Decade Inv. Corp. v. Hemmings

Decision Date29 October 1987
Citation142 Wis.2d 935,417 N.W.2d 196
CourtWisconsin Court of Appeals

Appeal from a judgment of the circuit court for Portage county: Robert C. Jenkins, Judge.

Before GARTZKE, P.J., EICH, J. and SUNDBY, J.

SUNDBY, Judge.

Decade Investment Corporation appeals a money judgment in favor of A. W. Hemmings, in fulfillment of a stock purchase agreement. Decade presents three issues: (1) Did the trial court abuse its discretion in denying Decade's motion for a mistrial because of counsel's misconduct. (2) Did the trial court abuse its discretion in admitting into evidence a handwritten letter of intent which preceded the stock agreement. (3) Did the trial court abuse its discretion in denying Decade's motion to change answers in the verdict. Because we find no abuse of discretion we affirm and do not reach Hemmings' claims of error.


Hemmings was the owner of forty-seven percent of the shares of FPC Holding Corporation ('FPCH'). FPCH owned all of the stock of Financial Planning Corporation of America ('FPCA'), an insurance brokerage company; FPC Properties Corporation, a real estate broker and property manager; and FPC Securities Corporation, a licensed securities broker-dealer. Hemmings was president of FPCH and FPC Securities.

Harold Barian, president of Harmony, Inc., offered to purchase Hemmings' FPCH stock if Hemmings acquired a controlling interest in FPCH. In January 1980 Hemmings and Barian signed a handwritten letter of intent. On February 18, 1980 a stock purchase agreement was executed between Hemmings and Harmony, Inc. In addition to cash, the agreement provided that Hemmings was to receive 'during the term of his employment by FPC Securities' ten percent of the syndication fees received by the general partner in certain limited partnerships, if (a) the general partner was Harmony, Barian or an affiliate, and (b) the limited partnership interests were sold to third-party investors by FPC Securities. Also, Hemmings was to receive ten percent of the annual net pre-tax profits of the asset management division of FPC Securities and was to be employed as president of FPCA and in an executive capacity by FPC Securities under a three-year employment contract.

On February 28, 1980 the transaction closed. Hemmings transferred his stock to Harmony, received from Harmony the down payment for the purchase of his stock and a promissory note for the balance of the stock purchase price, and executed an employment contract with FPCA and FPC Securities. Pursuant to the agreement Harmony loaned money to Hemmings and Hemmings gave two promissory notes to Harmony to evidence the debt.

Shortly after the closing Hemmings gave Harmony a 'price adjustment letter' which provided that if FPC Properties did not receive an anticipated syndication fee from an offering called University Square, Hemmings would adjust the purchase price of his stock, unless he caused the FPC companies to earn a comparable fee or fees.

At its first meeting after Harmony's purchase of Hemmings' stock, Barian advised the board of directors of FPCH, that all real estate syndications would go through the FPC companies and that FPC Properties would serve as the general partner. Barian was elected president of FPCH.

In March 1980 Harmony created a subsidiary corporation, Decade Investment Corporation. In August 1981 Decade purchased Harmony's FPCH stock, assumed Harmony's obligations to Hemmings and took an assignment of Hemmings' notes to Harmony.

From 1980 through 1983 nine real estate limited partnership were formed. In each, Barian and Jeffrey Keierleber were individual general partners and the corporate general partner was Decade 80, Inc. whose shareholders were Barian, Keierleber, and another associate of Barian's.

From July 1980 to July 1981 FPC Securities successfully marketed four of the partnerships for total sales of $3,475,000. FPC Securities received from these sales gross underwriting commissions of $253,600. The University Square offering encountered problems and was terminated.

Harmony defaulted on the first installment due on its note to Hemmings. During the summer of 1981 Hemmings and Barian negotiated the possible resale of the FPCH stock to Hemmings. In August 1981 Barian negotiated with the 'Argus Group' for the sale to it of the FPC companies.

Negotiations between Hemmings and Barian terminated unsuccessfully on September 4, 1981. Shortly thereafter, Hemmings learned that Barian was negotiating with the Argus Group for the sale of the FPC companies.

On September 25, 1981 Barian, in his capacity as president of FPCH, removed all of the directors of FPCA and FPC Securities and replaced them with himself and two associates. Simultaneously Hemmings' powers and duties and president were eliminated and vested in a chief executive officer. One of Barian's associates was named chief executive officer.

On October 14, 1981 the shareholders of FPCH approved the sale of the assets of FPCA and FPC Securities to the Argus Group. As the majority shareholder. Decade approved the sale. The purchase agreement provided that upon closing, FPC Securities would cease doing business and surrender its security license. Hemmings resigned from his positions the next day.

Decade then began this action to recover on the two notes Hemmings had given to Harmony. Hemmings counterclaimed to recover the balance due on the purchase of his stock, the syndication fees, and a share of the profits of the asset management division of FPC Securities. Hemmings' liability on the notes was stipulated and only his counterclaim was tried to the jury.


Decade contends that the trial court abused its discretion in denying Decade's motion for a mistrial because of the misconduct of Hemmings' counsel. Decade claims: (a) Counsel repeatedly violated the rules of evidence by attempting to introduce evidence as to the credibility of witnesses and attempting to impeach witness Barian. (b) Counsel repeatedly offered improper and prejudicial evidence as to a prior lawsuit, which the trial court had ruled was inadmissible.

Decade asks that we find that the trial court abused its discretion in denying its motion and reverse the judgment and order a new trial. Alternatively, it asks that we find that justice has miscarried and exercise our discretionary power under sec. 752.35, Stats., to reverse the judgment and order a new trial.

The denial of a motion for mistrial will be reversed only on a clear showing of an abuse of discretion by the trial court. Johnson v. State, 75 Wis.2d 344, 365, 249 N.W.2d 593, 604 (1977). The trial court must determine, in light of the whole proceeding, whether the claimed error is sufficiently prejudicial to warrant a mistrial. Oseman v. State, 32 Wis.2d 523, 528-29, 145 N.W.2d 766, 770 (1966). As the court noted in Oseman, at 528, 145 N.W.2d at 770, the inquiry 'must center primarily around the facts in each case, and the ultimate decision . . . rests in the sound judicial discretion of the court.'

In reviewing the trial court's denial of a mistrial, we must consider the possibly prejudicial nature of the claimed error and any steps taken by the trial court to mitigate such prejudice. Johnson, 75 Wis.2d at 366, 249 N.W.2d at 604. We will uphold the denial of a mistrial unless we conclude that there is a reasonable probability that the jury may have reached a different result had the claimed error not occurred. Oseman, 32 Wis.2d at 530, 145 N.W.2d at 770.

Section 752.35, Stats., gives us discretionary authority to reverse a judgment and order a new trial 'if it appears from the record . . . that it is probable that justice has for any reason miscarried,' or that the real controversy has not been tried. We may not exercise our discretion under the miscarriage-of-justice standard unless we conclude there is a substantial probability of a different result on retrial. State v. Wyss, 124 Wis.2d 681, 736, 370 N.W.2d 745, 771 (1985). We may however exercise our discretion under the real-controversy-not-fully-tried standard if the jury was not given the opportunity to hear important testimony of the jury had before it evidence not properly admitted which so clouded a crucial issue that it may be fairly said that the real controversy was not fully tried. Id. at 735, 370 N.W.2d at 770-71.

We conclude that we may not exercise our discretionary reversal authority under the miscarriage-of-justice standard because we cannot conclude from our review of the record that there is a substantial probability of a different result on retrial. We conclude we may not exercise our discretionary reversal authority under the real-controversy-not-fully-tried standard because Decade's claim does not relate to the erroneous exclusion or admission of evidence.

The supreme court has said, however, that 'the court must have the liberty . . . to consider the totality of circumstances and determine whether a new trial is required to accomplish the ends of justice because the real controversy has not been fully tried.' Wyss, 124 Wis.2d at 735-36, 370 N.W.2d at 771. In Lorenz v. Wolff, 45 Wis.2d 407, 424, 173 N.W.2d 129, 138 (1970), the supreme court exercised its discretionary reversal authority (sec. 751.06, Stats.) largely because of repeated 'prejudicial comments of counsel [which] were consistently objected to,' but continued to be referred to. We conclude we may reverse the judgment herein and remand for a new trial if our review of the record convinces us that because of counsel misconduct the real controversy has not been fully tried. However, our review of the record does...

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