Enchanted World v. Edwards
Supreme Court of South Dakota
341 N.W.2d 189
It is a general principle of equity that one party shall not be enriched at the expense of another party. Thurston v. Cedric Sanders Co., 80 S.D. 426, 125 N.W.2d 496 (1963). The enriched party may be required to make restitution of the value of the enrichment unless the enriched party has innocently changed its position to such a degree restitution would be inequitable. Enrichment can be unjust if it is a result of money paid by mistake. 66 Am.Jur.2d Restitution and Implied Contracts, §§ 3, 8, 118 (1973).
Enchanted World has been enriched. It received a price for the 1,500 shares of stock which should have been received only if the dividend shares were also sold. We find no error in the circuit court‘s decision that this enrichment was unjust. In making this determination we look beyond the corporate facade and recognize that the stock gift and sale were simply the business maneuverings of Sheldon Reese. His knowledge of the prices is imputed to both of the corporations which he controls. E.S. Gaynor Lumber Co. v. Morrison, 75 S.D. 132, 60 N.W.2d 83 (1953). Mr. Reese knew when he ordered the stock sold that if the stock was purchased for 81 7/8 the buyer would expect to receive the dividend shares when issued.
Edwards is not without fault. Mr. Boyer should have cleared up the details before the sale was completed. But, by the same token, there was nothing out of the ordinary in Enchanted World‘s (Reese‘s) order to sell the stock at 81 7/8. Mr. Boyer had been Mr. Reese‘s stockbroker for seventeen years. He knew well of Mr. Reese‘s long and financially rewarding career in the market and was warranted in assuming that Mr. Reese was aware of the consequences of selling the stock for the higher of the two prices offered.
There was no innocent change of position by the enriched party. The proceeds of the sale had not even been spent when the demand for the dividend shares was made.
We find the appellants’ other grounds for appeal to be without merit. The judgment of the circuit court is affirmed.
All the Justices concur.
ANDERSON, Circuit Judge, sitting for MORGAN, J., disqualified.
In the Matter of the Appeal and Hearing for Robert C. CLARK.
No. 13819.
Supreme Court of South Dakota.
Argued Nov. 18, 1982. Decided Nov. 16, 1983.
340 N.W.2d 189
Krista Clark of Dakota Plains Legal Services, Eagle Butte, for appellant Robert C. Clark.
Janice Godtland, Asst. Atty. Gen., Pierre, for appellee South Dakota Dept. of Social Services; Mark V. Meierhenry, Atty. Gen., Pierre, on brief.
HENDERSON, Justice (on reassignment).
Appellant, Robert Clark, appeals a circuit court order affirming a Department of Social Services’ (Department) decision denying appellant Clark subsidized energy payments under South Dakota‘s Low Income Energy Assistance Program (LIEAP). We affirm.
FACTS
Appellant Clark farms in Sully County, South Dakota. Mrs. Clark is a nurse‘s aide at Oahe Manor, Inc., and a part-time waitress. During December of 1980, appellant Clark applied to Department for LIEAP payments. Since LIEAP required verification of all income, appellant Clark‘s 1979 income tax return was filed with the Department. The Clarks are homeowners whose 1979 joint income was approximately $30,589.00. Appellant Clark‘s application for LIEAP energy assistance payments was denied based upon his farming gross profits of $23,904.91 reflected on his 1979 Federal Income Tax Return, Schedule F. The maximum gross income allowed in 1980 for energy assistance eligibility for a family the size of appellant Clark‘s was $16,890.00.
Examining Mr. Clark‘s 1979 tax return, we find the following “actual cash outlay” deductions: (1) Labor hired $487.41; (2) Repairs and maintenance $3,935.95; (3) Interest $6,099.84; (4) Rent of farm pasture $7,617.00; (5) Feed $3,040.59; (6) Seeds, plants purchased $1,957.90; (7) Fertilizers, lime, chemicals $95.50; (8) Machine hire $4,751.00; (9) Supplies $806.11; (10) Veterinary fees, medicine $327.57; (11) Gasoline, fuel, oil $6,111.09; (12) Taxes $2,345.53; (13) Insurance $2,891.59; (14) Utilities $605.32; (15) Freight, trucking $355.53; (16) Loss of five calves $1,000.00; and (17) Illegible entries totaling $407.50 ($10.00 of which appears to be for “box rent“). These “cash outlay items” total $42,835.43 and not the $37,797.43 figure reflected on Mr.
ISSUE
DID SOUTH DAKOTA‘S MANNER OF MEASURING INCOME FOR ITS LOW INCOME ENERGY ASSISTANCE PROGRAM VIOLATE FEDERAL REGULATIONS REQUIRING EQUAL TREATMENT FOR ALL APPLICANTS AND THE EQUAL PROTECTION CLAUSE OF THE FEDERAL AND STATE CONSTITUTIONS? WE HOLD THAT IT DID NOT.
DECISION
Viewing the income and economic circumstances of appellant Clark and his family, they are not an eligible household, as defined in
The State of South Dakota was founded on a concept of self-reliance.
In the recent decision of Crawford v. Janklow, 710 F.2d 1321, 1327 (8th Cir. 1983), the United States Court of Appeals for the Eighth Circuit examined South Dakota‘s 1982-1983 LIEAP and held: “[I]f the states wish to narrow the number of persons eligible for assistance, they must exclude persons from the top of the class described by Congress, in terms of income and proportionate energy costs, rather than from the bottom.” There can be no doubt that, if by any stretch of the imagination Congress could have intended to help the appellant Clarks of this Nation, appellant Clark‘s income would certainly be at the upper “top of the class described by Congress.”
Congress did not set a National income eligibility standard for LIEAP.
Naegle, id., stressed: “To be in compliance with the federal regulation § 160.154(g), the state must treat all applicants equally, regardless of their source of income.” Further reinforcement for this view is discovered as one reads on in Naegle, 525 F.Supp. at 1033: “As the prior portions of this opinion have sought to make clear, however, the use of different methods of income calculation for different classes of applicants simply because those applicants have different sources of income lacks any ‘reasonable basis‘.”
The Department‘s method of income calculation treated all applicants equally; they were all judged by their gross monetary intake as either income or profit which was clearly within the state‘s “considerable discretion” to use as an indicia of income. No applicant was allowed to subtract income tax deductions from his gross income. All were treated alike. The only way the state could determine gross income for the self-employed was to look at gross profits. The state looked at total income for the non-self-employed because the non-self-employed do not have “gross profits.” We fail to see any reason for overruling the Department‘s considerable discretion to define income as gross monetary intake in favor of appellant Clark‘s nebulous measurement based on tax deductions.
As for appellant Clark‘s equal protection argument, Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970), set forth the standard for testing the validity of classifications in the area of social welfare. Any regulation adopted by South Dakota must be upheld as long as it is rationally based and free from invidious discrimination. South Dakota, through Department, might not have adopted a perfect classification through its regulation. This does not make the state regulation invalid, for the regulation need not result in mathematical precision, and may well have some inequality without offending the Constitution. Califano v. Jobst, 434 U.S. 47, 98 S.Ct. 95, 54 L.Ed.2d 228 (1977). Simply because there is another method to attack a problem does not mean that the state‘s method was wrong. Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed.2d 285 (1972).
Appellant Clark has conceded that the classification in this case involves neither a fundamental right nor a suspect classification. Thus, we “must decide only whether it bears a rational relationship to the purpose of the legislation.” Budahl v. Gordon & David Assoc., 287 N.W.2d 489, 492 (S.D.1980). As mentioned above, the Clarks were not an elderly or disabled household. Mr. and Mrs. Clark‘s household is not a “low-income household” and is thus excludable from energy welfare by South Dakota. Such exclusion shores up funds for the elderly, disabled, and truly low-income people in this State who need help. Therefore, the classification adopted by the Department is rationally related to the purpose of the legislation.
Affirmed.
FOSHEIM, C.J., and DUNN and MORGAN, JJ., concur.
WOLLMAN, J., dissents.
In the Matter of the Appeal and Hearing for Robert C. CLARK.
No. 13819.
Supreme Court of South Dakota.
Decided Nov. 16, 1983.
WOLLMAN, Justice (dissenting).
In December of 1980, Clark, who farms and ranches near Gettysburg, applied to the Department for LIEAP payments for himself, his wife, and his four children. The Department examined Clark‘s 1979 tax return and determined that Clark was ineligible for assistance because his gross profits from farming, $23,904.91, exceeded the maximum income for eligibility for a family of six, which was $16,890.00. Clark contends that the Department‘s refusal to permit him to deduct his 1979 farm expenses of $39,219.41 in calculating his household income violated federal regulations governing the LIEAP program and constituted a deni-
The Department‘s program was created to administer funds designated by Congress to be used for energy assistance payments to eligible households within South Dakota. Eligible households, as defined in
Clark contends that the Department‘s eligibility guidelines for farmers violates
Under attack in Naegle v. Dep‘t of Social Services, 525 F.Supp. 1030 (1981), was that portion of the Department‘s state plan which determined LIEAP income eligibility for farmers and other self-employed individuals by using the previous year‘s federal income tax return and which determined the eligibility of other persons by annualizing their previous 90 days’ income. The effect of annualizing quarterly income in Naegle was to deny energy assistance payments to the plaintiffs because their previous 90 days’ income, when multiplied by four, exceeded the income eligibility guideline, whereas their actual annual incomes for the previous year were below the guideline figure. The court held that the state plan constituted a manifest violation of
In reaching this decision, the court stated, “Clearly, the state had considerable discretion to define income, and had it either used last year‘s income tax forms for all applicants, or used the prior 90 days income multiplied by four for all applicants, there would have been little to challenge in the plan.” Naegle v. Dep‘t of Social Services, supra, at 1032 (emphasis in original). The Department takes comfort in this language, arguing that inasmuch as the Department looks at the gross income of all applicants, Clark is being treated no differently from any other applicant. Although superficially persuasive, the Department‘s argument will not withstand analysis, for as Judge Porter stated in Naegle, “To be in compliance with ...
I would hold that the Department violated the mandate of