Ewing v. Hladky Const., Inc., 01-131.
| Decision Date | 25 June 2002 |
| Docket Number | No. 01-131.,01-131. |
| Citation | 48 P.3d 1086,2002 WY 95 |
| Parties | Van EWING, on behalf of himself and all other similarly-situated shareholders of Hladky Construction, Inc., a Wyoming corporation, Appellant (Plaintiff), v. HLADKY CONSTRUCTION, INC., a Wyoming corporation and Mike Hladky, majority shareholder of Hladky Construction, Inc., Appellees (Defendants). |
| Court | Wyoming Supreme Court |
James L. Edwards of Stevens, Edwards & Hallock, P.C., Gillette, Wyoming, Representing Appellant.
Paul J. Drew of Drew & Carlson, P.C., Gillette, Wyoming, Representing Appellee.
Before LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.
[¶ 1] While Appellant Van Ewing (Ewing) was employed by Appellee Hladky Construction, Inc., (company), he received one thousand shares of stock in the company from Appellee Mike Hladky (Hladky). Upon Ewing's resignation, Hladky demanded the return of the stock, and Ewing refused, insisting he was entitled to compensation for the return of the stock. Litigation ensued, and, after a bench trial, the trial court determined that the stock was a conditional gift with a reversionary interest and must be returned without compensation. In his appeal, Ewing contends that the evidentiary record does not support the determination that a condition was attached at the time that the gift was made, and no evidence was presented that the stock must be returned without compensation. This appeal followed.
[¶ 2] We affirm.
[¶ 3] Ewing presents this issue for our review:
Whether the decision of the district court to require the stock owned by Appellant to be returned without compensation is supported by the evidence and is correct as a matter of law?
Company and Hladky rephrase the issue as:
Whether the judgment entered in favor of the appellees is supported by the evidence.
[¶ 4] Ewing filed a shareholder derivative action, and Hladky counterclaimed asserting that Ewing was not a shareholder because the stock transfer was a gift conditioned on Ewing's continued employment. An unreported bench trial was held to determine Ewing's status. The parties have submitted a statement of the evidence approved by the district court in accordance with W.R.A.P. 3.03.
[¶ 5] Ewing testified that he began his employment with the company in 1991 and submitted a letter of voluntary resignation in 1998. During his employment with the company he held various positions, including foreman, foreman's superintendent, supervisor, and, at the time of his resignation from the company, as project manager for the company. Additionally, Ewing was a vice-president of the corporation and had held that position for about three years.
[¶ 6] In 1993 and 1994, Ewing received cash bonuses from the company and paid federal income tax. On March 23, 1995, he received a certificate for one thousand shares of the company's corporate stock from Hladky. The shares were reported as a gift to avoid income tax liability, and Ewing did not pay income tax on the value of the stock and never received any dividends or additional stock. Both Ewing and Hladky met with the company's accountant, Garland Marso, before the stock was given to Ewing to discuss transfer of the shares, and Marso suggested that the shares be gifted to Ewing to avoid tax consequences for Ewing. Marso also advised Ewing and Hladky to contact an attorney to prepare a buy-sell agreement of the stock and for the purpose of providing life insurance to fund such a purchase; however, no such written agreement was ever prepared. After the stock was transferred as a gift, the company purchased life insurance on each man in order to fund the purchase of each other's shares in the event of disability or death. Hladky prepared and delivered the stock certificate to Ewing stating, "now you can't quit." After Ewing resigned, he and Hladky met at a restaurant and Hladky demanded the return of the stock. Ewing stated that he would return the stock upon receipt of compensation.
[¶ 7] Hladky testified that he is the owner of all shares of the company and had made a gift of a thousand shares of stock to Ewing in March of 1995. His 1995 gift tax return reflected the transfer of a thousand shares of stock from himself to Van Ewing and his spouse. The gift's purpose was intended to provide Ewing a portion of stock that he would not later have to purchase if something happened to Hladky. Hladky admitted that Ewing had earned the stock but claimed that the gift carried a condition. Hladky testified that it was always understood between himself and Ewing that the continued ownership of Ewing's shares in the company was conditioned on Ewing's continued employment. At the time that he issued and delivered the share certificate to Ewing, Hladky advised Ewing, "now you can't quit," because Hladky intended that the gift of shares would terminate in the event Ewing quit his employment with the company.
[¶ 8] Marso testified that as the company's accountant he prepared the gift tax return and met with both parties on several occasions regarding a buy-sell agreement for the shares of the company. He also advised both men that if the shares were transferred as a gift rather than a bonus, Ewing would not have to pay income tax for receiving them.
[¶ 9] In its decision letter, the trial court stated:
The parties disagree as to the reason the stock certificate was given to the Plaintiff. The Plaintiff contends it was a bonus for work he performed for the Defendant. The Defendant argues that it was pursuant to a corporate arrangement; in the event of Mike Hladky's death, Plaintiff would be able to purchase the remainder or other 90 percent of the business.
The trial court determined that both parties agreed that the stock transfer was a gift and not a bonus, and ruled that the law recognized that a gift may have a reversionary interest if delivered with the manifested intention that the donee acquire an ownership that terminates on the occurrence or non-occurrence of some special event or condition. The trial court found that the gift was delivered with the intent that it should be returned to Hladky in the event that Ewing's employment terminated. The trial court entered judgment that the stock be set over to Hladky without compensation to Ewing, and this appeal followed.
[¶ 10] In this appeal, Ewing does not dispute the trial court's ruling as a matter of law that Hladky could make this gift with the condition that ownership revert to him upon the termination of Ewing's employment. Ewing instead contends that the evidence does not support the trial court's conclusion that Hladky expressly manifested an intent that the stock was a conditional gift that was to be returned without compensation upon employment termination.
[¶ 11] Essentially, Ewing's contentions challenge the trial court's determination of Hladky's intent at the time that the stock was transferred. "Whether an oral contract exists, the terms and conditions of the oral contract and the intent of the parties are generally questions of fact." Roussalis v. Wyoming Medical Center, Inc., 4 P.3d 209, 250 (Wyo.2000) (quoting Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 218 (Wyo.1994)). This Court will not set aside a trial court's factual findings unless the findings are clearly erroneous or contrary to the great weight of the evidence. Stansbury v. Heiduck, 961 P.2d 977, 978 (Wyo.1998); Sowerwine v. Nielson, 671 P.2d 295, 301 (Wyo.1983);. When reviewing the record, we keep in mind the following principles:
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