Leslie v. Pine Crest Homes, Inc.

• Decision Date: 29 August 1980
• Citation: 388 So.2d 178
• Parties: James H. LESLIE v. PINE CREST HOMES, INC., an Alabama Corporation. 78-702.
• Court: Alabama Supreme Court

Page 178

388 So.2d 178

James H. LESLIE v.PINE CREST HOMES, INC., an Alabama Corporation.

78-702.

Supreme Court of Alabama.

Aug. 29, 1980.

Roger M. Monroe and Martin D. Baker of Jones & Monroe, Birmingham, for appellant.

Eddie Leitman and Andrew P. Campbell of Leitman, Siegal & Payne, Birmingham, for appellee.

MADDOX, Justice.

This is an appeal from a final judgment entered in favor of plaintiff, Pine Crest Homes, Inc., against the defendant, James H. Leslie, in which the trial court held (1) that Leslie owed Pine Crest $23,761.38, (2) that Leslie was liable for one-half the reasonable attorneys' fees incurred and paid by Pine Crest for defending a claim filed against Pine Crest, and (3) that Leslie was liable for one-half of any judgment rendered against Pine Crest on the same claim.

The trial was before the Honorable William A. Thompson, who made findings of facts and conclusions of law, as follows:

"This action came on to be heard by the Court and was submitted on the pleading and testimony and evidence presented in open court.

"The complaint alleges an action for an accounting by the Plaintiff, Pinecrest (sic)Homes, Inc., against the Defendant, James H. Leslie, and seeks an accounting of the financial dealings of a joint venture between the parties.These dealings relate to the construction and sale of sixteen houses built by the joint venture.The Plaintiff further seeks a judgment against Leslie for one-half of the loss sustained by the joint venture and, also, the sums paid to Leslie alleged to be loans and advances against anticipated profits.

"The Defendant Leslie admits a joint venture between himself and Pinecrest but denies that there exists any indebtedness due by him.In summary, Leslie contends that he and Pinecrest entered into a joint venture wherein Pinecrest was to provide the building lots, financing, accounting services and make all payments of payroll, materials and sub-contractors.Leslie avers that he was responsible for the actual construction of the houses involved.Leslie alleges that Pinecrest refused to account to him, refused and denied access to the books and records, refused to agree on sales prices, refused to correct obvious errors, padded construction costs, charged the venture for labor and materials for the personal benefit of Pinecrest's president and numerous claims of unauthorized and unwarranted costs.Leslie further denies that he received loans and advances from Pinecrest and contends that all sums received by him were sums actually owed by Pinecrest to him.Leslie avers that the transactions are so complex that the services of an independent certified public accountant are required and should be appointed by the Court to render an accounting and that, upon such accounting, Pinecrest is due to account to him for monies due and owing.

"Prior to trial, the Court, on the joint motion of the parties, appointed J. Wray Pearce of Pearce, Summerford and Company, P. C., Certified Public Accountants, to render an accounting of the profits and losses of the sixteen houses referred to in the complaint.The accounting was to be based upon the construction costs of the houses, the financing, sale and income or loss therefrom.

"The accounting was thereafter conducted by the accountant and a memorandum report and analysis was provided to each of the parties.After certain adjustments were made by the accountant to his preliminary computations, he reported to the Court and the parties a net combined loss on the sixteen houses of $1746.26 without regard to loans or advances, if any, to Leslie.The accountant's report was subject to certain enumerated exceptions.These related to a few cost charges not verified by invoices and a few invoices for which no costs were charged.

"Upon consideration of the matters presented, the Court finds as follows:

"1.That Pinecrest Homes, Inc., and James H. Leslie entered into a joint venture agreement during the latter months of 1976 to construct sixteen houses for the purposes of sale.The houses were to be built on real estate owned by Pinecrest, as alleged in the complaint.The agreement further provided that Pinecrest was to provide the financing and administrative requirements attendant to construction, and Leslie was to provide the job supervision required for such construction.Profits, if any, were to (be) divided equally.All of such agreement was verbal and no part thereof was reduced to writing.

"2.In approximately March or April 1977, disagreements arose between Leslie and Leonard Hultquist, the President and owner of Pinecrest, over the payment of certain workmen and, also, over the loss incurred in connection with the sale of one of the houses.As a result of these disagreements, Leslie stopped performing his part of the responsibilities of the venture and Pinecrest was thereafter required to complete and sell the remaining houses.At the time of this occurrence, seven of the sixteen houses had been completed and sold.

"3.During the friendly and agreeable period of the venture, Leslie received the sum of $27,150 from the joint venture account as loans and advances against anticipated profits.According to the venture records, the parties had a paper profit of approximately $7829.The records show that the profits on the houses built and sold thereafter were nominal and that, in several instances, actual losses were incurred.

"4.Pursuant to the request of both parties and by agreement, an accounting of the joint venture was conducted by an independent accountant.This accounting shows that the venture incurred a loss of $1746.26 on the construction and sale of the sixteen houses.The evidence produced in open court failed to substantiate the correctness of certain charges by Pinecrest to the construction.These charges are:

Ace Plumbing                         $ 386.00
                Adjustment on Blaylock Construction    590.22
                Labor charges (Cummins)                421.77
                Overhead                              3150.00
                                                     --------
                  Total of Chargebacks                4547.99
                

"The evidence further shows that $400 was charged by Pinecrest to each of the sixteen jobs as a bookkeeping entry representing an allocation of insurance costs of a master builders risk insurance policy that was paid for and owned by Pinecrest.This policy covered other construction as well as that in controversy here.This arbitrary allocation was made notwithstanding the evidence that there was deducted from the payment to each subcontractor 1% of his contract to represent and cover the costs of workmen's compensation insurance.No accounting was made by Pinecrest or the independent accountant of these sums, but the evidence shows that Pinecrest charged to each job the total of the subcontract without an accounting or adjustment of the deduction.Such being shown, the arbitrary and unproven charge of $6400 to the joint venture is not due to be allowed.

"The evidence also shows that the independent accountant did not charge to the joint venture the sum of $2424.48 that was paid or expended by Pinecrest to correct deficiencies in connection with the sale of Lot 22, River Run, to Richard C. Duel, III, and a subsequent dispute with that purchaser.The joint venture is due to be charged with this sum and included in the accounting here.

"These adjustments are summarized and the totals thereof are as follows:

Account of joint venture by
                  accountant--Loss                 ($ 1,746.26)
                Additional charges in connection
                  with Lot 22, River Run           (  2,424.48)

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