Walker v. Hyde, 90-31

• Decision Date: 12 November 1990
• Docket Number: No. 90-31,90-31
• Citation: 798 S.W.2d 435,303 Ark. 615
• Parties: Donna WALKER, Appellant, v. Bert HYDE, et al., Appellees.
• Court: Arkansas Supreme Court

Page 435

798 S.W.2d 435

303 Ark. 615

Donna WALKER, Appellant, v. Bert HYDE, et al., Appellees.

No. 90-31.

Supreme Court of Arkansas.

Nov. 12, 1990.

John M. Belew, Jerry C. Post, Batesville, for appellant.

Michael G. Thompson, Little Rock, Ike Allen Laws, Russellville, for appellees.

E. CHARLES EICHENBAUM, Special Justice.

The plaintiff Donna Walker was a part owner in a vending company, Valley Vending, Inc., begun in 1984, which had, for a brief period, the concession for vending machines at Arkansas Nuclear One ("ANO"). Prior to March, 1984, she had been an employee of CM Vending, which had previously held the ANO contract, and before that an employee of Hyde Vending Company, owned by the defendant, Bert Hyde.

The defendant Bert Hyde had been the owner of Hyde Vending Company, who sold that company to CM Vending, and, from the sale date in 1972 through 1984, was contractually obligated not to compete with CM Vending. The defendant David Hyde is the son of Bert Hyde and was a part owner of Valley Vending, Inc., with the plaintiff. The defendant Randy Talkington was also a part owner of Valley Vending, Inc., and an officer of the First National Bank of Russellville. The defendants Robert Hayes Williams, Charles Blanchard, and John Doe were all employees, officers, or directors of the First National Bank of Russellville. Robert Hayes Williams was also an attorney. The defendant First National Bank of Russellville provided financing to Valley Vending, Inc. These loans were guaranteed by the appellant and other individual appellees.

The CM Vending Company, employer of Donna Walker, had a contract to install, maintain, and supply vending machines at Arkansas Nuclear One, Russellville, Arkansas. She believed, and it appears was encouraged to believe by employees at Nuclear One, that she had an opportunity to bid successfully on the renewal of the aforementioned contract. Prior to June 20, 1984, Ms. Walker formed her own corporation, Valley Vending, Inc.

Prior to the bidding, she approached the First National Bank of Russellville, Arkansas, for a loan to finance the proposed operation. In testimony, disputed as to detail, it appears that the bank was concerned with such application, noting to her an absence of managerial experience and financial background. In testimony, largely undisputed, the bank encouraged her to acquire such missing elements for the purposes of enabling approval of the loan.

During this period, and with the encouragement of the bank's employees, she consulted with her former employer, Bert Hyde. On the 14th day of June, 1984, she was told by Bert Hyde, one of the defendants, that she should take in his son as a shareholder for the enterprise. At the time of Bert Hyde's insistence and persuasion of Donna Walker with respect to sharing the stock of her corporation, Ms. Walker admitted in depositions that she was represented by counsel and she had knowledge of the existence of some contract between Hyde and the vending company, although she professed an absence of knowledge of details. Bert Hyde's desire to remain aloof from the transaction was more verbal than actual, and the record reflects that his role was not entirely passive. At the time she was a party to a non-competition agreement with CM Vending. The vending company by whom Donna Walker had been employed, and which was replaced in her successful bid, promptly sued all of the parties involved in the new corporation and Bert Hyde.

The basis for the vending company suit against Hyde and others was the non-competition agreement entered into at the time Hyde sold his company to CM Vending. The trial court had found the agreement to be in force and effect and this court affirmed Hyde v. CM Vending Company, Inc., 288 Ark. 218, 703 S.W.2d 862 (1986).

When this suit was successful, Donna Walker's corporation lost the contract. Financial reverses ensued; it became insolvent and its assets were sold in partial satisfaction of the bank debt.

The complaint in this matter was filed by Donna Walker against Bert Hyde, his son David Hyde, the First National Bank, and Robert Hayes Williams, Charles Blanchard, Randy Talkington and John Doe, officers of the First National Bank on August 28, 1987.

The original complaint, not a model of brevity, consisted of 55 allegations on its Count One, being a prayer against all of the defendants, and 17 allegations as a separate ground for action against the First National Bank of Russellville.

The factual allegations summarize that the defendants acted in concert by a course of conduct that resulted in the plaintiff giving substantial stock ownership in her new corporation to David Hyde (and ultimately to David Hyde and Randy Talkington). The gravamen of her complaint is that these additional stockholders exposed the new corporation to the risk that ultimately became the thread from which the cloth unraveled, the risk that the new corporation and its principals would be found in violation of Bert Hyde's contractual covenant not to compete. This, the appellant now claims is a risk that the appellees fully understood, that she did not fully understand, and that the defendants' failure to disclose same to her should be the basis for compensation in this action.

Damages were sought for deprivation of control and ownership of her enterprise, loss of good will of the business...