Edwards v. Thompson

Citation336 N.W.2d 612
Decision Date14 July 1983
Docket NumberNo. 10398,10398
PartiesAlan N. EDWARDS, Plaintiff and Appellant, v. Hayden THOMPSON, Defendant and Appellee. Civ.
CourtUnited States State Supreme Court of North Dakota

Eaton, Van de Streek & Ward, Minot, for plaintiff and appellant; argued by Jonathan C. Eaton, Jr., Minot.

Lundberg, Conmy, Nodland, Lucas & Schulz, Bismarck, for defendant and appellee; argued by Patrick A. Conmy, Bismarck.

ERICKSTAD, Chief Justice.

The facts relevant to this appeal are not in dispute and thus can be briefly summarized. On April 8, 1974, Edwards and Thompson entered into two joint-venture agreements whereby Thompson was to furnish approximately 400 1 head of Simmental, one-half blood, cattle and Edwards was to breed and care for these cattle until they could be sold as bred heifers. Edwards purchased 60 of these heifers from Thompson as his original capital contribution to the venture. As the venture continued, Edwards contributed additional cattle to the jointly owned herd. According to the parties' written agreements, any profits 2 derived from this business venture were to be shared equally.

In March, 1975, the parties purchased a prospective calf insurance policy. Thereafter, a number of the unborn calves died and, consequently, Thompson received an insurance proceeds payment of $561,000. Edwards then brought an action alleging that he was entitled to 43 percent of the insurance proceeds. In response, Thompson contended that Edwards' share of the proceeds was a mere 12 percent. Thompson also affirmatively asserted nine separate counterclaims.

The insurance phase of the case was severed and tried separately from Thompson's various counterclaims. With respect to the insurance proceeds, the trial court determined that Edwards' ownership 3 interest in the herd was 38 percent and accordingly he was entitled to 38 percent of the insurance proceeds. The trial court also held that any losses sustained in the joint venture were to be shared equally, in the same manner as profits derived from the venture.

The trial court appointed a referee to adjudicate and render an accounting with regard to Thompson's multiple counterclaims. On May 5, 1982, the referee filed his report. Subsequent thereto, on September 30, 1982, the court held a hearing to consider the parties' exceptions to the referee's report. Thereafter, the parties' exceptions were denied and on November 20, 1982, the court adopted the referee's report as his findings of fact and conclusions of law with regard to Thompson's counterclaims. Rule 52(a), N.D.R.Civ.P. A judgment 4 dated December 22, 1982, was entered in accordance therewith from which Edwards now appeals. For the reasons hereinafter stated, we affirm in part, reverse in part, and remand for modification consistent with this opinion.

The first and foremost issue to be determined on appeal is:

Whether or not the trial court erred in failing to consider the insurance proceeds as profits derived from the joint venture which should be divided equally in accordance with the parties' joint venture agreements.

In their pleadings and subsequent arguments, both parties unequivocally asserted that the insurance monies should be divided in accordance with each party's capital contribution to the joint venture. Edwards alleged a 43 percent ownership interest in the herd; however, Thompson argued that Edwards' capital contribution was a mere 12 percent. The trial court divided the insurance proceeds on the basis of what the court determined to be the parties' respective contributions to the capital of the joint venture.

In his exceptions to the referee's report, Edwards argued that the insurance proceeds constitute income derived from the joint venture and, accordingly, should be allocated 50/50 in accordance with the parties' joint-venture agreements. By making this argument, Edwards was, in essence, asking the trial court for permission to amend his complaint.

Under Rule 15(a), N.D.R.Civ.P., "a party may amend his pleading only by leave of court." The leave referred to "shall be freely given when justice so requires." Thus, a trial court's decision with regard to whether or not the parties should be permitted to amend their pleadings is discretionary in nature and, accordingly, will not be disturbed on appeal in the absence of an abuse of discretion. Powers v. Martinson, 313 N.W.2d 720, 732 (N.D.1981); Bender v. Time Ins. Co., 286 N.W.2d 489, 491 (N.D.1979); Vasichek v. Thorsen, 271 N.W.2d 555, 562 (N.D.1978).

Where Edwards' complaint and ensuing argument to the trial court was that the insurance proceeds should be allocated according to each party's capital contribution to the jointly owned herd, the trial court did not abuse its discretion by refusing to allow Edwards to revamp his theory of recovery. 5 In fact, if the trial court had allowed Edwards to replead his case subsequent to the court's decision on the basis of the parties' original pleadings and argument, a manifest injustice could have resulted.

The remaining five issues raised by Edwards all involve factual determinations, albeit some involve mixed issues of fact and law. It is elementary that a trial court's "findings of fact shall not be set aside unless clearly erroneous." Rule 52(a), N.D.R.Civ.P. The legal principles governing the application of Rule 52(a) are not in dispute. A finding is clearly erroneous only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948); Wilhelm v. Berger, 297 N.W.2d 776, 779 (N.D.1980); Alumni Association of University v. Hart Agency, Inc., 283 N.W.2d 119, 121 (N.D.1979); Schmidt v. Plains Elec., Inc., 281 N.W.2d 794, 798 (N.D.1979). That we may have viewed the facts differently if we had been the initial trier of the case does not entitle us to reverse the lower court. United States v. National Ass'n. of Real Estate Boards, 339 U.S. 485, 495-96, 70 S.Ct. 711, 717, 94 L.Ed. 1007 (1950); Nee v. Linwood Securities Co., 174 F.2d 434, 437 (8th Cir.1949); Schmidt v. Plains Elec., Inc., supra, 281 N.W.2d at 798. Our function is not to decide factual issues de novo. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 123, 89 S.Ct. 1562, 1576, 23 L.Ed.2d 129 (1969); In re Estate of Elmer, 210 N.W.2d 815, 820 (N.D.1973).

The second question to be resolved on appeal can be best summarized thusly:

Whether or not the trial court was clearly erroneous in determining that the evidence proffered by Edwards failed to substantiate his assertion that the parties' actions indicate that they implicitly agreed to apportion any losses sustained in the Simmental cattle joint venture in accordance with each party's capital contribution to the joint venture.

Specifically, Edwards contends that he is not required to contribute toward any capital losses sustained by his co-venturer, Thompson. The rationale underlying Edwards' contention is that Thompson sold a number of joint-venture cattle prior to the termination date of the joint venture and did not at that time ask Edwards to contribute toward the losses sustained by Thompson in such sales. Therefore, Edwards reasons Thompson implicitly recognized that Edwards was not obligated to share equally in any losses sustained in the joint venture.

Edwards' argument is, in essence, premised on the theory that Thompson sustained a loss with regard to the sales in question. Nevertheless, he has failed to factually substantiate with references to the record his allegation that Thompson actually incurred a loss. Furthermore, in the absence of evidence to the contrary, the appropriate time to determine whether or not a joint venture is unprofitable and thus requires one of the venturers to contribute toward the capital losses sustained by his co-venturer is at the venture's conclusion, not at the time each and every joint-venture sale is consummated. Hence, Thompson's failure to ask Edwards to share in the losses sustained, if any, prior to the venture's termination date, is irrelevant and does not prove that the parties agreed to share any losses sustained in the Simmental cattle joint venture on a basis different from the 50/50 division of profits. 6

In accordance therewith, we conclude the trial court properly determined that:

In the absence of an agreement to the contrary, joint venturers are presumed to bear any losses sustained in the venture on the same basis as the profits are divided. 7 Hilde v. Flood, 81 S.D. 25, 33, 130 N.W.2d 100, 104 (1964); 48A C.J.S., Joint Ventures, Sec. 39.

Applying this general rule to the case at bar, Edwards would be responsible for fifty percent of the losses sustained in the venture.

Edwards next contends that the referee's final accounting with regard to the Simmental cattle joint venture is erroneous in two respects. First, he argues that the referee improperly determined that the assets Edwards received from the joint venture included 100 calves which were actually in Thompson's possession as of July 1, 1975, the termination date of the joint venture. Nevertheless, where Edwards ultimately obtained possession of the calves on approximately October 1, 1975, we believe that the trial court's finding, based upon the referee's report, that the assets Edwards received upon termination of the joint venture should include the calves in question, was not clearly erroneous.

Edwards' second contention is that the referee improperly accounted for the cattle sold by Thompson prior to the termination date of the joint venture. The referee treated these cattle as if they were on hand as of July 1, 1975, and, accordingly, assigned them a value as of that date. However, where Edwards did not offer any evidence indicating that the fair market value of these cattle at the time of their sale was greater than the value...

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    ...court's actions, and not to afford an appellant the opportunity to develop and expound upon new strategies or theories. Edwards v. Thompson, 336 N.W.2d 612 (N.D.1983); Mattis v. Mattis, 274 N.W.2d 201 (N.D.1979). Furthermore, it is well established that we will refrain from deciding constit......
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