Leach v. Kelsch

• Decision Date: 11 October 1960
• Docket Number: No. 7887,7887
• Citation: 106 N.W.2d 358
• Parties: Thomas W. LEACH, Plaintiff, Appellant and Cross-Respondent, v. J. M. KELSCH, Defendant, Respondent and Cross-Appellant.
• Court: North Dakota Supreme Court

Page 358

106 N.W.2d 358

Thomas W. LEACH, Plaintiff, Appellant and Cross-Respondent, v. J. M. KELSCH, Defendant, Respondent and Cross-Appellant.

No. 7887.

Supreme Court of North Dakota.

Oct. 11, 1960.

Rehearing Denied Dec. 16, 1960.

Syllabus by the Court.

1. Trial de novo or anew in the Supreme Court is governed by Section 28-2732, NDRC 1943 and has no application to cases tried before a jury.

2. After motions for directed verdict are denied by the trial court and an appeal is taken from the order denying judgment in accordance with the motions for directed verdict, it is necessary for the Supreme Court to review the record to determine whether the motion for directed verdict should have been granted.

3. The essence of conversion is not the acquisition of property by the wrong-doer but a wrongful deprivation of it to the owner. The law of conversion is concerned with possession, not title, conversion being an offense against possession of property.

4. The wrongful sale of personal property in which another has an interest renders the seller liable for the conversion of that interest. That a tenant in common may maintain an action against a co-tenant to recover the value of a joint interest in personal property, to the actual possession of which he is entitled, at a time when his rights of ownership and possession are denied and ignored in a manner which deprives him of the possibility of any enjoyment thereof or benefit therefrom, is supported by both reason and authority. Hochstetler v. Graber, 78 N.D. 90, 48 N.W.2d 15.

5. To constitute actionable fraud the representations must be false and fraudulent and must be relied upon by the party asserting fraud. Fraud is never presumed; it must be proved.

6. Consideration necessary to support a simple contract may be either a benefit conferred upon the promisor or a prejudice suffered or agreed to be suffered by the promisee.

7. Upon examination of the record it is determined that there was conversion of property by defendant in which plaintiff had an interest and there was no fraud, undue influence or coercion shown and the transaction in issue was not void as against public policy.

8. The trial court erred in not granting plaintiff's motion for a directed verdict and motion for judgment notwithstanding the disagreement of the jury.

Jansonius, Fleck, Smith, Mather, & Strutz, Bismarck, Lord, Ulmer, Bair & Daner, Mandan, of counsel, for plaintiff, appellant and cross-respondent.

Conmy, Donahue & Conmy, Bismarck, for defendant, respondent and cross-appellant.

CLIFFORD SCHNELLER, District Judge.

Plaintiff brings this action sounding in trover and conversion, alleging that he is the owner of 3,600 shares of stock in North American Royalties, Inc., a Delaware corporation, which defendant has wrongfully withheld from him and converted, and demanding judgment for the highest value of such stock between the date of conversion and the date of trial together with the costs incurred in pursuit of said stock.

The defendant's answer, summarized as briefly as a fair statement permits, denies any conversion on the part of the defendant of any stock owned by the plaintiff, alleges that plaintiff's claim was based upon a purported contract for which there was no consideration, further alleges fraud, undue influence and coercion on the part of plaintiff toward the defendant, then sets forth a long, factual situation from his viewpoint, which facts are unnecessary to set out here, as they will be discussed later in this opinion. Defendant answered further by alleging a breach of trust on the part of plaintiff, and that any oral contract between the parties relative to such stock is void as against public policy.

The defendant demanded a trial by jury and the action was tried before the court and jury.

At the conclusion of all of the testimony the plaintiff moved for a directed verdict in his favor, as did the defendant for a directed verdict in his favor, both motions being denied by the trial court.

The case was submitted to the jury, who were unable to agree upon a verdict and were discharged by the trial court.

In accordance with Paragraph (b) of Rule 50 of the North Dakota Rules of Civil Procedure, both parties moved for judgment in accordance with their motions for directed verdict. The trial court denied both motions. Plaintiff appealed from the order denying his motion, and demanded a trial de novo in this court. Defendant filed a cross-appeal from the order denying his motion, and also demanded a trial de novo in this court.

Provision for trials anew or de novo in the Supreme Court is contained in Section 28-2732, NDRC 1943. This section applies only to actions tried and decided by the court without a jury and has no application here. Consequently we are unable to try this case anew. However, we are required under Paragraph 5 of Section 28-2702, NDRC 1943, to determine whether it was error for the trial court to deny the motion of plaintiff or defendant for judgment in accordance with the respective motions for directed verdict.

To pass upon the orders appealed from, it is necessary to set forth the facts shown by the record to determine whether the motion of either of the parties for a directed verdict should have been granted by the trial court. Smith v. Knutson, 76 N.D. 375, 36 N.W.2d 323.

A motion for judgment notwithstanding the verdict calls for a review of the trial court's ruling in denying a motion for directed verdict. Westerso v. City of Williston, 77 N.D. 251, 42 N.W.2d 429, and cases cited therein.

'If no verdict was returned, the court may direct the entry of judgment as if the requested verdict had been directed or may order a new trial.' Rule 50(b), N.D.R.Civ.P.

This rule is the basis for the present motions for judgment notwithstanding the disagreement of the jury. The scope of review from the court's order denying the motions is the same as if the motion were one for judgment notwithstanding the verdict. Neither motion should be granted unless the moving party is entitled to judgment on the merits as a matter of law. Olson v. Cass County Elec. Coop., Inc., N.D., 94 N.W.2d 506.

The plaintiff and defendant formed a partnership in 1950 or 1951 to deal in oil and mineral leases and royalties and for the drilling for oil and gas. Plaintiff had been engaged in this type of business since 1920. Defendant was a successful rancher, dealing in purebred livestock and selling and buying the same in North Dakota and other states of the Union. After four or five years of partnership operations, the parties decided to dissolve the partnership and divide their respective interests therein and to form corporations mainly owned and controlled by themselves and their wives. To that end plaintiff formed Northern Oil Company and Leach Oil Corporation, and defendant formed Northwest Oil Company. The plaintiff and his wife, with the exception of a few qualifying shares, owned Northern Oil Company and Leach Oil Corporation, and defendant and his wife, except for a few qualifying shares, owned Northwest Oil Company. The divided property of the partnership was placed by the parties in their respective corporations. Plaintiff and defendant together with others organized North American Royalties, Inc., a Delaware Corporation, as a holding company owning oil, gas and royalty interests in mineral property but not doing business as an operating company exploring for gas and oil. North American Royalties, Inc., became listed on the American Stock Exchange and its stock was bought and sold on the open market and had a day-to-day market value. The plaintiff became president, treasurer and a director of North American Royalties, Inc., and defendant became its vice-president and secretary and a director. In 1959 there were 16,000 to 20,000 individual stockholders in this company.

Sometime in late 1956 the parties talked about conveying the assets of Northern Oil, Leach Oil, and Northwest Oil to North American Royalties, taking in return stock in that company. This was thought to be of benefit to all concerned, for the parties hereto would then own stock having a market value and North American Royalties could expand by absorbing the cash assets of the other corporations and become an operating company exploring for gas and oil. This preliminary talk in 1956 culminated in a meeting in New York City in the early spring of 1957 with both parties in attendance. The proposition was talked over with the attorneys for North American Royalties, Inc. and officials of that company, and it was decided that an independent appraiser versed in the values of mineral rights, leases, and producing oil properties was to be appointed who would appraise the properties of the corporations owned by the parties, and that if the appraisal proved acceptable the tentative offer of North American Royalties to take over the assets of the corporations belonging to the parties would be completed with a cut-off date as of May 31, 1957, after which date all assets acquired by the corporations belonging to the parties would vest in North American Royalties and all their liabilities would be absorbed by North American Royalties.

In accordance with the tentative arrangements, C. T. Jones of Tulsa, Oklahoma, was appointed as the appraiser to appraise the property of Leach Oil, Northern Oil, and Northwest Oil. The appraiser's values of these properties were in the hands of the parties sometime prior to July 23, 1957. On July 23, 1957, the plaintiff contacted the defendant and informed him that the appraiser's values of his oil-producing properties were too low by comparison with the values accorded defendant's non-producing properties, and further stated to the defendant that there would have to be an adjustment of these values as between themselves.

On July 24, 1957, a further meeting took place between the parties, and was attended by a Mr. Zimmerman and a Mr. Donlin. The plaintiff at that time...