Baker v. Wilburn

BAKER, Plaintiff LeMoine Appellant, and Robert M. E. WILBURN

Lavern Appellees. Defendants 16602.

No. Dakota.

Supreme Court of South 27,

Argued Nov. 1989. May

Decided 1990.

Rehearing June Granted LaFleur, LaFleur of LaFleur

Mitchell C. LaFleur, plaintiff Rapid City, for appellant. Huffman, E. for defendants

Richard Banks, appellees; Delaney, John- John son, Johnson, Huffman, Rapid Colbath & City, on the brief.

SABERS, Justice. appeals judgment from a

LeMoine denying his claim individually for under a business agreement. sale Facts In sold Wendell Peden what Lounge Mar- then Anchor known and his The sale of low Jurisch wife. pursuant to an business was regular to make as- eventually Peden to Peden. Pe- seller’s interest Hills agreement to the Black den/Jurisch Hospital, which he controlled. Animal business, one- of the and Jurisch owed Baker purchased undivided an payment for Baker’s from a month as $602.92 interest in the business Jurisch half $50,000. in partner- interest the business. for The Jurisch/Baker forced to to a ship was move business partnership The Jurisch/Baker dissolu- planned to early location in 1978 and new for sale was and contract reopen under the new name of the bar incorporated by reference into the Jur- Lounge. Branding Iron contract. Baker isch/Wilburn & Steele party to partnership secondary financial was made a this con- encountered mid-1978, to waive problems beginning in eventual- tract because was in and to causing partners the re- interest the business ly to believe jeopar- indemnify Wilburn & Steele from liquor newal of their license was claims, demands, result, of action causes dy. As a Jurisch contacted Wilburn brought or asserted third if interested & Steele to see would be arising from acts Lounge. Wilburn & investing Branding in the Iron occurring or omissions of Jurisch or Baker purchase attempted to Wilburn & Steele prior possession. to the date of The Jur- interest in the business on the basis that provided & Steele contract isch/Wilburn obligation to Baker. they would have no would establish the Nation- result, attempt To to reach this Wilburn Dakota as al Bank of South required Jurisch to obtain receive, transfer, application and make free and clear of share of the business regarding liens or encumbrances. those which were due under the terms and 14, 1979, Baker, November Jurisch of the Jurisch/Baker contract. conditions wife, and his and Wilburn & Steele In order to establish the Bank as escrow agreements. Pursuant into a series of agent, <&Steele exe- Jurisch and Wilburn agreements, Baker transferred his these cuted a letter of transmittal which his in the business to Jurisch and April received on 1980. That Bank $62,000, acquired his Jurisch wife document stated that all into business, wife’s interest Bank account were to be credited acquired fifty-one percent of the & Steele up by account set directly to an escrow $62,000. Wil- business from Jurisch es- and Baker. The Jurisch/Baker Jurisch $25,000 paid Jurisch a down burn & Steele proceeds in provided that all crow account $15,000 paid as payment, of which Jurisch deposited to be in Bak- that account were to Baker. At the same payment a down The Jurisch/Baker er’s time, Steele entered into an monthly was to receive escrow account pur- Hospital Animal with from Jurisch for the payments of $602.92 its seller’s interest in the Peden/Jur- chase purchase of Baker’s interest in the busi- Wilburn, agreement.1 purchase payments by ness. Since incorporated then and Jurisch automatically trans- Steele to Jurisch Iron, owning Branding Inc. with Jurisch account, Jurisch was ferred to this escrow percent and forty-nine approximately on only required to add $134 owning percent. was re- fifty-one monthly payment complete his his own to guarantee quired pledge his stock Baker. Steele, Wil- obligations to Wilburn & agree- with the required. Payments As a accordance Steele were not so burn & regu- transactions, accounts were ments and the escrow of these Jurisch owed result through March 1982 when Wil- larly for their a month $720 burn, Steele, and Jurisch cancelled their Hospital’s seller’s purchase of the Animal time, Branding business, At that escrow account. interest in the Iron, obligation Inc. to assume payment a month as owed Jurisch $468.72 contin- to Jurisch and fifty-one percent of Wilburn & Steele purchase towards $30,000, though even Jurisch’s Hospital’s Animal 1. Wilburn & Steele $43,626.37. remaining purchase thereon balance seller’s Peden/Jurisch parties, for same time the same payments to the Jurisch/Bak- ued to part of the purpose months. and as account for several er escrow transaction, consider However, Branding after November Iron, as one contract.” Inc. ceased to make construe instruments GMS, (emphasis supra, action to enforce Wil- at instituted this pay added). Moreover, their obli- not critical whether burn & it is Jurisch into the Bank escrow gation exactly executed the documents were trial parties The court concluded that time or the same whether possess not enforceable Baker did As identical. each were payments regarding the Hampton Shipping court in Roads Ass’n appeals, Baker Ass’n, to make were Longshoremen’s v. International concluding claiming the court erred in (E.D.Va.1984), F.Supp. 709 remanded 597 Cir.1984), contractually not (4th & Steele were 1015 grounds, 746 F.2d on other make into the obligated to 1017, denied, 105 rt. 471 U.S. S.Ct. ce account. We reverse. (1985), denied, 2022, cert. 85 L.Ed.2d 304 2327, 85 105 L.Ed.2d 471 U.S. S.Ct. related 1. All documents executed for (1985), 845 stated: transaction purposes same together. be must construed writings are connected Where other, if internal references to each even a con The and terms of effects different dates they were executed on resolved questions of law to be tract are among not and were same Ins. v. Golden the court. North River Co. they single a parties, will constitute Constr., Inc., 912 296 Rule long they tract as as involve same (S.D.1980); Delzer Co. v. South Constr. parts subject prove matter to be Transp., Bd. 275 N.W.2d Dakota State an entire transaction. (S.D.1979). appeal, this 355 pre Neuman-Green, a 716; itself without can read a contract Inc. Id. at also R., court’s deter sumption F.Supp. in favor of the trial 612 1434 v. Alfonzo-Larrain River, supra, (Agreements 296 N.W.2d (N.D.Ill.1985) mination. North executed at the give The court is to enforce at 912-13. same time and in the course unambiguous effect to read and construed transaction be CMS, regardless Inc. v. Dead together, terms of the contract. whether Club, Inc., identical). wood Social language of (S.D.1983). a Whether the multiple The documents executed in ambiguous question is a contract is law change ownership of this busi order Doll Mu for the court. Enchanted World must be separated, cannot be con ness (S.D. Buskohl, 398 N.W.2d seum v. together single contract involv strued as a 1986). ambiguous ap when A contract is ing the same transaction. Several factors leave plication interpretation of rules of a writings compel conclusion uncertainty of two or genuine as to which part single of a contract or transac River, meanings is North more correct. example, For tion. 913; N.W.2d at see also En supra, 296 together at the documents be executed Museum, supra, 398 Doll chanted World time and not in isolation. Wilburn & 151. N.W.2d at attorney that his clients testified not have writings All executed to would that are partnership are if the dissolution gether part single of a transaction completed. Jurisch/Wilburn together. interpreted Restatement was be See (1981). refers to the Jur- (Second) have & Steele contract We Contracts § and Baker included recognized rule, noting that: isch/Baker “[W]hen Moreover, secondary Baker party.2 two are executed at or more instruments payments. The of Baker as a denomination 2. The that Baker trial court concluded significance. "secondary” party or no "secondary" party has little was not entitled and as such someone is a or not. Either to enforce any security the busi- LeMoine and in released considera- ($1.00) tion of indemnify good One Dollar and other ness consideration, and valuable the receipt against prior partnership acts as and sufficiency is hereby of which ac- agreement. of that part consider- knowledged, does release promise for Baker’s is to ation include the right, title, other documents time executed property Exhibit “B” Otherwise, within transaction. Agreement, including, but not lim- nothing exchange receive interests, ited security promise to release his interest and acquired by interest whatsoever would not sense. or otherwise. argue follow- addition, paragraph 11.05 of said con- ing language of the Jurisch/Baker contract provides “All part, shall is determinative: through Agent.” Escrow sole in the event of [Seller’s] 2. The together require documents taken default shall be an action for breach of & the pay- Steele to make escrow contract against E. Marlow Jurisch ments the Baker. benefit of any right and Seller waives may prosecute have to multiple action Construing the documents against any assignee together, Rita J. or it is clear that Wilburn & Steele obligated or payments transferee of to their this make to account, Jurisch into the Bank escrow herein.... and agreement, as to the by [promises] 2. Seller does these waive obligation. entitled to enforce that The liens, encumbrances, and all secur- provides Jurisch/Wilburn & Steele contract ity and entitlements whatso- the Bank as shall escrow receive regard ever with the to matter payments regarding all the and of resulting this application payments of which were entity stock of any corporate to which under due the terms and conditions of the property may this be transferred and The Jurisch/Baker contract. effect of that the interest of stockholders therein. provision is payments that all problem argument first this The with obligation made under their to Jur- misinterprets language it contract the go were to isch into that escrow account. quoted provision in the first passage. That establishing The letter of transmittal limits Baker’s a default Jur- consulted escrow account must be to deter However, on his to Baker. payments mine the how into that deny it does not Baker breach of contract dispersed. account were to be against action Wilburn & Steele for a fail- copies Both of the letter of transmittal payments. to ure make the escrow submitted at trial contained statements: problem argument The second with payments directly “Credit all to Jurisch- that it fails to consider all of the doc- The trial escrow account.” court uments, specifically the disbursement in- determined this was added after proceeds. structions for the escrow original typing the the letter and of Wil- expressly released his interests in the busi- knowledge & Steele had burn no that this Jurisch, against parties except as all ness language had been inserted letter. did not release his to the escrow if the Even trial court’s determination was parties. payments the correct, weight placed emphasis the fact, taking all of the documents into con- thereon was because the con- excessive sideration, appears that Baker released tracts the escrow accounts. Con- interest in the business in con- sidering copy the letter of trans- coming sideration file mittal from contained provides contract Jurisch/Wilburn & Steele credit to the instruction to account, given paragraph 8.02: the Jurisch/Baker and the 308 regard given to the the effect to the letter of transmittal parties with

conduct the parties “The construc- themselves. proceeds in accordance disbursement given parties themselves document, therewith, conclude that the we acts, if reason- contract as shown their interpreted part of the must be able, weight great will accorded be given unambiguous terms effect. its usually adopted by the court.” will be it failed not do because Shevlin, 76 v. S.D. done with the determine what was Huffman (1955); N.W.2d also Davis paid into the account. proceeds Corp., Davis Outboard Marine & Steele account The Jurisch/Wilburn (Minn.Ct.App.1987). gave ledger card, general instruc- which nearly years, For to this three account, administering direct- tions gave transaction effect go proceeds of the account were ed that having account. The Jurisch/Baker into the Jur- owed Jurisch be ledger card stated account Jurisch/Baker account, isch/Wilburn & Steele escrow for this escrow are that the “documents the funds to Jur- which transferred escrow.” held Steele] [Jurisch/Wilburn account, in turn isch/Baker escrow not entitled Although statements are these the funds transferred provisions weight as within to the same Indeed, Wilburn attor- themselves, they indicate contracts funds ney at trial: “Baker’s came testified accounts, sup- the two nection between from the of sale from Jurisch to port the conclusion. Wilburn and Steele argument Wilburn & Steele’s way to the that in distribute funds simply were established escrow accounts Despite the escrow.” Wilburn & Steele’s makes no for the convenience argument arrangement the that escrow considers that Jurisch sense when one only was “convenience” and manda- money Steele more than owed Wilburn & tory, compel fails a differ- evidence to Why owed Jurisch. Wilburn & Steele interpretation of the account ent escrow to agree would context, impor- In this it is instructions. per to an month escrow payments of $468 again expressly that tant to note when benefit account Jurisch/Baker’s security released his interest busi- per & Steele $720 Jurisch owed Wilburn not, expressly impliedly, He ness. conclusion is month? The reasonable payments. release his to the escrow accounts were established that the escrow appears he contrary, To the that released get him to release his Baker’s benefit'to in in con- security his business business. sideration of the escrow fact, right Baker insisted on his accounts mandato- That the escrow at all times. escrow in part by the Jur- ry supported is also require- contract isch/Wilburn & Steele that We conclude contract stock, pledge that all of 14, 1979, Baker, ment into on Jur- November not so re- Wilburn & Steele were isch, when required Steele Wilburn & explanation for this inconsist- quired. The & Steele owed Jur- payments Wilburn by Wil- ency account, is was to that Baker benefit Bank isch be than Jur- rather obligated burn was to transfer funds which isch, protect account, no so was reason there to the Jurisch/Baker which, turn, of the funds pledge Jurisch with a was transfer party As a stock. is to enforce entitled this proceeds We also conclude agreement.3 this paid to the the escrow account were to be Reversed. account because of Jurisch/Baker escrow opinion answer "majority Law are fatal." obvious ... dissent claims in error point number 1 was be- Conclusion of Law wherein the Conclusions of fail[s] out

WUEST, C.J., and totally MORGAN and I am Appellant astounded that MILLER, JJ., concur. argued Findings has not of Fact clearly erroneous or that the Conclu- HENDERSON, J., dissents. sions of Law Appel- were mistakes of law. HENDERSON, (dissenting) Justice lant has three issues briefed and not one of respectfully I dissent. This case was them, my opinion, upon scope touch tried to the circuit court without benefit of of review which must be exercised case, If jury. this Court reverses this it Court, case, as it reviews this for a deter- predicated upon legal one of two legal mination on propriety of the trial assumptions: Findings Either the of Fact court’s decision. erroneous, In Re Estate Ho Before purchase Wilburn & belsberger, 85 S.D. 181 N.W.2d 455 Branding Lounge, Iron (1970) or judge the trial entered Conclu Jurisch to obtain Baker’s law, sions of Law which are mistakes of free and clear of liens or Labor, Dept. Permann v. Dakota South encumbrances. Wilburn & Steele insisted Div., Unemployment Ins. 411 N.W.2d 113 Partnership Agreement Dissolution (S.D.1987). Violating these cardinal rules provide for a release of all inter- review, scope on majority opinion ests and a third liability release of has retried the case on the facts and failed Now, from Baker. important to the most point out wherein the Conclusions of part wife, of this case. Jurisch and his Law are fatal. Rita, party, with Baker as a executed a implied This case was not tried on an Partnership Agreement Dissolution theory. express contract There is no con- Contract for Sale which contained releases. Appellant, between Baker sold his interest in the business to Appellees. It is too the Jurischs rights against and waived all late, simply untimely, prevail for Baker to future transferees of any might interest he Thus, implied on prevail contract. he must have. can How Baker claim he is owed express contract. Baker cannot money when he a release? Such rely any implied on theory, advocacy legal juxtaposition at its zenith. brief, argues in his because he then testimony below, There argues, contra-distinction, express witnesses, that Wilburn & Steele would not tract. previous This cannot be under our purchase this business unless Baker was holdings. Thurston v. Cedric Sanders Co., (1963). completely Essentially, out. 80 S.D. Baker is con- tending made Wilburn & relying upon express Baker is Steele to Jurisch in escrow bought contracts. Wilburn & Steele never benefit of Baker. If one reads the con- heavily Baker’s interest. Baker relies on a documents, promise no such can be Nothing labeled Exhibit 1. Importantly, specifi- found. this trial court requires pay Exhibit Wilburn & Steele to cally (factual- found that Wilburn Jurisch’s to Baker. This debt Exhibit did ly) any representations never made any any not include Escrow Letters of Trans- kind to Baker. If I understand the transac- Furthermore, mittal. Baker’s Exhibit 1 correctly, agreed absolutely Baker provides this contract “... constitutes the him, pay if Jurisch did not recourse only agreements sole and between them Without that respecting obligations property commitment, Wilburn & Steele would not parties.” mine). (Emphasis supplied have entered into the transaction. escape Baker seeks to his own Exhibit. On the Wilburn & Steele-Jurisch con- seeking

He is to elevate an Escrow Letter tract, signed perforce LeMoine J. Baker as a “sec- implied Transmittal into an signed pay ondary party.” places He in two Wilburn & Steele to (Baker). attorney acting notary Jurisch’s debt to him with his own provide cause the contract did Baker enforce- able the escrow deceased, On XXII. Ken C. Graves. public, now 4.04 agreement, Section page 2 of this On about November acquired has “Marlow E. Jurisch express Letter of Transmit- and Steele executed a Rita J. and LeMoine tal. liens, en- free and clear of cumbrances, security and entitle- XXIII. page of this ments whatsoever....” Letter of Transmittal was not deliv- Said certainly is agreement, 8.02 Baker Section First Bank of ered or received South (as I previously a part of April Dakota until twice) mentioned, for it ex- he it presses: XXIV. Baker for and considera LeMoine J. Letter of Transmittal portion A said ($1.00) good Dollar and other tion of One as. reads follows: consideration, receipt valuable Payments February and March have hereby sufficiency of ac is current to been and the account release knowledged, does 4,1989, directly April credit all title, right, or interest to Jurisch-Baker escrow account. property in Exhibit “B” and the language at a typed This was different including, but not lim Agreement, to this place original typing time and than was interests, any security ited Letter of of said Transmittal. Wilburn acquired by contract interest whatsoever language knowledge had no had or otherwise.* Letter of Transmittal been inserted “Otherwise” the word “otherwise.” Note delivery to prior to or its the Bank. agreement as obviously put into this a was agent change An escrow cannot catch-all, under- so that would be parties. It terms of contract between term, general stood only implement parties' can intention. lock, stock, This would out barrel. should not be bound language or escrow any escrow include inserted, language which was without their (in majority documents which Baker knowledge. judge The trial found that catapult him opinion) trying to use to (“Credit payments directly these terms relationship which had into contractual account”) to Jurisch-Baker signed away. completely place added at a different time and than employ original Letter of agent under the terms bank an escrow Transmittal. The escrow cannot They obligations did not more exten- of the Letter of Transmittal. create financial Transmittal, sive than those set out contractual agree, pay Letter of by said absolutely agreement. He bound Jurisch’s debt to Baker. deposit and conditions of the terms negotiating When the execution charged with a strict Branding Iron purchase and sell He is voluntarily assumed. held to duties Jurisch), (Wilburn plus Lounge compliance per agree- strict summarily rejected any If the violates instruc- ment. have a fi- proposals by negligently, ordinarily he is tions or acts Findings nancial to Baker. any occasioned liable for loss breach Fact XII. Communities, duty. Katleman v. U.S. XXIII, XXII, Findings (1977); of Fact and XXIV Inc., Neb. 249 N.W.2d Escrow, Am.Jur.2d, They provide also, clearly p. erroneous. § 18, p. follows: §

* cannot, from Jurisch as Jur- collect sole es Exhibit E reflects that Baker’s Baker, therefore, against bankrupt. reaches event an action of default would be tap wallet. the available but refus- out to This document Baker

3H noted, writer, It is that Baker has V. findings concerning

not asserted that the Wilburn and Steele had an absolute de- on” of Trans- the crucial “add to the Letter fense to action Jurisch to recover Implanted mittal are erroneous. they agreed pay pursuant sums to the sponte triggering herein is a sua review Agreement Business Sale in the form of a great Spontaneity reversal. in the arts right of recoupment unpaid offset or and athletic endeavors but it is sour tribu- principal Hospital balance of the Animal appellate lation to an A record advocate. Any rights may contract. have had legal protect arising be made below to through extinguished Jurisch are Boortz, point. right recoupment. Weaver of offset or (S.D.1981). VI.

The trial court entered seven Conclusions of Law which are not Plaintiff has failed to meet mistakes of law: his burden of

establishing equitable the elements of an estoppel. I. secondary party Plaintiffs status as a VII. Agreement pro- the Business Sale does not Plaintiff has failed to establish facts suf- him

vide enforceable ficient which to recover for al- Wilburn and Steele there- leged fraud. Defendants Wilburn and in to make to Jurisch. suggestions no untrue nor as- true,

serted facts which were not nor suppressed any facts that were bound to II. disclose, promises nor made without inten- Plaintiff has failed to meet his burden of performing tion of the same. establishing that either of the summary, this case should be af- Agreement Business Sale intended to bene- firmed. Baker has no contractual cause of him executing fit such contract. action Wilburn & Steele for collec-

tion of Jurisch’s debt and he has failed to Findings establish that of Fact are III. clearly erroneous or that the Conclusions party beneficiary Plaintiff is not a third are mistakes of Law law. Agreement. of the Business Sale IV. beneficiary

Plaintiff is not a creditor Agreement.

the Business Sale

Case Details

Case Name: Baker v. Wilburn

Court Name: South Dakota Supreme Court

Date Published: Jun 28, 1990

Citation: 456 N.W.2d 304

Docket Number: 16602

Court Abbreviation: S.D.