Poulsen v. Russell, 64031

Citation300 N.W.2d 289
Decision Date14 January 1981
Docket NumberNo. 64031,64031
PartiesPaul POULSEN and Carmen Poulsen, Appellees, v. Gordon RUSSELL and Angeline Russell, Appellants.
CourtUnited States State Supreme Court of Iowa

James R. Snyder and Lawrence E. Blades of Simmons, Perrine, Albright & Ellwood, Cedar Rapids, for appellants.

John T. Nolan and Marc B. Moen of Lucas, Nolan & Bohanan, Iowa City, for appellees.


McGIVERIN, Justice.

Defendant Gordon Russell appeals from judgment on jury verdicts in favor of plaintiffs Paul and Carmen Poulsen on their claims for damages arising out of the dissolution of the parties' business relationship. Gordon and Angeline Russell appeal from trial court's decree reforming a contract for the sale of land from them to Poulsens. We affirm in part and reverse in part.

In 1974 Paul Poulsen was employed by Midwest Wrecker and Crane Service (Midwest) in Iowa City. Early in 1974 Poulsen decided to leave his employment with the investors in Midwest. As part of the separation, he wanted to acquire from Midwest a gas station and a car-crushing business. The investors agreed to sell these businesses if Poulsen would arrange to relieve Midwest and its investors of a $26,000 bank obligation. Poulsen had $6000 but could not get a bank to loan him the other $20,000.

To obtain the $20,000, Poulsen turned to Gordon Russell. Russell signed a $20,000 bank note as a comaker with Poulsen, and Poulsen received the money. Poulsen acquired the gas station and car-crushing business from Midwest and became the sole owner of them.

Later in 1974 Poulsen needed more money to purchase two trucks for a towing business. Russell agreed to be the comaker on another note for $13,800. In May 1974 Russell and Poulsen signed an agreement making them co-owners of all the businesses. In June the businesses were incorporated. Russell owned fifty percent of the stock and Paul and Carmen owned the other fifty percent. They agreed that Paul would manage the businesses and Gordon would be an advisor. Profits were to be split fifty-fifty. At the end of the relationship, Paul Poulsen and Gordon Russell were the only stockholders.

In the summer of 1974 the car-crushing business needed to relocate. On October 31, 1974, Poulsens signed a real estate contract to purchase for $94,000 "an undivided one-half (1/2) interest" in forty acres of land owned by Russells. This land was then leased to the corporation for use in the car-crushing operation.

The relationship between the parties deteriorated over the next two years. The gas station was closed and the towing business was sold. Finally, on January 11, 1977, Poulsen sold Russell his interest in the corporation for $5500. This suit followed.

In their petition Poulsens claimed actual damages for breach of fiduciary duty by Russell and intentional infliction of severe emotional distress on Paul Poulsen by Russell. They also claimed punitive damages. In addition, the petition stated a claim in equity to reform the land sale contract because it did not reflect the actual agreement of the parties.

The claims at law were separately tried to a jury. Iowa R.Civ.P. 186. The jury awarded Paul and Carmen Poulsen $83,545 for Russell's breach of fiduciary duty; $24,000 to Paul Poulsen for intentional infliction of emotional distress; and $200,000 punitive damages to Paul and Carmen. Judgment was entered on these verdicts.

The action to reform the contract and remaining issues, including a counterclaim by defendants, then were tried to the court. The court entered its equity decree reforming the contract and ruled on the remaining issues. The court found that the agreement of the parties was for the sale of the entire forty-acre tract to the Poulsens and reformed the written documents to indicate this agreement. Poulsens were also awarded back rent for the land of $22,950 plus interest. Russell was awarded $9500 on the counterclaim for an improvement made on the land.

Trial of the jury and equity issues took almost four weeks. Gordon Russell appeals from the judgment on the jury verdicts and Gordon and Angeline Russell appeal the decree reforming the contract.

The following questions are presented for our consideration:

1. Does this court lack jurisdiction to review the issues arising out of the jury trial because notice of appeal was not timely filed?

2. Should the entire appeal be dismissed on the grounds that defendants "flouted" the trial court's decree reforming the real estate contract or accepted the decree?

3. Did the trial court improperly shift to defendant the burden of proving that he did not breach the fiduciary duty that he owed to plaintiffs?

4. Did the trial court err in submitting to the jury the issue of whether defendant breached his fiduciary duty to plaintiffs?

5. Was the evidence sufficient to allow the jury to decide the existence and amount of actual and punitive damages for breach of fiduciary duty?

6. Did the trial court properly admit evidence of defendant's reputation?

7. Did the trial court properly submit to the jury plaintiff Paul Poulsen's claim for intentional infliction of emotional distress?

8. Should this court award the prevailing commercial rate of interest on plaintiffs' money judgment during the pendency of this appeal in order to protect plaintiffs from suffering economic harm?

9. Did the trial court properly reform the contract to sell land to indicate a sale of forty acres rather than the sale of an undivided one-half interest in forty acres?

10. Should cost of printing the second supplemental appendix be taxed to plaintiffs without regard to the outcome of the appeal?

We first discuss two issues involving our jurisdiction to consider this appeal.

I. Jurisdiction to review the jury trial issues. Poulsens moved to dismiss Gordon Russell's appeal from the judgment entered on the jury verdicts because the notice of appeal was not timely filed. That motion was submitted with the appeal. While a timely notice of appeal is jurisdictional, Rudolph v. Iowa Methodist Medical Center, 293 N.W.2d 550, 554 (Iowa 1980); Hogan v. Chesterman, 279 N.W.2d 12, 14 (Iowa 1979), we conclude the motion should be overruled.

In the petition Poulsens alleged several claims at law and in addition stated a claim in equity for reformation of the contract to sell land. The law claims were tried to a jury in January 1979. The equitable claim was tried to the court in March 1979. The jury returned verdicts on the law claims on February 16, and the court entered judgment on the verdicts on February 20. The court's decree reforming the land contract and ruling on remaining issues were entered on July 31. Russell filed a notice of appeal from both the judgment and decree on August 17, 1979.

Poulsens contend that the judgment on the jury verdicts was a final judgment, and because the notice of appeal was filed more than thirty days after that judgment was entered, the appeal from the judgment on the jury verdicts is untimely. Iowa R.App.P. 5(a). The parties agreed, and so do we, that the appeal from the court's decree reforming the land contract was timely.

We hold that the notice of appeal from the judgment on the jury verdict was timely because the judgment entered on February 20 was not a final judgment appealable under Iowa R.App.P. 1. The only final judgment entered in this case for appeal purposes was entered on July 31, 1979. The notice of appeal filed on August 17, 1979, was within thirty days and therefore timely.

In general, a judgment is not final unless the rights of the parties have been fully determined. Decatur-Moline Corp. v. Blink, 283 N.W.2d 347, 349 (Iowa 1979). Blink involved separate actions by a corporation against two employees for injunctive and damage relief for violation of covenants not to compete. The actions were consolidated but the trial was bifurcated into liability and damage stages. The trial court decided the issue of injunctive relief but left to a later determination the issues of amount of damages in one case and any offset against a counterclaim in the other case. We concluded that because these issues remained to be tried, the grant of injunctive relief did not fully determine the rights of the parties and therefore did not constitute a final judgment.

We conclude that Blink controls here. The judgment on the jury verdicts, like the grant of injunctive relief in Blink, did not fully determine the rights of the parties subject to the litigation. The respective rights of Poulsen and Russell, and their wives, in the land and other issues were yet to be determined before a final judgment was issued.

There is a strong policy of avoiding piecemeal appeals. Shoemaker v. City of Muscatine, 275 N.W.2d 206, 209 (Iowa 1979). Since Poulsens and Russells were involved in all the events in this case, this policy will be served if we conclude that the rights of these parties were not fully determined until all the claims in Poulsens' petition and Russells' counterclaim were determined. Cf. Mid-Continent Refrigerator Co. v. Harris, 248 N.W.2d 145 (Iowa 1976) (summary judgment on plaintiff's claim not final judgment where counterclaim arising out of same transaction or occurrence remained).

Plaintiffs' motion to dismiss the appeal from the judgment on the jury verdicts is overruled.

II. Motion to dismiss the entire appeal. Poulsens also moved to dismiss the entire appeal on the ground that defendants have "flouted" the trial court judgment and therefore lost their right to appeal. Among other things, Poulsens claim that since the final judgment and decree, Russells have served them with notice of forfeiture of the land contract for failure to make several monthly payments and executed on defendants' counterclaim judgment for $9500. On the other hand, Russells say they were only exercising their legal rights, which were not contingent on the outcome of this appeal or limited by the trial court or a...

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