Keppner v. Gulf Shores, Inc.

• Decision Date: 16 January 1985
• Docket Number: Nos. 54371,54486,s. 54371
• Citation: 462 So.2d 719
• Parties: Norbert KEPPNER and Michael L. Shular v. GULF SHORES, INC., and Wen Coast-Wendelta, Inc.
• Court: Mississippi Supreme Court

Page 719

462 So.2d 719

Norbert KEPPNER and Michael L. Shular v. GULF SHORES, INC., and Wen Coast-Wendelta, Inc.

Nos. 54371, 54486.

Supreme Court of Mississippi.

Jan. 16, 1985.

Joe Sam Owen, P.C. Alston, Blackwell, Owen & Galloway, Gulfport, for appellants.

Stanford E. Morse, Jr., White & Morse, Gulfport, for appellees.

En Banc.

PRATHER, Justice, for the Court.

This appeal involves the ownership and use of a sewage disposal system, a joint venture of three business corporations. The original joint venturers were Gulf Shores, Inc., Wen Coast-Wendelta, Inc. (Wendy's) and the Omelette Shoppe. After the Omelette Shoppe's bankruptcy, Michael Shular, who owned the Gulfport Sheraton Inn (Sheraton), bought the realty owned by the Omelette Shoppe upon which the sewage disposal system was located. Gulf Shores and Wendy's sought and secured a permanent injunction in the Chancery Court of Harrison County permanently enjoining Michael Shular, Sheraton owner, and Norbert Keppner, Sheraton manager, from discharging sewage from the Sheraton Inn into a sewage lift station constructed and utilized by Gulf Shores, Inc. and Wen Coast-Wendelta, Inc.

A second suit is combined in this appeal for a contempt citation against Shular's manager of the Sheraton, Keppner, for non-compliance with the injunction.

Shular and Keppner appeal from the issuance of the injunction and contempt order assigning as error:

(1) That the court erred in holding that Shular purchased the property upon which the sewage treatment station is located subject to the terms of a joint venture agreement between the Omelette Shoppe, Wendy's and Gulf Shores.

(2) That the court erred in admitting parol evidence to supplement the written joint venture agreement between the Omelette Shoppe, Wendy's and Gulf Shores.

(3) That the court erred in holding that Shular and Keppner committed trespass.

(4) That the court erred in holding Keppner in contempt of its order.

I.

Sometime prior to November 11, 1979, the Omelette Shoppe, Inc., Wen Coast-Wendelta, Inc., and Gulf Shores, Inc., owned properties contiguous to one another which properties were located on the west side of U.S. Highway 49 in Gulfport. The Omelette Shoppe, Inc., and Wen Coast-Wendelta, Inc. (Wendy's) each planned to build and operate a fast food restaurant, and Gulf Shores, Inc., planned to build and operate a 150 room motel, restaurant, lounge, swimming pool and related facilities under a franchise from Holiday Inns of America.

The parties were aware that sewage collection and disposal would be required for the operations of their respective facilities, and jointly agreed to build such facility which consisted of collection lines from each of their properties to a lift station with all necessary pumps, electrical circuits and controls, and a discharge line from such lift station to a sewage collection system which had been jointly built by the City of Gulfport and Harrison County in an unincorporated area located north of the city.

The parties also agreed to construct and operate a water main from such system built by Gulfport and Harrison County which would serve each of their properties.

This agreement was incorporated into a document dated November 11, 1979, and provided inter alia, that the parties would construct a 4 inch water and force main along with a lift station according to plans drawn by T.L. Reynolds at a cost of $50,425.00. The water was to be separately metered, and all maintenance costs of the system were to be divided equally by the original owners and any subsequent users.

Though it appears that the lift station was located on the property of Omelette, Gulf Shores, Inc., granted to Wendy's and Omelette an easement on Gulf Shores, Inc., property for location of a portion of the force main in consideration of Omelette granting to Gulf Shores, Inc., the right to connect to the lift station.

The uncontradicted evidence is that the facility was originally designed to accommodate the requirements of the three parties, and that the T.L. Reynolds design would be sufficient to handle a peak flow of 46.96 gallons per minute.

Wendy's built its restaurant and connected into the system in 1980. Gulf Shores, Inc. started construction of its Holiday Inn in September of 1981. The Omelette Shoppe was not built, and this corporation went into bankruptcy in the year 1981.

Appellant, Michael Shular (Shular), owns the Sheraton Inn which adjoins the Omelette Shoppe property. This motel consists of 170 rooms, meeting rooms, a restaurant, lounge and swimming pool. When acquired by Shular, the motel was discharging its sewage into its own package sewage treatment plant, and also permitted another fast food restaurant, the Waffle House, to discharge its sewage into the plant. Sometime around September of 1981, Shular purchased the Omelette Shoppe property from the Trustee in Bankruptcy for $70,000, which purchase included the Omelette Shoppe's easement across the property of Gulf Shores, Inc. At the time of the purchase, Shular was not aware of the terms of the agreement between the original parties, though he did believe that the lift station was on the Omelette Shoppe property which he acquired. His expressed reason for acquiring such property was for investment and expansion. Shular continued to use his package treatment plant until it became disabled around the first of November, 1981, and then, upon recommendation of an engineer, Shular caused a four inch plastic line to be attached to his pump at the treatment plant and ran such line across the surface of the Sheraton Inn property and the property acquired from Omelette Shoppe and discharged the raw sewage into the top of the lift station.

Such method of discharging sewage into the lift station was considered to be temporary as it did not meet the standards of the Mississippi Bureau of Pollution Control or regulations of the City of Gulfport and Harrison County. Though Harrison County had originally granted a permit to the original parties to the system, it did not permit this temporary solution adopted by Shular. Neither did the Bureau of Pollution Control.

Mr. Sherwood Bailey (Bailey), Vice President of Gulf Shores, Inc., and one of the principals in this corporation, learned in early February that Shular was discharging sewage into the lift station without the permission of Wendy's or Gulf Shores, Inc., and wrote Shular and demanded that he stop.

Hearing nothing from Shular, Bailey subsequently employed counsel who also wrote Shular. Shular did not respond, and on May 11, 1982 Gulf Shores and Wendy's filed their petition in the Chancery Court of Harrison County, seeking to enjoin Shular and Keppner from using the sewage treatment system as a trespass to their rights. Following a hearing for a preliminary injunction, consolidated with a trial on the merits, the court on June 14, 1982, found that Shular succeeded only to the interest of the Omelette Shoppe, and issued its judgment permanently enjoining Shular and Keppner from discharging sewage from the Sheraton Inn Motel into the sewage treatment station in excess of the Omelette Shoppe's estimated usage of five gallons per minute.

II.

Appellant's challenge to this holding raises three legal questions: (A) Whether the agreement between the Omelette Shoppe, Wendy's and Gulf Shores constituted a joint venture; (B) whether the bankruptcy of the Omelette Shoppe terminated the joint venture; (C) whether Shular bought the Omelette Shoppe property as an innocent purchaser for value without notice of the joint venture agreement.

A.

The trial court's conclusion that the agreement between the Omelette Shoppe, Wendy's and Gulf Shores constituted a joint venture was based upon this court's decision in Sample v. Romine, 193 Miss. 706, 8 So.2d 257 (1942). In that case, this Court recognized that an exact definition of joint venture to fit all cases could not be given. The case held that determination of whether an association was in fact a joint venture is based upon the terms of the agreement, the acts of the parties, the nature of the undertaking and other facts. In Sample this Court generally defined a joint venture as "an association of persons to carry out a single business enterprise for profit, for which purpose they combined their property, money, effects, skill and knowledge." 8 So.2d at 260. But the court also recognized that the venture could be for the purpose of material benefit rather than profit. However, the necessary elements to constitute a joint venture were recognized as joint purpose and proprietary control. 8 So.2d at 261.

In the case sub judice the agreement between the Omelette Shoppe, Wendy's and Gulf Shores provides that the parties will "share equally cost of running four inch water and four inch force main along with lift station as per plans and specifications ..." The agreement further provides that "all maintenance cost of this line and lift station to be divided equally by owners and any subsequent users." The parties, all businessmen with plans for the development of their properties, recognized that some form of sewage treatment would be necessary and agreed in writing to construct and maintain a sewage treatment station for the mutual benefit of all. Thus there was joint purpose and proprietary control.

This Court agrees with the trial court that these facts meet the necessary requirements of a joint venture. Therefore, the chancellor's conclusion that, based upon Sample v. Romine, the agreement between the Omelette Shoppe, Wendy's and Gulf Shores, constituted a joint venture was correct.

B.

Appellants argue that any joint venture agreement between the Omelette Shoppe, Wendy's and Gulf Shores was terminated in February of 1981 when the Omelette Shoppe became bankrupt.

There are no Mississippi cases, and none have been found from other jurisdictions, discussing the effect upon a joint venture of the bankruptcy of one of the members. Appellant cites ...