generally not consider matters not argued and considered in the district court).
Miller next argues that, because the promissory notes provide that the bank may setoff “any amount due and payable under this note against any right” Miller has to receive money from the bank, the bank must apply money from the dealer reserve accounts to pay off the notes before using those funds to satisfy any other claims by the bank against Miller. Again, this issue was not addressed at trial or in Miller’s posttrial motions, so we decline to reach it. Id. Similarly, Miller’s arguments that interest on the promissory notes and on the dealer reserve accounts “cancel each other,” and that the bank is not entitled to further relief after transfer of retail installment contracts that were funding Miller’s dealer reserve account were not raised at trial and were not the subject of a posttrial motion, so we decline to address those issues.
IV. Limit on bank’s losses to those incurred prior to December 11, 2000
The bank argues that the district court erred in limiting its losses from retail installment contracts to losses incurred prior to December 11, 2000. We have previously affirmed the district court’s finding with regard to the agreement between the bank and Miller as not clearly erroneous. Therefore, the district court did not err in limiting recovery of the bank’s losses to the operative dates of the agreement.
The bank argues that the district court erred by requiring it to prove damages or losses from contracts it alleges were breached by Miller by his failure to perfect a security interest on five vehicles. The record, however, supports the district court’s finding that the bank did not prove that it sustained any losses prior to December 11, 2000, because of those alleged breaches, and therefore, the district court did not clearly err by failing to award the requested damages.
In its brief on appeal, the bank argued that Miller failed to meet his burden of proof regarding the amount of money withdrawn from his dealer reserve account that was applied to Ferrozzo’s loan. But, at oral argument, the bank graciously conceded that the district court could rely on the posttrial motion of Berg to establish the amount. We therefore decline to address this issue, which was not raised at trial or in the bank’s posttrial motion. Id.
We affirm the judgment of the district court but modify its Amended Findings of Fact, Conclusions of Law and Order for Judgment to reduce the bank’s award for losses on double-funded vehicles to $131,339.
Affirmed as modified.
 The original dealer reserve account for Jim’s Auto Sales was #333. A separate dealer reserve account, #666, was opened after the contracts were no longer marked “with recourse.”
 The bank actually characterized the district court’s judgment as limiting recovery to “losses from retail installment contracts to those retail installment contracts in default as of December 11, 2000.” But the judgment and amended judgment clearly state that the limit is on losses incurred as of December 11, 2000, and the court’s memorandum attached to the amended judgment makes it clear that since Miller was not allowed to remedy defaults that existed as of December 11, 2000, the bank relinquished its right to offsets for such defaults.