Ennis v. Warm Mineral Springs, Inc.

• Decision Date: 27 October 1967
• Docket Number: No. 7418,7418
• Citation: 203 So.2d 514
• Parties: Thomas H. ENNIS, Appellant, v. WARM MINERAL SPRINGS, INC., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

Page 514

203 So.2d 514

Thomas H. ENNIS, Appellant, v. WARM MINERAL SPRINGS, INC., a Florida corporation, Appellee.

No. 7418.

District Court of Appeal of Florida, Second District.

Oct. 27, 1967.

Rehearing Denied Nov. 27, 1967.

Coleman, Leonard, Morse & Morrison, Fort Lauderdale, and Clyde H. Wilson, Sarasota, for appellant.

Millican & Trawick, Sarasota, for appellee.

PIERCE, Judge.

This is an appeal by Thomas H. Ennis, plaintiff below, from a Final Decree entered by the Sarasota County Circuit Court in a suit wherein Ennis sought a declaratory decree, together with an accounting and a money judgment, with reference to an employment contract entered into by him and Warm Mineral Springs, Inc., hereinafter referred to as the corporation.

The contract, of which Ennis sought a judicial interpretation, was in the form of a resolution of the corporation, and, in its essential part, was as follows:

'(5) that the Vice-President, Thomas H. Ennis, be paid twenty-five (25%) per cent of the gross profits before Federal Income Taxes, and * * * the corporation reserves the right to terminate the services of Thomas H. Ennis any time at the discretion of the Directors.'

While the issues were complex, the pleadings prolific, and the procedural strategies devious, the Decree disposing of the case was notable mainly for its paucity. We quote it in all its length:

'This cause coming on for final hearing and the Court having considered the evidence of the parties and being otherwise fully advised in the premises, it is hereby,

ORDERED, ADJUDGED and DECREED that:

1. Plaintiff THOMAS H. ENNIS take nothing by his suit and that defendant WARM MINERAL SPRINGS, INC. go hence without day.

2. Jurisdiction is retained for the sole purpose of taxing costs.'

A chronological factual background of the parties involved and their relationships may provide a logical approach to their later controversies.

Plaintiff Ennis and one Frederick Matthew Daley had been acquaintances, then friends, over a period of some thirty years. Daley was aware that Ennis had either promoted or been associated with some highly successful Florida real estate developments. In 1955, Ennis approached Daley at his home in Connecticut with a view toward getting him to back Ennis in a development deal. Daley was not interested in the property Ennis sought to acquire at that time, but after Ennis had obtained backing elsewhere and promoted that deal to a rapid and very lucrative conclusion, Daley became more interested. An arrangement was then worked out whereby Ennis would investigate various real property holdings being offered for sale in Florida and made recommendations to Daley as to suitability for development purposes. As his contribution to the joint venture, Ennis was to locate a suitable investment and after acquisition was to furnish the 'know-how' and devote full time to the development and promotion of the project. Daley was to provide the necessary funds. Ennis and Daley were to split the profits 50--50, but later Ennis agreed to take 25%.

During the summer of 1955, Ennis traveled extensively over the State of Florida inspecting and appraising various property offerings. Of the some twenty sites which Ennis recommended or referred to him, Daley selected Warm Mineral Springs, formerly Warm Salt Springs, near Sarasota as being best suited to the purposes of the joint partnership venture.

Warm Mineral Springs was owned by a corporation and by purchase of 100% Of the stock, Daley became the sole shareholder. So far as we can ascertain from the record, Daley at no time was either an officer or director, the corporate offices being held by non-shareholders, including Ennis as Vice-President, who continued to operate the business as a corporate enterprise, with Daley remaining, at least through the date of the final hearing in the instant case, as sole stockholder. Daley's son-in-law, Samuel H. Herron, Jr., was President of the corporation and Daley's daughter, Doris Herron, appealed to be the Secretary, at least ex-officio. Although Doris Herron was not officially listed as Secretary, she apparently acted as such and was present at all board meetings and participated in all discussions of corporate business.

Warm Mineral Springs, Inc. was organized for the purpose of subdividing the large tract of land purchased, and developing and selling the lots subdivided at a profit. The corporation was organized on October 8, 1955, the date the assets of Warm Mineral Springs were purchased by Daley. Shortly thereafter at the stockholders' and directors' meetings, the corporate resolution hereinbefore first quoted was adopted, outlining the status of Ennis's participation. Ennis had agreed, at Daley's urging, to take his 25% From the gross profits rather than the net profits of the corporation, because of Federal Tax considerations. The resolution also provided that Ennis as Vice-President would receive $600 (later raised to $700) per month 'draw' against his share of such profits.

Things rocked along for a few years, the corporation enjoying a notable degree of success, with Ennis providing the necessary impetus and know-how. An annual accounting was made and Ennis was paid A share of the profits, admittedly not amounting to '25% Of gross profits'. In April, 1958, Ennis was fired (later permitted to submit his resignation). Daley asked Ennis to come to Daley's home, and when he arrived, Daley informed him his services were no longer required. Daley told him he had 'some money' coming and offered Ennis a check in the amount of $12,497.86 as payment in full of all remaining sums due and at the same time presented to him various documents of waiver and release of all claims against Warm Mineral Springs, Inc. Ennis declined the check and refused to sign the documents.

On September 15, 1958, Ennis filed his instant complaint, alleging the corporate resolution and his employment thereunder, and seeking a declaratory decree as to his rights and status, directed mainly at an interpretation of the term, 'gross profits' as used in the contract, and particularly whether 'accounts receivable' should be included in 'gross profits'; also whether sums used for capital improvements, i.e., in developing more lots for future sale, were properly deductible by the corporation before computation of the 25% Share for Ennis.

It will be perceived that the Chancellor in his Final Decree never actually determined whether or not Ennis was entitled to a declaration of his rights, although respective motions of the parties for summary judgments were denied.

F.S. Sec. 87.02 F.S.A., in its pertinent parts, reads:

'Any person * * * in doubt * * * or whose rights * * * are affected by a * * * contract * * * or instrument in writing may have determined * * * and obtain a declaration of rights, status * * * or legal relations thereunder.'

In Resenhouse v. 1950 Spring Term, etc., Fla.1952, 56 So.2d 445, the trial Court had dismissed a declaratory judgment action without indicating whether the dismissal was because plaintiff was not entitled to have his rights determined or whether he was not entitled to the ultimate relief prayed. The Supreme Court reversed and held that--

'The test of the sufficiency of a complaint in a declaratory judgment proceeding is not whether the complaint shows that the plaintiff will succeed in getting a declaration of rights in accordance with his theory and contention, but whether he is entitled to a declaration of rights at all.'

To the same effect, see Platt v. General Development Corp., Fla.App.1960, 122 So.2d 48; Hankins v. Title & Trust Co. of Fla., Fla.App.1964, 169 So.2d 526; Modernage Furniture Corp. v. Miami Rug Co., Fla.1955, 84 So.2d 916; and Johnson v. Thoburn, Fla.App.1964, 160 So.2d 729.

Ennis contends here that the trial Judge under Section 87.02, should have declared his rights by interpreting the corporate resolution (employment contract), where a dispute admittedly existed as to the true meaning and effect of the resolution. The corporation counters that the suit was actually one for an accounting and damages, and that a construction of the resolution by the Court was not necessary, also that a declaratory decree is only appropriate when one is seeking a guide to future conduct.

As to the latter contention, we find nothing in Section 87.02 that so limits its scope. Nor does the fact that Ennis also sought an accounting and a money judgment preclude a declaratory decree. This is implicit in F.S. Sec. 87.01, F.S.A. which vests original jurisdiction in the Circuit Court to declare a litigant's rights 'whether or not further relief is or could be claimed or prayed'.

Considerable testimony was taken and a declaratory decree should have been entered, adjudicating the rights of Ennis in the subject matter of the suit. Such 'declaration' may not have given him his 'heart's desire', but in all fairness after eight years of litigation he was entitled to know whether and to know why. See May v. Holley, Fla.1952, 59 So.2d 636. And if the Chancellor felt that Ennis was not entitled to a declaratory decree, both parties should have been so informed, and they could have molded their subsequent litigious procedures accordingly.

Perforce, it has made mandatory upon us the task to analyze and dissect the voluminous record ourselves to determine, first, whether the showing made by Ennis entitled him to a declaration of his rights, and second, if so, whether he was entitled to the further relief prayed for in his complaint. Upon a rather painstaking review of the entire record, we are impelled to hold with Ennis on both items, although we must leave to the Court below the final determination of the accounting.

Ennis contends that, in construing the employment contract, the term 'gross profits' should be held to include accounts receivable, i.e., the unpaid deferred balances upon the purchase price of parcels of the Warm Mineral Springs property sold to...