Cornett v. Roth, 55137

Decision Date15 July 1983
Docket NumberNo. 55137,55137
Citation666 P.2d 1182,233 Kan. 936
PartiesCharles E. CORNETT, et al., Appellants, v. Clifford R. ROTH, et al., Appellees.
CourtKansas Supreme Court

Syllabus by the Court

1. While there is no invariable rule which determines the existence of a fiduciary relationship it is manifest that there must not only be confidence of one in another, but there must also exist a certain inequality; dependence; weakness of age, mental strength, business intelligence, knowledge of the facts involved, or other conditions, giving to one an advantage over the other. (Following Denison State Bank v. Madeira, 230 Kan. 684, 640 P.2d 1235 [1982].)

2. A person who is not under any disability or disadvantage may not abandon all caution and responsibility for his own protection and unilaterally impose a fiduciary relationship on another without a conscious assumption of such duties by the one sought to be held liable as a fiduciary. (Following Denison State Bank v. Madeira, 230 Kan. 684, 640 P.2d 1235 [1982].)

3. The liability of a guarantor upon an obligation cannot be extended by implication and the guarantor should not be held beyond the precise terms of the guaranty agreement.

4. If the language of the contract of guaranty is clear and leaves no doubt as to the parties' intention concerning the measure of the guarantor's liability, the guarantor cannot be held liable in excess of the limitations that the contract language imposes.

5. The doctrine of anticipatory breach of contract by which the time to sue thereon may be accelerated applies to bilateral executory contracts; it does not apply to a mere promise to pay money, such as a negotiable promissory note. (Following Upham v. Shattuck, 151 Kan. 966, Syl. p 1, 101 P.2d 901 [1940].)

6. The assessment of attorney fees under K.S.A.1982 Supp. 60-211 and K.S.A.1982 Supp. 60-2007(b) lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of that discretion.

7. In an action for actual and punitive damages based upon an alleged breach of fiduciary duty, fraud, negligence, breach of oral contract of employment and for money damages based upon various written agreements and promissory notes, the record is examined and it is held the trial court did not commit error in (1) dismissing two causes of action as being barred by the statute of limitations; (2) dismissing two causes of action as being prematurely filed; (3) assessing an attorney fee for the filing of a frivolous motion, and (4) entering judgment for the defendant in a consolidated case.

Michael E. Whitsitt, Overland Park, argued the cause and was on the briefs for appellants.

Richard T. Merker of Wallace, Saunders, Austin, Brown & Enochs, Chartered, Overland Park, argued the cause and was on the brief for appellee Clifford R. Roth.

Mark S. Gunnison of McDowell, Rice & Smith, Chartered, Kansas City, argued the cause and was on the brief for appellee Mid-Continent Research, Inc.

HOLMES, Justice:

Charles E. Cornett and Virginia B. Cornett, husband and wife, the plaintiffs in the trial court, appeal from various judgments and orders entered in favor of the defendants, Clifford R. Roth and Mid-Continent Research, Inc. The defendant Mid-Continent Research, Inc., was formerly known as Mid-Continent Research Animals, Inc., and will be referred to herein as MCRA. The Cornetts also appeal from the assessment of an attorney fee for allegedly filing a frivolous motion and from a judgment in favor of Roth in a different case which was consolidated with the principal case in the trial court.

The facts, which are complicated and confusing, need to be set forth in some detail. In July, 1977, the Cornetts approached Mr. Roth, an attorney in Johnson County, about the possibility of selling a business operation and two pieces of real estate. It was alleged that Roth was the business adviser, or the attorney for the Cornetts, or represented them in some other unspecified fiduciary relationship. Roth denied any representation of the Cornetts or the existence of any fiduciary relationship. The Cornetts were the owners of a business known as Mid-Continent Research Animals, Inc. which raised and supplied rats for research purposes. The business was located upon fourteen acres of real estate which the Cornetts desired to sell, along with the business itself. The second tract of land was a quarter section of farm property located in Johnson County. Roth determined that he would purchase both tracts of land and the corporate stock of MCRA.

On August 19, 1977, the parties entered into a written agreement for the sale of the MCRA stock and real estate. The total purchase price was $252,000.00 to be paid as follows:

"$150,000.00 to be delivered to the Sellers in the form of an installment note to the Sellers, payable in monthly installments of $1,000.00 per month at an interest rate of eight percent (8%) per annum, payable over a period of ten (10) years at said rate with the balance of $150,000.00 due at the end of said 10 year period. Said note shall be executed to the Sellers by Mid-Continent Research Animals, Inc.

"Additionally, Buyer also agrees to deliver to the Sellers Twenty-Seven Thousand Dollars ($27,000.00) in the form of a non-interest bearing note due and payable within ten (10) years from the date hereof, in a form agreeable to the Buyer.

"Additionally, the Buyer has executed to the Sellers a note for the sum of Seventy-Five Thousand Dollars ($75,000.00) to be paid ten (10) years from August 30, 1978, with no accumulation of interest."

The agreement was executed by the Cornetts as sellers and by Roth as purchaser. MCRA was not a party to the agreement but did execute a promissory note to the Cornetts dated October 2, 1977, for $150,000.00 due September 30, 1987, with the interest at 8%, also payable on the due date. MCRA made monthly interest payments of $1,000.00 to the Cornetts through the month of May, 1980, even though they were not a party to the agreement and the note did not require payment until the due date. Answers to interrogatories indicate MCRA made the monthly interest payments pursuant to some side agreement with the Cornetts, the terms of which do not appear in the record. Mr. Cornett was retained by Roth as a consultant in the management of MCRA and was serving as its president at the time the assets were sold. The business of MCRA steadily declined and in May or June of 1980, all of its assets were sold and the proceeds utilized to pay other outstanding debts of the rat-raising venture. The Cornetts received none of the proceeds of the sale and the purchaser was not informed of the MCRA note to the Cornetts, although Mr. Cornett, as president of MCRA, executed a verified statement of the liabilities of MCRA. He did not include the $150,000.00 payable to him and Mrs. Cornett.

On August 30, 1977, the Cornetts, as sellers, and Roth, as buyer, entered into a real estate contract for the sale of the quarter section of farm land. The contract provided the total consideration of $250,000.00 would be paid as follows:

"Thirty-five Thousand Dollars ($35,000.00) deposited with Sellers, the balance to be paid in the following manner: One Hundred Thirty-Five Thousand Dollars ($135,000.00) to be delivered in the form of an installment note to the Sellers, payable in monthly installments of Six Hundred Eight and 33/100 Dollars ($608.33) per month at an interest rate of 5.4074 percent per annum, payable over a period of ten (10) years at said rate with the balance of One Hundred Thirty-Five Thousand Dollars ($135,000.00) due at the end of said 10 year period.

"Additionally, a note shall be executed in the amount of Five Thousand Dollars ($5,000.00) payable in ten (10) years from date to the Sellers at a rate of six percent (6%) per annum with no payments on principal or interest to be made until the end of the term of said note in ten (10) years with said principal and interest being paid to the Sellers at that time.

"Additionally, the Buyer has executed to the Sellers a note for the sum of Seventy-Five Thousand Dollars ($75,000.00) to be paid 10 years from August 30, 1978, with no interest accumulating.

"Additionally, the Sellers shall not secure a mortgage on said property described above in paragraph 2." (Emphasis added.)

Upon the failure to receive the $1,000.00 interest payment due on June 1, 1980, the Cornetts filed suit July 17, 1981. In the final amended petition filed January 15, 1982, the Cornetts, in four separate counts, sought actual and punitive damages and reformation of the agreements entered into with Roth. The trial court ruled that counts I and III were barred by the statute of limitations and that counts II and IV were premature and dismissed all counts alleged in the amended petition. Extensive discovery had been completed at the time the trial court ruled on the various pretrial motions which have led to this appeal. The facts involved in the award of attorney fees for filing a frivolous motion and the granting of judgment in favor of Roth in the consolidated case will be considered later in this opinion.

As a preliminary matter to determining the issues on appeal, we are faced with a jurisdictional challenge by the defendants who have filed a motion to dismiss the appeal. The journal entry of final judgment in the district court was filed October 5, 1982, and plaintiffs' notice of appeal was filed November 2, 1982. On October 15, 1982, plaintiffs had filed a motion for reconsideration of the order of October 5, 1982. This motion was overruled on November 10, 1982, and defendants contend that the notice of appeal had to be filed subsequent to that date. No additional notice of appeal was filed. Defendants have shown no prejudice resulting from the alleged premature filing of the notice of appeal. Considering the liberal construction to be given our procedural statutes and rules and the intent of our code of civil...

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