Floyd v. Jay County Rural Elec. Membership Corp., 3-1275A282

• Decision Date: 18 June 1980
• Docket Number: No. 3-1275A282,3-1275A282
• Citation: 405 N.E.2d 630
• Parties: Harold FLOYD, Appellant (Defendant and Intervenor Below), The Aetna Casualty & Surety Company, (Defendant Below), v. JAY COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 630

405 N.E.2d 630

Harold FLOYD, Appellant (Defendant and Intervenor Below) The Aetna Casualty & Surety Company, (Defendant Below), v. JAY COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION, Appellee (Plaintiff Below).

No. 3-1275A282.

Court of Appeals of Indiana, Fourth District.

June 18, 1980.

Jerrald A. Crowell, Bowman, Crowell & Swihart, Fort Wayne, for appellant; Christina McKee, Fort Wayne, of counsel.

J. A. Bruggeman, Barrett, Barrett & McNagny, Fort Wayne, for Aetna Cas. & Sur. Co.

John E. Hoffman, Hoffman, Moppert & Solomon, Fort Wayne, John Coldren, Coldren & Frantz, Portland, for appellee.

YOUNG, Judge.

This action was initiated by the plaintiff-appellee, the Jay County Rural Electric Membership Corporation, (hereinafter REMC), against the Aetna Casualty & Surety Company seeking recovery on a comprehensive dishonesty, disappearance and destruction bond for the period of time from 1948 to 1965, alleging fraudulent and dishonest acts committed by the REMC's general manager, the appellant Harold Floyd. Floyd was granted permission to intervene and filed a claim against the REMC for damages resulting from false and fraudulent representations of his dishonesty. The REMC answered in denial, and added a paragraph of complaint against Floyd. The paragraph alleged that Floyd was indebted to the REMC for funds expended by Floyd for his personal use, personal property of the REMC which Floyd had taken for his personal use, excess salary, payment of Floyd's personal expenses, and for work performed by REMC employees on Floyd's personal residence.

At the close of the REMC's case the trial court found that the REMC's directors had sufficient awareness of possible wrongdoings to obligate them to further inquiry and that their failure to inform Aetna released it from liability on the bond. At the close of all the evidence, the trial court found in favor of the REMC and entered judgment against Floyd, ordering him to pay $44,420.54 in principal and interest.

I.

Floyd's first contention is that the trial court erred in admitting evidence which contradicted the corporate minutes of the REMC. Floyd points out that the corporate minutes show three resolutions authorizing certain types of expenditures and a general clause for each meeting indicating that the board of directors had read and approved a list of checks written during the previous month. He relies on Jones v. State, (1960) 240 Ind. 230, 163 N.E.2d 605. That case is inapplicable, however, because it involved a public corporation. With respect to private corporations, IC 1976, 23-1-12-1, provides that originals or copies of corporate minutes are admissible as prima facie evidence of directors meetings. Prima facie does not mean conclusive. Definitions of the term imply that such evidence may be contradicted. See, e. g., Johnson v. State, (1972) 258 Ind. 648, 283 N.E.2d 532 (prima facie evidence is that which is "sufficient to establish a given fact and which will remain sufficient if uncontradicted."); Rene's Restaurant Corp. v. Fro-Du-Co Corp., (1965) 137 Ind.App. 559, 210 N.E.2d 385 (same). Many jurisdictions hold that corporate minutes are only prima facie evidence of what happens at a directors' meeting, not conclusive, and that oral evidence is admissible to contradict the written records. Cox v. First National Bank, (1935) 10 Cal.App.2d 302, 52 P.2d 524; Lewis v. People, (1936) 99 Colo. 102, 60 P.2d 1089; Hopewell Baptist Church v. Craig, (1956) 143 Conn. 593, 124 A.2d 220; Mason Hall Corp. v. Dicker, (1965) D.C.Mun.App., 141 A.2d 190; Silver Bowl, Inc. v. Equity Metals, Inc., (1970) 93 Idaho 487, 464 P.2d 926; Graham v. Fleissner's Executors, (1931) 107 N.J.L. 278, 153 A. 526; KoEune v. State Bank, (1939) 134 Pa.Super. 108, 4 A.2d 234.

Objections to parol evidence concerning directors' meetings are usually based on either the best evidence rule or the rule excluding evidence of prior or contemporaneous oral agreements at variance with existing valid written contracts. Annot. 48 A.L.R.2d 1259 (1956). The first is irrelevant to this case because all the relevant documents were in evidence, and the second, if applicable, ¹ makes exception for proof of fraud. Hines v. Driver, (1880) 72 Ind. 125. A principal's knowledge of all material facts is indispensable to ratification of an agent's unauthorized acts. Hutter v. Weiss, (1961) 132 Ind.App. 244, 177 N.E.2d 339. Thus, even if the corporate minutes were conclusive evidence that the directors approved Floyd's expenditures, evidence of Floyd's fraud would be admissible to show that the approval was insufficient to ratify Floyd's unauthorized acts because the directors were unaware of material facts.

The trial court committed no error in hearing evidence outside the corporate minutes of what transpired at the directors' meetings.

II.

Floyd's second contention of error is that the award of damages was not supported by evidence of probative value. Specifically, Floyd contends that the charge against him for the use of REMC employees on construction of his home was based on speculation as to the exact amount of time each worked on his home.

Evidence of loss is not objectionably uncertain if it is sufficient to enable the fact-finder to make a fair and reasonable finding. Less certainty is required to prove the amount of loss than the fact that some loss occurred. Kroger v. Haun, (1978) Ind.App., 379 N.E.2d 1004, 1017. On appeal, uncertainty as to the exact amount of damages is resolved against the wrongdoer: "justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong created." Charlie Stuart Oldsmobile, Inc. v. Smith, (1976) Ind.App., 357 N.E.2d 247, 252, quoting Bigelow v. R. K. O. Radio Pictures, Inc., (1945) 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652. There is evidence in the record that Floyd instructed the REMC employees working on his home to bill their time to power use or meter room. Thus, uncertainty as to the number of hours worked by these men appears to be a direct result of Floyd's concealment. There is no uncertainty that they did a substantial amount of work for Floyd on REMC time, to which two testified in some detail.

Schedule E, sub-exhibit K, is a breakdown of the amount charged to Floyd by the REMC for use of REMC employees based on the employees' estimates of time expended and their hourly wage as determined from the REMC records. Only two of the employees testified. The court allowed substantially less than the REMC prayed for. It is apparent that the trial court arrived at the figure it did by allowing recovery only for the two employees who testified. The court used the hourly wage according to Schedule E with estimates of time made by the employees while testifying. The second was unable to estimate the amount of time he spent altogether. The trial court apparently arrived at an estimate on the basis of what witness's description of each job he undertook and the approximate amount of time necessary to complete it. The trial court consistently used the low range of the estimates. We have no difficulty in finding that the trial court was fair and reasonable in computing this aspect of the REMC's damages.

Floyd also argues, under his second contention of error, that the evidence of long distance phone calls for his personal use was based on hearsay. The REMC offered into evidence a chart of phone calls showing locations from which and to which the calls were placed, the cost, the account number charged, and in some cases, names. The auditor who compiled the chart testified that REMC employees informed him that some of the names were those of Floyd's relatives. On cross-examination, Floyd himself specifically identified some of the names as those of his relatives. Thus, error in admitting the auditor's testimony on this point was harmless. The trial court did sustain a hearsay objection to the chart itself, after which the auditor testified that it was based solely on records and telephone bills of the REMC. He had checked every phone call he could find a record of, both in and out of the REMC customer area, and listed all calls for which he could find no evidence of a business purpose. The chart was properly admitted upon this foundation. Indiana has long recognized the voluminous records exception to the hearsay rule. The evidence must be based on an examination of records which might themselves be properly admitted into evidence and which are available to the opposing party. Any qualified person who has examined them may testify as to the result of his examination. The rule is particularly applicable where the ultimate fact to be ascertained must be the result of a calculation involving many transactions and numerous amounts. Cleveland, C., C. & St. L. Ry Co. v. Woodbury Glass Co., (1918) 80 Ind.App. 298, 120 N.E. 426, 433.

III.

Floyd's third contention of error groups four sections from his motion to correct errors. The first two are that the trial court's decision is not supported by sufficient evidence and contrary to the evidence, and contrary to law. The statement of facts and grounds in support of these contentions is an argumentative and incomplete statement of the facts. Floyd's appellants brief expands this by arguing the sufficiency of evidence with respect to items not mentioned either in the specifications of error or the statement of facts and grounds. These issues may not be considered on appeal. Ind. Rules of Procedure, Trial Rule 59(G).

We do not believe the first two specifications meet the formal requirements of Trial Rule 59(B). We may consider them waived. Meeker v. Robinson, (1977) Ind.App., 370 N.E.2d 392. Even did we not, Floyd's arguments are without merit. For instance, Floyd claims that the trial court erroneously interpreted the directors resolutions as limiting Floyd to.$1000.00 per year for making movies. His references to the record are incomplete however. The witnesses he mentions all...