Quandary Land Development Co. v. Porter, 20659

• Decision Date: 27 December 1965
• Docket Number: No. 20659,20659
• Parties: QUANDARY LAND DEVELOPMENT COMPANY, a Colorado Corporation, Plaintiff in Error, v. Vernon V. PORTER, Defendant in Error.
• Court: Colorado Supreme Court

Page 978

408 P.2d 978

159 Colo. 8

QUANDARY LAND DEVELOPMENT COMPANY, a Colorado Corporation, Plaintiff in Error, v. Vernon V. PORTER, Defendant in Error.

No. 20659.

Supreme Court of Colorado, In Department.

Dec. 27, 1965.

Victor F. Crepeau, Denver, for plaintiff in error.

Salazar & Delaney, Carl L. Harthun, Denver, for defendant in error.

SUTTON, Justice.

The Quandary Land Development Company, a Colorado corporation, hereinafter referred to as Quandary or the Corporation brought an action against its former president, Vernon V. Porter, hereinafter referred to by name or as the defendant. It sought to recover monies allegedly due it as a result of certain alleged acts of commission and omission on the part of Porter while he was employed by the Corporation. It also sought to secure a judgment on a note allegedly given by Porter for certain stock. Trial was had to the court without a jury. The litigable issues were incorporated into a pre-trial order by the court. Following the trial, judgment was entered in favor of the Corporation on two of its four claims. Motion for a new trial was dispensed with.

The record discloses that during the month of November 1960, Mrs. Martha Belle Frank and the defendant, also admittedly were 'very good friends' until their parting of the ways, conceived the idea of constructing the Quandary Inn and of developing certain lands owned by Mrs. Frank at Breckenridge, Colorado. On November 25, 1960, Mrs. Frank deposited her personal check in the amount of $700.00 in the Cherry Creek Bank in Denver, thereby opening a checking account in the name of Quandary Land and Development. The defendant was the sole person authorized to write checks on the account at that time. He was told by Mrs. Frank that he would be given a salary of $50.00 a week, and that he could further draw on the account to cover 'expenses.'

On January 12, 1961, the enterprise was formally incorporated. The defendant was elected as the president of the Corporation and was also appointed as its general manager. His salary was increased to $100.00 a week, retroactive to December 20, 1960. In addition, he was issued 75 shares of the Corporation's stock, while Mrs. Frank received 2,625 shares, and Stanford Hyman, the then corporate attorney and the third director, was issued one share.

The checking account opened on November 25, 1960 was continued with checks to be honored when written either in the name of 'Quandary Land and Development' or 'Quandary Land Development Company.' Subsequent to incorporation, both Mrs. Frank and the defendant were authorized to draw on the account. What might be termed 'normal business' checks were drawn thereafter by Porter along with certain questioned checks. Mrs. Frank also drew at least one non-business check herself. The evidence reveals that, except for a nominal sum deposited by Porter, Mrs. Frank was the sole contributor to the account. Defendant's position with Quandary was terminated at a special meeting of the directors held on December 8, 1961. All of the claims for conversion set out in the complaint arose out of alleged wrongful transactions committed by Porter during the period described.

Quandary assigns nine grounds for reversal which can be consolidated into four points as follows, viz.:

(1) That the trial court committed error by not admitting Plaintiff's Exhibits Z-1 through Z-81 (excepting Z-12, Z-37, Z-60, Z-63, Z-68, Z-77 and Z-78) into evidence and in not entering judgment for the amounts shown to be due thereby;

(2) That it was error not to permit Quandary to amend its complaint so it could seek an accounting to conform to the evidence;

(3) That the defendant should have been held liable for penalties and interest charges levied on Quandary for its failure properly to withhold from the salaries of its employees certain federal and state withholding and social security taxes; and,

(4) That the defendant should have been held liable in the amount of $93,614.76 on a promissory note allegedly given by him to cover the purchase price of additional stock in the Corporation.

The evidence is that Exhibits Z-1 through Z-81, referred to in the first assignment of error (except Z-77 drawn by Mrs Frank), represent certain checks drawn by the defendant on Quandary's account during the period between December 10, 1960 through October 17, 1961. In addition to this group of checks, Porter wrote other checks designated as Plaintiff's Exhibits R and S, about which there are no issues raised on this writ of error.

As concerns the first ground urged for reversal, trial was had pursuant to the pre-trial order on the issue as to whether the defendant, while an officer of the Corporation, had converted to his own use proceeds from certain checks. The court found the defendant to be liable on Exhibits R and S only, less certain credits, with a net sum due of $3,470.85. As above indicated, no cross-error is assigned as to this amount. The court, however, without stating why, refused to admit Exhibits Z-16 through Z-81 (less the exceptions heretobefore noted) when offered as a group. The court also subsequently refused to admit any of the exhibits from Z-1 to Z-11, and Z-13 to Z-15. It made no findings of fact and entered no judgment in favor of the Corporation in regard to certain amounts testified to as converted by Porter when he was cross-examined as to these exhibits.

As to Exhibits Z-1 through Z-11, and Z-13 to Z-15, the record shows that they were checks written before the Quandary Land Development Company was incorporated. There is no showing that before its...