King v. Bullard

• Decision Date: 30 June 2008
• Docket Number: No. ED 89833.,ED 89833.
• Citation: 257 S.W.3d 175
• Parties: Kerry G. KING, Appellant, v. Kevin BULLARD, Respondent.
• Court: Missouri Court of Appeals

257 S.W.3d 175

Kerry G. KING, Appellant, v. Kevin BULLARD, Respondent.

No. ED 89833.

Missouri Court of Appeals, Eastern District, Northern Division.

June 30, 2008.

Steven E. Raymond, Shelbyville, MO, for appellant.

James McConnell, Shelbina, MO, for respondent.

KURT S. ODENWALD, Judge.

Introduction

Kerry G. King (King) appeals from that part of the trial court's judgment¹ in favor of Kevin Bullard (Bullard) in the action King initiated against Bullard demanding an accounting, and claiming conversion and breach of fiduciary duty. We reverse and remand for further proceedings.

Background

King filed a petition on September 23, 2004, alleging, as pertinent to the issues on appeal, that he and Bullard formed K & K Logging (K & K), a partnership in which they were equal partners. He further alleged that Bullard, while holding himself out as King's partner in K & K, wrongfully withdrew funds from the partnership in an amount greater than his share of the profits, withheld records of the partnership, incurred debts in the name of the partnership, converted income of the partnership to himself, failed to pay debts of the partnership, withdrew all funds of the partnership, closed the partnership bank account, used King's credit to incur debts for Bullard's personal use and benefit, converted partnership income and funds to himself, and committed other wrongful and injurious acts unknown to King. King claimed that, although he had made numerous demands upon Bullard to account for the sums of money taken by Bullard while Bullard was purporting to act upon King's behalf, Bullard refused to account to King or to pay any sums due to King, refused to return property of the partnership, and refused to pay any part of the debts he incurred in the name of the partnership. King further claimed that King had performed all of his partnership obligations and had been required to pay out of his personal funds checks drawn upon the partnership account for partnership expenses and debts.

In response, Bullard filed Defendant's Answers and Counterclaims, in which he admitted that he and King formed K & K Logging as an equal partnership and owed each other a fiduciary duty as partners of the partnership. Bullard denied King's other allegations, claimed he had been damaged by King's wrongful, intentional, wanton and malicious acts, and requested that King be ordered to pay him for all sums owed, costs, attorney fees, fair and reasonable compensatory or actual damages, and punitive or exemplary damages.

King and Bullard testified during a bench trial conducted on November 28, 2006. The evidence presented by both King and Bullard was often contradictory, confusing and unsubstantiated. Bullard testified that he and King entered into a partnership arrangement. Bullard knew that King provided capital when they created their partnership, but Bullard did not know the amount. King deposited $28,000 into a checking account at Community State Bank for K & K. Bullard signed a contract with King, and promised to pay $12,000 to Hilltop Wood Products, Inc. for machinery and equipment to be used in the partnership. Bullard did not know how much King paid for the equipment and machinery, and Bullard's name was not added on the titles to the equipment. Bullard thought they were purchasing a four-by-four, 26-foot lift loader, a Wood-Mizer sawmill, a band saw sharpener, a log deck, a sawdust system and various extra tools and supplies. Bullard did not know what monies King paid to Hilltop; King retained all the machinery and equipment.

King and Bullard became partners because Bullard needed a skidder for his logging operations. At the beginning, they agreed that Bullard would make a $500 monthly payment on a skidder owned by King. The motor on the skidder shortly broke down and King told Bullard that he did not have the funds to repair the machine. Bullard paid for the repairs, but charged the parts to King's account at Altorfer. Bullard later reimbursed King for the parts. Bullard paid around $5000 for the repairs and parts. Afterward, Bullard and King formed the partnership because King performed dozing work only in the summer and wanted to log with Bullard during the winter. According to Bullard, he and King agreed that they would form a partnership in which they would share the labor, income, and expenses involved in logging and dozing operations. Proceeds from the dozing operations were never deposited into the partnership account. Bullard and his helpers performed almost all of the labor for the logging operations. King's contribution of labor to the logging operations was negligible.

King maintained the partnership checking account, but King gave Bullard checks each day depending upon what Bullard had to do that day, in case Bullard "had a tire blow" or needed fuel. King was responsible for the partnership's bookkeeping and Bullard gave King all the receipts he had for expenditures. For a short period of time, Bullard used one of King's fuel cards. Bullard testified that he could not produce any receipts or cashier's checks for discovery because King kept all of the receipts and paperwork for the partnership.

During trial, Bullard identified various checks in varying amounts that were made out to and signed by him in February, March, April, May, and August 1999, with a memo of "personal account." Bullard identified several other partnership checks in different amounts that were made out to him. Bullard also identified a check, payable to Perry State Bank, written by him in the amount of $1600, which showed that $600 was to go to his account. Bullard identified a check made out to Household Finance Corporation for $215.02 and acknowledged that it was used to pay a bill for his girlfriend, and he identified two checks, payable to the City of Shelbina for $300 and $154.92, that were used to pay his utility bill. Bullard testified that both he and King paid utility bills and personal expenses out of the K & K account. Bullard identified a check, dated April 20, 1999, payable to the City of Shelbina in the amount of $300, which King wrote to pay King's utility bill.

Bullard testified that he wrote a check for $1502 to Perry State Bank for a cashier's check that he used to buy a John Deere rear-end part needed for the skidder, and that he also wrote checks to Perry State Bank in the amount of $1,840.40 and $400 as payment for personal debts. Bullard testified that he wrote checks to various vendors including Casey's, Midwest Tire, Air Co., Orscheln's, Tallman's Tire Service and Sam's Auto Parts in varying amounts. Some of the checks were for personal use and others were written for partnership activities, in particular for fuel, parts and repair.

Bullard identified two checks that King wrote to him as payment for his labor, one for $300, dated July 30, 1999, and another dated August 20, 1999, in the amount of $100. Bullard testified that he and King often would write checks, sign them and hand them back to the other. Bullard sometimes used cash to pay business expenses, such as lunch for his workers, gas and parts for chainsaws, and diesel fuel for equipment.

Bullard identified a deposit slip showing that a check in the amount of $2745 was presented, with $145 received in cash. Bullard acknowledged that he received the money, but did not know the purpose for which he used it. Bullard did not recognize several deposit slips that were presented with cash received, but believed they must have been King's because the deposit slips were not in Bullard's handwriting and King made most of the deposits. These deposit slips showed various amounts of cash being received, including $1000 on May 25, 1999, and $400 on May 10, 1999.

Bullard identified two cash withdrawal slips bearing his signature, one for $100 on May 11, 1999, and one for $100 on May 24, 1999. He testified that the withdrawals were "probably not for personal; probably for fuel or gas tickets." Bullard identified a withdrawal slip, dated September 24, 1999, where he withdrew $809.49 and closed the account; however, $101.82 of that money was directly deposited back into the account to pay outstanding checks. Bullard stated that he closed the account because King kept writing checks to Hilltop and other individuals, which required Bullard to keep working because he was liable for payment of those checks, and the partnership was over. Bullard admitted that he cashed a $1600 logging proceeds check because he could not pay his rent. Both Bullard and King would cash proceeds checks, always with the knowledge of the other partner. Bullard testified that he always told King when he received money, so King was always aware when Bullard received cash from deposits.

After the partnership was concluded, Bullard testified that he continued to pay several partnership claims, including a debt of $3500 to Ray Hillman and a settlement with Mr. Latchford for $1600. Although Bullard believes King owes him money from the partnership operations, he does not have any receipts or records, and he has no knowledge of what King earned on his dozing.

King, who owns a bulldozing business, testified that Bullard and another man had rented a skidder from him prior to February 11, 1999. After they returned the skidder to King, Bullard approached King to rent the skidder and agreed to pay $500 weekly and to return it in as good or better shape than when he received it. Sometime thereafter, King entered into an agreement with Bullard to form a logging operation, K & K.

King testified that after he and Bullard agreed to create the partnership, King borrowed $28,000 to buy a forklift to load logs. King opened the partnership checking account with this money, but immediately wrote a check to Hilltop Wood for $21,000 to purchase various items of machinery and equipment. The total purchase price was "32,000-something[,]" so King gave Hilltop a promissory note for $12,000.

King kept the checkbook for the...