*1 on the issue of solely trial grant a new conformity the views ex- damages in opinion. in this
pressed part, part, reversed
Affirmed with instructions.
remanded Video, U.S.A., WALES,
Ron d/b/a (Defendant), Appellant Franke, Wy a and Vicki
Ross M. ROLL Partnership, oming d/b/a (Plaintiffs). Appellees
Enterprises,
No. 88-166. Wyoming.
Supreme Court
Feb. Hoard, (de- Casper, appellant
John C. fendant). Gillette, Wolfe, appellees
J. Stan (plaintiffs). URBIGKIT, THOMAS, MACY
Before BROWN, J., GOLDEN, JJ., and Retired.
MACY, Justice. summary judg- appeal
This is an replevin ordering appellant ment in a action U.S.A., Video, to deliver Ron d/b/a appellees Ross M. properties to Franke, Enterpris- d/b/a RV Roll and Vicki es, finding and Franke had upon a that Roll continuing security interest notwithstand- property by subsequent sale of the the debtor to Wales. *2 pay
We affirm. to a to unable obtain bank loan price. purchase balance generically Wales states his issue be: to 23, 1987, February On Wales entered granting Did the District err in Court agreement into a written Schulte Appellees’ Summary Judg- For Motion $90,000 purchase pay- genuine ment because issues of material ing $55,000 in thirty-six monthly cash and Appellees fact existed and the $1,000 payments of each. The additional judgment entitled to as a matter of law? $1,000 payment was Schulte’s fee for act- Specifically, questions Wales whether it ing as prepared the straw man. Franke permit was error for Roll and signed this contract and to evidence her Franke their motion summa- responsibility for it. Roll first became ry judgment untimely Franke, Schulte, aware that and Wales had whether the acts of caused engaged in the straw man transaction after security Roll’s and Franke’s interest to be- pay Schulte failed to due balance under against posses- come unenforceable Wales’ Enterprises/Schulte the RV contract. sory rights properties. to business These 17, 1987, July On Enterprises RV filed a law, questions are answers which complaint against Wales, alleg- Schulte and depend upon the facts of case. The contracts, existence the two material facts in this case are not in dis- agreements, security and the default and pute. praying that Enterprises’ security RV in- Roll and Franke were two members property terest in the superior be declared of a partnership Enterprises known as RV contracts, that the be as- operated which owned and a video rental delivered, sembled, sold, judg- and that Gillette, agency in Wyoming. During the against ment be entered Schulte for 1986, Enterprises month of June RV listed deficiency remaining after sale. Wales Century video business for sale with timely plethora filed his a alleging answer Agency Gillette, Sun Wyoming. Wales of affirmative defenses which included purchase made an offer to the business for part Enterprises by fraud on the of RV $85,000. give Roll said he would con- conspiring with Schulte to induce Wales to price sent to sell the of- buy the they keep business so that could accept $2,500 fered if Century would a $50,000 intentionally after Schulte commission rather a than commission failed to make payment pursu- the balloon percent selling seven price. Century ant to Enterprises the terms the RV 21 refused to take a lesser commission. answer, contract. Schulte failed to Franke, (a Monte G. Schulte defendant against default was entered him. below), they and Wales reasoned that could progressed through After the action satisfy Roll’s cash price by minimum struc- schedule, management par- court’s case turing they a sale to since Schulte believed ties each filed a motion judg- generate this sale would not an entitlement stating ment they rely would to a real estate commission. To facilitate depositions Wales, Roll, and Franke. plan, Schulte entered into written 8, 1988, On March the court filed its order Enterprises contract with RV on December allowing Enterprises depo- RV to file these purchase $86,- the business for 26, 1988, April On sitions. the court also $50,000 by paying in cash down and the signed April a similar order which was filed $36,850 plus percent balance ten interest 27, 1988. thereon on or before March 1987. Con- 26, 1988, signing purchase current with agree- April immediately prior On ment, signed security Schulte on the cross-motions for sum- granting Enterprises mary judgment, objected RV inter- use est in the business depositions by assets to secure the of unfiled price. purchase pro- opposition balance or in to the motions. vided following Schulte colloquy place: with the down took guess my problem using the entire I have a motion
MR. WOLPE: really I’m filed, depositions. haven’t filing been motion for file that has not— given exactly por- notice of what discovery depositions, and I filed this going to tions of the are 4th, filing asks for the March argument. or the basis of the used Wales, Franke and depositions of But I'm familiar with Roll. *3 Honor, Your all three of them. right; that was THE You’re COURT: Well, you THE if familiar COURT: are
filed. simply going with all three of them we’re I renew that mo- MR. WOLFE: would proceed today then. present the court at this time and tion this, any if And at the close of there depositions. copies of their with response, I you need for to make further Honor, ex- Your that’s MR. O’NEIL: you the additional time to do will allow talking actly I was about. what that. copy of that motion. receipt I’m in of a proceed your argument, may You court, stipulate on that to the I would Mr. Wolfe. 302(b) Rule, says Rule # at Uniform Enterprises, through and RV If the filing of the motion. the time of attorneys, extensively then referred to the today, on that motion later or court ruled respective depositions mo- not sufficient under the Uniform that’s tions. Rules. 27, 1988, filed its April On the court Well, the court should THE COURT: granting Enterprises’ order RV motion earlier, on that and that’s have ruled denying summary judgment and doing that. fault for not findings motion that: claiming some sort of sur- you Are In accordance with W.S. 9. O’Neil, of those prise, Mr. the use 34-21-935(b), security interest col- § course, you noting, of that notwithstanding its lateral continues your part of those used sale, exchange disposition, unless the motion? by the se- disposition was authorized are, Because, simply put you if we’ll party. cured you’ve this motion until off Enter- There is no evidence of RV responses time to make sufficient authorizing the sub- prises Schulte to sell appropriate proceed at you think are unencumbered ject to Wales that time. interest. why I see no reason But can judg- its May the court filed On depositions. should not consider those incorporated it reference ment in which made, motion appropriate 27, 1988, it April order and which on it simply failed to rule and deliver ordered Wales to assemble oversight, or whatever. Enterprises. It assets to RV go and use can either ahead But we appeal has judgment from this now, or, to do you don’t wish them taken. that, hearing at a simply reset this we’ll DEPOSITIONS FILING DISCOVERY compliance, we’re in strict time so that Rules of Civil Proce- compliance with the requirement purpose behind dure. concurrently filing discovery documents summary judgm Honor, Well, filing a motion Your
MR. O’NEIL: responding party a ent1 is to afford a surprise in that in the motion can’t claim challenge the meaningful opportunity to going use the that he’s it is mentioned Macaraeg v. Wil- submitted. documents depositions in reliance. designate and file 302(2) ry judgment the movant shall the Dis- Uniform Rules for 1. Rule discovery portions documents provides relevant State of trict Courts upon." filing for summa- relied part: time of a motion "At the son, lent, unlawful, (Wyo.1988). recently P.2d against public policy, We held, however, in Atlas Construction for imputing there no basis such actions Slater, Company (Wyo. P.2d Enterprises. to RV 1987), file the failure to 17-13-301(b) Wyo.Stat. (1977)provides: § filing the time of a motion for An appar- act of a which is not judgment is not reversible error unless it ently carrying of the business right. affects a substantial the partnership way in the usual does not bind the unless autho- Wales has failed to demonstrate to partners. rized prejudiced by how he was Court timely Enterprises’ depo file failure Although carry Franke was authorized its sitions used to motion for video rental the usual record, however, summary judgment. The way, she did have the sell that, reflects in addition to the court enter the business assets of RV *4 allowing Enterprises orders two RV without the consent of Roll. Her conduct depositions, subject use the of court dealings in with Schulte their Wales hearing fered to and if vacate reset apparently carrying was “not on of any way surprised in by Wales was in the business of the usual use. Wales or surprise not disclaimed Thus, way.” her did conduct not bind the unfamiliarity, depositions he used the same by “unless authorized the oth- summary his motion for judg partners.” er It is undisputed Roll that did having to, ment without filed them at time knowledge of, or prior not consent have he motion. the sale of the property to Wales man, Schulte as a straw or other- depositions before wise. Since did Roll not authorize Franke's it summary when ruled on the motion for conduct, part- her conduct did not bind the judgment and, like in Atlas Construction nership. Company, Enterprises the failure of RV it depositions file We hold as matter of law that was timely was a technical error, imperfection not under the circumstances of this which did affect not a sub- case, permit district right court to RV stantial and Wales reversi- depositions to use unfiled ble error. summary its judgment motion alleged that and acts Franke did not VALIDITY OF SECURED Enterprises’ undermine security inter- TRANSACTIONS Schulte, est in sold to notwith- 34-21-935(b) (1977) Wyo.Stat. provides: § standing subsequent sale to Wales. Except where this article otherwise AFFIRMED. provides, security interest in continues sale, notwithstanding exchange collateral J., URBIGKIT, opinion files an disposition thereof unless the concurring part dissenting and in disposition se- was authorized part. party cured in the otherwise, any and also iden- continues URBIGKIT, Justice, concurring in proceeds including tifiable re- collections part dissenting part. and ceived the debtor. WAIVER OF NON-COMPLIANCE attempts ef to avoid the WITH RULES FOR SUMMARY
fect of this by reasoning statute that JUDGMENT participation Franke’s he what character izes path analysis as fraudulent transactions should I would take a different Enterprises/Schulte cause the RV overlook permitted contract movants’ error which and security agreement to be unenforcea trial court consideration of agree. ble. We do Assuming arguen- summary when ruled on motions for do that Franke’s judgment. actions are either fraudu- With their motion for 1988, appellees filed on March consideration of either the judgment Franke-Roll mo- (Franke-Roll) reliance on their brief cited tion or rejection of his cross-motion for “depositions of Ron Vicki summary judgment if either would be M. Roll.” the same Franke and Ross On based on a consideration of the then unfiled date, Filing they filed a Motion to Allow of depositions. course, urged Of attaching Discovery Depositions without excerpts consideration of the which had depositions.1 day, Also on same that reproduced properly submitted (Wales), appellant, Ron Wales filed his mo- Responsive him. objection quot- summary judgment relying tion for on a decision, ed in majority more detail properly designated attached affidavit given right surprise Wales was to claim depositions for portions of several eviden- and ask for a continuance: tiary support. After Franke-Roll 'filed you claiming Are some sort of sur- request depo- to file the prise, [attorney Wales], Mr. O’Neil sitions, approving order court the use those noting, However, granted on March 1988. course, you part depo- used of those nothing did further to either Franke-Roll your sitions in motion? present file or to the trial Because, are, you simply put we’ll prior hearing. pretrial An earlier hearing you’ve off this motion until given party right order had each to file any responses sufficient time to make summary judgment a motion for also you appropriate proceed think are hearing April date for set a that time. convened, When that Franke-Roll *5 why I see no But can reason the court any depositions had not filed or other doc- should depositions. not consider those supply uments to evidence to made, and, fact, appropriate The motion was and summary judgment motion for actually simply failed to rule on it were with oversight, the clerk’s office until June 1988. or whatever. Clearly, compli- Franke-Roll not in were go But can either ahead we and use rule, summary judgment our ance with now, or, you them don’t wish to do W.R.C.P. 56. that, simply hearing we’ll reset this at a compliance, time so that we’re in strict
Immediately upon commencement of this compliance hearing, respondent to the mo- with the Rules of Civil Proce- judgment, objected tion for to dure. (2) appears filing
1. It
that attachment of the
At the time of
a motion for sum-
discovery
designate
or other
originally presented might
material to a motion when
mary judgment
the movant shall
deter some of
portions
discovery
and
file relevant
of
problems now found in this case. Some of
upon.
opponents
documents relied
The
of a
posed
these same concerns were
in Matter
summary judgment
designate
motion shall
Obra,
1988)
(Wyo.
Estate
suasive,
SUMMARY JUDGMENT DENIAL OF
inviting
orderly
desirable
THE FRAUD DEFENSE
justice;
and effective administration
only permits non-compli-
simply,
view
In recognition
par-
of the nature of the
ance with this court’s established rules of
ties involved
this sales
transaction
Contrary
procedure.
majority’s
process
negotiation,
stance,
way
this case
not in
similar
subsequent litigation,
agree
I also cannot
Slater,
to Atlas
Co. v.
tween Franke-Roll money Roll interest in the Since had the though executed and Schulte were business from his bank loan debt South unknown to the innocent unannounced and Dakota, significantly he was involved in the was not told about the bal- Wales. Wales decision never in direct con- sales agree- in the payment provision first loon sign Roll tact with Wales. did real ment, which became his burden even when listing agreement and then later estate agreement. in the second not included deposit signed money the first earnest met Consequently, pay- even if Wales sales for a sale to Wales. That agreement, obligations ment the second proposal earlier did mature since bank executed, the business deal the one he had funding was not available to Wales to fi- jeopardized payment since the balloon required in excess of his nance amount original owners to foreclose permitted the compensa- cash from the worker’s available agreement. sales As real- under the first tion settlement. certainly istically anticipated could be financing, Lacking propos- bank second happen just programmed, did even parties al was floated between the way. Despite payment Wales whatever net cash did not Roll’s demand for after basis, the made on an installment contract payment the real estate commission. original partnership of Franke-Roll de- then, Schulte, conjunction Franke payment month balloon manded a three cheating the out of the set about realtor any pay- exceeded satisfaction full which by a straw man sale so that the commission capacity ment of Wales. brother, by her initial cash desired Recognition parties nature Roll, undisputed would be achieved. It proper is intrinsic to the resolution perpetrated fraud was Schulte and case, particularly disposition Franke, so since on the realtor but also on summary judgment in analy- was made on a basis. which occasions dissent *7 Roll, brother, initially resulting summary judgment as funded the the sis of against buyer. of RV on bor- the granted establishment Wales as provide responsibility to be is the of a money question rowed a business issue sister, Lacking the fraud operated by partnership his Franke. brother-sister buyer of the by the Wales as the profitability, it was later decided committed Franke, by the sis- sell. as business when committed partners to brother-sister business, manager ter/partner, brother/partner the the essen- the was to be of got proceeds.2 negotiator. During tially that the sales Gillette security exposure. In recognize any the sec- do claim in with filed chattel I actionable Franke-Roll, by agreement prepared theory that the on the ond fraud committed signed agreement liability. extinguishes agreement a more favorable Wales realtor sales agreement prior knowledgeable participant terms of the and that the less favorable Wales was a certainly him. It is in this fraudulent undisclosed to fraud would not absolve the relation- preparation presentation the ships in the document between and Franke-Roll responsibility Can perpetrated partnership issue is derived. result achieved. The fraud whereby partner partnership profit from what a layered agreement and a Wales was the sales sale, man, Schulte, fraudulently acquires agreed partner in a paid the straw less perpetration specific of arrangement the details of the payment even if an balloon unattainable presented against question Related the is the is evidence 17-13-615] partnership. the litigation structure which in itself surprising in was that Wales did not coun- added). (emphasis W.S. 17-13-303 terclaim and filed an de- affirmative any partner any Notice to matter litigation by fense. This initiated Franke- affairs, relating partnership and the Roll, Wyoming partnership, d/b/a knowledge partner acting the in the Enterprises against Schulte and Wales matter, particular acquired part- while a prayed preliminary injunc- non-transfer mind, or present ner then to his and the replevin inventory tion and of the business knowledge any partner other who rea- which, instance, chattel assets in this sonably could and should have communi- the essentially This business. lawsuit was acting partner, operate cated recovery to accommodate for Franke-Roll knowledge notice to partner- or of the payment of.the balance balloon on the first ship, except the in case of a fraud on the partner- sales made between partnership or by committed with the ship man, answer, and straw In Schulte. partner. consent of that pleaded an affirmative defense W.S. 17-13-304. in he had been defrauded Where, any by wrongful act or omis- $55,000 deposit cash as a make any partner acting sion of the ordinary $5,000 up picked sale. Schulte had around partnership, course “availability,” shortly cash for his and then authority copartners, or with the thereafter, relationship broke off his injury any person, loss or is caused to departed parts Franke and for Florida or being partner partnership, otherwise unknown. He served any incurred, penalty replevin Perhaps action and defaulted. is liable therefor to the same extent as reason, undisclosed, or others a cross- partner acting omitting so to act. against by claim him Wales was also not W.S. 17-13-305. made.3 long-standing aAs result of the common problem no have citation of the predate law standards that codification and 17-13-301(b), majority to W.S. but consider Act, Partnership the Uniform the principle that the statute does not reach nor contem- benefit-responsi- evolved that I describe as plate facts these where bility. partner realized benefit of the imposition liability of civil on an business, fraud in sale whether partner innocent for the fraud of his Although disclosed or not. this case is far copartner especially applicable where carefully pleaded develop- issue partner the innocent receives fruits ment, I provisions discern that fraudulent conduct. A false rep- Act, Partnership Uniform now found partner, by resentation means of statutes, applied. should be firm, property is obtained representation An admission or made imputed will in law part- to the other concerning partnership holding ners the extent of them liable scope debt,
affairs within the where remains identifiable, as conferred this act 17-13-101 and the claimant can follow [§§ may only perception the fraud managing have been known to the that the real issue of case in view partner? perpetrated clear Wales is *8 partnership whether the is bound the better record, exactly 3. It is from clear the agreement layered terms the second sales money by paid all most if not which was upon enticing the first Schulte for $5,000 except by for was retained parting money entering into with his and Schulte, by and used was delivered to Roll words, purchase. into the In other is' Shortly his debt the reduction. after fraudulently payment pro- the inserted balloon sale, relationship the romantic between Franke vision enforceable under these circumstances in something up. and Schulte broke Franke had partner may partici- favor who not have breakdown, in the nature of a nervous and fraud, pated in its the but received benefits? litigation by repos- followed as an effort Roll to merchandising sess the video business. It
907 business, ship and and partnership hands of the with reference there- it into the to, it. partner recover one makes false or fraudulent misrepresentations injury of fact to the Partnership 670 at 570 Am.Jur.2d 59A § persons him of innocent who deal with (footnotes omitted). Recognition of (1987) firm, representing the notice implicit and without principle oc- rationale in the case, Douglas upon general in Res- limitations his au- curred one v. Maur- thority, partners escape pecu- ervoirs Water Users Association cannot Garst, P.2d (Wyo.1965), 398 74 where er & responsibility niary upon therefor partnership partner re- subject of ground misrepresentations such partner’s illegal action sponsibility for knowledge. made without were their However, (theft) questioned. the dis- was when, especially This is so as in the partnership escape connected service us, partners, case who before Douglas in Water liability found Reservoirs guilty wrong, not themselves received Association, 78, no has Users 398 P.2d appropriated fruits here where have the sale application we conduct associate their fraudulent assets, in which endeavor [Emphasis in business. added.] also fraud and where was committed rap A real estate transaction of similar partner re- partnership and the other Gannon, port Goulding in found & gathered fruit. ceived Hausaman, 41, P. Thies v. 42 140 Okla. has a benefit-responsibility principle 407, (1914)(quoting 410 Stanhope v. Swaf in an strong history and firm as anchored 45, (1890) 45 14 ford, 80 Iowa 403 N.W. Supreme decision of United States 1885 (2d Ed.) 156, Ency. respectively), E. L. A. & 555, Court, Bradner, 114 Strang v. U.S. specified: where that court 1038, (1885), 561, 1041, 248 5 S.Ct. 29 L.Ed. partner, acting one for the it is stated: “Where while where firm, by exchange makes an of lands only other deter- question be defendants, representations, other is, means of false John mined whether the Holland, fraud, though Joseph partner can be is liable for the he B. Holland for the and fraudulent held liable false takes no personally part the transac- being representations partner, their tion, ignorant and is of the fraud.” * * * they made conceded were not responsible is also for the “One knowledge. direction nor with person fraud of a who has assumed regarded this action as one Whether be authority, him if he rati- act for without damages prac- recover for the deceit by accepting of it fies his act the benefit plaintiffs, upon tised or as one to or otherwise.” the amount created recover of a debt A volume of cases ban be considerable part Strang, we are of subject general to this found reference imputed, opinion that fraud is to be (U.L.A.) 13 Partnership Act 6 Uniform § action, purposes to all relating (1969) to the model code sec- of his firm. The transaction members example, For or benefit of tions. the fruit him plaintiffs and the between dispositive conduct the fraudulent transaction, deemed a be- Byrd, Bagging Co. v. decision Carolina cause, representation in addition to his 136, (1923). S.E. Partner- 185 N.C. 90 *9 all if, partnership the renders gained by ship. partner- And the conduct of 908
partners discharge civilly despite liable
bankruptcy.” KAVANAUGH, Appellant Helen (Defendant), example
Another Boston Zemelman v. Co., 206, 207, Cal.Rptr. 4 Cal. Ins. v. (1970) App.3d (quoting from Stewart v. Wyoming, of STATE (1868))involving Levy, Cal. an (Plaintiff). Appellee proceeds That relat- insurance claim. ed: MARKLAND, Appellant Robert partners “All will bound (Defendant), partners of fraud in contracts relating partnership to the made with Wyoming, STATE parties. say,
innocent third That is to all (Plaintiff). Appellee responsible injury are occasioned * * * fraud, they whether 88-46, Nos. 88-47. cognizant fraud or not. The rule Supreme Wyoming. Court of respect as it same is in responsibility principal Feb. agent, acting
fraud while within indeed, scope and, authority;
partner becomes liable the fraud co-partner, because of the relation agent bears
each other
partnership business.”
Since this decision is rooted
judgment, partnership the burden is on the partners deny apparent
the fraudulent conduct. Cook v. Brun Fountain, Churchill,
didge, Elliott & (Tex.1976). case, part
S.W.2d 751 In this buy
ner/Franke committed on partnership property
er/Wales of so partner, Roll, monetary Unques
received the benefit.
tionably, record, as reflected in this
sale authorized each
undertaken interest. countervailing would sum- reverse
mary judgment which all leaves the bene-
fits defrauding par- fraud with the
ties. The case should be tried its merits proper determine whether Wales has a repossession
defense to the business purchased
assets which he basis partner-
the fraud committed on him the
ship in arranging the sale.
notes
that the
were for the benefit
similarly
sale
ship property
fraud was.
firm,
had,
agency
he
virtue of his
Berdine,
Cal.
presented Siebold v.
firm
partnership,
and as between
(1923).
158,
App.