Key Hotel Corp., Club Olympia, Inc. v. Crowe, Chizek & Co.
| Decision Date | 27 January 1977 |
| Docket Number | No. 3--1074,3--1074 |
| Citation | 172 Ind.App. 15,359 N.E.2d 262 |
| Parties | KEY HOTEL CORPORATION, CLUB OLYMPIA, INC., Appellants, v. CROWE, CHIZEK & COMPANY, and David A. Thakar, Appellees. A 178. |
| Court | Indiana Appellate Court |
Donald F. Strutz, S. Douglas Trolson, Jr., Fort Wayne, for appellants.
Max E. Hobbs, for David A. Thakar.
Byron F. Novitsky, Fort Wayne, for Crowe, Chizek & Co.
Crowe, Chizek & Company (the accountants) performed auditing and other accounting services regarding the books and affairs of Key Hotel Corporation and its affiliate, Club Olympia, Inc., the appellants herein. (Hereinafter appellants are referred to as 'Key' and 'Club O' or collectively as the 'corporations.') A dispute arose regarding the liability of the corporations to pay for the services. A trial by court resulted in a judgment against the corporations for the majority of the services rendered and against appellee Thakar for the balance. We conclude that the corporations have failed to assert prejudicial error on appeal. We therefore affirm.
To understand the posture of the appeal it is necessary to recount in some detail the procedural background of the case and the factual circumstances which gave rise to litigation.
In the autumn of 1970 Donald Strutz was a shareholder, officer and the attorney for Club 'O'. While the exact relationship of the two corporations does not appear, it was undisputed that they were related and that Strutz had actual and apparent authority to speak for both. Strutz and Thakar entered into negotiations whereby Thakar was to purchase stock in Key and assume control of the corporations as their chief executive officer. As a result of these negotiations both Thakar and Strutz spoke with the accountants and the services in question were performed. (Although both the extent and value of the services were in question at the trial, no error is asserted on appeal regarding the total amount found due by the court, and we need not further consider that aspect of the case.)
In mid-October Thakar withdrew and an escrow agreement previously entered into was rescinded. Admittedly, Strutz then advised the accountants that thereafter the accountants were employed by the corporations. It is the liability for the work performed by the accountants prior to that notification that prompted the litigation. The accountants billed the corporations for the entire value of the services they had rendered. The corporations declined to pay, and Key commenced a suit for declaratory judgment naming the accountants and Thakar as defendants. The suit alleged that Thakar, not Key, had employed the accountants and sought a determination of the rights of the parties. The accountants filed a counterclaim against Key seeking payment of the portion of its bill attributed by it to Key, 2 and Key answered in denial. A second paragraph of answer asserted that Thakar had ordered the services and was liable to the accountants for their payment.
The accountants then commenced a separate action against Club 'O' for its portion of the debt. Club 'O' answered this complaint by a denial and filed a third party complaint against Thakar asserting that Thakar was liable to the accountants for the debt. Thakar answered by general denial.
The accountants did not amend their pleadings in either action to assert a claim against Thakar. Subsequently, the original complaint for declaratory judgment was dismissed. A consolidation was then granted combining for trial the counterclaim and answer thereto from the original action with the complaint, answer, third party complaint and third party answer contained in the second action. No pretrial order was entered. The consolidated claims were tried by the court. With respect to the claim involving Key, the court entered judgment that the accountants recover from Key $1,575.00 and that they recover from Thakar $510.00. On the claim involving Club 'O', the accountants were awarded judgment of $1,935.00 against Club 'O' and $600.00 against Thakar. Neither the accountants nor Thakar have assigned any cross errors.
Indiana Rules of Procedure, Trial Rule 14 permits a defendant to assert a claim against a third party 'who is or may be liable to him for all or part of the plaintiff's claim against him.' While the rule then permits direct claims to be asserted between the plaintiff and the third party defendant, it does not require the assertion of such claims. Thus, the rule appears to retain the right of a plaintiff to sue whom he chooses. However, it enables a defendant so chosen to seek relief against a third party who may, in turn, be liable to him for all or part of the potential judgment. Such an interpretation is reinforced by the change effected in the language of TR 14 when it was amended December 7, 1970. 3 As originally adopted the rule permitted third party actions against a person who might be liable 'with, to, or with respect to' the third party plaintiff for all or part of the plaintiff's claim. The effect of the amendment appears to narrow the permissible area for the assertion of such claims.
However, TR 20(A)(2) provides in part:
'. . . and the defendant may make any persons who could be joined under this rule parties by alleging their interest therein with a prayer that their rights in the controversy be determined, along with any counterclaim or cross-claim against them, if any, as if they had been originally joined as parties.'
The apparent implication of our Supreme Court's recent decision in City of Elkhart v. Middleton (1976), Ind., 356 N.E.2d 207 is that the corporations could require litigation of the accountant's potential or possible claim against Thakar.
However, the corporations did not assert that Thakar was liable to them for all or part of the claim as permitted by TR 14. Moreover, neither Thakar nor the accountants have assigned cross errors. Thus, in analyzing the issues available for appeal, if the evidence is sufficient to support a finding of liability on the part of the corporations for the full amount of the debt, then any error in assessing a portion of that liability to Thakar would be harmless to the corporations.
Conversely, while the corporations may attack the failure of the court to permit them to recover from...
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