Case Title: GERALD SCHMIDT and CLAUDIA MELCHER V. KARL KILLMER, Trustee in Liquidation of Triple B Limited Partnership 1998B; MACY & ASSOCIATES, LLC, f/k/a MACY & McKEE, LLC, a Wyoming Limited Liability Company; TRIPLE B LIMITED PARTNERSHIP 1998B, a Wyoming Limited Partnership; BRAMMER PETROLEUM, INC., a Texas Corporation doing business in Wyoming; CARPENTER & SONS, INC., a Wyoming Corporation; BTS LLC, a Wyoming Limited Liability Company; SILVER PETROLEUM CORPORATION, an Oklahoma Corporation doing business in Wyoming; SUN CEMENTING OF WYOMING, INC., a Wyoming Corporation; KENNETH D. WAGNER (XS ENERGY, INC.); and WILLIAM R. BARTH, JR.

Citation: 

Docket Number: 06-38

State: wyoming

Court: Wyoming Supreme Court

Date: 2009-02-23T00:00:00Z

Document:
GERALD SCHMIDT and CLAUDIA MELCHER V. KARL KILLMER, Trustee in Liquidation of Triple B Limited Partnership 1998B; MACY & ASSOCIATES, LLC, f/k/a MACY & McKEE, LLC, a Wyoming Limited Liability Company; TRIPLE B LIMITED PARTNERSHIP 1998B, a Wyoming Limited Partnership; BRAMMER PETROLEUM, INC., a Texas Corporation doing business in Wyoming; CARPENTER & SONS, INC., a Wyoming Corporation; BTS LLC, a Wyoming Limited Liability Company; SILVER PETROLEUM CORPORATION, an Oklahoma Corporation doing business in Wyoming; SUN CEMENTING OF WYOMING, INC., a Wyoming Corporation; KENNETH D. WAGNER (XS ENERGY, INC.); and WILLIAM R. BARTH, JR.2009 WY 23201 P.3d 1121Case Number: 06-38Decided: 02/23/2009
OCTOBER 
TERM, A.D. 2008

 
 
GERALD 
SCHMIDT and CLAUDIA 
MELCHER,Appellants(Plaintiffs),v.KARL KILLMER, 
Trustee in Liquidation of Triple B Limited Partnership 1998B; MACY & 
ASSOCIATES, LLC, f/k/a MACY & McKEE, LLC, a Wyoming Limited Liability 
Company; TRIPLE B LIMITED PARTNERSHIP 1998B, a Wyoming Limited Partnership; 
BRAMMER PETROLEUM, INC., a Texas Corporation doing business in Wyoming; 
CARPENTER & SONS, INC., a Wyoming Corporation; BTS LLC, a Wyoming Limited 
Liability Company; SILVER PETROLEUM CORPORATION, an Oklahoma Corporation doing 
business in Wyoming; SUN CEMENTING OF WYOMING, INC., a Wyoming Corporation; 
KENNETH D. WAGNER (XS ENERGY, INC.); and WILLIAM R. BARTH, 
JR.,Appellees(Defendants).

 
 
Appeal 
from the District Court of Campbell County

The 
Honorable Dan R. Price II, Judge

 
 

Representing 
Appellants:

Stuart 
S. Healy of Healy Law Firm, Sheridan, Wyoming.

 
 

Representing 
Appellees:

Stephenson 
D. Emery of Williams, Porter, Day & Neville, P.C., Casper, Wyoming; Morris 
R. Massey of Brown, Drew & Massey, LLP, Casper, Wyoming.  Argument by Messrs. Emery and 
Massey.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, 
JJ.

 
 
*This 
case was reassigned to Chief Justice Voigt on December 1, 
2008.

 
 
VOIGT, 
Chief Justice.

 
 
[¶1]      The appellants, 
Gerald Schmidt and Hank Melcher, were general partners in Triple B Limited 
Partnership 1998B (Triple B).1  The Triple B partners voted to dissolve 
and liquidate the partnership, and appointed appellee Karl Killmer to act as 
liquidating trustee to wind up the partnership's affairs.  Following liquidation of the partnership 
and distribution of its assets, the appellants filed suit against Killmer, Macy 
& Associates, LLC (Killmer's accounting firm), and the remaining Triple B 
Partners (appellees).  The appellees 
moved for and were eventually awarded summary judgment resulting in a dismissal 
of the suit.  The appellants now 
appeal that ruling.  We will 
affirm.  

 
 
ISSUE

 
 
[¶2]      The district 
court's primary rationale for granting summary judgment in favor of the 
appellees was a finding that the appellants had expressly consented to the 
liquidation and distribution plan.  
The appellants contend on appeal that genuine issues of material fact 
exist as to whether they had sufficient knowledge of the differences between the 
Partnership Agreement and the settlement plan to consent to the latter.    

 
 
FACTS

 
 
[¶3]      Triple B was 
formed in October of 1998.  The 
purpose of Triple B was to "own, manage and develop oil and gas leases and 
interests therein, and to explore for, produce and sell hydrocarbons . . . 
."  Under the Partnership Agreement, 
the equity and ownership of the partnership was to be divided 25% to General 
Partners and 75% to Limited Partners.  
Triple B Energy, Inc. and its president, Joe Banks, held a 24.9% general 
partnership interest, with Vernon E. Neils holding the remaining 0.1% general 
partnership interest.  On July 20, 
1999, Mr. Banks transferred 15.225% of the partnership interest to other 
parties, including 5% to each of the appellants.  A few days later, on July 28, 1999, Mr. 
Banks relinquished his remaining 9.675% interest to the Triple B partners, 
divided proportionately according to each partner's existing interest.  Through this division, the appellants 
each acquired an additional .5417% interest, leaving each with a 5.5417% 
partnership interest.

 
 
[¶4]      Differences arose 
among the Triple B partners as to the management and direction of the 
partnership, and in October of 2000, the decision was made to liquidate and wind 
up the affairs of the partnership.  The partners voted unanimously to hire 
Killmer as liquidating trustee.  On 
July 9, 2001, Killmer, through counsel, sent a letter to the partners detailing 
the plan for final liquidation and distribution of partnership assets.  Enclosed with the letter was a ballot 
for each partner to indicate agreement to proceed with the liquidation as set 
forth in the letter.  On July 13, 
2001, appellant Schmidt returned the ballot expressly indicating his approval of 
the proposed distribution plan.  Eventually, partners owning approximately 
62% of the profit/loss interests in the partnership voted in favor of the 
proposed method of liquidation.  
Killmer therefore informed the partners that he would proceed with the 
liquidation as proposed.

 
 
[¶5]      Appellant Melcher 
was involved in a pending collateral lawsuit against Triple B.  On March 5, 2002, Melcher agreed to 
settle the lawsuit and entered into a settlement agreement with Killmer, who was 
acting as trustee for Triple B.  
Melcher's interest in the liquidation and distribution of Triple B was 
addressed as a term of the settlement.  
Specifically, the settlement agreement read, in pertinent part: "All 
distributions in liquidation of [Triple B] . . . shall be made to Melcher in the 
proportion reflected on the attached Exhibit A at the same time or times as 
distributions to other partners."  
Exhibit A to the settlement agreement was a "Capital Account Analysis"  
a spreadsheet illustrating all of the distributions as described by Killmer in 
the original proposal for liquidation and distribution of 
assets.

 
 
[¶6]      In November of 
2002, Killmer, through his attorney, sent a letter to the partners indicating 
that with the exception of a few final tasks, the liquidation and dissolution of 
Triple B was complete.  In the 
letter, Killmer also noted that appellant Schmidt was claiming that the 
partnership assets had been improperly distributed.  Schmidt brought his concerns to the 
attention of appellant Melcher, and when Melcher's attorney elected not to 
pursue the matter, Melcher contacted Schmidt's attorney and on July 8, 2003, 
Schmidt and Melcher filed a civil action against Killmer, his accounting firm, 
Triple B, and the individual partners. 

 
 
[¶7]      On August 18, 
2003, Killmer and his accounting firm filed a motion for summary judgment 
arguing, inter alia, that the 
appellants were not entitled to any relief inasmuch as they had consented to and 
ratified Killmer's actions.  The 
district court heard argument on the motion and on September 9, 2004, issued a 
decision letter denying the motion.  
The court addressed Killmer's arguments as follows:

 
 
As 
to the ratification and consent argument, the court is unable to find with the 
material submitted whether the distribution was made according to the 
representation.  The representation 
was:  "The assets will be 
distributed to partners holding positive capital accounts until all such 
accounts equal zero, and thereafter to partners at their profit and loss 
percentages."  Exhibit 8 to Killmer 
Affidavit, page 4.  Once all of the 
bills are paid and the capital accounts are reduced to zero, profits were to be 
divided 25% to the general partners and 75% to the limited partners.  As I said above, I am unable to tell if 
that distribution has been made.  
Finally, with regard to plaintiff Melcher, Exhibit A to his settlement 
agreement is not self-explanatory such that he received the appropriate 
distribution.

 
 
[¶8]      A year later, 
after further discovery, Killmer filed a renewed motion for summary 
judgment.  In his brief in support 
of the motion, Killmer argued that further discovery had "fill[ed] in the holes" 
in the initial record by confirming that the appellants had consented to the 
terms of the settlement and received everything that Killmer told them they 
would get.  A second hearing was 
held and on December 22, 2005, the district court issued a decision letter 
indicating that it would grant Killmer's renewed summary judgment motion.  Specifically, the court 
stated:

 
 
With 
this motion, Defendant seeks summary judgment dismissing Plaintiff's claims 
against them.  Defendants have 
seized upon language in the court's decision letter of September 9, 2004, which 
stated that "the court is unable to find with the material submitted whether the 
distribution was made according to the representation."  Indeed, Defendants have provided more 
than enough evidence to the court, and Plaintiffs by stipulation in court and agreement have 
not contested, that the Plaintiffs did receive the distributions Mr. Killmer 
told them that they would get upon dissolution of the 1998B partnership.  Plaintiffs continue to assert that the 
proposal was not in accordance with the Partnership Agreement.  Based upon the admissions, the court 
finds that there was a ratification and consent to any resulting deviations from 
the Partnership Agreement.

 
 
(Emphasis 
in original.)  The district court 
entered an order dismissing the case on January 12, 2006.  The appellants timely filed a Joint 
Notice of Appeal.

 
 
STANDARD 
OF REVIEW

 
 
[¶9]                                         
When we review the granting of a summary judgment, we employ the same 
standards and use the same materials as were employed 
and used by the trial court. We examine the record from the vantage point most 
favorable to the party who opposed the motion, and we give that party the 
benefit of all favorable inferences that may fairly be drawn from the record. 
Summary judgment is appropriate only when no genuine issue as to any material 
fact exists and the prevailing party is entitled to have a judgment as a matter 
of law. A genuine issue of material fact exists when a disputed fact, if it were 
proven, would have the effect of establishing or refuting an essential element 
of the cause of action or defense which the parties have asserted. We review a 
grant of summary judgment deciding a question of law de novo and afford no 
deference to the trial court's ruling.

 
 
"We 
will affirm a grant of summary judgment if it can be sustained on any legal 
ground appearing in the record."

 

 

(Citations 
omitted.)  Platt v. 
Creighton, 
2007 WY 18, ¶ 7, 150 P.3d 1194, 1198-99 (Wyo. 
2007).

 
 
DISCUSSION

 
 
[¶10]   The appellants argue on appeal that 
Killmer's actions as liquidating trustee violated contractual and fiduciary 
duties.  Killmer responds that even 
if he somehow acted improperly, which he disputes, the appellants consented to 
his actions and ultimately received everything to which they agreed.  The appellants argue that genuine issues 
of material fact exist with regard to whether they consented to Killmer's 
actions in liquidating Triple B Partnership.  Because the question of appellants' 
consent is dispositive, our discussion will begin there.

 
 
[¶11]   "Principles of trust law recognize 
that [a]fter a breach of trust has occurred, a beneficiary may expressly or 
impliedly express satisfaction with the trustee's action and thereby prevent 
himself from claiming thereafter that it was illegal.'" In re Spengler, 596 N.W.2d 818, 
824 (Wis. Ct. App. 1999) (quoting George Gleason Bogert et al., The Law of Trusts and Trustees § 962 
(rev. 2d ed 1983)).  "[A] trust 
beneficiary who consents to or approves of an act, omission, or transaction by a 
trustee may, upon ground of waiver or estoppel, be precluded from subsequently 
objecting to the impropriety of the act, omission, or transaction."  76 Am. Jur. 2d Trusts § 338 (2005) (citing Mahle v. First Nat'l Bank, 610 N.E.2d 115, 117 (Ill. 
App. Ct. 1993)).  This Court has 
said: 

 
 
To 
establish a ratification by a cestui que 
trust, the fact must not only be clearly proved, but it must be shown that 
the ratification was made with full knowledge of all the material particulars 
and circumstances, and also in a case like the present that the cestui que trust was fully apprised of 
the effect of the acts ratified, and of his or her legal rights in the 
matter.

 
 

Int'l 
Trust Co. v. Preston, 
24 Wyo. 163, 156 P. 1128, 1131 (1916).  
A beneficiary's consent or ratification is not valid, however, if the 
beneficiary is able to prove such was induced by fraud in the execution, fraud 
in the inducement, mutual mistake, or mental incompetence.  76 
Am. Jur. 2d Trusts § 338 (2005) 
(citing McCormick v. McCormick, 455 N.E.2d 103, 112 (Ill. App Ct. 1983)).2  In sum, consent or ratification by a 
trust beneficiary requires proof of: 1) express or implied consent to the 
trustee's action, and 2) full knowledge of all the material particulars and 
circumstances.

 
 
[¶12]   As to the first requirement, it is 
undisputed that both Schmidt and Melcher signed documents indicating consent to 
the distributions.  On July 9, 2001, 
Killmer sent a letter to all partners specifically detailing his proposed final 
liquidation and distribution of all the partnership assets.  Attached to that letter was a ballot 
wherein each partner could indicate whether he agreed with or objected to the 
proposed plan.  Appellant Schmidt 
returned the signed ballot with a check in the box indicating that he agreed 
with the proposed distribution.

 
 
[¶13]   Although Appellant Melcher 
initially disagreed with the proposed distribution, he later consented to the 
plan as part of the separate lawsuit settlement. As a term of the latter 
settlement agreement, Melcher agreed to accept distributions in liquidation of 
Triple B in the proportion set forth in the liquidation and distribution plan 
presented by Killmer in the July 9, 2001 letter.  The settlement agreement included an 
exhibit detailing the individual percentage distributions assigned to each 
Triple B partner.

 
 
[¶14]   The appellants do not dispute that 
they received and signed these documents.3  Rather, their argument rests primarily 
on the second requirement of the consent/ratification analysis.  They assert that their consent was not 
valid inasmuch as they did not have full knowledge of the specifics of their 
consent, or that the extent of their knowledge is a disputed question of 
fact.  In response, Killmer insists 
that the appellants had full knowledge of the facts by virtue of the series of 
letters sent to them explaining his actions in detail at every step of the 
liquidation process.

 
 
[¶15]   We find Killmer's position to be 
supported by the record.  We 
specifically look to Killmer's July 9, 2001, letter.  In that correspondence, Killmer set 
forth the exact percentages all partners, including the appellants, were to 
receive on liquidation.  He 
explained, in detail, how he had reached his conclusions, referencing the 
specific provisions of the Partnership Agreement upon which he was relying.  This information was readily available 
to both Schmidt and Melcher at the time they signed the documents indicating 
their consent to Killmer's proposed distribution plan.  

 
 
[¶16]   With respect to an individual's 
knowledge of facts, the Wyoming Uniform Trust Code 
indicates:

 
 
(a)    Subject to subsection (b) of 
this section, a person has knowledge of a fact if the person:

(i)      Has actual 
knowledge of it;

(ii)     Has received a notice 
or notification of it; or

(iii)    From all the facts and 
circumstances known to the person at the time in question, has reason to know 
it.

 
 
Wyo. 
Stat. Ann. § 4-10-104(a) (LexisNexis 2003).  Further, we have said: 

 
 
One 
who signs a contract generally cannot avoid it on the ground that he did not 
attend to its terms, or did not read it, or supposed that it was different in 
its terms, or that he took someone's word as to what it 
contained.

 
 
"The 
rule is that one who signs a paper, without reading it, if he is able to read 
and understand, is guilty of such negligence in failing to inform himself of its 
nature that he cannot be relieved from the obligation contained in the paper 
thus signed, unless there was something more than mere reliance upon the 
statements of another as to its contents.  * * *"

 
 
(Citations 
omitted.)  Laird v. Laird, 597 P.2d 463, 467 (Wyo. 
1979); accord First State Bank of 
Wheatland v. American Nat'l Bank, 808 P.2d 804, 806 (Wyo. 
1991).

 
 
[¶17]   The appellants do not attempt to 
nullify their consents by arguing that they were fraudulently obtained, or based 
on mistake, or that Killmer engaged in any type of self-dealing.  Instead, their contention is that 
Killmer's plan of liquidation and distribution deviated from the terms of the 
Partnership Agreement, and that they were not fully aware of such 
deviations.  Because we find that 
the appellants consented to Killmer's actions when they signed documents 
accepting the distribution plan, and they were fully apprised at the time of all 
the details thereof, the appellants cannot now challenge the distribution plan 
on the ground that it differed from the Partnership Agreement.  They had an opportunity to make that 
challenge before they agreed to the settlement, and they did not do 
so.

 

CONCLUSION

 
 
[¶18]   Having considered all of the 
admissible evidence and argument submitted by the parties in the summary 
judgment proceedings, we find no disputed questions of material fact as to the 
appellants' consent to Killmer's actions, and conclude, as a matter of law, that 
the appellees were entitled to judgment.  
Affirmed.

 
 
FOOTNOTES

 
 

1Hank 
Melcher died during the pendency of this action and Claudia Melcher, personal 
representative of his estate, was substituted as a party in his 
place.

 
 

2Although 
not binding in this matter, as it was not effective until July 1, 2003, 
Wyoming's recently-codified consent, release, and ratification statute is 
consistent with these principles:

 
 
(a)     A fiduciary is not 
liable to a beneficiary for breach of trust if the beneficiary consented in 
writing to the conduct constituting the breach, released the fiduciary from 
liability for the breach or ratified the transaction constituting the breach, 
unless:

(i)      The consent, 
release or ratification of the beneficiary was induced by improper conduct of 
the fiduciary; or 

(ii)     At the time of the 
consent, release or ratification, the beneficiary did not know of the 
beneficiary's rights or of the material facts relating to the 
breach.

 
 
Wyo. 
Stat. Ann. § 4-10-1009(a) (LexisNexis 2007).

 
 

3An 
affidavit submitted by Schmidt states the following regarding the 
ballot:

 
 
I 
did receive a copy of the letter of July 9, 2001, referred to in paragraph 19 of 
the Killmer Affidavit and attached as Exhibit 8 within a few days after it was 
mailed, and I did sign and return the Ballot referred to in paragraph 21 and 
shown as Exhibit 11 to the Affidavit, probably on the same day it was 
received.

 
 
Melcher's 
affidavit includes a similar statement concerning the settlement agreement, 
stating, "As represented in paragraph 23 of the Affidavit of Karl Killmer 
supporting his Motion for Summary Judgment, on March 5, 2002, I did sign the 
Settlement Attached (sic) as Exhibit 13 to the Killmer 
Affidavit."