Sporleder v. Van Liere

• Decision Date: 09 October 1997
• Docket Number: EN-R-G,No. 19309,19309
• Parties: Robert SPORLEDER, Plaintiff and Appellee, v. Merle VAN LIERE andMax, Inc., Defendants and Appellants.
• Court: South Dakota Supreme Court

Page 8

569 N.W.2d 8

1997 SD 110

Robert SPORLEDER, Plaintiff and Appellee, v. Merle VAN LIERE and EN-R-G Max, Inc., Defendants and Appellants.

No. 19309.

Supreme Court of South Dakota.

Argued Dec. 3, 1996.

Decided Sept. 3, 1997.

Rehearing Denied Oct. 9, 1997.

Gale E. Fisher, Sioux Falls, for plaintiff and appellee.

Michael J. Schaffer and Cheryle Wiedmeier of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendants and appellants.

AMUNDSON, Justice.

¶1 Robert Sporleder (Sporleder) brought a cause of action against Merle Van Liere and En-R-G Max, Inc. (collectively referred to as Van Liere), claiming implied contract, unjust enrichment, breach of fiduciary duty, and fraud and deceit. The claims of unjust enrichment, breach of fiduciary duty, and fraud and deceit were submitted to the jury, while the court directed a verdict on the implied contract claim. The jury returned a verdict in favor of Sporleder for $320,000 in compensatory damages and $100,000 in punitive damages. ¹

¶2 We affirm.

FACTS AND PROCEDURAL HISTORY

¶3 This dispute arose out of an alleged joint venture between Sporleder and Van Liere, involving the development and manufacture of tub feed supplements. Both men have dealt extensively with feed supplements. Sporleder earned an associate's degree in applied science in animal nutrition and soil sciences. He then became a feed dealer for a company called TCI, selling livestock feed products. In 1988, he began his employment with Winner Circle Feeds (WCF). Throughout his career, he researched different feed products.

¶4 Van Liere is a farmer who began selling feed products for Ralston Purina Company in order to supplement his farm income. In 1967, he and his father built a feed mill, Colton Feed Service (CFS), which housed the only steam flaking system in South Dakota. By 1976, Van Liere bought his father out and incorporated the business with his wife.

¶5 Van Liere and Sporleder became acquainted through Sporleder's employment with WCF, a wholesaler that purchased feed products from CFS. WCF eventually fell into financial trouble and owed CFS about $13,000. Although CFS refused to extend additional credit to WCF, Van Liere agreed to sell feed to some of WCF's customers directly. Van Liere allowed Sporleder to sell CFS products on a commission basis.

¶6 During this time, both parties apparently continued researching the development of tub feed products. In May of 1989, Sporleder and Van Liere agreed to work together to produce a marketable feed product. Sporleder claims they agreed to form a joint venture, with Sporleder starting out with a ten-percent ownership of the company, with an option to buy up to one-third, or an additional twenty-three and one-third. Van Liere maintains he hired Sporleder on a commission basis, paying Sporleder $7.00 per ton sold. No written contract was signed by the parties.

¶7 Agreeing that they needed better equipment, Sporleder and Van Liere worked together to design a new factory. Although they disagree as to each person's contribution, a factory was built, including a filling and pressing station. Equipment was either purchased or built, including a prototype hydraulic press and a tub washer.

¶8 Both Sporleder and Van Liere submitted evidence regarding their contribution toward building the plant. Essentially, Van Liere claims he was the general contractor and Sporleder was the plant manager who assisted Van Liere with various tasks. Sporleder, on the other hand, contends he was instrumental in designing and building the plant as well as the equipment.

¶9 In June of 1989, Van Liere and his wife formed En-R-G Max, Inc. with fifty-one percent and forty-nine percent ownership, respectively. Sporleder claims this was the first time he learned that he had no ownership interest in the company. Various discussions ensued and Sporleder left the company in 1991. He then brought a cause of action against Van Liere, claiming implied contract, unjust enrichment, breach of fiduciary duty, and fraud and deceit. The claims of unjust enrichment, breach of fiduciary duty, and fraud and deceit were submitted to the jury, while the court directed a verdict against Sporleder on his implied contract claim. The jury returned a verdict in favor of Sporleder for $320,000 in compensatory damages and $100,000 in punitive damages.

¶10 Van Liere appeals, raising the following issues:

I. Whether the verdict is inconsistent.

II. Whether there is sufficient evidence to support a finding of fraud and deceit.

III. Whether there is sufficient evidence to support a finding of unjust enrichment.

IV. Whether there is sufficient evidence to support a finding of joint venture.

V. Whether there is sufficient evidence to support a finding of breach of a fiduciary duty.

VI. Whether the trial court improperly instructed the jury.

VII. Whether the damages awarded by the jury are supported by the evidence, are contrary to the law, or are the result of passion and prejudice.

VIII. Whether the court made improper evidentiary rulings.

IX. Whether the jury improperly found against En-R-G Max, Inc. as to the counterclaims against Sporleder.

X. Whether the award of costs should be reversed.

DECISION

Inconsistent Verdicts

¶11 Due to our holding in Weins v. Sporleder, Van Liere, & En-R-G Max, Inc., 1997 SD 111, 569 N.W.2d 16, we need not address this issue.

Fraud and Deceit

¶12 Van Liere argues that because there was insufficient evidence to support a finding of fraud and deceit, the trial court erred in denying motions for directed verdict and judgment notwithstanding the verdict. The standard of review this Court applies in such situations is clearly set forth in Olson v. Judd:

"In reviewing [a] contention that the trial court erred in failing to grant a directed verdict, we view the evidence in a light that is most favorable to the non-moving party and give that party the benefit of all reasonable inferences that fairly can be drawn from the evidence. When viewed in this light, if there is any substantial evidence to sustain the cause of action or defense, it must be submitted to the finder of fact. 'If sufficient evidence exists so that reasonable minds could differ, a directed verdict is not appropriate.' Sabag v. Continental South Dakota, 374 N.W.2d 349, 355 (S.D.1985)."

534 N.W.2d 850, 852 (S.D.1995) (quoting Weiszhaar Farms, Inc. v. Tobin, 522 N.W.2d 484 (S.D.1994) (citation omitted)); see also LBM, Inc. v. Rushmore State Bank, 1996 SD 12, p 18, 543 N.W.2d 780, 783 (citation omitted). The same standard is applied when reviewing a motion for judgment notwithstanding the verdict. Olson, 534 N.W.2d at 852.

¶13 We therefore determine whether substantial evidence exists to sustain Sporleder's action for fraud and deceit. SDCL 53-4-5(4) defines actual fraud as "a promise made without any intention of performing it[.]" Deceit is defined as "a promise made without any intention of performing." SDCL 20-10-2(4). This same phrase is included in Jury Instruction 30, in addition to language similar to other subsections of both SDCL 53-4-5 and 20-10-2. ² Therefore, the jury was properly instructed on the elements of fraud and deceit, and applying these elements to the facts is typically the jury's responsibility. For example, this Court addressed the issue of deceit in Moss v. Guttormson, and stated: " 'Questions of fraud and deceit are generally questions of fact and as such are to be determined by the jury.' " 1996 SD 76, p 7, 551 N.W.2d 14, 16 (quoting Laber v. Koch, 383 N.W.2d 490, 492 (S.D.1986) (citations omitted)). See also Piner v. Jensen, 519 N.W.2d 337, 339 (S.D.1994) (stating, "Claims of fraud and deceit are usually jury questions.").

¶14 It is also the jury's duty to test the credibility of the witnesses. LDL Cattle Co., Inc. v. Guetter, 1996 SD 22, p 20, 544 N.W.2d 523, 528. Sporleder testified that Van Liere promised to pay Sporleder a royalty of ten percent of the net profits, later changed to $7.00 per ton, together with a ten-percent ownership in the corporation. Sporleder also testified he possessed an option to buy twenty-three and one-third percent. Later, Sporleder was informed Van Liere actually owned fifty-one percent of the business, and Van Liere's wife owned the remaining forty-nine percent. Van Liere also backed out of various financing arrangements he had been negotiating with other investors. From this evidence, the jury must have concluded Van Liere never intended to keep his promise to allow Sporleder an ownership interest in the corporation. This conclusion is a fair inference from the evidence presented. See Olson, 534 N.W.2d at 852 (stating the nonmoving party must receive the "benefit of all reasonable inferences that can fairly be drawn from the evidence."); LBM, Inc., 1996 SD 12, at p 18, 543 N.W.2d at 783 (stating the prevailing party must receive "the benefit of every inference"). The jury's finding that there was a promise and that Van Liere never meant to keep the promise is enough to sustain a verdict for fraud and deceit in this case.

Unjust Enrichment

¶15 Van Liere asserts there was insufficient evidence to support a finding of unjust enrichment, specifically claiming that Van Liere received an unjust benefit. We again apply the standard of review set forth above. Olson, 534 N.W.2d at 852.

¶16 The jury was instructed that "[i]n order to recover for unjust enrichment, the party making the claim must prove another party against whom the claim is made has received a benefit, and that retention of that benefit would be unjust." This instruction is similar to this Court's description of the basis for unjust enrichment in Randall Stanley Architects, Inc. v. All Saints Community Corp.: "When a party confers a benefit upon another party who accepts or acquiesces in that benefit and it is inequitable to receive that benefit without paying[.]" 1996 SD 138, p 20, 555 N.W.2d 802, 805 (quoting Amert Constr. Co. v. Spielman, 331 N.W.2d 307, 310 (S.D.19...