Robinson v. Riverside Concrete, Inc.

TURNAGE, Judge. This appeal presents the question of the sufficiency of the jury’s verdict to support a judgment for actual and punitive damages. John Robinson and his wife brought suit against Riverside Concrete, Inc., Ernest Mountjoy, Mary Mountjoy, Frank Sambol, Lake Ozark Concrete, Inc., and Ted Mountjoy for accounting, fraud, conversion and replevin. The jury returned a verdict for “damages” in the amount of $43,300, interest of $17,350, and attorney fees of — 868 — $21,000, being the total sum of $81,650, against Riverside, Ernest, Mary and Sam-bol. The jury also returned a verdict against the same defendants for punitive damages in the sum of $75,000. Judgment was entered according to the verdict, and Ernest Mountjoy, Mary Mountjoy and Riverside Concrete, Inc., have appealed therefrom. The dispositive issue raised on this appeal is the insufficiency of the verdict to support the judgment. Reversed and remanded. Ernest and Mary Mountjoy were the sole stockholders of Riverside Concrete, Inc. Feeling the need for capital with which to operate such business, the Mountjoys arranged to borrow $50,000 from the Robin-sons. A promissory note in that amount was executed by the Mountjoys in their corporate officer capacities. The Mountjoys simultaneously executed a loan agreement in their corporate capacities and in their individual capacities by which the undertaking of Riverside was guaranteed and by which they agreed to indemnify the Robinsons against any loss. The agreement provided a security agreement was to be executed to convey a security interest in certain equipment and vehicles used in the concrete business to Robinson. Such agreement was in fact executed. It was further agreed Riverside would not declare or pay any dividend, increase its capital stock or retire or exchange any of its capital stock without the written consent of Robinson. Ernest was also to receive $250. per week for services to Riverside and such salary was not to be increased nor was he to be paid any other remuneration without the written consent of Robinson. In addition to interest on the note, Robinson was to receive 43% of the annual net profits of Riverside, less agreed upon deductions, and he and his agents were to have the right to examine Riverside’s books and income tax returns at any time. Riverside was to pay all of Robinson’s expenses including legal expenses incurred in connection with the enforcement of the loan agreement. Robinson and his wife filed suit following default on the note and following the failure of Riverside to pay the 43% of net income. In Count I of such suit the execution of the $50,00Q note and loan agreement was alleged, together with the provisions of such agreement, together with the allegation no payment had been made and no accounting had been provided. Count I prayed for an accounting and that Riverside be required to pay Robinson such amount as determined to be 43% of net income. Such count further pleaded fraudulent and malicious conduct on the part of the Mountjoys to deplete the assets and profits of Riverside and alleged they took the items covered by the security agreement and devoted them to their own use. It was alleged such actions were for the sole purpose of defrauding Robinson and by reason therefor, Robinson was entitled to punitive damages in the sum of $500,000. Count II was based upon the security agreement executed by Riverside and alleged the property covered thereby was in danger of being lost to Robinson unless taken from the possession of Riverside. The prayer was for recovery of the property and $5,000 damages for its return. Count III was against Frank Sambol, brother-in-law of Ernest Mountjoy, and alleged Sambol was acting in concert with the Mountjoys to convert the property covered by the security agreement to such use as to defeat the rights of Robinson in the same. The prayer was for $50,000 plus interest and costs. Count IV was against Lake Ozark Concrete, Inc., and Ted Mountjoy, the owner of Lake Ozark. Ted is the son of Ernest and Mary. This Count alleged certain of the property covered by the security agreement given by Riverside'was through the conspiracy and acts of the three Mountjoys placed in the possession of Lake Ozark which converted the same to its own use. Damages in the amount of $50,000 were prayed. Count V incorporated by reference the allegations of the first four counts and further alleged that all the defendants did — 869 — unlawfully and fraudulently conspire together to cheat and defraud the Robinsons and pursuant to such scheme, the property covered by the security agreement would be turned over to Sambol, Lake Ozark and Ted and such property would be used, converted and sold and the proceeds derived from the sale would be divided among the defendants. This count concluded with a prayer for $50,000 actual damages and $500,000 for punitive and exemplary damages. Following a lengthy trial, which covers some 840 pages of transcript, the court gave the jury its instructions. The following verdict directing instructions were given: INSTRUCTION NO. 3 authorized a verdict against Riverside on the principal amount of the note. INSTRUCTION NO. 6 authorized a verdict against Ernest and Mary on the guarantee agreement and the loan agreement. INSTRUCTION NO. 8 authorized a verdict against Riverside for transferring and conveying some or all of the secured concrete equipment to Lake Ozark. INSTRUCTION NO. 10 authorized a verdict against Ernest for conversion of secured property or for transfer of the secured property to delay or hinder his creditors. INSTRUCTION NO. 12 authorized a verdict against Mary for aiding and abetting Ernest in the transfer of secured property or for her intentional participation in transfer of the secured property to hinder or delay creditors. INSTRUCTION NO. 14 authorized a verdict against Sambol for intentionally aiding and abetting the transfer of secured property for the purpose of hindering, delaying and defrauding Robinson. INSTRUCTION NO. 16 authorized a verdict against Lake Ozark for knowingly participating in the conversion of secured property. INSTRUCTION NO. 19 authorized a verdict against Ted for knowingly participating in the conversion of secured property. INSTRUCTION NO. 21 was MAI 4.01, the measure of damages. INSTRUCTION NO. 22 was MAI 10.03 authorizing the award of exemplary damages. Instruction No. 25 was the form of verdict instruction and is set out in full hereafter: INSTRUCTION NO. 25 You are instructed that nine or more jurors may return a verdict for either party in this case. If all of you agree upon a verdict, your foreman alone will sign it, but if your verdict is returned by nine, or more, and less than twelve jurors, your verdict must be signed by all of the jurors who agree to it. Forms of Verdict If all of you agree upon a verdict in favor of the plaintiffs for the principal amount on the note and guarantee agreement, and against defendants Ernest W. Mountjoy, Mary Mountjoy and Riverside Concrete, Inc., it may be in the following form: “We, the.jury, find the issues in favor of the plaintiffs and against defendants (here insert the names of defendants against whom you find) and assess their damages at $_(stating the amount.) -Foreman.” If all of you agree upon a verdict in favor of the plaintiffs for both principal amount and interest on the note and guarantee agreement, and against defendants Ernest Mountjoy, Mary Mountjoy and Riverside Concrete, Inc., it may be in the following form: “We, the jury, find the issues in favor of the plaintiffs and against defendants (here insert the names of defendants against who you find) and assess their damages at $_, and assess interest at $_, being the total sum of $_ (stating the amount). _Foreman.” If all of you agree upon a verdict in favor of the plaintiffs for principal — 870 — amount, interest and attorney’s fees on the note and guarantee agreement, and against defendants Ernest Mountjoy, Mary Mountjoy and Riverside Concrete, Inc., it may be in the following form: “We, the jury, find the issues in favor of the plaintiffs and against defendants (here insert the names of defendants against whom you find) and assess their damages at $_, and assess interest at $_, and assess attorney’s fees at $_, being the total sum of $_ (stating the amount). _Foreman.” If you find the issues in favor of plaintiffs under Instructions numbered 8, 10, 12, 14, 16, 19, and find that plaintiffs are entitled to actual damages only, your verdict may be in the following form: “We, the jury, find the issues in favor of plaintiffs and against defendants (here insert the names of defendants against whom you find) and we assess plaintiffs’ damage at $_ (stating the amount). _Foreman.” If you find for plaintiffs and against one or more defendants and if you further find that plaintiffs are also entitled to punitive damages, then your award of punitive damages shall be in the following form: “We, the jury, find the issues in favor of plaintiffs and we find that plaintiffs are entitled to punitive damages against the following defendants (here insert the names of defendants against whom you find), in the following amount $_ (stating the amount). _Foreman.” YOU MAY NOT AWARD PUNITIVE DAMAGES AGAINST ANY DEFENDANT UNLESS YOU HAVE ALSO AWARDED ACTUAL DAMAGES AGAINST THAT SAME DEFENDANT. If you find the issues against the plaintiffs and in favor of all defendants, then your verdict shall be in the following form: “We, the jury, find the issues in favor of all defendants. _Foreman.” If less than twelve jurors return a verdict in this case, you should begin your verdict with the words: “We, the undersigned jurors, find,” etc., instead of “We, the jury, find,” etc. THESE FORMS ARE GIVEN FOR GUIDANCE ONLY AND YOUR VERDICT SHOULD BE WRITTEN ON A SEPARATE PAPER, AND NOT ON ONE OF THESE INSTRUCTIONS. Converse instructions were given on behalf of the various defendants. The jury returned the following verdicts: “We, the jury, find the issues in favor of the plaintiffs and against the defendants Ernest Mountjoy, Mary Mountjoy, Riverside Concrete, Inc., and Frank Sam-bol, and assess their damages at $43,300 and assess interest at $17,350, and assess attorney’s fees at $21,000, being the total sum of $81,650. /s/ Wavne L. Lucas. Foreman.” “We, the jury,; find the issues in favor of plaintiffs and we find that plaintiffs are entitled to punitive damages against the following defendants: Ernest Mountjoy, Mary Mountjoy, Riverside Concrete, Inc., and Frank Sambol, in the following amount: $75,000. /s/ Wavne L. Lucas. Foreman.” No question is raised on this appeal concerning the sufficiency of the evidence to support any of the instructions. It should be noted at the outset the jury was instructed they could return a verdict in favor of Robinson for the principal amount of the note, together with interest and attorney fees, and for damages for the conversion of property covered by the security agreement. ' No motion to require Robinson to elect which of these remedies he would pursue was filed. Since the parties have not raised any question of Robinson pursuing a remedy on both the note and — 871 — for conversion of property covered by a security agreement to secure such note, this court does not pass on the propriety of such action. Neither have the parties raised any question concerning the applicability of the Uniform Commercial Code, 400.1 et seq., RSMo 1969, and that question likewise is not passed on herein. The sole question raised by Ernest, Mary and Riverside, the only parties appealing, concerns the verdict returned by the jury. These parties contend the verdict does not definitely show the jury found against Ernest, Mary, Riverside and Sambol for damages for conversion or for the transfer of secured property. They contend the verdict actually is based on the principal amount due on the note, together with interest and attorney fees. The contention proceeds that since the verdict was for the principal of the note, this is a finding of a breach of contract. The argument concludes with the well recognized doctrine that a finding of a breach of contract will not support a finding for punitive damages. These parties are correct in their attack on the verdict but their reasoning does not go to the basic defect. Robinson counters such argument by stating the jury actually found under the conversion or transfer of secured property instructions. He further contends that by spelling out interest and attorney fees in addition to the amount of “damages” the jury simply gave a breakdown of how they arrived at the total amount of damages on this fraud theory. Robinson’s claim further illuminates the fatal flaw. This court cannot determine the jury’s basis or theory of finding for the respondent. The general rule is announced in Smith v. Piper, 423 S.W.2d 22, 27[17,18] (Mo.App.1967) that punitive damages do not lie for breach of contract. Thus, if the verdict is construed to be a finding on the contract theory that Robinson is entitled to the principal amount due on the note, together with interest and attorney fees, such verdict could not support a verdict for punitive damages. Thus, the first question to be resolved is the determination of whether the jury found on the note or the conversion tort theory. The crux of this case is that this question cannot be answered because of the unclear verdict which does not manifest the jury’s intent. Although Robinson did not seek a judgment in his petition for the principal amount due on his note, he did introduce evidence as to the principal amount due and the amount of interest and attorney fees. Of course, such evidence supported the giving of the instruction authorizing a verdict against Riverside, Ernest and Mary on the principal amount of the note and on the loan and guarantee agreement. The rules by which a court considers a verdict to see if it can determine the intent of the jury are fully set out in McIlvain v. Kavorinos, 212 S.W.2d 85 (Mo.App.1948). Fully consistent with the rules set out in such case is the statement in Thorne v. Thorne, 350 S.W.2d 754, 757[1-3] (Mo.1961): “It has been stated that the courts will construe a verdict liberally in an effort to ascertain the jury’s intent. 53 Am.Jur., Trial, § 1052, p. 716. And, of course, the court considers a verdict to see if it can find a reasonably clear intent expressed therein, though perhaps inartfully expressed.” The court further stated at Page 758, “[cjertainly, the verdict of a jury must be reasonably clear and definite, and it must contain at least the substance of the legal requirements.” In Ralston Purina Company v. Kennedy, 347 S.W.2d 462,466 (Mo.App.1961) the court stated: “On the question of certainty and definiteness of a verdict we find this statement in 89 C.J.S. Trial, § 496, pp. 157, 158: ‘However, the verdict of the jury, to serve as a basis for a judgment, should be clear, intelligible, consistent, and certain; and it should import a definite meaning free from ambiguity and should show just what the jury intended’.” It is further stated in Boone v. Richardson, 388 S.W.2d 68, 76[14-16] (Mo.App.1965): “The parties were entitled to the — 872 — unconditional judgment of the jury, rather than a court’s interpretation of its finding To consider the verdict returned, it is first apparent the verdict does not follow the directions for use of the forms of verdict given. The verdict conforms in all respects with the third verdict form listed in Instruction No. 25 except for the inclusion of a finding against Sambol. This instruction advised the jury that forn\> was to be used only if they found against Ernest, Mary and Riverside. That form also advised the jury they were to use it if they found in favor of Robinson for the principal amount, interest and attorney fees on the note and guarantee agreement. It is conceded by all parties that Sambol had no connection with the note or the guarantee agreement, and, of course, there was no instruction given which would authorize a verdict against Sambol on either the note or the guarantee. The only instruction authorizing a verdict against Sambol was Instruction No. 14 which submitted the tor-tious acts of conversion or unlawful transfer of secured property. A finding against Sambol should have been in the form of verdict given to the jury in case they found the issues in favor of Robinson under Instruction Nos. 8, 10, 12, 14, 16 or 19. That form of verdict made no reference whatever to principal amount, interest or attorney fees, but called for the assessment of damages in one lump sum. If the verdict is to be construed as strictly a finding on the balance due on the note, then the finding against Sambol must be disregarded. However, the only basis on which this express finding against Sambol could be disregarded would be to arbitrarily ignore the express finding which the jury made against him. To properly construe the jury’s verdict, the entire verdict must be read and considered without arbitrarily adding or omitting express findings which the jury used. In this instance, to give full effect to the express finding on the issues which the jury made, it must be concluded the jury found generally in favor of the Robinsons and against Ernest, Mary, Riverside and Sam-bol. To make a finding against Sambol the jury could not have been making a pure finding on the note. On the other hand, after the jury made its express finding against Ernest, Mary, Riverside and Sambol, it awarded the sums of money it found to be due on the note, plus the interest and attorney fees. Thus, although the jury made an express finding against those liable on the note and guarantee agreement, it also expressly found against one who was not a party to these agreements. The conclusion seems to be inescapable to this court that the verdict returned by the jury was not one authorized by the court and it is impossible to determine the intent of the jury from the verdict they did return. Because the jury commingled a finding on the note with a finding against one not liable thereon, the verdict is ambiguous. To surmise on what the jury intended and ignore what it said would bring a dangerous intrusion upon the fundamental concept of our system of justice which intrusts to the jury the sole duty to find the facts. Johnson v. Girvin’s Estate, 370 S.W.2d 163[2, 3] (Mo.App.1963). It was further stated in Johnson, . .we may not speculate upon what a jury meant by what it said.” 370 S.W.2d 167[2, 3], It should be apparent that any construction of this verdict would involve surmise and speculation as to what the jury meant. Because a court cannot speculate as to what a jury meant, a verdict which requires speculation to determine its meaning cannot stand. If a verdict is not reasonably clear and definite, it cannot support a judgment entered thereon. Thorne v. Thorne, supra. In that circumstance the judgment must be set aside. It follows that if the verdict here is not definite and certain then it cannot be said that the jury found for Robinson on any tort theory which would support a verdict — 873 — for exemplary damages. For that reason, the verdict and judgment for exemplary damages may not stand. It may be observed that the jury in this case was unquestionably confused by the large number of instructions, the number of parties, and the number of forms of verdict. It should also be noted Robinson submitted, rightly or wrongly, two distinct and separate causes of action, one on the note and the other on the fraud theory. Yet the jury was not instructed to return a verdict on each of these separate and distinct causes of action. It has long been held in this circumstance there must be a separate finding on each cause of action. Rossen v. Rice, 230 Mo.App. 109, 87 S.W.2d 213 (1935). Robinson contended in oral argument that MAI 36.09 had been used to submit the issue concerning the note, and MAI 36.12 had been used to submit the issue of actual and punitive damages on the tort theory. These forms would not be appropriate to be used in a proper case when two separate and distinct causes of action are submitted without modification to require a jury to make a finding with respect to each cause of action. It should be further noted MAI 36.09 does contain a form allowing the jury to find for the defendant after the form finding for the plaintiff on the note, but this was omitted. Likewise, MAI 36.12 is not followed exactly because the form did not require the jury to name each defendant and list the amount of punitive damages assessed against that defendant. A further source of confusion in the instructions was undoubtedly the fact the only form given to the jury to find for any of the defendants was the very last form which was appropriate to be used only in case the jury found in favor of all the defendants. Certainly, with separate submissions against multiple defendants, the jury should have been given appropriate forms by which they could express their finding with respect to each defendant as well as with respect to each separate cause of action. Robinson urged on oral argument the jury simply followed counsel’s final argument and found under the tort submission, but spelled out the method by which they arrived at the amount of damages. This ignores the form of verdict which they followed and which plainly told them it was to be used if they found for the principal amount of the note. Robinson also argues a finding for him implies a finding by the jury adverse to all other claims submitted. It is true a finding can sometimes be made by implication — such as when the jury returns a verdict on a claim but does not return a verdict on a counterclaim. In that situation, if the verdict on the claim necessarily constitutes a determination of the counterclaim, no express verdict is required. Commercial Nat. Bank of Kansas City, Kan. v. White, 254 S.W.2d 605, 608 (Mo.1953). However, such rule cannot be applied in this case because the verdict returned is ambiguous since it cannot be determined whether the jury made a finding on the note or on the conversion claim. Even if the verdict were not ambiguous, a finding on the note issue would not necessarily constitute a finding on the conversion or transfer of the security issue. Likewise, it cannot be held the jury found for or against the other parties not mentioned. The verdict must be responsive to all material issues and it should find the issues for or against the respective parties. Albrecht v. Piper, 164 S.W.2d 105 (Mo.App.1942). Further, a judgment entered against a party not based upon a verdict is in excess of the power of the trial court. Stafford v. Far-Go Van Lines, Inc., 485 S.W.2d 481, 492 (Mo.App.1972). Where a verdict cannot be fairly resolved into a definite finding for either party, it will not support the entry of any judgment. Boone v. Richardson, 388 S.W.2d 68 (Mo.App.1965). For all of these reasons, the verdict returned in this case will not support a ver874 diet in favor of or against any party to this action. Robinson makes a final contention that the jury must have found under the tort theory because it awarded punitive damages and the instructions clearly stated punitive damages could not be awarded unless actual damages were awarded against the same defendant. Again, the answer is two-fold. First, the verdict is ambiguous. Second, the form of verdict used contained the words “assess their damages.” The jury could well have understood the damages found in the verdict were sufficient to support punitive damages. The anomaly is contained in MAI to require the jury to state they assess damages when they are actually finding the amount due on a note. While this may be technically correct from legal considerations, it could well have produced confusion to this lay jury. However, this verdict may not be made clear by considering this possible confusion because it remains ambiguous. One other matter which may occur on retrial involves the attempt of Ernest to show a payment of $4,800 on the $50,000 loan. This, together with a $5,000 payment which was admitted, would have made a credit of $9,800. However, Ernest had not pleaded any payment of $4,800 nor any facts to show he was entitled to credit for this amount, and when he attempted to do so during trial, the court refused permission. There is some confusion in the brief as to whether the claim concerning the $4,800 was in the nature of a counterclaim or as a credit for payment. However, there will be ample opportunity before another trial for Ernest to amend his pleadings. At that time, the court can determine whether a counterclaim or credit for payment is claimed and can properly rule on any issue arising from such amendment. Because the verdict of the jury is not definite and certain, the judgment is reversed and the cause is remanded for a new trial as to all parties, including those who did not appeal. PRITCHARD, C. J., and SHANGLER, DIXON, SWOFFORD and SOMERVILLE, JJ., concur. SHANGLER, J., concurs in separate concurring opinion in which PRITCHARD, C. J., and SWOFFORD and SOMERVILLE, JJ., concur. WASSERSTROM, J., dissents in separate dissenting opinion.