Ries Biologicals, Inc. v. Bank of Santa Fe

OPINION BY: CROW, District Judge.
This is an appeal by the defendant, the Bank of Santa Fe, from a judgment for the plaintiff, Ries Biologicals, Inc., based upon the bank's alleged oral guarantee of payment for supplies delivered by Ries to Dialysis Management Systems, Inc. The trial court awarded the plaintiff $20,276.69 plus interest in the amount of $6,632.96, and costs including attorneys fees.

Ries Biologicals is distributor of medical supplies. In 1979, Ries began selling supplies to Dialysis Management Systems, Inc. (DMS) a health care provider specializing in kidney dialysis, operating in New Mexico and adjacent states. DMS was experiencing financial problems quickly accumulating a debt to Ries Biologicals in the approximate amount of $42,000. Because of the size of this debt, in January of 1980 Ries refused to make further shipments to DMS except for cash on delivery. Sometime in the first quarter of 1980, Ries resumed shipments to DMS on credit. The trial court found that resumption of credit shipments resulted from Ries' reliance on the Bank's oral agreement to guarantee payment for orders which were approved in advance. From the time of the agreement until July 30, 1980, Ries made regular shipments to DMS based upon prior approval of the senior vice-president of the bank, Philip Levitt. During this time, the invoices were sent directly to Mr. Levitt at the bank.

Despite obtaining advance approval from the bank, Ries was not paid the full amount due for materials shipped under this arrangement. The trial court entered judgment in favor of Ries for the balance due and further found that the debt constituted an open account which, under New Mexico law, entitles Ries to recover attorney's fees.

On appeal, the Bank of Santa Fe contends that the claim of Ries Biologicals is barred by the statute of frauds, that the relationship between Ries Biologicals and the Bank of Santa Fe does not constitute an open account as a matter of law, that any oral guarantee of the debts of DMS by Philip Levitt is void as an ultra vires act, that the oral agreement was established by inadmissible hearsay, and that Ries Biologicals failed to adequately carry its burden of proving delivery and acceptance of the goods. For the reasons stated below, we affirm.

All of the bank's contentions on appeal depend, to some degree, on the trial court's assessment of the evidence presented. For this reason, we first consider whether the disputed evidence was appropriately received. The admission of evidence is largely a matter of discretion and we will not reverse the trial court's decision to admit evidence absent manifest error. Big O Tire Dealers v. Goodyear Tire & Rubber Co., . . .

The defendants contend that the trial court erroneously admitted testimony concerning Philip Levitt's oral, out-of-court statements guaranteeing payment for approved shipments and documents, primarily correspondence from Philip Levitt, which were offered in support of the existence of the oral guarantees.

The oral statements of Philip Levitt were expressly offered for a nonhearsay purpose. The relevance of Levitt's statements is not their truth or falsity, rather it is the fact the statements were made. The relevance of the statements depends, therefore, not on the credibility of the out-of-court declarant, Philip Levitt, but on that of the testifying witness…. There was no manifest error in the admission of testimony concerning the oral statements of Philip Levitt. . . .

The judgment of the trial court is affirmed.