Wyoming Bancorporation v. Bonham

• Decision Date: 10 May 1977
• Docket Number: No. 4589,4589
• Citation: 563 P.2d 1382
• Parties: WYOMING BANCORPORATION, Appellant (Plaintiff and Appellant below), v. Dwight BONHAM, Wyoming State Bank Examiner, and Wyoming Security Bank, Sheridan, Wyoming, a Wyoming Corporation, and its organizers and proposed officers and directors in their official capacity, Appellees (Defendants and Appellees below).
• Court: Wyoming Supreme Court

Page 1382

563 P.2d 1382

WYOMING BANCORPORATION, Appellant (Plaintiff and Appellant below), v. Dwight BONHAM, Wyoming State Bank Examiner, and Wyoming Security Bank, Sheridan, Wyoming, a Wyoming Corporation, and its organizers and proposed officers and directors in their official capacity, Appellees (Defendants and Appellees below).

No. 4589.

Supreme Court of Wyoming.

May 10, 1977.

Rehearing Denied June 14, 1977. See 566 P.2d 219.

Jack B. Speight, Hathaway, Speight & Kunz, Cheyenne, and Jack R. Gage, Hanes Carmichael, Gage & Speight, P. C. Cheyenne, for appellant.

Henry A. Burgess, Burgess & Davis, Sheridan, and Richard L. Eason, of Simon, Eason, Hoyt & Malone, P. C., Englewood, Colo., for appellees.

Before GUTHRIE, C. J., McCLINTOCK, THOMAS and ROSE, JJ., and ARMSTRONG, District Judge, retired.

ARMSTRONG, District Judge, retired.

This matter has previously been before this court on appeal from the decision of the District Court of Laramie County, Wyoming which affirmed the order of the State Examiner authorizing the issuance of a state bank charter to Wyoming Security Bank of Sheridan, Wyoming. We affirmed the district court's decision. Wyoming Bancorporation v. Bonham, Wyo., 527 P.2d 432, rehearing denied, 527 P.2d at 445 (Wyo.1974). We are now asked to consider the propriety of a judgment for damages occasioned by a stay order entered during that appeal.

Bancorporation had moved the district court for entry of an order staying issuance of the state bank charter to Security pending the appeal. On December 27, 1973 the district court orally granted the stay and after hearing evidence pertinent to damages due to a delay in the issuance of the charter fixed a supersedeas bond at $100,000 to be posted in the form of a cashier's check. Bancorporation not yet having filed the $100,000 bond, and at Bancorporation's request, the district court granted a withdrawal of the stay order on February 27, 1974.

On March 11, 1974 Bancorporation moved this court for an order staying enforcement of, and an injunction to stay, the State Examiner's order. On April 23, 1974, pursuant to Art. 5, § 3 of the Wyoming Constitution and Rules 62(e), 72.1 and 73(d) and (e), W.R.C.P. this court ordered a stay, pending Bancorporation's appeal, subject to the posting of a $100,000 cashier's check by Bancorporation. On April 25, 1974 Bancorporation filed a 'Conditional Bond and Partial Waiver of Stay of Enforcement' which was not in compliance with this court's April 23, 1974 order. On May 9, 1974 Bancorporation was ordered to file proper bond-the $100,000 cashier's check to remain as security for the bond without necessity of corporate or other surety-and it did so on May 13, 1974.

On August 1, 1974 Bancorporation opened its own banking establishment in Sheridan, Wyoming as a national bank, being the third bank in Sheridan and the fourth bank in Sheridan County.

On October 16, 1974 this court entered its decision affirming the district court's order, Wyoming Bancorporation v. Bonham, supra.

On November 6, 1974 Security received its charter from the State Examiner and commenced its banking business as the fourth bank in Sheridan and the fifth bank in Sheridan County.

In the mandate of affirmance to the district court filed December 18, 1974, this court ordered that all proceedings in connection with the previously entered stay of execution and bond be returned to the district court for such other proceedings as may arise in connection with any claim for damages. Pursuant to this mandate, Security moved that district court for an award of damages resulting from the stay in the amount of $189,269. After a hearing on the issue of damages and a request for submission of findings of fact and conclusions of law, the district court on June 11, 1975 entered judgment against Bancorporation and in favor of Security in the amount of $162,488.96, together with Security's costs incurred therein. It is the propriety of this judgment which is now before this court for consideration.

Appellant herein asserts seven bases for reversal of the district court's judgment:

I. THE EVIDENCE DOES NOT SUPPORT THE JUDGMENT.

A. THE DISTRICT COURT RELIED UPON EVIDENCE PRESENTED EX PARTE AFTER THE RECORD WAS CLOSED.

B. THE DAMAGES AWARDED FOR LOSS OF FUTURE PROFITS WERE NOT SUPPORTED BY PROPER EVIDENCE.

C. SECURITY'S PROOF OF DAMAGES FOR LOSS OF FUTURE PROFITS DOES NOT MEET REQUISITE LEGAL STANDARDS.

II. THE TRIAL COURT'S AWARD FOR DAMAGES WHICH ACCRUED PRIOR TO THE OPENING OF SECURITY'S BANK IS IMPROPER.

III. SECURITY FAILED TO PROPERLY MITIGATE DAMAGES.

IV. THE TRIAL COURT IMPROPERLY CONSIDERED COMPETITION BETWEEN THE THIRD AND FOURTH BANKS.

V. SECURITY'S DAMAGES MUST BE LIMITED TO $100,000, INCLUDING INTEREST AND COSTS.

VI. THERE WAS AN IMPROPER LACK OF COMPLIANCE WITH THE CIVIL RULES.

VII. THE LARAMIE COUNTY DISTRICT COURT DID NOT HAVE JURISDICTION TO CONSIDER DAMAGES ON REMAND.

I. and II.

The evidence does not support the judgment; and the trial court's award for damages which accrued prior to the opening of security's bank is improper.

Appellant asserts that the district court improperly relied on ex parte evidence presented after the record was closed. Reference is made to a letter tendered with appellee's proposed findings of fact and conclusions of law. Attached to the letter were alternative calculations of appellee's damages. We can find nothing inappropriate about this communication. It was merely in response to the district court's invitation to submit proposed findings of fact, and the alternative calculations contained therein are fully supported by substantial evidence taken at the hearing.

Appellant seeks to buttress part of its first contention by reference to dicta contained in Diefenderfer v. Totman, 73 Wyo. 409, 280 P.2d 284 (1955), wherein we cited with approval 25 C.J.S. Damages § 42b.

Since then the text writers have modified the lost-profits rule as it relates to new businesses, as follows:

'Where a new business or enterprise is floated and damages by way of profit are claimed with respect thereto, as for its interruption or prevention, they will generally be denied, for the reason that such business is an adventure, as distinguished from an established business, and its profits are speculative and remote, existing only in anticipation. The same principle applies to a business which is not yet established, but is merely in contemplation. On the other hand, lost profits will not be denied merely because a business is new if factual data are available to furnish a basis for computation of probable loss of profits.' (Emphasis added) 25 C.J.S. Damages § 42b).

We find the last-mentioned portion of the rule properly emphasizes the calculation of lost profits with reasonable certainty, rather than relying on the classification of the business in question as new or established. See S. Jon Kreedman & Co. v. Meyers Bros. Parking-Western Corp., 58 Cal.App.3d 173, 130 Cal.Rptr. 41 (1976); Vickers v. Wichita State University, Wichita, 213 Kan. 614, 518 P.2d 512 (1974), and Smith Development Corporation v. Bilow Enterprises, Inc., 112 R.I. 203, 308 A.2d 477 (1973). The evidence necessary to establish lost future profits with reasonable certainty depends, then, upon the circumstances of the particular case. Notes: Requirements of Certainty of Proof of Lost Profits, 64 Harv.L.Rev. 317, 319 (1950). A court should approach each case in an individual manner and require the claimant to furnish the best proof available as to amount of loss. Vickers v. Wichita State University, Wichita, supra, 518 P.2d at 517; and McCormick, Law of Damages, § 29 (1935). Absolute certainty in proving loss of future profits is not required. Smith Development Corporation v. Bilow Enterprises, Inc., supra; and 22 Am.Jur.2d Am.Jur.2d Damages, § 172.

'Thus as we see it a sharp line of distinction should not be drawn between old and new businesses, but recourse should be had in both situations to the basic question whether a prospective loss of net profits has been shown with reasonable certainty. See Am.Law Inst., Restatement, Contracts, Sec. 221(1) and Comment d., illustration 6, thereunder.' Standard Machinery Co. v. Duncan Shaw Corp., 208 F.2d 61, 64 (1st Cir. 1953).

With respect to appellee's evidence of lost future profits, it is sufficient to note that Security's experts, Dean C. Coddington and Eugene K. Ogier, concluded, based on bank feasibility studies and projected deposits, that Security would lose $167,200 in income over a ten-year period, having a present value of $114,910.

Appellant asserts that Security's proof was based on certain improper assumptions dealing with loan demand, time money to demand money ratios, loan and time money interest rates, and lost deposits due to delay. Appellant presented its expert, Nelson E. Tamplin, to explain its view of these assumptions. The district court could have believed Tamplin's version of profitability; it chose not to do so. The correctness of these assumptions was obviously a fact question resolved against appellant by the district court. The use of projected deposit and loss figures is not in itself objectionable, and is permissible in determining the lost profits occasioned by a delay in starting up a banking business. Appellee presented factual data of its losses which were acceptable as bases for calculating its probable losses resulting from the five months' delay occasioned by he stay of execution.

In view of our decision, regarding the effect of the $100,000 bond on these proceedings, it is unnecessary to reach the remaining damage questions raised by appellant.

III.

Security failed to properly mitigate damages.

With respect to appellant's third assignment of error, it is well established that one who is injured by the wrongful act of another must exercise reasonable care and diligence to avoid loss or to minimize the resulting damage. See Thayer v. Smith, 357 P.2d 1115, 1119 (Wyo.1960). The...