Turner v. PV Intern. Corp., 05-87-01123-CV

• Citation: 765 S.W.2d 455
• Decision Date: 19 December 1988
• Docket Number: No. 05-87-01123-CV,05-87-01123-CV
• Parties: Malcolm TURNER, Appellant, v. PV INTERNATIONAL CORPORATION and R.W. Forsythe, Appellees.
• Court: Court of Appeals of Texas

Page 455

765 S.W.2d 455

Malcolm TURNER, Appellant, v. PV INTERNATIONAL CORPORATION and R.W. Forsythe, Appellees.

No. 05-87-01123-CV.

Court of Appeals of Texas,

Dallas.

Dec. 19, 1988.

Rehearing Denied Feb. 16, 1989.

Gerald R. Powell, Waco, Robert D. Allen, Barbara E. Pusch, Dallas, for appellant.

G.H. Kelsoe, Jr., Jeffrey L. Clark, Dallas, for appellees.

Before ENOCH, C.J., and McKAY ¹ and BISSETT ², JJ.

BISSETT, Justice.

PV International Corporation sued Malcolm Turner, individually, and the firm of Turner, Mason & Solomon, a partnership, for damages based on an alleged breach of contract to raise $750,000.00 capital for PV International Corporation, for fraud and for breach of fiduciary duty. R.W. Forsythe sued Malcolm Turner for the alleged alienation of affection of his wife, Barbara Forsythe. No motion to sever the two causes of action was filed in the trial court. Turner answered with a general denial and affirmative defenses of statute of frauds, statute of limitations, judicial estoppel, collateral estoppel and release. Trial was to a jury, which answered all issues favorably to PV International Corporation and R.W. Forsythe, respectively. The judgment decreed that PV International recover $1,250,000.00 from Malcolm Turner, and that R.W. Forsythe, individually, recover $1,000,000.00 from Malcolm Turner. An appeal from that judgment has been perfected by Malcolm Turner, defendant in the trial court. We reverse.

BACKGROUND

This suit was originally filed on May 6, 1980, in the 162nd District Court of Dallas County. Judge Dee Brown Walker presided at the trial, which commenced on July 16, 1984. On December 31, 1984, Judge Walker granted defendants' (Malcolm Turner and the firm of Turner, Mason & Solomon) motion for judgment non obstante veredicto and rendered judgment that plaintiffs PV International Corporation and R.W. Forsythe take nothing. Then, on April 15, 1985, Judge Joe Burnett, sitting for Judge Catherine Crier, judge of the 162nd District Court, on his own motion set aside the judgment non obstante veredicto, and, on the same day, signed a judgment which decreed: (1) that PV International Corporation recover $570,000.00 against Malcolm Turner and the firm of Turner, Mason & Solomon; (2) that PV International Corporation further recover from Malcolm Turner the sum of $830,000.00; and (3) that R.W. Forsythe recover $1,000,000.00 from Malcolm Turner. Judge Crier, by order signed on April 29, 1985, on her own motion set aside the order of Judge Burnett which set aside the judgment non obstante veredicto previously rendered by Judge Walker.

When PV International first filed the appeal, this Court on its own motion raised the issue of jurisdiction. This Court concluded that it did not have jurisdiction, reasoning that "there is not a final and appealable judgment." See PV International Corporation v. Turner, Mason & Solomon, 700 S.W.2d 21, 22 (Tex.App.--Dallas 1985, no writ). Accordingly, the appeal was dismissed for want of jurisdiction.

Judge Crier recused herself from further service in the case by order signed on March 24, 1986. The case was transferred to the 160th District Court of Dallas County by order signed on March 26, 1986. Judge Joe Bailey Humphreys signed the final judgment in this case on July 14, 1987. The judgment was solely against Malcolm Turner. PV International does not complain by a cross-point of the failure by Judge Humphreys to decree any recovery against the partnership of Turner, Mason & Solomon. We do not further notice the suit against such partnership.

PV INTERNATIONAL'S SUIT AGAINST TURNER

PV International Corporation (PV International) is a foreign corporation and was chartered in the Cayman Islands in 1974. R.W. Forsythe was president and sole stockholder until 1983, when he sold his stock to a third party. The corporation was engaged in the business of manufacturing and selling explosives (nonmilitary) to third world countries. In May 1977, it had plants in Malaysia and a tentative contract to build a plant in Ecuador. At that time, it was out of money and desperately in need of additional capital.

Forsythe and his wife, Barbara Forsythe, met Malcolm Turner and his wife, JoAnn Turner, in 1969. They became friends and socialized with each other. In late 1969, Forsythe was attempting to raise capital for his company named Kinetics International Corporation and talked to Turner about raising money for the corporation. Some kind of an arrangement was made between the two; later a dispute arose concerning the amount of stock which Turner was to receive for his services. The parties eventually settled the dispute, and a certain amount of stock was issued to Turner. Forsythe later sold Kinetics International Corporation.

On May 13, 1977, the Turners invited the Forsythes to dinner at a restaurant located at Chandler's Landing, a yacht club. At the dinner, Forsythe told Turner about the financial difficulties being experienced by PV International and that additional capital was needed. Forsythe testified that Turner then told him that he could easily raise $750,000.00, the capital needed by PV International. Following the dinner, Turner suggested that Forsythe prepare a "proposal" showing all relevant facts of the corporation and explaining how the $750,000.00 would be spent. Such proposal was prepared by Forsythe and delivered to Turner.

On May 26, 1977, Turner and Forsythe had a meeting. Forsythe testified that Turner agreed that his firm, Turner, Mason & Solomon, "would raise the $750,000.00 for a $10,000.00 fee," plus expenses. Turner testified that it was agreed that his firm would furnish consulting services in connection with his efforts to raise the desired capital and that such services were in the area of organization and fund raising. He further testified that it was understood that he, personally, was not required to fund PV International out of his own resources. On June 20, 1977, Turner told Forsythe that First Oklahoma Venture Company (First Venture) had expressed an interest in investing in PV International and that he was setting up a meeting with John Tinkle, the president of First Venture. On June 24, 1977, Turner told Forsythe that Tinkle wanted him (Forsythe) to go to Ecuador and try to close "the contract" with the government because more than the one operation in Malaysia was needed. Forsythe then went to Ecuador where he remained until July 19, 1977. In the meantime, Turner and Barbara Forsythe commenced "an affair," which continued until May 4, 1978, as hereinafter particularly detailed.

Forsythe also testified that on July 26, 1977, Turner "indicated" that he (Forsythe) "needed to go to Malaysia;" that PV International had problems in Malaysia with the production facility; and that he (Turner) thought it was more important to solve those problems than it was to complete the financing. The next day, July 27, 1977, Forsythe told Turner that PV International was out of working capital and that a Mr. Burridge "had committed that he could raise the $750,000.00." According to Forsythe, Turner told him "at that point that if they did not have an exclusive that he would drop the whole thing, but that First Oklahoma Venture was on the verge of signing and that I just had to be patient, that the lawyers were slow in drawing up the papers." Forsythe accepted the explanation because, in his words, "I was dealing with a friend."

In September 1977, Forsythe flew to Quito, Ecuador, where "we executed the contracts." PV International was supposed to start building a plant immediately. Also, by the middle of September 1977, PV International was entirely out of money, and Forsythe borrowed money personally and sold personal assets to keep the company "going." At that time PV International was negotiating with Trojan Tylar Corporation about a license to produce elements of the explosives, and Turner told him that Tinkle wanted such negotiations concluded "before the money was put up." Forsythe, upon Turner's urging, flew to Salt Lake City, Utah, to talk with the people of Trojan Tylar.

In November 1977, Tinkle, Forsythe and Barbara Forsythe went to Malaysia to view the plant operations. Then, they went to Seoul, Korea, where Forsythe explained PV International's technology to people introduced to him by associates of Tinkle and Turner. All of this traveling was at the expense of PV International. On the plane flying back from Korea, Tinkle "indicated" to Forsythe that he was "excited" over the plant operations in Malaysia and the prospects of additional business in the Far East. Both Turner and Tinkle agreed, according to Forsythe, that after this trip they would complete the financing.

In the fall of 1977, Allstate Insurance Company expressed an interest in investing in PV International. Tinkle contacted Richard Dumlar, Allstate's representative, who was head of Allstate's Venture Capital Investment Department. Several meetings were held in Chicago and Dallas with Turner, Tinkle, Forsythe and Dumlar being present. However, Allstate did not invest in PV International.

As already noted, PV International had signed a contract with the government of Ecuador in September 1977. When the funds promised by Tinkle were not paid, the government of Ecuador agreed to extend the time of performance until January 1, 1978. At that time, PV International hired three engineers who were sent to Ecuador, and Turner "indicated" to Forsythe that "the money would be forthcoming very quickly."

On January 23, 1978, according to Forsythe's testimony, it was agreed between PV International and First Venture that:

(1) a limited partnership and a Texas corporation would be formed immediately, and simultaneously with the formation of such entities, First Venture would invest $350,000.00 in preferred stock in the corporation, which would result in its owning 35% of the stock;

(2) First Venture would loan the newly created corporation $350,000.00 and would place...