Mansfield v. Smithie

• Decision Date: 27 April 1981
• Docket Number: No. 11840,11840
• Parties: Sam MANSFIELD, Plaintiff-Respondent, v. Bill SMITHIE, Tommy Hyde, and Betty Hyde and the Cardwell Country Club, Inc., Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 649

615 S.W.2d 649

Sam MANSFIELD, Plaintiff-Respondent, v. Bill SMITHIE, Tommy Hyde, and Betty Hyde and the Cardwell Country Club, Inc., Defendants-Appellants.

No. 11840.

Missouri Court of Appeals, Southern District.

April 27, 1981.

Edward L. Downs, Downs & Johnson, Cape Girardeau, for defendants-appellants.

James C. Bullard, Kennett, for plaintiff-respondent.

PER CURIAM:

By his first amended petition, the plaintiff alleged that he was assaulted by Bill Smithie who was acting as the agent of Cardwell Country Club, Inc., and Tommy Hyde and Betty Hyde. He prayed compensatory damages in the amount of $50,000.00. A jury returned a verdict against all the defendants in that amount. All defendants appeal presenting four points of alleged error. Only the points so presented will be considered by this court. Bryan v. Vaughn, 579 S.W.2d 177 (Mo.App.1979).

A summary of the evidence follows. However, in the review of the points of alleged error the evidence and all reasonable inferences therefrom supporting the verdict must be accepted and the defendants' evidence disregarded except where it supports the verdict. Smoot v. Marks, 564 S.W.2d 231 (Mo.App.1978).

Defendants Hyde owned property in Cardwell used for dancing and the sale of food and drink, referred to as a nightclub. For at least ten years prior to 1977, defendants Hyde owned and operated a nightclub on that property. In 1977, when they had a problem with selling liquor by the drink, they changed the name of it from the American Club to the Cardwell Country Club.

Cardwell Country Club, Inc., was incorporated on October 8, 1977, as a not-for-profit corporation under Chapter 355, RSMo 1969. The incorporators and initial directors were Tommy L. Blackford, Betty Ross Hyde and Thomas W. Hyde. The stated purpose of the corporation was:

To operate a country club for the citizens of Cardwell, Missouri, and the surrounding area of southeast Missouri and northeast Arkansas, which includes the operation of a clubhouse, recreational and sporting activities including but not limited to tennis, swimming, and golf; and any and all other things not forbidden by law or contrary to the provisions of Chapter 355, Revised Statutes of Missouri, 1969.

The evidence concerning the status of the corporation and subsequent operation of the business is sketchy. There was testimony that subsequent to the incorporation the business was operated by the Hydes. Defendant Tommy Hyde testified that he was the manager. Defendant Betty Hyde testified that she was the secretary and kept all of the records. Other than the W-2 form and payroll records hereafter referred to, no financial records of the corporation or of the Hydes were introduced. The auditors had lost the copies of employment security and other returns and records. Tommy Hyde did not know if the corporation had filed a tax return with the Internal Revenue Service for either 1978 or 1979. Four occupational licenses pertaining to periods after the incident in question were introduced. The county liquor license was issued to Tommy Hyde and the other three were issued in favor of Cardwell Country Club, Inc. After the instant lawsuit was commenced, a lease was prepared whereby defendants Hyde leased the nightclub property to Cardwell Country Club, Inc., retroactively commencing October 8, 1977. The lease was not signed on behalf of the corporation, although the corporate acknowledgment indicated it was so signed by its vice president Tommy Blackford before Notary Public Tommy Hyde.

The corporation was said to have issued 200 memberships at $35.00 each. Yet, Tommy Hyde and Betty Hyde testified that they owned all of the stock in this not-for-profit corporation. In answer to the question, "Now you and your wife live together and share in the profits and so forth of the club?" Tommy Hyde replied, "Yes, we do" and he added, "they always have". He further stated that prior to June of 1979, he and his wife "was living out of the club the same way that we are living now" and that the proceeds that came in went to him and his wife "if there was any left". Concerning his wife's activities, Tommy Hyde concurred with plaintiff's counsel that his wife agreed with the way that he ran it and that was true before and after the incorporation.

Defendant Smithie had been associated with Tommy Hyde in business for a number of years. At times, he had been employed as a bartender, bouncer and general helper at the nightclub. However, defendants Hyde and Smithie testified this employment terminated in November, 1978, and he did not again work at the nightclub until the months of June, July and August, 1979. Betty Hyde identified the payroll records she prepared corroborating this employment history. Defendant Smithie produced and identified a copy of a W-2 form issued by Cardwell Country Club, Inc., for 1979 for the total amount of wages shown on the payroll records. Smithie testified that at the time in question he and Tommy Blackford, an incorporator and vice president of Cardwell Country Club, Inc., had leased a lot adjoining the nightclub and were in the used car business. Defendant Smithie said he was at the nightclub on the evening in question as a patron.

On June 8, 1979, after work, the plaintiff was in the nightclub from approximately 4:30 p. m. to 6:30 p. m. drinking and visiting. After a trip to his parents' home to clean up, he returned and visited and drank until about 1:00 a. m. The plaintiff did not have a membership but was admitted as a guest. During the evening, the plaintiff observed that a patron had pulled a gun and stuck it in another man's face. The peace officer who was there at the time left. When another officer arrived, the plaintiff spoke to him. When the plaintiff and his party were ready to leave, Smithie asked to speak to him in the poolroom. He followed Smithie and Tommy Hyde into the poolroom. There the plaintiff was told to be seated and he was interrogated about why he had called the law. When he denied doing so, defendant Smithie hit him in the face several times with brass knuckles. Plaintiff stated he did not try to defend himself because of his fear of Tommy Hyde. When Tommy Hyde said, "that's enough, let him go", the plaintiff started out. But Smithie hit him again and Tommy Hyde said, "I said that is enough, Bill." The plaintiff then left and was taken to the hospital. A friend of the plaintiff witnessed and corroborated a part of the assault.

Defendant Smithie testified that during the course of the evening plaintiff spoke to him three times concerning an old grudge. The third time the plaintiff invited Smithie to the poolroom, from which they repaired to the outside. There, he said, the plaintiff attacked him and he hit the plaintiff in self-defense. When they went back to the poolroom, Tommy Hyde ordered them from the premises. The defendants produced several witnesses who testified to the plaintiff's reputation as a bully and for violence. Tommy Hyde confirmed his limited participation as related by defendant Smithie.

In two related points defendant Tommy Hyde and defendant Betty Hyde have asserted that the evidence is insufficient to support the jury's determination that Smithie was acting as their agent within the scope of his authority. ¹ As stated in their brief, these points are each first premised upon the proposition that "any existing liability based upon agency should be limited to the defendant Cardwell Country Club, Inc." To so insulate themselves from liability these defendants cite the corporate charter and their testimony that the business was being conducted by Cardwell Country Club, Inc.

Even ignoring for the consideration of this proposition, the obvious liability of Tommy Hyde arising from his personal involvement, the evidence does not compel such an absolution. Even further assuming the business was in all respects such as the receipt and disbursement of funds conducted in the name of the corporation, those defendants are not necessarily absolved from liability. The acts of those defendants in handling the affairs of the corporation provide a basis for disregarding the corporate entity. 18 Am.Jur.2d Corporations § 15 (1965). "The underlying theory seems to be that where stockholders, by those acts, show that they themselves ignored the corporate entity, the courts will do likewise.... (T)he corporate entity has been ignored by the courts when the stockholders were conducting the business of the corporation as individuals or as partners ...." Annot., Disregarding Corporate Entity, 46 A.L.R.3d 428, 430-431. These defendants demonstrated their total disregard for the corporate entity of Cardwell Country Club, Inc. They regarded themselves as the sole owners of that not-for-profit corporation; they lived out of the club the same as they did before incorporation; and they shared the profits as they always had. There was an ample basis in the evidence for the jury to conclude that in fact those defendants continued to operate the club as they had for more than ten years and, as Betty Hyde put it, changed the name when the corporation was created. Under these circumstances, it requires no further citation of authority to demonstrate that the corporate existence of Cardwell Country Club, Inc., does not absolve Tommy Hyde and Betty Hyde from liability as operators of the nightclub.

These defendants next contend they cannot be held vicariously liable because (1) defendant Smithie was not employed by them, and (2) he was not acting within the scope of his employment. These points must be considered separately in respect to Tommy Hyde and Betty Hyde. Tommy Hyde on two occasions directed Smithie that he had administered enough punishment to the plaintiff. From all the circumstances, including these directions, the jury could, and it obviously did, reasonably infer that Tommy Hyde believed the plaintiff had called the law enforcement officers to the club; that this was detrimental...