Valley Bank v. Dowdy

37 N.W.2d 164 (S.D. 1983)

 

RULE:

The doctrine of promissory estoppel provides: A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.

FACTS:

In order to buy a truck, appellee purchaser gave appellant bank a promissory note. The seller transferred the truck's title to appellant and appellant never transferred title to appellee. Appellee was in possession of the truck and made certain repairs to the truck but never made any payment on the promissory note. Appellant commenced an action against appellee for repossession of the truck. The trial court awarded appellant possession of the truck but ordered appellant to pay appellee for repair costs to the truck. On appeal, the court affirmed the portion of the trial court's judgment granting possession of the truck to appellant and reversed the portion of the trial court's order granting equitable relief to appellee.

ISSUE:

Could appellee purchaser recover repair costs to the truck even though appellee failed to make any payments on a promissory note which appellee gave to appellant bank for the truck?

ANSWER:

No.

CONCLUSION:

The record failed to show that appellee suffered any detrimental reliance arising from the failure of appellant to require the seller to assign the title to appellee. Although appellee lost the cost of repairs, appellee was out such amount because appellee did not pay the amount due on the note. Had appellee tendered payment of the promissory note and had appellant then been unable to deliver to appellee a properly assigned title appellee would have had a claim for detrimental reliance, but not otherwise. In addition, appellee was not entitled to a mechanic's lien because appellee could not acquire a security interest prior to that which appellee had granted to another.

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