Hong v. Kong, 9092
| Citation | 5 Haw.App. 174,683 P.2d 833 |
| Decision Date | 07 May 1984 |
| Docket Number | No. 9092,9092 |
| Court | Hawaii Court of Appeals |
| Parties | Karen N.H.L. HONG, Plaintiff-Appellee, v. Lily L.H. KONG and Ivan F.S. Kong, Defendants-Appellants. |
Syllabus by the Court
1. A trial court's findings of fact shall not be set aside unless clearly erroneous and they are not clearly erroneous if they are supported by substantial evidence in the record. Substantial evidence means credible evidence of sufficient quantity and probative value to justify a reasonable man in reaching a conclusion.
2. In case of conflicting evidence, the weight and credibility of testimony are within the province of the trial court and will not be reviewed on appeal.
3. An issue which was not raised in the lower court will not be considered on appeal and an appellate court will deviate from the general rule only when justice so requires.
4. Testimony regarding a letter and an attached memorandum containing suggested forms of recitals and agreements to be included in a settlement agreement which defendants' counsel was requested to prepare was properly excluded as evidence of an offer of compromise or settlement under Rule 408, Hawaii Rules of Evidence.
5. An action for rescission of an agreement and for restitution of monies paid on account of the agreement is "an action in the nature of assumpsit" within the meaning of HRS § 607-14 and attorney's fees will be taxed against the losing party in such action.
Anson O. Rego, Honolulu (Joanne M. Lanham, Honolulu, with him on the reply brief; Anson O. Rego, A Law Corporation, Honolulu, of counsel), for defendants-appellants.
Harold W. Goble, Honolulu (Harold W. Goble, Attorney at Law, A Law Corporation, Honolulu, of counsel), for plaintiff-appellee.
In an action on a promissory note, defendants Lily L.H. Kong (Lily) and Ivan F.S. Kong (collectively the Kongs) appeal from the judgment which awarded plaintiff Karen N.H.L. Hong (Hong) $19,600 plus interest, costs, and attorney's fees and dismissed the Kongs' counterclaim. We affirm in part and reverse in part.
The issues on appeal and our answers are as follows:
1. Whether the trial court's finding that the Kongs had failed to prove their alleged defenses and counterclaim was clearly erroneous. No.
2. Whether the trial court erred in excluding a document marked Exhibit J for identification and testimony relating to it. No.
3. Whether the trial court erred in awarding to Hong attorney's fees of $5,362 for prevailing on the counterclaim. Yes.
In December 1977, Hong was the owner of 22,000 shares of capital stock, constituting a 52% interest, of Tan Hing, Inc. (Tan Hing), a Hawaii corporation, doing business as Chinatown Chop Suey. The remaining 48% interest was owned by four of the restaurant's cooks.
By an agreement dated December 29, 1977, Hong agreed to sell and the Kongs agreed to purchase the 22,000 shares of stock for $22,000, payable $2,000 in cash and the balance in monthly installments of $200 each, without interest. The agreement expressly required the Kongs to regularly make the corporate loan payments to Liberty Bank and Oahu Finance Company and the lease rental payments to Yee Hop Realty, Ltd.
On the same date, the Kongs signed a promissory note for $20,000 and a second mortgage to secure their obligations under the agreement. The promissory note included a guaranty by the Kongs to pay Tan Hing's debt to Liberty Bank which Hong had personally guaranteed.
The Kongs made only two installment payments totaling $400 on the note. On July 11, 1979, Hong sued the Kongs for $19,600, the balance due on the note. The Kongs answered, asserting affirmative defenses, inter alia, of fraud and payment. They also counterclaimed alleging, inter alia, that Hong intentionally, willfully, and falsely represented to them that Tan Hing was "financially sound," had "only a few thousand dollars of outstanding and current debts" other than the loans from Liberty Bank and Oahu Finance Company and fraudulently induced them to purchase the 22,000 shares of Tan Hing's stock. They prayed for cancellation of the agreement, promissory note, and second mortgage and for an award of general damages of $89,490.14, punitive damages of $100,000, costs and attorney's fees.
After a bench trial commencing on June 28, 1982, the trial court found in favor of Hong. The Kongs appealed.
The Kongs challenge Finding of Fact No. 5 which reads:
5. Defendants have failed to prove the material allegations of their Counterclaim or their alleged defenses.
A trial court's findings of fact "shall not be set aside unless clearly erroneous," Rule 52(a), Hawaii Rules of Civil Procedure (HRCP) (1981), and they are not clearly erroneous if they are supported by substantial evidence in the record. Shoemaker v. Takai, 57 Haw. 599, 561 P.2d 1286 (1977); Stewart v. Smith, 4 Haw.App. 185, 662 P.2d 1121 (1983). Substantial evidence means credible evidence of sufficient quantity and probative value to justify a reasonable man in reaching a conclusion. MPM Hawaiian, Inc. v. Amigos, Inc., 63 Haw. 485, 630 P.2d 1075 (1981); Geldert v. State, 3 Haw.App. 259, 649 P.2d 1165 (1982). In case of conflict in the evidence, the weight and credibility of testimony are within the province of the trial court and will not be reviewed on appeal. Rule 52(a), HRCP; Molokoa Village Development Co., Ltd. v. Kauai Electric Co., Ltd., 60 Haw. 582, 593 P.2d 375 (1979); Anders v. State, 60 Haw. 381, 590 P.2d 564 (1979); Nani Koolau Co. v. K & M Construction, Inc., 5 Haw.App. 137, 681 P.2d 580 (1984).
We apply the foregoing precepts in our consideration of the Kong's challenge to the trial court's finding.
The Kongs initially argue that the agreement should have been reformed for mutual mistake since Hong understated the business debts. Hong contends that the issue of reformation based upon mutual mistake was never raised in the trial court and should not be considered on appeal. We agree with Hong.
The principal thrust of the Kongs' defense and counterclaim was misrepresentation and fraud by Hong. In their pretrial statement, the Kongs stated that their theory of the case was that Hong "deliberately, willfully, and fraudulently misrepresented the financial condition of the corporation to induce [the Kongs] to purchase her stock in the corporation." Record at 43. In his opening statement at trial, the Kongs' counsel stated that Hong "has committed a fraud upon my client [sic]" and that the Kongs were seeking punitive damages "for the fraud and misrepresentations of [Hong]." I Transcript at 12. The pleadings and transcripts are devoid of any reference to mutual mistake by the parties or to the remedy of reformation of the agreement. Thus, the trial court was never asked to, and did not, consider the alternative theory of mutual mistake in the case.
The general rule is that an issue which was not raised in the lower court will not be considered on appeal. Kawamoto v. Yasutake, 49 Haw. 42, 410 P.2d 976 (1966); In re Keamo, 3 Haw.App. 360, 650 P.2d 1365 (1982). An appellate court will deviate from this rule only when justice so requires. Earl M. Jorgensen Co. v. Mark Construction, Inc., 56 Haw. 466, 540 P.2d 978 (1975); Bank of Honolulu v. Anderson, 3 Haw.App. 545, 654 P.2d 1370 (1982). In determining whether justice requires the consideration of the issue, the appellate court considers three factors: " 'whether consideration of the issue requires additional facts; whether the resolution of the question will affect the integrity of the findings of fact of the trial court; and whether the question is of great public import.' " Earl M. Jorgensen Co. v. Mark Construction, Inc., 56 Haw. at 476, 540 P.2d at 985 (quoting Fujioka v. Kam, 55 Haw. 7, 9, 514 P.2d 568, 570 (1973)); Cabral v. McBryde Sugar Co., Ltd., 3 Haw.App. 223, 647 P.2d 1232 (1982).
Here, consideration of the new issue will affect the integrity of the findings of fact since the defense or claim of mutual mistake is antithetical to that of misrepresentation and fraud. The new issue, furthermore, is of no great public import. Consequently, we exercise our discretion and decline to consider the issue of reformation based on mutual mistake which was not raised in the court below.
The Kongs claim that since there was substantial evidence to prove misrepresentation and fraud by Hong, Finding of Fact No. 5 is clearly erroneous. We do not agree.
The evidence on the issue of misrepresentation and fraud was conflicting. The indication is that the trial court found the testimony of Hong and witnesses Martin Lynn (Lynn) and Ralph Matsumura (Matsumura) credible, while it disbelieved and gave no weight to the testimony of Lily and witness Robert Chang. As stated above, credibility and weight to be given the testimony of witnesses are the province of the trial court and we will not disturb the court's finding.
Furthermore, upon review of the record, we do not have a definite and firm conviction that a mistake has been made. Waugh v. University of Hawaii, 63 Haw. 117, 621 P.2d 957 (1980); Stewart v. Smith, supra.
The Kongs contend that the trial court erroneously excluded Exhibit J, which is a one-page letter dated March 20, 1978, from Lynn, Hong's friend, to Matsumura, the Kongs' attorney at that time, together with a two-page memorandum of a proposed settlement agreement between Hong and the Kongs and testimony relating to it. 1 We disagree.
There is much confusion as to whether Exhibit J was actually admitted into evidence. The briefs imply that Exhibit J was not admitted into evidence. However, during oral argument, the Kongs' counsel claimed that Exhibit J was in evidence by referring to II Transcript at 43 which reads:
To continue reading
Request your trial
-
Beneficial Hawaii, Inc. v. Kida
...occupied, either by the return of something which he formerly had or by the receipt of its equivalent in money," Hong v. Kong, 5 Haw.App. 174, 182, 683 P.2d 833, 841 (1984) (internal quotation marks and citation omitted), it is axiomatic that equitable relief is available to Beneficial Hawa......
-
Honda v. Ers
...55 Haw. at 9, 514 P.2d at 570 (noticing plain error where, inter alia, "there is no material fact in issue"); Hong v. Kong, 5 Haw.App. 174, 177, 683 P.2d 833, 837 (1984) (reviewing FOFs entered by the circuit court, citing Earl M. Jorgensen Co. and Fujioka, and declining to notice plain err......
-
Exotics Hawaii v. E.I. Du Pont De Nemours
...agreement ab initio." Peine v. Murphy, 46 Haw. 233, 239, 377 P.2d 708, 712 (1962) (citations omitted); see also Hong v. Kong, 5 Haw.App. 174, 181, 683 P.2d 833, 840 (1984) (stating that "[t]he rescission of a contract for fraud in the inducement is part of the law of restitution") (citation......
-
Alvarez Family Trust v. Ass'n of Owners
...also cites more recent cases that apply the second factor in accordance with its interpretation, specifically: (1) Hong v. Kong, 5 Haw.App. 174, 177, 683 P.2d 833, 837 (1984), which relied on Jorgensen and Fujioka and declined to notice plain error because, inter alia, "consideration of the......