Grover v. Sturgeon

• Decision Date: 20 May 1970
• Citation: 255 Or. 578,469 P.2d 617
• Parties: V. J. GROVER, Appellant, v. Loren STURGEON and Linda Sturgeon, Respondents.
• Court: Oregon Supreme Court

Page 617

469 P.2d 617

255 Or. 578

V. J. GROVER, Appellant, v. Loren STURGEON and Linda Sturgeon, Respondents.

Supreme Court of Oregon.

Argued and Submitted at Pendleton, May 4, 1970.

Decided May 20, 1970.

Claud A. Ingram, John Day, argued the cause and filed a brief for appellant.

Wendell Gronso, Burns, argued the cause for respondents. With him on the brief were Cramer & Gronso, Burns.

Before McALLISTER, J.P., and SLOAN, O'CONNELL, DENECKE, HOLMAN, TONGUE and HOWELL, JJ.

TONGUE, Justice.

This is an action on two promissory notes totalling $4,000, in which defendants counterclaimed for damages for breach of two oral agreements. The first was an alleged agreement by plaintiff to pay $12,000 to defendant Loren Sturgeon as a bonus. The second was an alleged agreement by plaintiff to transfer to defendant Loren Sturgeon 25% Of the stock in a corporation owned by plaintiff and allegedly worth $10,000. Plaintiff appeals from a verdict and judgment against him and in favor of defendants for $6,000.

Plaintiff has assigned four errors: (1) and (2) the failure to grant plaintiff's motions for directed verdicts on his first and second causes of action (for payment of the two promissory notes); (3) the refusal of a requested instruction that plaintiff was not responsible for a debt owed by a corporation (to pay the $12,000 bonus) unless the promise was in writing and signed by plaintiff; and (4) the refusal to grant plaintiff's motion for a directed verdict on defendant's counterclaim for failure to transfer 25% Of the stock in another corporation on the ground that there was no evidence of the measure of damages (i.e., the value of such stock).

In considering these assignments of error some discussion of the facts becomes necessary, based upon the evidence offered by and most favorable to defendants, as this court must do on appeal from the verdict and judgment in favor of defendants.

Plaintiff was engaged in operating an automobile agency in Burns. The business was incorporated and plaintiff was its president and the owner of all of its stock. In March, 1966, plaintiff engaged defendant Loren Sturgeon as general manager of the business.

At Christmas time in 1966 plaintiff told Mr. Sturgeon that he had a 'good bonus' coming for the good job he had done 'in pulling the business out of the hole', but no amount was agreed upon. In October, 1967, plaintiff went to California. Upon leaving for California plaintiff promised to pay a bonus to Mr. Sturgeon if he would stay on as manager of the automobile business until it could be sold. Again, no amount was agreed upon. In April, 1968, plaintiff told Mr. Sturgeon that the amount of the bonuses to be paid to him would be $12,000 and that plaintiff would pay it personally, according to the testimony of defendant Sturgeon. A written agreement was also offered in evidence, under which plaintiff agreed that he would 'cause to be recorded on the books' of his automobile business an entry showing a liability to Mr. Sturgeon in the sum of $12,000 for 'unpaid bonuses.'

Also, in October, 1967, plaintiff told Mr. Sturgeon that if he would stay on as manager until the automobile business was sold, and then move to California to join plaintiff in his new venture there he would give Sturgeon '25% Of Pan-Pacific Homes', a trailer manufacturing business, purchased by plaintiff for $40,000. Thus, plaintiff promised to transfer to Mr. Sturgeon a '25% Interest' in that business. Again, at 'Christmas time' in 1967 plaintiff said that 'the first of the year' he was going to transfer 25% Of the stock to Mr. Sturgeon 'as soon as the stock was available for transfer.'

Meanwhile, in March, 1967, defendants borrowed $2,500 from a bank and plaintiff signed an agreement with the bank to guarantee payment of that loan. On July 9, 1968, that loan was renewed by a 90 day note signed by defendants and also by plaintiff as guarantor. No payments were made on that note by defendants. Mr. Sturgeon testified that in October, 1968, plaintiff said that he would pay the note and take $100 out of Sturgeon's pay check, which plaintiff then did. On November 4, 1968, the bank was paid $100 in principal and interest, presumably by plaintiff.

In addition, on September 28, 1967, plaintiff loaned $1,500 to defendants on a promissory note payable in monthly installments over a period of two years. No payments were made by defendants on that note and no demands for payments were made by plaintiff, saying that defendants could pay it 'as soon as this thing gets all settled,' according to defendants.

Finally, in late 1968, plaintiff sold the automobile business in Burns, but refused to either pay Mr. Sturgeon the $12,000 bonus or transfer to him 25% Of the stock in his new California business, although Mr. Sturgeon had stayed until then as manager and testified that he had also been ready to go to California with the plaintiff.

On November 20, 1968, the balance of the $2,500 note was paid by plaintiff by giving the bank another note, which was not paid until the sale of plaintiff's automobile business on February 18, 1969, when it was paid out of the proceeds of the sale of that business. Meanwhile, the $2,500 note, along with the $1,500 note, had been turned over by plaintiff to his attorney and on December 6, 1968, plaintiff filed this action to enforce payment of the notes and levied an attachment upon defendant's personal property, including his automobile and his wife's jewelry, among other things. Mr. Sturgeon also filed an action against Ganger & Grover Motor Co. to collect the bonus of $12,000, but apparently was unable to enforce payment against that corporation.

Plaintiff denied much of the foregoing testimony and contended that the California business (for which he paid $40,000) had no value, but did not produce any records to establish that fact. He also admitted that he had transferred $54,000 to that business from his automobile business in Burns (apparently including the $40,000 purchase payment), none of which was repaid, and that he had also personally withdrawn other money from that corporation, leaving it without funds to pay the $12,000 bonus to Mr. Sturgeon.

On this record it may have been error to deny plaintiff's motions for directed verdicts on his two causes of action on the promissory notes. It is clear, however, that any such error was not prejudicial to plaintiff, since the trial court was careful to instruct the jury that if it found 'that the plaintiff is entitled to recover on his complaint and that defendants are entitled to no recovery on their counterclaims, or if you find that the recovery is less than the amount you find for the plaintiff' it was to return a verdict for plaintiff in that amount, but that 'if you find that he (plaintiff) is entitled to something, but is in a lesser amount than defendants are entitled to on their counterclaims', then the jury was to return a verdict for defendant for an amount representing the difference. Cf. Western Feed Co. v. Heidloff, 230 Or. 324, 329--331, 370 P.2d 612 (1962).

In this case defendant alleged two counterclaims: one based upon an agreement to pay defendant a bonus of $12,000 and the other based upon an agreement to transfer to defendant a 25% Interest in a California business (purchased by plaintiff for $40,000) which plaintiff admitted to be worth $10,000, as discussed below. The principal consideration for both agreements was defendant's promise to remain as manager of the automobile business in Oregon until it was sold. Thus, it is obvious that defendant was not entitled to collect on both agreements.

Since the original amount of the two promissory notes totaled $4,000 and since it was agreed that the amount of the bonus payable to defendant (if payable by plaintiff) was the sum of $12,000, it is also obvious from the amount of the verdict, in the sum of $6,000, that the jury could not have based such a verdict upon an allowance of that counterclaim. On the other hand, since plaintiff himself admitted that at the time of the alleged agreement relating to the 25% Interest in the California business that interest was worth $10,000, it follows that the jury must have allowed recovery to defendant based upon that counterclaim, but only after first deducting the original amounts of the two promissory notes, in the total sum of $4,000. Cf. Powder Valley State Bank v. Huddelson, 74 Or. 191, 194, 144 P. 494 (1914).

As for the refusal to instruct that plaintiff was not responsible for debts of the corporation unless such a promise was in writing, as required by the Statute of Frauds in Oregon, ORS 41.580(2), it suffices to point out that the statute has no application where the oral promise has been performed. Thus, in this case, defendant Sturgeon testified that he performed his part of the oral agreement under which he was to be paid a bonus of $12,000 by plaintiff. Osburn v. DeForce, 122 Or. 360, 373, 257 P. 685, 689 (1927). See also, Kneeland v. Shroyer, 214 Or. 67, 82, 328 P.2d 753 (1958).

Finally, the trial court did not err in refusing to grant plaintiff's motion...