Amert v. Ziebarth Construction Co.

payments recovery on illegal “Since an an transaction for the activity, Bayer equipment by unconstitutional we hold sale of saloon a beer distribu- cannot recover.” What unconstitutional tor to a retail outlet. The transaction in- talking agree I activity are we about? volved in the payment case before us is the Bayer’s bookmaking activity taxes, payment falls within of taxes. The burden- games sometimes, the classification of of chance may which some as it seem hardly is legislature approve illegal True, is to un- forbidden an transaction. we said in III, der Article section 25 of the Bayer I that it was unconstitutional for the point I legislature impose Dakota Constitution. out that the to a sales tax on book- bookmaking making. however, of a tax on say, exaction sales ac- We did not that it activity is tivities the unconstitutional we was either unconstitutional illegal “If Bayer struck down in I: it be the will pay tax. license, people tax and thus autho- Finally, language I Jasper, note some chance, privately operated games rize supra: illegality prevails, “The defense of requires further likewise amendment. defendant, protection not as a but as legislature.” It cannot be done disability plaintiff. a The reasons for The N.W.2d at 450. constitution does not refusing the aid of the court become even bookmaking illegal declare or unconstitu- stronger property when the liable prohibits legislature

tional. It from proceedings by the state to enforce a for- authorizing activity. such That is what feiture.” 73 S.D. at 41 N.W.2d at 312. They grants constitutions are for. are of Again, I payment out that legislature authority to the or limitations illegal, money taxes is not nor is the tax rings piously thereon. a little hollow to liable to forfeiture. say deny access to we the courts to Bayer for his so-called unconstitutional ac- I am authorized to state that Justice tivity, thereby protect but the unconstitu- joins in this HENDERSON dissent. activity collecting tional of the State illegal taxes with the aid and assistance of

our lower court. supporting cases cited as rationale majority opinion clearly distinguish- They from this case.

able all involve trans- actions that were in and themselves AMERT, Henry Appellant, Plaintiff and Rossman, illegal. Jasper 73 S.D. (1950), N.W.2d the suit was for ZIEBARTH CONSTRUCTION COMPA- gambling on balance due a sale of NY, Compa- Madison Insulation d/b/a equipment (punchboards). In Ferguson v. ny, Corporation, and U.S. Fiber De- Yunt, (1900), 13 S.D. 82 N.W. 509 Party fendants and Third Plaintiffs and suit was to recover on the bond of a stake- Appellees, horse-racing holder of E.P. bet. Wilbur Trust Co. v. Fakrendorf (1936), a suit to recover on involved COMPANY, AMERT CONSTRUCTION the inducement of a note executed under Corporation, Party Third Defendant agreement prosecute alleged not to Appellee. Codington In Bartron v. embezzlement. No. 15299. (1942), County, 68 S.D. Supreme Court South Dakota. recovery for the suit was for services and supplies indigents under a con- furnished Considered Briefs Nov. 1986. county profession- tract between the and a Decided Feb. corporation physicians al when it was illegal physicians incorporate. And

finally, Beverage Marie Co. v. Villa (1944), was for Lammers,

Jerome B. Lammers of Lam- mers, Casey, Madison, Kleibacker & for appellant. and Woods, Fuller, E. John Simko Shultz Smith, P.C., Falls, & Sioux for U.S. Fiber Corp. Arneson,

Thomas M. Issenhuth of Issen- Madison, Gienapp, huth & for Ziebarth Const. Madison Insulation d/b/a Co. Evans, Davenport, Michael L. Luce of Smith, Falls, Hurwitz & Sioux for Amert Const. Co.

WUEST, Chief Justice. Appellant appeals trial court’s denying prejudgment interest. We reverse and remand. (Amert),

Appellant, Henry Amert is the Madison, building owner a recreation South Dakota and was a stockholder in Company. Amert Amert Con- Company prime was contrac- building. tor on the recreation Insulation work on the was subcontracted to Company, doing the Ziebarth Construction business as Madison Insulation. The insu- supplied by Corpora- lation Fiber U.S. tion. building, conjunc-

The recreation built apartment twenty-four tion with a unit complex, was constructed winter of spring appellant no- panels ticed the outside steel of the build- ing begun The corrosion had to rust. predominant in an area enclosed the swimming pool. Testing showed the cellu- provided by lose insulation U.S. Fiber Cor- poration highly corrosive. The cellu- high humidity lose fibers reacted with the swimming pool created and caused severe corrosion to the sheet metal building. The insulation was not recom- buildings. mended in metal sued Amert Construction Company implied warranties breach particular purpose. Amert of fitness for a third-party complaint Construction filed a Construction, Zie- against Halloran, an v. fourth-party complaint filed in turn barth of ex- sought U.S. Fiber the theories Where the amount for re implied press warranty though warranties of covery liquidated,, even particular merchantability fitness value ascertainable 4, 1982 purpose. Appellant’s October com- or property, general of services alleged damages A June plaint interest, better considered rule is to allow complaint alleged also amended strong equities at least absence of $95,505. damages of On November Casualty Aetna Co. contrary. Ins. v. the granted appellant’s the motion States, court Cir.1966). (8th United 365 F.2d 997 complaint dismiss the amended damages Interest is allowable on if there party Third claims Amert Construction. exists established or ascertain by against Amert Construction Ziebarth prices subject able market or values on the preserved. On and U.S. Fiber were Octo- by matter reference to which the amount appellant filed a second the ber may computation. due be by determined $141,- complaint requested amended Barton, supra; supra; Dougherty, damages, in amount was 543.00 but that supra; Hyde, v. Gearhart S.D. $95,505 changed the date of later before denying N.W. 58 The reason for trial. person interest on a claim is that when the owes, not liable does know what sum he he jury the

The trial court instructed it paying. in default for cannot be not How damages the less- could award ever, the when exact sum of the indebted expense er either the reasonable mak- or can ness is known be ascertained repairs ing necessary or the difference be- the denial of not reason interest does property the fair market value of tween Beka, supra. exist. immediately before and the fair market unrepaired property of the immedi- value dispute There no over the was actual ately discovery damage. The after of the physical damage amount of to the struc- $95,505, jury awarded but the trial court Appellant prejudgment ture. is entitled to prejudgment appellants denied motion for long damages capable interest as court that the ex- interest. trial held being by Appel- calculation. amount of the fair and cost act reasonable out that lees had several necessary repairs to the repairs. Appellant estimates of the cost of being capable certain or made cer- not $36,705 January of had an estimate of in by calculation. tain September in and the estimate prejudgment Dakota’s September just In be- provides: trial, damages statute is SDCL 21-1-11. in fore the second amended $141,910.09, complaint were set at but Every person is entitled to recover who repairs. no itemized there was estimate of certain, damages capable of had its own estimate of calculation, and made certain rebuilding Ap- for a total of the structure. in him to recover vested argue pellees point to these estimates and upon particular day, also to is entitled capable were of ascer- day, recover interest thereon from by computation. tainment except during the debtor is such time as law, act of the prevented Appellant explains discrepancy be- creditor, paying from the debt. January September tween the 1982 and pool by claiming only The mere claim is dis 1982 estimates fact that a surveyed puted January does not defeat the allowance area was estimate v. Masonry, interest. Barton Inc. Vari further were not discovered lek, However, (S.D.1985); Dougherty appear until later. it does N.W.2d 200 Beckman, included 347 N.W.2d 587 both estimates on both the America, Beka v. Corporation Lithium pool rest of the structure as a area Moreover, (1958); Corcor whole. the line items are the estimates, yet (S.D.1981), same both there is prejudgment court allowed large discrepancy in the dollar totals for interest based on the surety’s performance event, any jury each line item. under a Damages contract bond. accepted appellants explanation. The sec- performance awarded for of construction ond estimate of was the one that work based on the price contract bid and its appellees submitted it was breakdown. In Williams Ins. v. Dee-Bee figure jury returned appel- for the (S.D.1984), Cont. lant. prejudgment court awarded interest on es- timated fire wrongfully losses withheld party A prejudg is not entitled to company. an insurance Although based on ment interest cases where the amount of estimate, a fire approved pre- this court damages remains uncertain until deter judgment interest on percentage a definite mined the trial court. Arcon Const. Co. of the damage estimated withheld Plant, S.D. Cement N.W.2d 407 company insurance under a coinsurance (S.D.1984); Fullerton Lumber Co. penalty. Reindl, 331 N.W.2d 293 State Son, v. Ed Cox and 132 courts, The California applying an identi (1965). Arcon, prejudgment In statute, recognized cal have ratio Beka In interest was denied. that case the con for awarding prejudgment nale interest tractor admitted that its own records were explained have their own test for the determining for damages. not usable actual by computation” problem “ascertainable Averages used, and estimates were but the plagues today. which courts “The test we guidelines plaintiffs used for the estimates glean prior from decisions is: did de questionable vigorously were and were ob actually fendant know the amount owed or jected Here, by plant. the cement from available information damages objective were based measure computed could the defendant have that ment of the necessary labor and materials Only amount. if one of those two condi building, to restore the and the defendants pre tions are met should the court award dispute did not of appel reasonableness interest.” Chesapeake Indus lant’s calculation. Togova Enterprises, tries v. 149 Cal. 901, 907, App.3d Cal.Rptr. Fullerton, In prejudgment interest was (1983). “Prejudgment interest runs from keep denied. Plaintiff testified he did not damages the date when the are of a nature pig records of of the number deaths due to capable or being to be certain made leaking roof. He submitted evidence by certain calculation and when the exact twenty-five, thirty, on a loss of or plaintiff sum due to the is made known thirty-five pigs. Damages were not certain statute, the defendant. Pursuant to the if jury that case because the had to deter- the defendant does not know or cannot adopt mine the number of animals it would readily damages, ascertain it is incumbent physical Similarly, the actual loss. plaintiff provide on the the defendant Intern., Hanson v. Funk Seeds supporting with some statement and data (S.D.1985),this N.W.2d 30 court held that from defendant can make the prejudgment interest was not recoverable necessary determination.” Levy-Zentner plaintiff’s yields year because varied from Transp. v.Co. Southern Pac. 74 Cal. year. damages The amount of was not (1977). App.3d Cal.Rptr. by jury. certain until decided Masonry, supra, In Barton appellees given which cited Here the were long list of South Dakota cases constru- itemized list of they needed 21-1-11, ing prejudgment question. SDCL free to examine or They were quantum was allowed on a questioned meruit award have never the reasonableness for plaintiffs the reasonable value of ury con- of the estimate. The awarded In Eng. work. Northwestern v. the amount itemized Enterprises, 301 requested complaint. Thunderbolt N.W.2d 421 in his California large capable being held where there is a were have courts prevailing calculation reference to mar the amount of dam discrepancy between and materials. All of the kets labor complaint and the ages demanded in spirit above is line with the letter and award, fact mili the eventual size of Dixon, (S.D. Meyer certainty against the mandated tates 1985). Swing, 164 Cal. Polster Inc. statute. Cal.Rptr. 567 Here App.3d HENDERSON, (dissenting). Justice discrepancy at all in the dam there was no dispute awarded. There was considerable concern- ages requested and Thus, damages. depend ing the amount of such were not The amount dispute underscores the tenuousness of the any contingencies jury discre ent majority’s position. Damages ascertainable tion. computation appellees had all neces Dixon, Meyer 369 N.W.2d complete de sary information available (S.D.1985), emphasized three we condi- costs. termination party tions must be met could before prejudgment recover interest: judgment denying pre-

The trial court’s (1) clear must be judgment interest is reversed and we re- certain, entitled to recover a sum computation prejudgment in- mand for damages sought capable that the terest. calculation; made certain POSHEIM, MORGAN, J., (2) Retired to recover must be vested Justice, plaintiff particular day; in on the concur. SABERS, J., specially concurs. (3) pre- must not have been debtor

HENDERSON, J., dissents. plaintiff the law from vented paying the debt. MILLER, J., having not been a Melvin, F.Supp. 441 210 See Cole of the Court at the time this member (D.S.D.1977). See also Hanson Funk Court, did action was to submitted Int’l, 373 36 Seeds N.W.2d participate. not Disk, Subsurfco, v. B-Y 369 Inc. Water SABERS, concurring). (specially Justice 129,131 (S.D.1985). N.W.2d The basic stat- ute controlling is SDCL 21-1-11. to I concur in the result and wish stress conditions, establishing a re continuing These three following respect in to the prejudgment interest quirement for be problem applying prejudgment interest awarded, underlying reason have which First, law, 21-1-11, SDCL to the facts. Corp. set forth v. Lithium Beka difficulties continue to law is known but America, 370, 375, 77 S.D. N.W.2d multiple to the applying exist in that law (1958): denying 159-60 “The reason for time to arise from and diverse facts which person on a claim is that where Secondly, in the ab- time these cases. owes, does not sum he he liable know what pay on sence of an offer or tender their paying.” cannot in default for not be part, able to defendants should be they prevented by law or claim that shaky underpinnings Let us examine the paying. Thirdly, plaintiff examining creditor from majority opinion of the damages capable of right to recover Defendants not advised of cer- facts. calculation was not performed totaling repairs, tain plaintiff in case until $13,688, in the this vested until trial. There was some subse- 28, 1982, and September figure chang- then quent mental fluctuation and $95,505. though 19, 1982, ing, January is so Con- amount of This even for on Amert Company in 1977 and 1978 and estimated the cost was built struction eight spring Some months early the rust as as the to be was noticed later, Amert Con- time, September on plaintiffs of 1979. At that amounts, varying changed even on the changed the estimated Company $95,505, approxi- trial, morning repairs to and it should not be held cost of origi- the amount of paying mated three times in default for not an unascertaina- Then, very shortly before estimate. nal ble sum it that it knew owed. trial, Company amend- Amert Construction distinguishable This case is from Gear $141,543.09. ed its claim Hyde, hart v. 164 N.W. 58 Query: Ziebarth be faulted for not Can (1917), proposition which stands for the knowing exactly sum it owes when what mere is fact that the claim dis “[t]he the extent of its plaintiff does not know puted does not defeat allowance Thus, Beka, under defendant/Zie- claim? interest.” 77 S.D. at 92 N.W.2d charged prejudg- not be with barth should Halloran, (citing at 159 Corcoran v. it, debtor, ment interest because as (1906)). If, indeed, S.D. ascertain the could not know uncertainty is filled with Hanson, owing. exact sum See coming, it has the defendant what how can 659; 36; Meyer, at 369 N.W.2d at N.W.2d certainty regarding filled with be what My at 131. view- Subsurfco, 369 N.W.2d owing? supported is also State ex rel. Son, v. Ed Farmers State Bank Cox & trial,

Then, morning of very on the Company

Amert amended

again, and went back If is not the straw that

amount. this uncertainty, the camel’s back

breaks Compa- consider that Amert Construction NATIONAL BANK OF FIRST expert testified that the costs of ny’s own HILLS, STURGIS, Dak. BLACK So. (damages) were somewhere between Hills, N.A., Bank of Black now Norwest $280,000. Furthermore, dur- Appellee, Plaintiff and trial, costs ing the there was evidence that $25,000 and would total between BEUG, Defendant Kenneth $30,000 repairs if had been made when Appellant. damage first noticed. No. 15212. figures and all of these facts and With it, jury ultimately circumstances before Dakota. Supreme Court $95,505 which as- returned a verdict of of the verdict sessed: 3% on Briefs Oct. Considered Company, of the verdict 91% 11, 1987. Decided Feb. Corporation, and against U.S. Fiber 6% against Amert Construction the verdict en- Whereupon, the trial court

Company. awarding prejudg-

tered without I that the trial

ment interest. As believe majority opinion is and the

court

wrong, not reverse the I would affirm and

trial court. of the indebted- the exact sum

“When readily ascertained

ness is known or can be of interest does

the reason for the denial at

not exist.” Here, however, appel- at 160. besought claims of

lee/Ziebarth with

Case Details

Case Name: Amert v. Ziebarth Construction Co.

Court Name: South Dakota Supreme Court

Date Published: Feb 11, 1987

Citation: 400 N.W.2d 888

Docket Number: 15299

Court Abbreviation: S.D.