Horton v. Robinson

• Decision Date: 02 August 1989
• Docket Number: No. 08-89-00096-CV,08-89-00096-CV
• Citation: 776 S.W.2d 260
• Parties: Jack Richard HORTON, Shere L. Griggs and Seville Financial, Inc., Appellants, v. Glen ROBINSON, Appellee.
• Court: Texas Court of Appeals

Page 260

776 S.W.2d 260

Jack Richard HORTON, Shere L. Griggs and Seville Financial Inc., Appellants, v. Glen ROBINSON, Appellee.

No. 08-89-00096-CV.

Court of Appeals of Texas El Paso.

Aug. 2, 1989.

Rehearing Denied Sept. 6, 1989.

Ted M. Akin, Akin & McMullen, P.C., John Alan Goren, Akin & McMullen, P.C., Dallas, for appellants.

Robert J. White, Plano, for appellee.

Before OSBORN, C.J., and WOODARD and KOEHLER, JJ.

OPINION

OSBORN, Chief Justice.

This appeal is from a judgment based upon a jury verdict awarding damages to a party who had entered into a written agreement with two of the Appellants to form a corporation for the purpose of engaging in certain financial transactions. The Appellee alleged he was entitled to damages for breach of contract, breach of fiduciary duties and because of a conspiracy between the individual Appellants. The trial court's judgment reduced the actual damages found by the jury from $160,000.00 to $67,488.33 and awarded $125,000.00 in exemplary damages against Horton and Seville and $50,000.00 in exemplary damages against Griggs and Seville, plus attorney's fees of $30,000.00, and interest and costs. We reform and affirm the judgment.

The three individuals entered into a written agreement on December 1, 1983, in which they were to form a financial services company to be composed of Seville Financial, Inc., and other companies. Each of the three parties were to own twenty percent of the parent company with the remaining forty percent to be available to attract other personnel and capital for the company. The agreement provided "profits are to be distributed pro-rata, 33 1/3 each."

Robinson contended that Horton and Griggs decided at a meeting on February 18, 1984 to oust him from Seville. After that date, his requests for his share of the profits of the company were refused and he was not permitted to inspect the company books and records. Finally, in May 1984, he left Seville and obtained other employment.

The jury found (2) that Horton and Griggs failed to perform pursuant to the written agreement; (3) which proximately caused Robinson's damages; (6) a fiduciary relationship existed between Horton and Robinson; (7) Horton violated his fiduciary duties (8) which proximately caused damage to Robinson; (9) such violation was done willfully and maliciously; (10) Griggs entered into a civil conspiracy with Horton to violate fiduciary duties to Robinson; (11) such conspiracy proximately caused damage to Robinson; (12) she acted with malice in her conduct; (13) actual damages of $160,000.00; (14) exemplary damages as to Horton of $125,000.00 and as to Griggs of $50,000.00; (16) that Seville Financial, Inc. ratified (a) the failure to perform the written agreement (b) the violation of fiduciary duties and (c) the civil conspiracy. In the first question, the jury failed to find that Robinson waived his rights under the written agreement.

The Appellants present thirty-six points of error and the Appellee has one cross-point. Initially, Appellants assert that Appellee has failed to plead a cause of action for which he can recover in his individual capacity. They argue that Appellee, as a corporate stockholder, has no individual cause of action for personal damages caused solely by a wrong done to the corporation, even if he is injured by that wrong. Clearly, individual stockholders have no cause of action to recover damages sustained by a corporation. Commonwealth of Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216 (1942); Group Medical and Surgical Service, Inc. v. Leong, 750 S.W.2d 791 (Tex.App.--El Paso 1988, writ denied). But, an exception exists "where the wrongdoer violates a duty arising from contract or otherwise, and owing directly by him to the stockholder." Commonwealth, 168 S.W.2d at 222. The court recognized the exception is applied most often in cases where there was a fiduciary relationship which required the wrongdoer to protect the interest of the stockholder and this duty was violated. Also see Stinnett v. Paramount-Famous Lasky Corporation of New York, 37 S.W.2d 145 (Tex.Comm'n App.1931, holding approved); Morrison v. St. Anthony Hotel, San Antonio, 295 S.W.2d 246 (Tex.Civ.App.--San Antonio 1956, writ ref'd n.r.e.). In the Morrison case, Justice Pope noted the general rule but said, "in a proper case, where a majority stockholder has abused its discretion and has maliciously suppressed the payment of dividends, a stockholder may assert a cause of action for damages and may compel the declaration of dividends."

In this case, the Appellee alleged violations of his own individual rights. He claimed the Appellants Horton and Griggs breached a contract to which they were all parties and further that Horton breached independent fiduciary duties owed to him and Griggs conspired with Horton to breach those duties. Such pleading is sufficient to support a recovery in one's individual capacity.

Appellants also question Appellee's standing to file this suit. If that be an issue, the Appellants were required to raise the issue by a special exception or plea in abatement in the trial court. Group Medical and Surgical Service, Inc. v. Leong, 750 S.W.2d 791. That was not done and the issue may not now be raised for the first time on appeal. Neither did the Appellants file a sworn pleading under Tex.R.Civ.P. 93(2) to contest the Appellee's capacity to bring this suit. Appellants have waived their right to complain. Pledger v. Schoellkopf, 762 S.W.2d 145 (Tex.1988). Point of Error No. One is overruled.

The next four Points of Error attack the legal and factual sufficiency of the evidence to support the award of damages and particularly the jury finding of actual damages of $160,000.00. Question No. Thirteen inquired as to, "What sum of money, if any, if paid now in cash would fairly and reasonably compensate Glen Robinson for damages, if any?" There was no instruction with the issue. The Appellant does not present any point of error which attacks the form of this issue. The primary evidence on damages came from Willard Brown, a certified public accountant, who had examined various financial documents relating to Seville, including tax returns and monthly financial statements. He prepared a spread sheet analysis summarizing Seville's financial records for the end of each fiscal year from 1984 to 1986. This was undated to include the period ending July 31, 1987.

Brown defined net income, or profit, as the total income of the company less reasonable, ordinary and necessary business expenses. He reached the conclusion that Seville had $486,240.00 in profits available for distribution to the three stockholders during the period of his analysis, which would equal $162,080.00 to each of the three owners. The total figure included $111,742.00 of net income shown on Seville's financial records, $202,465.00 paid in excessive directors' fees, $160,000.00 paid as salaries to Horton and Griggs in 1987, along with income tax refunds and penalties of $12,033.00. The jury found this testimony credible and answered Special Issue No. Thirteen within the bounds set by the accountant. His testimony was sufficient to support the verdict under the standards set forth in both Garza v. Alviar, 395 S.W.2d 821 (Tex.1965) and In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). Points of Error Two through Five are overruled.

Appellants' next contention is that the jury's finding in answer to Question No. One--that Appellee did not waive his rights under the December 1, 1983 agreement--is against the great weight and preponderance of the evidence. In order to establish an abandonment or waiver of rights under a contract there must be proof of an intent to relinquish a known right. Huffington v. Upchurch, 532 S.W.2d 576 (Tex.1976). Waiver has been defined as an intentional relinquishment of a known right or intentional conduct inconsistent with claiming it. Massachusetts Bonding and Insurance Co. v. Orkin Exterminating Company, 416 S.W.2d 396 (Tex.1967).

The evidence on the issue is conflicting. Appellants Horton and Griggs testified that they all agreed to part company at the February 18, 1984 meeting. They said it was agreed that Robinson would take the commercial leases, Horton would take the home improvement loans, and Griggs would take the mortgage loans, and each would go a separate way. But, Robinson said Griggs told him she could not work with him anymore and one of them was going to have to leave; and that he told her he would be sorry to see her go because he intended to remain with Seville. Horton admitted that in April 1984, he asked Robinson to sign a release, waiving his rights in Seville's home improvement division, and Robinson refused to sign. That could hardly be considered an intentional relinquishment of a known right.

Robinson testified that he continued to work full-time for Seville until May 1984, and continued to obtain leases for the company through August. He said he obtained employment elsewhere only after Horton refused to give him any money, although Horton acknowledged that he and Griggs were dividing Seville's income among themselves. Robinson did acknowledge that he claimed one hundred percent ownership of post-February leases on his tax returns but indicated that the accountant who prepared the returns made a mistake, because he never intended to claim more than a one-third interest. Some of the leases had Horton's initials on them indicating his approval. Horton denied ever giving any approval for those particular leases, although he did acknowledge that he had initialed the documents. Clearly, the evidence was conflicting. Appellants claim that Robinson was reimbursed for out-of-pocket expenditures when he left the company and relinquished all of his rights. But, the evidence reflects Horton was also reimbursed for his expenditures and he never claims to have left and relinquished his rights. The jury chose to believe Robinson with regard to the...