Richardson v. Schaub

• Decision Date: 20 August 1990
• Docket Number: No. 89-149,89-149
• Citation: 796 P.2d 1304
• Parties: Jack D. RICHARDSON, an individual, and Battlefield, Inc., a Wyoming corporation, Appellants (Defendants), v. Donald V. SCHAUB, an individual, and H & S Marketing, Inc., a Wyoming corporation, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

Page 1304

796 P.2d 1304

Jack D. RICHARDSON, an individual, and Battlefield, Inc., a Wyoming corporation, Appellants (Defendants), v. Donald V. SCHAUB, an individual, and H & S Marketing, Inc., a Wyoming corporation, Appellees (Plaintiffs).

No. 89-149.

Supreme Court of Wyoming.

Aug. 20, 1990.

Richard H. Honaker, Honaker & Hampton, Rock Springs, for appellants.

John A. Snow and Paul M. Durham, Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, and F.L. Thomas, Jr., Kemmerer, for appellees.

Before URBIGKIT, C.J., and THOMAS, ^* CARDINE, MACY and GOLDEN, JJ.

THOMAS, Justice.

At its eye, this controversy revolves around the application of Rule 15(b), W.R.C.P. At the close of the evidence, the trial court granted a joint motion to amend the pleadings to conform to the evidence. It then entered judgment in favor of Donald Schaub and H & S Marketing, Inc. (Schaub) and against Jack D. Richardson and Battlefield, Inc. (Richardson) for a commission earned by arranging a trade of land for engineering work accomplished in Richardson's subdivision. Since that specific claim for commission fees had not been pleaded by Schaub, Richardson contends that a subsequent motion for a new trial based upon surprise should have been granted. Collateral issues are asserted with respect to whether the record contains sufficient evidence to sustain the judgment for the commission fees; whether the claim is barred by the statute of frauds; and whether Richardson should have been permitted to recover on a counterclaim for repayment of a loan because Schaub had waived the defense of statute of limitations. In its rulings, the trial court resolved the question of sufficiency of evidence in favor of Schaub and concluded that his claim was not barred by the statute of frauds. The trial court did, however, permit Schaub to assert the defense of statute of limitations to Richardson's claim for repayment of a loan. Our review of the record in light of the pertinent law persuades us that there is no error in the several rulings complained of, and we affirm the judgment of the trial court.

Richardson sets forth the issues in this way:

"1. Where judgment was entered on a claim which was never pleaded, did the trial court abuse its discretion in denying a motion for a new trial based upon unfair surprise?

"2. Is there sufficient evidence to sustain the portion of the judgment entered below which related to the Bennett-Carder land trade?

"3. Are Appellees' claims barred by the Statute of Frauds?

"4. With regard to Appellants' counterclaim for repayment of a loan, did Appellees waive the defense of statute of limitations?"

Schaub addresses the same issues in his brief, but he restates them for effect in this way:

"1. Did the trial court abuse its discretion in denying a motion for a new trial based upon unfair surprise regarding the Bennett-Carder land trade?

"2. Is there sufficient evidence to sustain the portion of the judgment entered below which related to the Bennett-Carder land trade?

"3. Are Appellees' claims barred by the Statute of Frauds?

"4. Is Appellants' counterclaim for repayment of a loan barred by the statute of limitations, or by the equitable doctrines of set-off or laches?"

On January 25, 1975, Richardson entered into an agreement with Schaub and Harold Hesner pursuant to which Schaub and Hesner, for a 30% commission, were to market and sell lots in a subdivision owned by Richardson. The land was located north of Kemmerer, in Lincoln County, and was identified as the Commissary Ranch Subdivision. At that time, Richardson loaned Hesner and Schaub $10,600 for start up costs, and it is undisputed that the loan was not repaid. Battlefield, Inc. and H & S Marketing, Inc. were not parties to the agreement because Hesner and Schaub did not incorporate until February 21, 1975, and Richardson, as the sole shareholder, did not incorporate until November 7, 1975. In 1976, Hesner assigned his interest in the venture to Schaub and left H & S Marketing, Inc. In addition to marketing and selling the land, Schaub and H & S Marketing, Inc. were involved in subdividing, engineering, and surveying the Commissary Ranch lands. The record is persuasive that it is the law of this case that Schaub and Richardson, in continuing their business relationships, treated the corporations, Battlefield, Inc. and H & S Marketing, Inc., as their respective alter egos without maintaining any true separation of the individual and corporate identities. We see no reason for the court to treat the corporations differently.

When Schaub embarked upon this business venture, he was not licensed to sell real estate in Wyoming. He relied upon the advice of several attorneys and real estate brokers in concluding that, at that time, he did not need to obtain any license under the Wyoming licensing statutes relating to brokers and agents. See §§ 33-28-101 to -206, W.S.1977. Richardson was not concerned about the fact that Schaub had no license. In 1979, Schaub became a licensed real estate salesman and, in 1982, he obtained a real estate broker's license. This latter license became inactive at the end of 1983.

In marketing the Commissary Ranch Subdivision, land was exchanged for property or services in addition to its being sold for cash or credit. In one of the exchange transactions, Bennett-Carder & Associates, Inc. (Bennett-Carder) received ten lots in the Commissary Ranch Subdivision in exchange for engineering work on a different tract, the Spring Canyon Ranch Subdivision, with those services being valued at $122,450. Richardson also owned the Spring Canyon Ranch subdivision which is north of the Commissary Ranch subdivision. In 1984, Richardson sold the entire Spring Canyon Ranch property, and Schaub had no opportunity to earn commissions from the sale of these lands.

In the period from 1975 to 1984, Richardson and Schaub conducted their business relationship pursuant to a number of modifications of the original agreement. In May of 1975, they executed an agreement to convey title to some of the parcels to Schaub and Hesner in order to permit them to sell the property as owners. This arrangement continued until the fall of 1975. From 1976 forward, Richardson and Schaub essentially defined their relationship by oral agreement. Pursuant to that agreement, Schaub and H & S Marketing, Inc. were to receive a 30% commission on property sales, but they also were obligated to pay a pro rata share of development costs.

Beginning in August of 1984, Richardson unilaterally adjusted the agreement so that he paid commissions to Schaub of only 10%. Schaub endeavored to contact Richardson for an explanation of the adjustment, but Richardson never responded. In July of 1987, after Schaub commenced this action, Richardson stopped paying commissions altogether. ¹

In his complaint, Schaub alleged breach of contract, anticipatory breach of contract, and quasi-contract. For relief, he sought monetary damages, an accounting, a declaratory judgment, and attorney fees. Richardson presented a counterclaim alleging that Schaub had converted property to his own use and had never paid the development fees as he had agreed.

The trial was held to the court from October 24 through October 26, 1988. At the conclusion of the evidence, Schaub and Richardson both moved to amend the pleadings to conform to the evidence, and the trial court granted these motions in accordance with Rule 15(b), W.R.C.P. ² The court then entered its findings of fact and conclusions of law on January 16, 1989 and, in response to additional arguments and requests submitted in correspondence and briefs by counsel, supplemented them on March 13, 1989 and March 30, 1989 to correct them in appropriate ways. The court limited any recovery of commissions by Schaub to those earned during the period that he was a licensed real estate broker. ³ The judgment that was entered included $36,735, plus interest, for Schaub's services in connection with the Bennett-Carder land trade. The court ruled that Richardson's claim for the $10,600 loan was barred by the statute of limitations. With respect to the claim for Schaub's share of development costs, the court concluded it was unable to determine the amount of Schaub's share and simply awarded Richardson $1.00 in nominal damages. The judgment incorporating the several determinations was entered on April 4, 1989.

Following the entry of judgment, both parties submitted motions for a new trial or, in the alternative, to alter or amend the judgment. Richardson's motion was based upon his surprise with respect to the claim for commissions on the Bennett-Carder land trade, error in the amount of the assessment of damages, the sufficiency of the evidence, and claimed newly discovered evidence. Schaub's motion asserted error in the amount of the assessment of his damages and the sufficiency of the evidence with respect to a claimed different amount. The trial court held a hearing on these motions and then denied them, finding that the evidence supported its conclusions. Schaub initiated a cross-appeal of the judgment of the trial court, but it was dismissed, upon Richardson's motion, because of Schaub's failure to meet procedural deadlines established in the Wyoming Rules of Appellate Procedure. This appeal, therefore, is limited to the issues presented by Richardson.

Richardson earnestly contends that the trial court erred in failing to grant his motion for a new trial which was premised on the basis of surprise in the proceedings. Analysis of this issue depends upon the proper application of Rule 59, W.R.C.P., which states, in pertinent part:

"(a) * * * A new trial may be granted to all or any of the parties, and on all or part of the issues. On a motion for a new trial in an action tried without a jury, the court may open the judgment, if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new findings and conclusions,...