*1
845
of its discretion to
exalt technicalities over the
precipitantly
sentiment
this court in
predominate right
public
recognized
Las
Vegas Chamber Commerce or the exercise
its discretion
in favor of the
to communicate
public right
“clearly
branches of
representative
government
popular sentiment on a
Commerce,
Vegas
issue or issues.” Las
Chamber
particular
Nev.
106
at
TOPAZ MUTUAL Respondent/ MARSH, v. FLORENCE Respondent, and VIRGIE ARDEN Cross-Appellant, ARDEN, Deceased, JOHN Cross- Estate Respondents.
No. 21068 P.2d 606 September
Bible, Miller, Wadhams, Reno, for Hoy, Appellant/ Trachok & Inc. and Cross- Cross-Respondent Topaz Company, Mutual Virgie Arden. Respondent Allison, MacKenzie, Hartman, & Russell Soumbeniotis Pavlakis, City,
Mike Carson Respondent/Cross-Appellant. Wilson, Reno,
Gregory F. Estate of John Cross-Respondent Arden.
OPINION
Per Curiam:1 originally Topaz docketed in court to reflect that 1 Thismatter was this Company, parties were the to this Mutual Inc. and Florence Marsh note, however, appeal cross-appeal. We that Florence Marsh’s “Notice 6, 1990, challenges: Cross-Appeal” specifically of filed March Fact, portion Findings Judgment of Law and That of the Conclusions 19, January which limited entered in this matter on Florence defendants, recovery against Virgie Marsh’s Arden and the Estate of Arden, Deceased, $5,000 each, portion John to from that 19, Judgment January on Verdict entered in this matter on 1990 which recovery Judge ruling that the maximum resulted from Torvinen’s defendant, Company, Topaz Mutual Inc. on the Contract and $73,001 Judge ruling Note was and from Torvinen’s that Florence
Facts is a owned Inc. Company, (Topaz) privately Mutual Topaz County Douglas to a portion water utility supplies that public Virgie Arden owned John and Lake. Topaz near Topaz Corporation. Topaz Development corporation, its through parent who, 1986, in citizen (Marsh) private is a Florence Marsh her in stay to fund opportunity for an investment looking Barbara, On March 21 California. retirement home in Santa debts, retire system the water improve to year, ostensibly whereby with Marsh she loan commitment entered into a at an interest a maximum of would loan a loan commit- According annum. percent per rate of sixteen the loan through repay ment agreement, Topaz expected was negotiated The loan commitment on its customers. surcharge in partner Nevada Skip (Roggenbihl), in part Arden, (NLA). president John as Association Lands agreement. and Marsh Company, Mutual 23, 1986, terms of the loan commit- required by July On ment, for the loan financing Topaz requested Service Commission from Public the amount $73,001.00, amount of (PSC). PSC a loan approved for a at least three banks contingent upon Topaz approaching could it concluded that obtain lower rate. Because interest elsewhere, give final rate PSC refused a lower interest Intent Marsh could not maintain an action for fraud the basis 21, dated March Loan 1986. Accordingly, caption we have modified the on this court’s docket to reflect Virgie cross-respondents Arden and the Estate of John Arden are in this matter. Further, cross-appeal, docketing filed Marsh’s notice of statement June answering opening cross-appeal brief and brief on filed March May challenge reply cross-appeal filed all brief on damages unjust district court’s limitation of enrichment recoverable from Virgie duly Arden the Estate John Arden. These documents all Bible, Miller, Wadhams, Hoy, *4 upon served the law firm of Trachok & Arden, Topaz Virgie Company, upon counsel for Mutual Inc. and and Wilson, attorney Gregory April F. for the of John Arden. On counsel Estate 25, 1991, Bible, Miller, Hoy, law firm of Trachok & Wadhams filed a reply answering and cross-appeal brief brief on which addresses the issues cross-appeal. on raised Marsh Notwithstanding docketing appeal, of notice service Marsh’s of statement briefs, attorney response to file and Wilson elected not a brief the issues cross-appeal, join answering on reply raised Marsh in the and brief 1991, 25, cross-appeal April appear- brief on filed enter an or to otherwise Consequently, court on ance this behalf the Estate John Arden. this 9, following argument September matter was submitted for decision oral on 1991, upon arguments oral for briefs and tendered counsel Florence Topaz Company, Virgie Marsh and Inc. Mutual Arden. loan, but no one informed Marsh of the to the Marsh PSC’s decision. the Ardens sold their corporate On October Estates, Ranch Inc. Topaz, Topaz (Topaz properties including — Ranch), $7.5 NLA for million. The corporate and others—to original that date showed that the partners minutes of Topaz (Martin) V. Ruff and Gordon Tony Wesley Martin NLA— (Ruff) well as the Ardens’ other Topaz directors of as —were NLA, stock was issued to Forty Topaz’s corporations. percent Ruff) enact (Martin and NLA was authorized to all business funding and sale of Topaz, including properties. on behalf thirty percent The Ardens issued a for their sharehold proxy Ruff. interest in to NLA and was told that NLA and its current partners Martin, Marsh —
Ruff, the Ardens’ Roggenbihl purchasing properties —were authority and had to act for the Ardens. She also told On October Topaz. NLA had become Marsh part $121,000.00, in the amount of with the wrote a check to Topaz that the would be used to understanding pay system funds She the check to who later gave Roggenbihl, improvements. that she make her check out to NLA rather than to requested $121,000.00 to and Marsh issued a check for NLA. In Topaz, note NLA and its return she received promissory well contract with Topaz signed partners as a partners, Marsh, the borrowers used most of the of NLA. Unbeknownst in an to forestall foreclosure on attempt loan unsuccessful Ranch, was not mentioned in the loan agreement, property $6,000.00 procur- received as a commission for Roggenbihl each received Virgie the loan. John and Arden ing loan, money system improve- purchased Marsh’s and none interest promised pay- ments. Marsh received two of the note. ments on NLA, filed suit February, against Topaz, In Marsh Ardens, Martin, Ruff, The district court entered Roggenbihl. NLA, Martin, Ruff, and against a directed verdict ruled that note. The court also promissory their on the con- recovery against Topaz allowable Marsh’s maximum the PSC had because of the limitation tract was verdict, to a the district court on the loan. Pursuant placed $73,001.00, with together interest pay ordered dating annum from percent per calculated at a rate of sixteen in the loan commit- language December Based on the 1986. note, the district court ment and the contract and agreement $73,001.00, in the sum of with mortgage imposed equitable interest, in favor of Marsh. the assets
850 verdict, In contained in the the interrogatories jury answers Ruff, NLA, Martin, Roggenbihl liable on the found Topaz, $121,000.00. at damages fraud and assessed one-fourth of count fraud, also liable for jury again Later the found Topaz $121,000.00. There no damages assessed at one-fourth net damages, for this allocation of but the result is explanation the found were one- parties that each of five liable assessed $30,250.00. fourth of total loss or Marsh’s Martin, Ruff, and against Punitive damages $5,000.00, $10,000.00, also in the amounts of assessed $20,000.00, attorney’s Marsh was also awarded respectively. to be five In parties. fees in the sum of the paid addition, the awarded to Marsh each of against court Ardens, $10,000.00, total on her claim unjust the a enrichment. and Marsh all of appealed, cross-appealed court’s
parties on issues the district limitations of equitable mortgage unjust By the award of enrichment. 28(h)2 stipulation to NRAP which was filed Decem- pursuant trial, ber the defendant at to file the Topaz, agreed brief as opening appellant/cross-respondent.
Discussion Claim Damages on Fraud each item of damage No. 29
Jury provided Instruction evidence. preponderance must be proved convincing evidence” and not observes that “clear and correctly correct burden of proof of the evidence” “preponderance context, jury out with the fraud claim. Read respect However, misleading. jury instruction is received instructions it of the burden of proper on fraud that informed adequately 25, No. which outlined essential Jury Instruction proof. Marsh, fraud, including damage provided elements convincing each element must be clear and evidence. proved Instruction No. 27 defined “clear convinc- Additionally, Jury mere of the evidence.” “beyond a ing” preponderance con- Where other instructions inform the information instruction, court give tained trial need proposed Valley Grading, Colorado Environments v. instruction. proposed 28(h) part: provides in 2 NRAP below plaintiff in the court cross-appeal, the involving a In cases parties unless the purposes, appellant all be deemed the shall orders. agree the court otherwise otherwise added.) (Emphasis
851 Thomas, (1989); v. 82 Beattie P.2d 105 Nev. 779 579, 583-84, (1983); see Gordon v. P.2d Nev. *6 (no Hurtado, (1980) reversal P.2d 327 Nev. 609 96 is technically not correct which is of instruction giving jury where, all of instructions into consideration taking required instructed). the Because sufficiently fairly and jury given, of the standard' jury informed the adequately related instructions evidence, No. was not so Instruction 29 convincing of clear and reversal. as to warrant misleading Ruff, Martin, and Topaz, found five jury parties NLA, — fraud, of damages but awarded Roggenbihl guilty— found jury unequivocally each against party. that the total amount of of fraud and determined Topaz guilty acts was Marsh because of the fraudulent suffered damage $121,000.00. over to Topaz The Ardens had turned control Ruff, NLA, Martin, sufficient evidence to and this provided and acts. and the Ardens Topaz hold liable for their fraudulent Topaz dissent, claim, Ruff were “rogues” that Martin and as does the But, who turned it was the Ardens they and that to be. proved in the fall of and to Martin and Ruff 1986 over control of them to act for Topaz. empowered that, observed on appeal has
Concerning damages, Topaz for fraud against Topaz repre- awarded damages “The amount four of the and note divided sents the amount of the contract $30,250.00).” 4 ($121,000.00 equals divided defendants case, claim was loss on the fraud the facts of this Marsh’s Under found the five nothing. jury Once either damage and her total liable to her for fraud parties conduct, each party because of their fraudulent for the total severally liable have been found jointly should Inc., Limited, (Idaho 701 P.2d Price v. Aztec amount. See where (rule liability 1985) prevails and several joint Ct.App. purpose). execution of common act in concert in tortfeasors However, that the fraud appeal claimed on since Marsh has not jury or divided restricted damages improperly issue, we decline to alter not briefed this have parties leave those and we damages imposed, the fraud Marsh’s favor by judgment and entered as assessed damages court. district forced to proceed have been that Marsh should argues claim, both, but not contract or fraud on either the
against will Marsh a permit resulting that the awards plaintiff assert several disagree. We A recovery. double on theories. It damages claims relief be awarded different see assert contractual claim plaintiff uncommon to on facts asserting also a cause of action fraud based surround Amoroso Con performance. execution and See ing contract’s Lazovich, v. 107 Nev. 810 P.2d str. Lazovich and (1991). on claims and contract damages The measure of fraud However, Marsh is not to recover permitted are often same. She plus any punitive damages more than her loss assessed. total parties can of the five extent any execute the assets of against them until she recovers her full judgments entered damages.
The Contract Claim the loan is void because it lacked PSC
Topaz argues that
for the full amount. Other states’ statutes declare
utility
to a
without
public
transaction void ab initio if it is made
*7
See,
public
of the commission that
utilities.
regulates
107(c)(4) (1991
also
e.g.,
Supp.);
Vt.Stat.Ann.tit.
see
§
Utilities,
(N.M. 1949) (the note
v.
No owned under privately public any of and in the State of Nevada shall issue operating laws endorser, security, obligation guarantor, or assume any otherwise, other surety any security any or in respect until, corporation, only firm or unless and and person, extent, by written order of the commission. authorized 704.325,3 use of prohibits unapproved See also NRS 704.323(1) NRS and 704.325 do not render proceeds. expressly statutes, effect, an unauthorized loan or transaction void. in any voidable security make an loan or transaction unapproved lender, interest, utility, the or the Public public in party regulate the statutes that Normally, public Service Commission. effect, loans should be full force and and or other given utilities have not PSC approval transactions with utilities which secured provides as follows: 3 NRS704.325 commission, shall, apply utility the consent public without No any specified in the purpose not security any proceeds thereof to any or order, order, any purpose in excess or to supplemental commission’s order, or otherwise purpose in such for such the amount allowed of such order. contravention However, the unenforceable. thus voidable be deemed will different result. to reach us compel case of this facts make to always intended to a loan to improve the utility’s delivery system. agreement water While the to loan and note subsequent promissory indicated that PSC approval was necessary, the fraudulent Topaz, through conduct its officers directors, to represented Marsh that approval had been secured and that it make to the loan in the appropriate full amount. In reliance on the false representation, Marsh issued her $121,000, check in the amount of but none of the money was for the system’s used improvement, and bulk of funds was ranch, diverted to forestall foreclosure on the Ardens’ which was loan, an asset of Topaz. permit If we to claim that the which was consummated fraudulent acts of its officers and directors, 704.325, is pursuant unenforceable to NRS we will be permitting utility from own profit its wrongful conduct. This we will not do.
To enforce contract to the limit of the PSC approval would allow full escape for its responsibility misrepre- Marsh, sentations and would who penalize loaned the full sum requested good faith and on the assumption that Topaz would utilize the loan proceeds improve utility’s system water debt structure. “The elementary conceptions justice most public policy require that the shall bear wrongdoer the risk of the uncertainty which wrong his own has created.” Bigelow v. RKO Pictures, Radio (1946). 327 U.S. duty good faith and fair is dealing created law in all contracts. K Mart Corp. Ponsock, v. 103 Nev. (1987). 732 P.2d Equitable estoppel applied prevent injustice manifest hardship injured as in Inc. party Cheqer, v. Painters & *8 Decorators, 609, (1982), Nev. 98 665 P.2d where a hospital 996 relied to its detriment on a letter of approval specified a timetable within which act or to lose to proceed authorization the with and court that project, Department this held the Human Resources estopped was from vacating its previously issued letters of approval.
Equitable estoppel functions to
the
prevent
assertion of legal
that in
rights
equity
good
and
conscience should
be
available
Dahnke,
to a party’s
due
conduct. United Brotherhood v.
102
20,
Thus,
(1986).
Nev.
854 directors, it officers and and by Topaz’s the misrepresentations obtained, the had been was to her that PSC represented now to from estoppel applies prevent principle equitable Therefore, we is conclude the contract voidable. asserting that loan enforceable ruling that the that the district court erred $73,001.00, PSC had expressly the amount the only to approved. service, they on necessary have a a monopoly Because utilities and the public, parties are to regulated protect ratepayers, not only with them. We are concerned who transact business 704.323(1) a upon good of NRS and 704.325 about the impact utility, but also upon faith lender is defrauded who will on ratepayers Topaz. that the have impact judgment con- ‘to agency protect power “The is purpose regulatory that costs against prices’ by assuring passed- sumers excessive just are and reasonable.” Alliance utility into rates through Orleans, 949, Energy (La.Ct.App. v. New 578 So.2d 972 Aff. F.P.C., Co. 1991) Pennsylvania Power v. 343 U.S. (quoting charges made (1951)). specifically Nevada law requires must be and reason- utility just for services rendered public (NRS 704.040(1)); every unjust able and unreasonable (NRS 704.040(2)). is unlawful charge conduct of the officers Given fraudulent and unauthorized judgment none of the burdens of this Topaz, directors its rather borne charged be on or but passed ratepayers, should Commission, v. Service Nevada Power Public solely Topaz. (1989) (a may P.2d judgment 105 Nev. rather equity it the owners’ require utility satisfy through We ratepayers.) to be on to the than to the cost permit passed who were deprived that neither the ratepayers, therefore hold them, Marsh, nor who sought provide the PSC protection be forced proceeds, with the full amount of the loan should parted conduct and manipulative bear burden created and its officers breach of contract attributable her the full amount of contract directors. Marsh entitled to of which be Topaz, interest none damages plus or charged ratepayers. passed Equitable Mortgage Assessment of as the con- well agreement Based on the loan commitment note, equitable mortgage imposed court tract district $73,001.00. part: contract and note states in against Topaz of individually are declared signers of this contract
855 jointly responsible of this note and repayment agree to underwrite the contract by pledge personal credit as well as income derived sale water and other assets of from Mutual Co. as security for the amount of principal $121,000.00 and all accrued interest when due. added.) (Emphasis $121,000.00, The note in favor of Florence Marsh for Martin, Ruff, Association, and Roggenbihl as Nevada Lands
Nevada General contains the Partnership, following language:
This note is secured the assets Topaz Mutual Water Inc., Company a Nevada Corporation in an amount equal- the face ling value of this promissory note. The present total assets of Mutual Water Company Inc. include $1,335,000.00 of water office rights plus and physical assets $1,469,725.00. of: added.) executed, At the (Emphasis time these documents were Ardens, as majority stockholders of Topaz, as well as the officers, principal had relinquished control of Topaz to NLA. Smith, Inc., 47-8, In Nee v. L. C. Nev. 97 624 P.2d 7
(1981), this court stated: “A mortgage usually is considered to be a nominal conveyance, abeyance, held in of certain as a property security for the payment of a certain debt. If the parties intend to create a mortgage, no form particular of instrument or words is to create necessary (Footnote omitted; an equitable mortgage.” omitted.) citations We do not the district question court’s reasons However, imposing equitable mortgage. Topaz argues that to be property impressed with this lien was not sufficiently documents, therefore, identified in the the equitable lien cannot be For an imposed. equitable to be mortgage imposed, there be must an identifiable “In res. order for an agreement to give a to be mortgage considered an equitable mortgage it must clearly describe or out the point property intended to be charged with the lien.” Mortgages (1949 1992). 59 C.J.S. & Supp. § In judgment, its the district court the lien on imposed the assets and income of Topaz. This is what the documents specifically stated would be the security to the loan guarantee repayment. terms,
While the defined
property
described
broad
agreed
language, and the identification of the res as the
profits and income of a company is a sufficient identification of
to be
property
encumbered
an equitable lien. See Sund
Dist.,
(Pa. 1933) (an
heim v. School
Since $121,000.00 subject to be to the interest and the plus property described, equitable the sufficiently imposition lien was the and the amount of lien the district court affirmed by lien $121,000.00. be increased to shall Unjust Enrichment unjust against enrichment claim court limited the district $10,000.00 a of and did not Arden to maximum Virgie
John and
decision, but
reserved
to the
for its
instead
jury
submit the claim
of
to make at the conclusion
the trial.
that decision for itself
issue, we
the
reservation of this
con-
ruling
Without
court’s
a
recovery
the
to maximum
limiting
clude
($87,000.00)
the
went to
portion
proceeds
A
loan
major
error.
twice on
the
in order to
foreclosure
postpone
Federal Land Bank
improve-
Some of the
funded
proceeds
the Ardens’
ranch.
the
to
portions
ranch. Other
loan
went
proceeds
ments on the
to
including
commission
parties,
various
Marsh did not know about.
to
retention of a benefit
the
unjust
enrichment is
“Unjust
another,
money
or
of another
property
or
retention
loss
justice
good
against
principles
equity
the fundamental
Benedetti,
360,
Dev. v.
103 Nev.
Nevada Industrial
conscience.”
n.2,
(1987).
observed
n.2
This court has
363
P.2d
804
741
“are a benefit
unjust
elements of
enrichment
that the essential
appreciation
plaintiff,
conferred on the defendant
benefit,
and retention
of such
and acceptance
defendant
McDonald,
v.Mtg.
of such benefit.” Unionamerica
97
defendant
(1981).
P.2d
Nev.
on a
benefits the owner
property
foreclosure
Postponing
time to
reducing
by allowing
his or her total debt and
additional
to
benefit
made
also
Improvements
property
a sale.
negotiate
Thus,
postpone
used to
foreclo-
proceeds
owner.
property
benefited the
indirectly
the ranch at least
improve
sure
permitted
have
benefited them. If
may
directly
Ardens and
Ardens,
or court
jury
benefits
consider these additional
$10,000.00.
than
benefited more
See
they
conclude
Artukovich,
Truck,
(Ariz.
v.
Conclusion affirm the
Accordingly, judgment against we fraud increase the contract We judgment plus interest. also affirm the of an imposition equitable levied mortgage assets and income and remand to the Topaz’s district court to Finally, increase the amount of this lien as indicated. we reverse and remand for a new trial as to the extent of the Ardens’ unjust enrichment.
Young, J., dissenting: cases, cases,
Respectfully, I dissent. like hard make Complex bad law—and this is indeed a complex case. It difficult presented the trial questions jury, judge, and our court on appeal. Moreover, the questions considered atmosphere *11 Marsh, profound for a of advanced sympathy person years who cynically was swindled out of three by unscrupulous men, Roggenbihl, Martin and Ruff.
It has been well said that a camel is a horse a put together by is, committee. I that the suggest majority figuratively opinion It speaking, judicial only camel. error commit- perpetuates below, ted but enhances it at the level. I appellate respectfully submit, hereinafter, for reasons stated that the matter should be sent back for a new trial before a instructed on both properly and liability damages.
Facts Events the instant lawsuit are underlying as follows: In Verdi, first, on Roggenbihl began living property Marsh’s in a later, in camping trailer and her home while she was away receiving medical treatment. He became her confidant and Late in helper. paid Roggenbihl a ten percent commission for her in the of water assisting rights. sale She apparently had so much confidence in him that at one time Marsh wanted him secretary to serve as a director and of her corpora- tion. utility, learned that owned was Topaz, privately to its water He to
seeking financing improve system. sought create a financial that would be beneficial to both arrangement Marsh and to himself some of finder’s Topaz through type —and fee if a loan was made. Loan,”
An to agreement, signed by Topaz entitled “Intent was and on It for a maximum loan provided Marsh March 1986. Marsh to in the amount of at sixteen Topaz (a) were limited to:
percent purposes expressly interest. Loan paying existing improve- the balance of an loan for Phase One ments; (b) for parent corporation the balance due a paying One; (c) paying made for Phase contractors
advances Phase Two. for to be under improvements completed suppliers was with Marsh’s assistance and agreement, prepared The her, obligated provided reviewed carefully (1) a approval “prior Marsh with: PSC’s provide copy (2) a all assignment for “note and of any request funding”; from individual customer service surcharge collections hook-up from each collection of new fees.” 23, 1986, July Four months later on submitted its law) (as required approval the PSC application sixteen percent in the amount with financing concluded that an institutional lender would interest. PSC a lower rate interest. give Topaz Consequently, probably Marsh upon Topaz PSC conditioned its loan from at three other lenders to determine if first least approaching money percent. at less than sixteen No such would be available ever made Phase Two by Topaz. improvements effort was borrowing by Topaz. without ultimately completed Ardens, (John Arden died elderly poor also health trial), retire from real estate and on development before wanted to into of their October entered a contract sale properties NLA, a Roggenbihl, Ruff and Martin. partnership with of sale was the Ranch which was Included in contract Bank; Land encumbered a first deed trust Federal contract, was in default. In the note secured trust deed all the Arden agreed purchase NLA not properties Ranch) but assume all liens and encum- (including brances. to the PSC’s decision Topaz’s early prior In October (the decision was filed to borrow *12 permission application Marsh that the 1986), fraudulently told Roggenbihl November to fund met and asked Marsh had been loan conditions 8, 1986, to a check Marsh made out On October loan. $121,000.00 gave it in the amount Company Mutual Arden who Virgie this to mentioned Roggenbihl Roggenbihl. not be accepted check could told him that the immediately by PSC. had not been application approved the Topaz because fraudulently check to Marsh then returned the Roggenbihl an abiding Having would be required.1 her another check told dated October him check gave in Marsh Roggenbihl, confidence $121,000.00, not to 21, 1986, payable Topaz, in the amount Ruff, to NLA. Martin or but Roggenbihl, what was entitled of this 1 In prepared request, support 1986) (dated for the first which, time, October “Contract and Note” borrowers. were shown as as well as Ruff and he, Martin, Topaz, (who were with the Ardens had no communication Marsh the Intent to Loan the loan after concerning directors of Topaz) $121,000.00 July until The March 1987. signed was checking NLA was into NLA’s deposited check payable of the fraud totally perpe- unaware account. The Ardens July check to NLA until nothing and knew trated NLA ever months later. None of the was almost ten by Topaz. received NLA, (1) received: a promis- for the check to
In return NLA, Martin and signed by Roggenbihl, note executed sory Ruff; (2) Note Martin Roggenbihl, a Contract and the Contract and Note and note Although promissory and Ruff. they signed by assets of were not Topaz, purported pledge nor on its behalf. by anyone corporation difficulty experienced by jury
The verdict alone reflects the The was on the considering jury permitted pass the issues. (Contract October on the contract and Note dated liability issue of 18, 1986), from the breach. damages resulting alleged but not on $73,001.00. set at arbitrarily damages The court conditionally to understand how the amount I am at loss ($73,001.00), after fraud the PSC three weeks approved Ruff, Martin and by Roggenbihl, probative perpetrated conditionally if the PSC had damages. Presumably, approved ($93,187.84), this full in the sought Topaz application amount of damages against would have been as the amount designated never executed or on its for breach of a contract a loan which never would repay probably behalf and for failure have been made! when the deter- reign supreme jury
Confusion also seemed to interrogatories, to special mined for fraud. In answers damages at for each of five defendants jury damages set “V4 $121,000 awards total separate + interest.” The five $151,250.00. a total of Did the intend jury intended, $121,000.00? presumably If was $151,250 have been “Vs + inter- award each would not instructed on legal principles jury apparently est.” contributed liability probably and several governing joint sincere, apportion to' tort misguided, attempt to a but perhaps damages. of the sum fact was the treatment Another perturbing “V4 “
$121,000 court + May simply ignore + interest.” was instructed that dam- interest” in the verdict form? difference, between the actual value of any, be the if ages “shall she have received and the value which would that which [Marsh] been true.” had misrepresentations had if the fraudulent *13 damage on the tort awarded interest trial court 860 “with interest thereon at the
($30,250.00 dependent) for each (the February complaint date was legal rate from 1988” “ a + filed). jury, awarding that the sum respectfully I submit interest,” the court’s instruction. If the strictly following was true, would had been have misrepresentations fraudulent October commencing received sixteen interest percent Note). date until the fixed (date jury of Contract and From this 21, 1989) thirty-five months (September in its verdict damages later, $400.00 have amounted to over per the interest would on the sums awarded.2 month defendant per discharged, was jury that before the suggest I respectfully to resolve these have made an effort and counsel should court this could jury, instructions to the issues. With disturbing proper been done. readily have sum, It was frustrating assignment. a jury experienced
In with determining liability contract task of given daunting hereinafter); (as forth it was will be set insufficient instructions it was damages; contract determine opportunity denied and its award of interest damages; on tort instructed inadequately the court ignored by was damages of tort component following instructions. dutifully although jury with the alone in connection suggest problems I warrant a new trial. taint the judgment two docu- against Topaz predicated upon claim The contract ments, in the amount of October note'dated promissory $121,000.00 her survivors3 and a document to Marsh or payable 2 Arguably, only percent computed the sixteen interest should be until the $121,000.00 (February 1988). complaint was filed If had been awarded joint liability, with and several interest would have amounted to year per per period appro or over month for whatever be would priate. note reads as follows: promissory
3 The NOTE PROMISSORY Dated: October ASSOCIATION, A received, LANDS undersigned, NEVADA value For the transaction if its’ principal office for Partnership, with General Nevada #B, Reno, hereby promise to Nevada 89502 does Gentry Way at 425 business of One Hundred principal sum survivors the Marsh or her pay Florence thereon ($121,000.00) together with interest Twenty Dollars One Thousand eighth decreasing from (16%) balance per annum on percent of sixteen eighth of each October, Payments are due paid in full. day until month. days. within 60 on line to come is scheduled Service Commission Public Commission Public Service paid will be until principal Interest (16%) Payments on percent per annum. the rate of sixteen comes on line at thereafter. will commence principal and interest Inc., Company Water Topaz Mutual by the assets of This note is secured promissory value of this the face equalling amount Corporation in an Nevada Company Inc. include Mutual Water present total assets note. The *14 and Water Inc. Topaz Company “Contract and Note With entitled Martin, V. Ruff and William R. Roggenb Gordon Tony Wesley ihl.”4 $1,335,000.00 rights plus physical of water office and assets of: $1,469,725.00. demand, notice, protest diligence
The maker hereof waves and and the maker fully promises hereof further that if this Note and the interest thereon are not provided, pay expenses, including will all paid as above it costs and fee, attorney’s collecting any reasonable be incurred in this Note or part thereof. Nevada Lands Assoc. Partnership A Nevada General s/. Martin, Tony Wesley Partner s/. Ruff, Gordon V. Partner si. Roggenbihl William R. October, me, day personally appeared On this 13th of before aforesaid, notary County undersigned, public in and for the and State MARTIN, RUFF, V. AND TONY WESLEY GORDON WILLIAM R. ROGGENBIHL, general person partners, known to me to be the described in instrument, acknowledged and who executed the within and who to me that freely voluntarily they purposes executed the same and and for the uses and mentioned, therein s/. LORRAINE W. YOUNG 4 TheContract and Note reads as follows: WATER COMPANY CONTRACT AND NOTE WITH TOPAZ INC. MARTIN, AND TONY WESLEY GORDON V. RUFF AND WILLIAM R. ROGGENBIHL agrees Topaz Florence Marsh to loan the sum of Mutual Martin, Ruff, Tony Wesley Rog- Company and Gordon V. and William R. personal genbihl agree who loan with sufficient assets as to secure said guarantee principle the aforementioned Interest the whole amount of [sic]. annually, paid eighth on the payments are to be made at the rate of 16% every year in no less than one of month. Terms of the loan shall be effect for longer years signing agreement and no than three from from the date of this signing of contract. the date this individually jointly signers responsible The of this contract are declared agree pledge contract repayment of this note and to underwrite the water and other
personal credit as well as income derived from sale of assets security principal Topaz Mutual Co. as for the amount all accrued interest when due. timely by Topaz Mutual Co. or failure make In the event default note, agreed upon in attached payment principle on interest and sums [sic] signatories agreed personally carry the loan until such time as carry obligation. Company Mutual can the loan Company note and contract event that Mutual is sold this IS In the payable ownership becomes due and TRANSFERABLE to new at NOT On the NLA. clearly was note, obligor In the promissory payable a check executed, gave this was day $121,000.00. the amount told Arden Virgie Roggenbihl, this being advised Upon approved the PSC money until not borrow could him PSC without money by Topaz borrowing of application. its NRS violation of liability by Topaz assumption penalties. to criminal involved any person subject would 704.323 for purposes funds any expenditure NRS 704.640. NRS by statute. prohibited is also commission approved 704.325. drawing back to went Ruff then Martin Roggenbihl, them- they wherein and Note Contract prepared board and *15 Pursuant Topaz. with along borrowers as designated were selves not to check payable document, Roggenbihl gave to this the amount Association Lands Nevada but to Topaz, on behalf signed Note was and $121,000.00. This Contract paragraph the second states in the document although Topaz principle time of sale in the sum together of the amount of [sic] year with all interest to the end of calendar in which said sale is consum- mated. regular In the may, course of events this contract and note at the beneficial concerned, agreement parties opened negotiation be at the end of the year original third full calendar signatory from the time of the date of agreement. legal charges required All timely fees to ensure the execution of this contract and Topaz its terms shall be bourne Company Mutual [sic] as integral part agreement. of this acknowledged agreed It is prepayment that there privilege is no on this year period note for the three signature, from date of however in the event Topaz Mutual Co. wishes to retire company may, this note and contract said Marsh, contingent agreement on of Florence retire the remaining note and interest due. s/. Tony Wesley Martin s/. Gordon V. Ruff s/.. William R. October, 1986, day me, On this 18th personally appeared before undersigned notary aforesaid, public County in and for the and State TONY MARTIN, RUFF, ROGGENBIHL, WESLEY GORDON V. WILLIAM R. general partners, persons known to me to be the described and who executed instrument, foregoing the within and acknowledged they and who me freely voluntarily executed the same and for the purposes uses and therein mentioned. s/. LORRAINE W. YOUNG the contract . . . pledge . . . to underwrite “signers agree sale of water and other assets of of income derived from Mutual Co.” Ruff and Martin and the Roggenbihl, signers date, identical for the indicated that
acknowledgement, except NLA. To the “general partners” presumably they — liability create or a lien put the document purported extent that assets, it was in violation of NRS 704.323 income or Topaz’s given had been or was ever given because no approval not become aware security. The Ardens did provide to borrow following year. July the Marsh to NLA until payment into a account or money of the Marsh ever went None in any way. benefitted Topaz rogues was that three happened simply
Put in what perspective, going Topaz that Marsh was fraudulently money thought took largely it for their own Trial was cynically purposes. used the Ardens would be determining whether devoted of three scoundrels as a result of the wrongdoing liable for the 1, 1986, to sell their into a contract on October entering Ardens the time the contract to NLA. The in NLA at partners properties Martin. and in Subsequently, appar- was executed were Ruff and funds, ability Rog- of his demonstrated to raise recognition ent interest—and a partnership a minor genbihl given finder’s fee. to increase the its decision majority opinion predicates $73,001.00 (the sum on the Contract and Note from
damages court) (the sum referred to in the trial awarded Note) “the fraudulent conduct of its the Contract and upon *16 . . .” officers and directors . is not that this characterization sweeping
I submit respectfully architect of the fraud was the record. The supported by principal Marsh, from person a confidant of and Roggenbihl, in contact with her. Neither Ardens Topaz either NLA or (when the Intent to Loan was Marsh from March 1986 saw August until 1987.5 signed) as a result of Topaz directors arguably
Ruff and Martin were 1, 1986, and the Ardens. between NLA agreement the October meeting called August Marsh until the 1987 Ruff never met in but neither met Marsh 1985 informally Arden. Martin Virgie in August meeting until the with her her nor communicated saw The Topaz. nor officer was neither a director Roggenbihl 1987. 1, the October assuming remained directors Ardens nonpayment Virgie July complaining about called Arden in 1987 5 Marsh received the Ardens of the information of the note. This was first 18, 1986, Virgie and caused Arden to Marsh check to NLA dated October meeting August. call a in 864 directors, there Ruff and Martin also agreement sales made of funds from Marsh meetings receipt
were no board where PSC would money approval To borrowed without have discussed. Virgie Arden penalties. to criminal have the directors exposed he her that he told when advised Roggenbihl this specifically This necessi- Marsh for Topaz. had a check from resourcefully he Roggenbihl; then change strategy by tated a in he, to be where Martin Contract and Note drafted caused the ultimately was made Ruff be check would borrowers—and presumably partner which time he was then (by to NLA payable fund-raising ability). distinguished for his was note nor the Contract Note promissory Neither if it Topaz, Even signed by Topaz. or on behalf authority. or apparent would have been to show actual necessary Thatcher, (1987). Clearly 742 P.2d Dixon v. 103 Nev. 1029 in generally here. This is the form authority there no actual was an conduct. authorizing agent’s of a board resolution had or Roggenbihl implied is to whether next inquiry authority under bind authority Topaz. Apparent apparent estoppel be where predicated principal certain circumstances to exercise or to holds as him agent possessing permits his out as to under such circumstances possessing himself as represent Stations, denying from its existence. Orbit estop the principal Curtis, 205, 207, (1984). Nev. 678 P.2d Inc. v. not estoppel. I here does establish that the evidence suggest been in touch with Marsh. None the directors or officers had Loan agreement set in the Intent to Topaz’s forth position 1, 1986, to March which indicated that going with Marsh back be prior any request the PSC would furnished copy any efforts to they had presumed stopped to borrow. Ardens told Virgie Roggenbihl borrow for when Arden not and therefore Topaz application PSC had approved 8, 1986, Roggenbihl, not who accepted. October check could be obtaining acting was not with authorization from and inveigled returned it to Marsh check in the first then place, $121,000.00, time payable her out of another check for this Note, said be secured Contract NLA with loan obligation to be although an purporting assets, signed by Topaz. its was not pledge without do create estoppel. The acts of more (Second On Agency “In it is stated in Mecham respect this Edition) (Liability by estoppel): secs. relied can not be agent question upon ‘The acts of the *17 If his acts are relied enough support estoppel. alone of the knowl- principal’s there must also be evidence upon in them. edge acquiescence ‘Moreover, case, have been a any the reliance must one, with the exercise of reasonable consistent reasonable who claims reliance must not have and the prudence, party circumstances. or inconsistent eyes warning closed his the authority the inferences the existence of ... If it, in favor of there can be no as reasonable as those just are ” reliance within this rule.’ Nelson, 410, 419, (1951). 233 P.2d Ellis v. 68 Nev. her confidence in there is Probably Roggenbihl, blinded Roggen- failed to heed clues that substantial evidence that Marsh bihl, scope Ruff were outside the their acting Martin and the Intent to Loan Marsh had draft document authority. helped She knew a to borrow had signed by request and herself. of the language to the PSC. She knew from the been submitted had not occurred. She knew note that PSC promissory “will agreement, Topaz provide that under the Intent to Loan any order copy prior request lender with a of the commission’s the first check had funding.” (payable Topaz) She knew note promissory been returned to her. She knew that neither the nor Contract and Note was She knew check Topaz. to Nevada Lands Association. of October was made out something on notice that unusual was manifestly put She was occurring. it was error for the court to refuse the foregoing,
In view of by Topaz: instruction offered following bind the corpo-
A director or directors of a corporation object ration to a contract if the purpose the contract for the benefit of the director is to enter into or directors enter into contract If a director corporation. benefit, not bind then the contract does for personal either a of the stock- majority unless ratified corporation holders or the board of directors. egregiously the court erred even more
I further submit that as follows: Jury provided Instruction No. 20 giving to be liable to on the plaintiff For Mutual Company Note, following by must plaintiff prove Contract and of the evidence: preponderance the Contract and Note on behalf of 1. The execution of agent; or its Mutual its directors 21, 1986, Mrs. Marsh 2. That a check dated October $121,000 to Mutual Company; intended to lend six of the November paragraph 3. That the condition order was satisfied. Public Service Commission to subsection 3 of this instruction and objected counsel Topaz’s *18 be the chance to jury given that the should instead suggested pursuant there had been the loan approval decide whether 704.323, “No privately in relevant provides part: NRS any any . . . or assume utility security, owned shall issue public otherwise, endorser, surety respect obligation guarantor, as firm or any any corporation, other unless security person, until, extent, order by to the a written authorized ” added.) (Emphasis the commission. weeks prior to NLA occurred more than two Marsh’s payment the of the PSC to the order and condition six paragraph PSC six, was to paragraph order was never satisfied. Under “make efforts to Phase II ... at improvements finance diligent demonstrating Only less than sixteen interest. after percent the applicant efforts have obtain financ- staff that their failed at interest.” ing percent sixteen at Indisputably, Topaz financing made no effort obtain less Thus, there approval by than sixteen interest. was never percent view of PSC staff and no under Nevada law. In authorization evidence the conditions had not been satis- uncontroverted that fied, present jury it error to even to find opportunity was To there was liability, it had been satisfied. conclude contractual was had to find the condition of six satisfied paragraph the finding. and there was no evidence to support The against Topaz trial court denied the claim based on the note dated October in the amount of promissory $121,000.00. on a The claim was dismissed the court motion 41(b) signed only it was name pursuant to NRCP because acknowledgement signed of NLA The shows it was Partnership. Ruff, Martin, V. and William by “Tony Wesley Gordon R. Roggenbihl, general partners.” However, Topaz on liability against the court found contractual notwithstanding the Contract and Note October that the same individuals. The check was it three made even named Lands who was not as payable to Nevada Association document, except on this acknowledgement borrower! note, date, the promissory was identical to that on signatures “general their parties indicated that affixed partners.” (1) that: loan court concluded apparently (2) NLA to Topaz; approval Marsh was a loan a PSC really
on a order than two later in November conditional more weeks check; (3) somehow related back to the October date of the had either occurred or was unnec- compliance with the conditions essary; (4) the check to NLA created a even repayment obligation though loan money none of conditions of PSC Topaz received order not been met! had surface, erred. that the trial court On the loan was suggest
I To the or otherwise it estoppel might not to extent Topaz. loan, was in violation clearly be to be a it of law deemed (who even the Ardens subject presumably and would all parties, later), until ten were not aware of the months criminal payment NRS penalties. 704.640. NRS in the concede that 704.323
My colleagues majority liability by saying to find contract presents problem “[n]or- the statutes that utilities should be mally, regulate public given effect, or other with full force and and loans transactions utilities will be deemed voidable which have secured PSC *19 However, the case facts of this us compel and thus unenforceable. to reach a different result.” disregard provisions
The rationalizes its of the clear of opinion by liability 704.323 that unless is enforced in the saying NRS $121,000.00,6 “we will the to utility amount of be permitting not from its own conduct. This we will do.” profit wrongful found to the majority gone utility Just what the to have profit undisputed not The evidence is that not unfortunately described. Roggenbihl, Ruff fraudulently by one cent of the money acquired Any money was ever received to Topaz. going and Martin obviously profit Ruff and Martin was not to Roggenbihl, Topaz. accruing that the of to majority’s perception “profit” I submit clear bar to statutory would not overcome the contract Topaz statutory would make law subser liability. To conclude otherwise of I be vient to the law This submit would inconsistent judges. wisely of As Justice Cardozo system justice. pointed with our statute, out, a but a statute if Constitution overrides “[t]he law of with the overrides the judges.” consistent Constitution Benjamin Cardozo, M. The Nature the Judicial Process 14 of (1921). I suggest now to lien the assets of Turning upon Topaz, the the “upon court erred lien assets granting equitable the trial in $73,001.00.” The judge’s of Mutual for the sum of trial Topaz note both the and Con- predicated upon promissory decision was motion, 41(b) the court Note. an NRCP Ruling upon tract and claim on the note rejected promissory Marsh’s contract only by it the its signed partnership. Upon because was face, purporting the note violated NRS 704.323 promissory Having properly assets before PSC pledge Topaz’s approval. note, was contrary the I it liability contract on submit rejected the was somehow a and law to then find same note logic both on all assets. equitable Topaz’s for an lien predicate a against creating be made lien on the arguments can Similar 6 Therecord Virgie shows that was received from Arden the partial estate of John April Arden with filed satisfaction 1991. It was in terms the Contract and Note. assets the money received signed, by Topaz when no
violation law note, and the Topaz, the it was on behalf result of a “signers the terms states that express document its By income and assets of no stretch Topaz. pledge contract” can through legal innovative doctrine imagination any or signer. be deemed a 704.323, namely, behind NRS public policy There is sound illegal improvi- the threat of utility customers from protect management. opinion The increases amount majority dent and includes both income liability contract The mortgage. major- covered property equitable assets states, “None of the burdens of this then ity opinion reassuringly charged to its but passed should be on or judgment ratepayers, by Topaz.” borne solely rather logic comforting yield logic The this rhetoric must lien com- litigation regarding shows that reality. record January was entered shortly judgment menced after III erupted. when the of World War legal equivalent $174,659.29. Topaz seeking garnishment served writ of weeks, deciding moved for an order Within several PSC later, days Three belonged ratepayers. the funds Estate Owners Association became Property participant Ranch melee, Office of April Attorney and on General’s fray. Public entered the the Advocate for Customers of Utilities record not reflect what thereafter but happened presum- does *20 all, lawyers. Maybe had the time was ably good by particularly enlightenment from this court. are for participants waiting NRS was designed is a situation that 704.323 precisely This it have done so if had been fol- properly would prevent—and lowed. to the enrichment claim unjust
The court next turns its attention by John which was limited the trial Virgie Arden $10,000.00, them to a maximum of the sum received court NLA on from October 1986. had sell their On October the Ardens contracted to NLA, upon Ranch which foreclo- holdings including $10,000.00 agreement, pay this NLA was to By sure occurred. This from thirty to the Ardens. received every days such The Ardens were unaware payments. NLA was first of the loan Marsh to NLA until money the source of the or of it made. ten months was nearly after fraudu- contends that because was majority The foreclosure on a under prevent property used NLA to lently NLA, Federal benefitted the Ardens. The contract sale to this Bank, a' several month foreclosed postponement, Land after the property. that the in foreclosure have colleagues delay
My suggest more time to benefitted Ardens because it provided somehow all, benefit, at have quantifiable Such if would buyer. find a but to NLA which had not to the benefit of Ardens redounded from the Ardens assume contracted to purchase property alludes other direct opinion vaguely the encumbrances. The any illumi- regrettably provide benefits but does and indirect what they nation as to are. difficult, record, jury to hold that a or court
It is from the by more than conclude the Ardens benefitted would that The amount. trial court considered all of —if limit been would imposed paid. the evidence and this which has It evidence to the trial court’s support there substantial appear erroneous, find no clearly and not I basis judgment, being jury Marsh to have another trial to seek reversing permitting damages enrichment. unjust more but for Marsh who was victimized
One cannot feel sympathy greedy two associates. unscrupulous confidant his fraud; easy were with was liability Their actions instinct to find. However, the and the Ardens is far less clear. liability fraud against trial that evidence of judge Even the admitted to something they defendants entitled “skimpy.” with a instructed jury. not receive—a fair trial properly did from the majority opinion part was fashioned court, deliberations, in and in part judgment part from the I submit that the majority’s respectfully from the perceptions. to, form “camel” alluded combination of three parts my irreverently, at dissent. beginning somewhat perhaps stated, camel should be suggest judicial For reasons I this court for new trial. a caravan back lower put heading NEVADA, COUNTY, SHERIFF, JOHN T. CLARK MORAN, Appellant, v. EDWARD THOMAS HAR- Respondent. RINGTON,
No. 23319