Gary Outdoor Advertising Co. v. Sun Lodge, Inc., 15844

• Citation: 650 P.2d 1222,133 Ariz. 240
• Decision Date: 01 September 1982
• Docket Number: No. 15844,15844
• Parties: GARY OUTDOOR ADVERTISING CO., an Arizona corporation, Plaintiff/Appellant, v. SUN LODGE, INCORPORATED, an Arizona corporation, and Rex E. Bishop, individually and Rex E. Bishop and Mona E. Bishop, husband and wife, Defendants/Appellees.
• Court: Supreme Court of Arizona

Page 1222

650 P.2d 1222

133 Ariz. 240

GARY OUTDOOR ADVERTISING CO., an Arizona corporation, Plaintiff/Appellant, v. SUN LODGE, INCORPORATED, an Arizona corporation, and Rex E. Bishop, individually and Rex E. Bishop and Mona E. Bishop, husband and wife, Defendants/Appellees.

No. 15844.

Supreme Court of Arizona,

In Division.

Sept. 1, 1982.

Morgan & Cord by B. Monte Morgan, Scottsdale, for plaintiff/appellant.

Ettinger & Deckter, P. C. by Nathan A. Parkey, Tucson, for defendants/appellees.

MELVYN T. SHELLEY, Superior Court Judge:

In July and August of 1977, the plaintiff, hereinafter called appellant, and Sun Lodge, Inc., hereinafter called Lodge, entered into two contracts for the lease of two outdoor advertising signs. The contracts were signed by an officer on behalf of appellant and on behalf of the Lodge by Rex E. Bishop, President. The contracts provided that a person signing on behalf of a corporation would be severally liable under the contract.

The Lodge defaulted on the monthly payments required by the contracts and appellant filed suit against the Lodge and Rex E. and Mona Bishop, hereinafter called appellees. Appellant filed a Motion for Summary Judgment. Appellees filed a Counter-Motion for Summary Judgment. The Court granted partial summary judgment in favor of appellant. Default was entered against the Lodge, but the record does not reveal that a default judgment was entered against it.

After the trial of the case, the Court found in favor of appellees and against appellant and entered judgment against appellant, awarding attorney fees to appellees in the amount of one thousand five hundred ($1,500.00) dollars. From this judgment appellant filed this appeal.

Appellant contends that the partial summary judgment granted by the court limited the trial only to the issue of the amount of appellant's damages.

This was not the intent of the order granting partial summary judgment. The preamble to the order refers to the provision of the contracts having to do with personal liability of persons signing for the corporation. Based thereon, the court ordered "Defendants REX E. BISHOP and MONA BISHOP are personally liable for any damage which may be ultimately determined at the trial." By no stretch of the imagination can this be construed to exclude liability issues. Said partial summary judgment merely provides that if judgment is entered in favor of appellant, the Bishops would be personally liable with the Lodge for payment of the judgment.

Appellant contends that the trial court erred in granting judgment in favor of appellees, and/or, in allowing testimony and evidence on appellees' claim that the contracts were void as against public policy inasmuch as appellees failed to plead affirmative defenses as required by Ariz.R.Civ.P. 8(d) and 12(i).

Appellees did not allege in their answer that the contracts were illusory, unconscionable, penal, void, and against public policy; however, the penalty issue was clearly articulated in appellees' countermotion for summary judgment, and the trial memorandum filed by appellees eleven days before the trial clearly raised all of said defenses. Although appellant alleges it objected at trial to this defense, it did not object in its reply to appellees' countermotion for summary judgment, and it noticed the penalty defense as an issue for trial in paragraph (4)(A) of its pretrial statement. In addition, the issues so raised were based upon the clear and unambiguous terms of the contracts. Ariz.R.Civ.P. 15(b) states:

"If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits."

This Court in referring to Rule 15(b) said:

"Failure to formally amend the pleadings will not affect a judgment based upon competent evidence. If an amendment to conform the pleadings to the proof should have been made, an appellate court will presume that it was so made to support the judgment."

Electrical Advertising, Inc. v. Sakato, 94 Ariz. 68, 71, 381 P.2d 755, 756-57 (1963).

The trial court did not err in receiving evidence relevant to the above mentioned affirmative defenses. The court reasonably could have determined that appellant was not prejudiced by the amendment and justice would be served by allowing the amendment.

Appellant contends that the court erred in failing to direct a verdict in its favor and in failing to grant a new trial. The contracts contained a provision perpetually waiving the statute of limitations. The trial court made only one conclusion of law, holding that the contracts were void because of the provision perpetually waiving the statute of limitations. Appellant submits that because the lawsuit was filed well within the permissible limits of the statute of limitations, that the waiver provision was immaterial. We agree. Such a provision is unenforceable. However, we hold it does not void the contracts in these cases because suit was filed before the expiration of the period set forth in the statute of limitations, A.R.S. § 12-548.

The trial court will be affirmed when it reaches the correct conclusion even if it does so for an incorrect reason. Certified Collectors, Inc. v. Lesnick, 116 Ariz. 601, 570 P.2d 769 (1977); Komarek v. Cole, 94 Ariz. 94, 381 P.2d 773 (1963). There are other cogent reasons for sustaining the judgment of the trial court in favor of appellees. This Court is not bound by conclusions of law reached by the trial court. Park Central Development Co. v. Roberts Dry Goods, Inc., 11 Ariz.App. 58, 461 P.2d 702 (1969); Owen v. Mecham, 9 Ariz.App. 529, 454 P.2d 577 (1969).

Therefore, we may independently determine the validity of the contracts. One portion of the contracts that gives us concern is as follows:

"It is understood and agreed that should we default in these payments for two successive months, Gary Outdoor Advertising shall have the right to discontinue service on the bulletins covered by this contract and sell them to other advertisers, and the rental for the remainder of the term covered by this contract shall at once become due and payable as liquidated damages, and deferred payments will bear interest at ten per cent per annum. The undersigned purchaser(s) hereby perpetually waive(s) the Statute of Limitations."

The above quoted provision eliminates the requirements of mitigation of damages inasmuch as it provides that the entire contractual amount must be paid in the event of default for two successive months. Said provision has no reasonable relation to actual damages--it is penal in nature.

The case of Vincent v. Grayson, 30 Cal.App.3d 899, 106 Cal.Rptr. 733 (1973), is very similar to the case at bar, as it deals with an outdoor billboard and the plaintiff prayed for the total unpaid balance of the contract as damages. The court held that when the plaintiff seeks the unpaid contract price in a suit for a total breach of the contract and fails to prove actual damages resulting from the total breach, the award of the unpaid contract price cannot stand as a matter of law. The court...