Hammons v. Ehney

• Decision Date: 25 June 1996
• Docket Number: No. 78504,78504
• Parties: John Q. HAMMONS and Juanita Hammons, Respondents, v. Theodore J. EHNEY, Jr., Defendant, and Carolyn Ehney, Appellant.
• Court: Missouri Supreme Court

Page 843

924 S.W.2d 843

John Q. HAMMONS and Juanita Hammons, Respondents, v. Theodore J. EHNEY, Jr., Defendant, and Carolyn Ehney, Appellant.

No. 78504.

Supreme Court of Missouri,

En Banc.

June 25, 1996.

Stephen G. Mirakian, Kansas City, for appellant.

Douglas L. Carter, Kansas City, for respondents.

PRICE, Judge.

Mrs. Carolyn Ehney appeals a judgment for equitable contribution against her. We hold that (1) a claim for contribution by a codebtor may be tried in equity over the defendant's objection, (2) a litigant does not have a right to findings of fact and conclusions of law in a court-tried case, unless clearly and unequivocally requested, (3) there was sufficient evidence for the trial court to have found the guaranty was relied on and supported by sufficient consideration, (4) any claim Mrs. Ehney might have against Metro North State Bank based on the Equal Credit Opportunity Act is not attributable to the Hammonses and does not void her guaranty or negate her liability for equitable contribution, and (5) a guarantor is liable for only a pro rata proportion of the common debt. We affirm the trial court's judgment as modified in Section VI.

I.

Ted Ehney, Jr., a real estate developer, was loaned 2 million dollars by Metro North State Bank ("Bank") in exchange for a promissory note. The unsecured loan was to be used to cover expenses for one of Mr. Ehney's real estate developments, Executive Hills North, Inc., but Mr. Ehney was the principal on the note.

Mr. Ehney did not pay the note when it came due, but instead negotiated another unsecured loan for 5 million dollars to retire the debt and pay additional expenses. As a condition for the loan, Carolyn Ehney, Mr. Ehney's wife, signed a guaranty making her jointly and severally liable for the full amount. Mrs. Ehney was a businesswoman in her own right and personally owned several businesses. John Hammons, real estate developer, and his wife, Juanita Hammons, also signed guaranties. Mr. Ehney secured the Hammonses' guaranties by offering a second deed of trust in real estate and stock ownership. One of the expenses paid for by the loan was a $125,000 debt to Executive Hills Designs, an interior decorating company owned by Mrs. Ehney.

Once again Mr. Ehney was unable to pay the note when it came due, and the bank notified the Hammonses of the default. The Hammonses paid the bank $5,487,134.94 to satisfy the debt. They brought an action against Mr. Ehney for reimbursement and fraudulent representations and prevailed on a motion for summary judgment in the amount $7,390,645.48. They also sought equitable contribution from Mrs. Ehney for her pro rata share of the payment and, in the alternative, payment on her guaranty as assignees of the note from the Bank. Before trial, the Hammonses voluntarily dismissed their claim as assignees, leaving only their equitable claim for contribution. Mrs. Ehney requested a jury trial. The trial court refused, finding (1) contribution is "a purely equitable claim" and (2) the guaranty Mrs. Ehney signed contains a jury trial waiver. The court rendered judgment against Mrs. Ehney for $2,463,548.47.

II. Right to a Jury Trial for Contribution Claim

A.

Mrs. Ehney claims that the trial court erred in hearing this case in equity without a jury. She argues that contribution is a legal claim for a money judgment as to which she has a constitutional right to a jury trial. A careful analysis of the development of the law on this issue indicates that Mrs. Ehney is incorrect.

Normally when distinguishing between legal and equitable actions one looks to the remedy requested. A money judgment is a legal remedy whereas some other type of court order is equitable. This distinction is not always controlling. 47 Am.Jur.2d Jury § 34 (1995). This Court has recognized that courts sitting in equity may grant money judgments. Craig v. Jo B. Gardner, Inc., 586 S.W.2d 316, 325 (Mo.banc 1979); State ex rel. Willman v. Sloan, 574 S.W.2d 421, 422 (Mo.banc 1978). We must look to the essential nature of the action, not merely the remedy sought, to determine if contribution is equitable or legal. 47 Am.Jur.2d Jury § 34 (1995).

Contribution between co-debtors originated as an equitable action in Missouri. "The doctrine of contribution is not founded on contract, but is based on the principle that equality of burden as to a common right is equity, and that wherever there is a common right the burden is also common." Missouri District Telegraph Co. v. Southwestern Bell Telephone Co., 338 Mo. 692, 93 S.W.2d 19, 23 (1935). "The doctrine of contribution finds its basis in general principles of equity and of natural justice rather than contract." Commercial Union Ins. Co. v. Farmers Mut. Fire Ins. Co., 457 S.W.2d 224, 226 (Mo.App.1970). The ultimate money judgment is awarded only after the court has determined that it is equitable to share the burden of the debt when no actual contract existed between the co-debtors.

Missouri courts have also developed a legal claim for contribution between co-obligors. Dysart v. Crow, 170 Mo. 275, 70 S.W. 689, 690 (1902); Jeffries v. Ferguson, 87 Mo. 244, 245 (Mo.1885); Van Petten v. Richardson, 68 Mo. 379, 380 (Mo.1878); Hoerrman v. Latham, 71 S.W.2d 70, 72 (Mo.App.1934); Hanna v. Hyatt, 67 Mo.App. 308, 313 (1896); Wilkerson v. Sampson, 56 Mo.App. 276, 280 (1893). This "new" action has arisen both in common law under the theory of implied contract and by the creation of a statutory right to contribution. ¹ Dysart, 70 S.W. at 690 (statute); Van Petten, 68 Mo. at 380 (implied contract).

Generally, equity will not intercede if there is an adequate remedy at law. Harris v. State Bank and Trust Co. of Wellston, 484 S.W.2d 177, 179 (Mo.1972); Umphres v. J.R. Mayer Enterprises, Inc., 889 S.W.2d 86, 90 (Mo.App.1994). An exception to this theory, however, exists for claims which originated in equity prior to the recognition of a legal claim. For such claims concurrent jurisdiction in both equity and law exists. As explained in 1 Pomeroy's Equity Jurisprudence § 182 (1941):

Whenever equity originally acquired jurisdiction over any particular subject-matter, right, or interest, because the law either did not recognize the existence of the right or interest, or could not furnish an adequate remedy for its protection, and the scope of the common law has since become enlarged, so that it now not only admits the particular primary right or interest to be legal, but also furnishes a legal remedy by its actions, which may even be adequate under ordinary circumstances, still the equitable jurisdiction is not in general thereby destroyed or lessened, although it is made to be concurrent, and although the special reasons for its continued exercise--namely, the inadequacy of the legal remedy--may no longer exist.

This exception has been recognized generally. "The cases over which the courts have concurrent authority are exceptions to the rule which precludes the equity court from hearing a cause where the law affords a remedy." 27 Am.Jur.2d Equity § 88 (1966). It has also been recognized in Missouri. "[W]hen concurrent jurisdiction exists, i.e. law and equity, equitable principles can be invoked despite the existence of an adequate remedy at law." Estate of Cantonia v. Sindel, 684 S.W.2d 592, 595 (Mo.App.1985).

Thus, the subsequent creation of a legal claim for contribution in Missouri by common law and statute did not extinguish the equitable action, but simply created concurrent jurisdiction in both law and equity for contribution claims. 18 Am.Jur.2d Contribution § 84 (1985); 72 C.J.S. Principal and Surety § 280 (1987). Missouri courts, as well as others, have recognized that contribution between co-debtors may be brought as either an equitable or a legal action. Dysart, 70 S.W. at 690; Hoerrman, 71 S.W.2d at 72; Michigan Millers Mutual Ins. Co. v. United States Fidelity and Guaranty Corp., 306 Pa.Super. 88, 452 A.2d 16, 18 (1982); Cooper v. Greenberg, 191 Va. 495, 61 S.E.2d 875, 878 (1950). Contribution may still be brought in equity. Tindall v. Holder, 892 S.W.2d 314, 324 (Mo.App.1994); Automobile Club Inter-Insurance Exchange v. Farmers Ins. Co., Inc., 646 S.W.2d 838, 840 (Mo.App.1982) ("Contribution is an equitable duty rather than contractual and is enforceable where one party is required to pay more than his share of common liability ..."); Citizens State Bank v. Bossard, 733 P.2d 1296, 1298 (Mont.1987).

For the proposition that contribution is now solely a legal claim, Mrs. Ehney relies on Equity Mut. Ins. Co. v. Kroger Grocery & Baking Co., 238 Mo.App. 4, 175 S.W.2d 153, 158 (1943), which states that "[i]n modern jurisprudence contribution is a law action." However, the sole case on which Equity Mutual relies does not state that contribution is exclusively a law action. Missouri District, 93 S.W.2d at 22. In fact, that case implies that an action in contribution, particularly one not based on statute, could be brought in law or equity. Id. To the extent that Equity Mutual implies an action for contribution may only be brought in law, it should not be followed.

It should also be noted that Equity Mutual and Missouri District were personal injury tort cases. Equity Mutual, 175 S.W.2d at 154-55; Missouri District, 93 S.W.2d at 21. Historically, Missouri enforced contribution between co-debtors, but not between joint tort-feasors, assuming that by relieving a person committing a tortious act from full responsibility courts would encourage these acts. Missouri Pacific Railroad Co. v. Whitehead & Kales Co., 566 S.W.2d 466, 469, 473 (Mo.banc 1978); 18 Am.Jur.2d Contribution § 40 (1985). The right to contribution among joint tort-feasors was created by statute. Whitehead & Kales, 566 S.W.2d at 473; § 537.060, RSMo 1994. At the time Equity Mutual and Missouri District were decided, joint tort-feasors only had a legal, statutory remedy and equitable contribution did not exist outside the scope of the statute. ² State ex rel....