Scotti's Drive In Restaurants, Inc. v. Mile High-Dart In Corp., HIGH-DART

• Decision Date: 08 October 1974
• Docket Number: HIGH-DART,No. 4340,4340
• Citation: 526 P.2d 1193
• Parties: SCOTTI'S DRIVE IN RESTAURANTS, INC., Appellant (Defendant below), Scotti's Drive In of Iowa City, Inc., and Lucky's Drive In of Scottsbluff, Inc. (Defendants below), v. MILEIN CORP., Appellee (Plaintiff below).
• Court: Wyoming Supreme Court

Page 1193

526 P.2d 1193

SCOTTI'S DRIVE IN RESTAURANTS, INC., Appellant (Defendant below) Scotti's Drive In of Iowa City, Inc., and Lucky's Drive In of Scottsbluff, Inc. (Defendants below), v. MILE HIGH-DART IN CORP., Appellee (Plaintiff below).

No. 4340.

Supreme Court of Wyoming.

Oct. 8, 1974.

Paul B. Godfrey, Cheyenne, for appellant.

Walter C. Urbigkit, Jr., Urbigkit, Moriarity, Halle & Mackey, Cheyenne, for appellee.

Before PARKER, C. J., and McEWAN and GUTHRIE, JJ.

Mr. Chief Justice PARKER delivered the opinion of the court.

Defendant, Scotti's Drive In Restaurants, Inc., a franchisor of franchisee-owned hamburger outlets, has appealed from a judgment ¹ of $13,863.12 issued by the Laramie County District Court in favor of Mile High Oil-Dart In Corporation, plaintiff.

The judgment, which contained no special findings of fact or conclusions of law (none having been requested under the provisions of Rule 52(a), W.R.C.P.), covered funds realized from the sale of gasoline through plaintiff's pumps located on property leased by Lucky's Drive In of Scottsbluff, Inc., which money had been deposited by Lucky's manager to its account. ²

Although the trial was somewhat protracted and the evidence quite voluminous, the matter presented to this court is, at least in first analysis, fairly simple, defendant stating in its brief and oral argument the single point for consideration to be that the trial court found for plaintiff on one issue: a trust relationship. Counsel's thesis is that under the circumstances disclosed by the record there can be no viable basis for holding that a trust existed. A scrutiny of the judgment reveals it to contain no reference to a trust relationship. The court, several days before the issuance of the judgment, wrote a letter to counsel indicating that it would hold for the plaintiff, saying at one point that the 'parent organization (defendant) held and disbursed Plaintiff's funds in a trust relationship and is indebted to Plaintiff * * *.' Without minimizing the value of such memoranda to the reviewing court or the desirability of its being a part of the record, we think any assumption that such a memorandum could take the place of special findings of fact and conclusions of law would be unjustified; and the judgment will be affirmed if sustainable on any legal grounds appearing in the record. In re Romer, Wyo., 436 P.2d 956, 958.

In 1966, Richard F. Pickett and W. Andrew Bunten, Jr., acting as Andi's, Inc., secured from Scotti's Drive In Restaurants, Inc., of which Arnold O. Flinn was president, the exclusive right to issue franchises for the use of 'Scotti's' and 'Lucky's' in the State of Nebraska. ³ The same year Pickett and a number of other Cheyenne investors entered into an incorporation agreement for the purpose of operating a drive-in restaurant in Scottsbluff, Nebraska, under a Lucky's franchise. There was no written franchise agreement between the Lucky's entity and defendant.

In February 1968 Lucky's and plaintiff's predecessor in interest, M H I Oil, Inc., acting by its president, James P. Federer, entered into a marketing agreement by which Lucky's was to be the distributor for the oil company, operating its dispensing equipment near the Lucky's restaurant installation for one-half of the gross profits from the sale of the oil products, with a minimum monthly guarantee of $300. By the terms of the agreement, the proceeds were to be deposited in the oil company's account opened at a Scottsbluff bank.

The controversy in this case arises out of the fact that by certain oral arrangements money which under the marketing agreement was to be deposited in the oil company's account was diverted to Lucky's account. The basic question before the trial court and in this appeal is whether defendant by its activities and the acts of its officers became liable to the oil company for the plaintiff's gasoline money which was diverted to and used by Lucky's.

Every witness who testified concerning the arrangement by which it was agreed that plaintiff's gasoline money was to be used to increase the cash flow of Lucky's testified that the initial meeting took place sometime in February or March 1969 when a number of Lucky's stockholders met with Flinn, defendant's president, to discuss the insufficiency of Lucky's funds to pay its current obligations. Versions of testimony on the subject tend to show that the idea of securing the money from plaintiff was Flinn's-although this is denied by Flinn-and that he called Federer, plaintiff's president, by phone and asked him to meet with them, Federer doing so the following day, and being asked by Flinn to consider depositing the money from gasoline sales into Lucky's bank account and then disbursing it in a manner which would give Lucky's a cash flow. ⁴ Federer left the meeting with no decision, but when Flinn called him a week later he said he would approve the funds going into 'their' account, providing the money was repaid to him on a regular basis. This, together with the fact that plaintiff alleges defendant's accountant handled the money emanating from the sales of gasoline, is relied upon by plaintiff as evidence of defendant's liability. On the other hand, Flinn's testimony tended to show that he was merely acting to help Lucky's, that Federer corresponded with Lucky's officers and not with defendant's, and that while defendant was interested in the success of Lucky's, the transaction was not in any way that of Scotti's. Scrutiny of some of the testimony regarding the arrangement for the gasoline money throws light on the question before us.

Pickett, Lucky's president, said that he wasn't sure who called the meeting in the basement of his office. He said most of the Lucky's stockholders were present, the Scottsbluff store was in bad financial condition, and they were trying to find where they could perhaps secure some money to get it back on its feet. The proposition came up from Flinn; McCammon, the accountant; ⁵ or 'somebody,' that maybe gasoline money could be used for a time to 'bail us out' and that a request should be made to Mile High Oil for use of the gasoline money. Pickett testified, 'I understood * * * that we would ask them if we could use the money for probably-as I recall, it was to be three or four months; then we would repay them out of the gas proceeds following that time and/but as I say, this was a conversation that Arnie Flinn had apparently over the telephone to start with with Jim Federer.' Later Pickett said, 'we had a report from Arnie Flinn that he (Federer) agreed to let us use the gasoline money.'

McCammon testified that Flinn told him the full cash flow of the gas operation would be available to Lucky's for six months or so. McCammon made decisions as to what bills were to be paid and wrote Lucky's checks.

Dudney, a stockholder of Lucky's, told how Flinn at the meeting early in 1969 suggested that he could make an arrangement with Federer for the use of some other funds, maybe as a loan, Flinn going to the telephone and...