Title: Hurd v. Nelson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Hurd v. Nelson1986 WY 46714 P.2d 767Case Number: 85-92Decided: 02/21/1986Supreme Court of Wyoming
DALE H. HURD, APPELLANT 
(DEFENDANT), 

 
 
v. 

 
 
DARLA MAE NELSON, 
FORMERLY DARLA MAE HURD, APPELLEE (PLAINTIFF).

 
 
Appeal from the District 
Court, LincolnCounty, John D. Troughton, 
J.

 
 
 
 
Representing 
Appellant:

David A. Hampton, 
Rock 
Springs.

 
 
Representing 
Appellee:

Dennis L. Sanderson, 
Afton. 

 
 
Before THOMAS, C.J., and 
BROWN, CARDINE, and URBIGKIT, JJ., and ROONEY, J. 
(Ret).

 
 

BROWN, 
Justice.

 
 

[¶1.]     This appeal results 
from an order wherein the district court found appellant Dale Hurd liable to 
appellee Darla Mae Nelson (formerly Darla Mae Hurd) for appellant's breach of 
the parties' stipulation and settlement agreement. Such agreement was entered 
into between the parties pursuant to their divorce and made a part of the 
divorce decree. Appellant raises the following issue for our 
consideration:

 
 
"Whether the trial Court 
abused its discretion in awarding Plaintiff $12,500.00 for Defendant's breach of 
the Stipulation and Settlement Agreement for failure to remodel the parties' 
house and to complete the construction of the shop building for the 
Plaintiff."

 
 

[¶2.]     We will 
affirm.

 
 

[¶3.]     The parties were 
divorced on June 8, 1981. On May 22, 1981, the parties signed a stipulation and 
settlement agreement which was incorporated into the divorce decree. This 
agreement provided, inter alia, the following:

 
 
"4. The Plaintiff shall 
be awarded as her sole and separate property, free and clear of any claims or 
demands by the Defendant, the following described 
property:

 
 
"A. The physical 
possession of the house and real estate in Grover, Wyoming, for a period of ten 
(10) years or until the Plaintiff should remarry, whichever first occurs at which time the house and real property 
shall be sold and the proceeds shall be divided equally between the parties. 
The Plaintiff is hereby given the first right to purchase the Defendant's equity 
in the house and real property at a rate equal to the highest bona fide offer of 
a third party given to the parties. It is further understood and agreed that the 
Defendant will pay for the remodeling of the house to the Plaintiff's 
satisfaction at a cost not to exceed the sum of $10,000.00 and that this 
remodeling shall be completed no later than June 1, 1982. It is further 
understood and agreed that the Defendant shall pay for the completion of the 
construction of a shop and storage building which is planned to be erected upon 
the real property of the parties and that the Plaintiff shall be entitled to 
rent the space in this building on such terms and conditions as she deems 
advisable and that she may retain the rental income solely and separately for 
herself." (Emphasis added.)

 
 

[¶4.]     Appellant did 
contribute between $2,000 and $3,000 for the remodeling of the house, as well as 
another $800 expenditure for basement carpeting. He testified, however, that he 
estimated it would take an additional $6,000 to complete the remodeling of the 
house.

 
 

[¶5.]     Appellant contributed 
approximately $12,000 in materials for the construction of the shop, but did not 
pay for any labor, except $700 which was paid by appellant to a contractor who 
did some work on the shop. Members of appellee's church eventually erected the 
shop at no charge.

 
 

[¶6.]     Appellee then filed a 
petition for order to show cause why the terms of the divorce decree should not 
be enforced.1 Appellee sought to collect from 
appellant the costs of remodeling the house and the construction of the shop. 
After a hearing on the matter, the court rendered judgment finding, inter 
alia:

 
 
"IT IS THEREFORE ORDERED, 
ADJUDGED, AND DECREED:

 
 
"* * 
*

 
 
"2. That judgment be 
entered against the Defendant in the sum of TWELVE THOUSAND FIVE HUNDRED DOLLARS 
($12,500.00) for the Defendant's breach of the Stipulation and Settlement 
Agreement for failure to remodel the parties' house and to complete the 
construction of the shop building for the Plaintiff.

 
 
"* * 
*

 
 
"4. Judgment shall be 
entered against the Plaintiff in the sum of ONE THOUSAND ONE HUNDRED TWENTY-FIVE 
DOLLARS ($1,125.00) for Defendant's share of the rental value of the house from 
September 21, 1984 until February 21, 1985. The Plaintiff may continue to occupy 
the house until sold. Provided, however, she shall continue to pay the Defendant 
the sum of TWO HUNDRED TWENTY-FIVE DOLLARS ($225.00) per month as rental for the 
use and occupancy of the property of the parties.

 
 
"5. That the above 
payments of the parties shall be made through the Clerk of the District Court in 
and for the County of Lincoln, State of Wyoming.

 
 
"IT IS FURTHER ORDERED 
that the property of the parties be sold and the judgment amounts of TWELVE 
THOUSAND FIVE HUNDRED DOLLARS ($12,500.00) and ONE THOUSAND EIGHT HUNDRED 
NINETY-FOUR DOLLARS AND EIGHTY CENTS ($1,894.80), if not previously satisfied, 
may be deducted from the purchase price and paid to the Plaintiff. The ONE 
THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($1,125.00) owed by the Plaintiff to 
the Defendant shall be deducted and paid to the Defendant. The remaining balance 
of the proceeds from the sale of the property be divided equally between the 
parties.

 
 
"IT IS FURTHER ORDERED 
that each party shall pay for their own costs and attorney's fees for this 
hearing."

 
 

[¶7.]     As previously noted, 
appellant asks whether the trial court abused its discretion in awarding 
appellee $12,500 for appellant's alleged breach of the agreement. We have oft 
stated our applicable standards of review. When reviewing cases on appeal, we 
accept the evidence presented by the prevailing party as true, leaving out of 
consideration entirely evidence presented by the unsuccessful party in conflict 
therewith, giving every favorable inference that fairly and reasonably may be 
drawn from the successful party's evidence. Stockton v. Sowerwine, Wyo., 690 P.2d 1202 (1984); and Zanetti v. 
Zanetti, Wyo., 
689 P.2d 1116 (1984). Furthermore, a trial court's findings carry with them 
every finding of fact that fairly and reasonably can be drawn therefrom. 
Zanetti v. Zanetti, supra; and Meeker v. Lanham, Wyo., 
604 P.2d 556 (1979).

 
 

[¶8.]     Turning to the facts of 
this case, appellant admitted he was responsible for contributing up to $10,000 
for the remodeling of the house. He further testified he had contributed between 
$2,000 and $3,000 toward such end, but he estimated the total cost of remodeling 
the house would be $6,000. And he admitted that he had not paid the full cost of 
remodeling up to $10,000 as he expressly agreed to. Appellee testified there was 
still work to be done on the house to complete its remodeling. She also 
testified she borrowed $3,000 to pay a contractor for his work and appellant 
never paid her the $3,000 she borrowed.

 
 

[¶9.]     Appellee testified she 
could not afford to pay for the cost of labor to construct the shop, even though 
appellant purchased the materials, so her church members eventually did the work 
for her free of charge.

 
 

[¶10.]  In its closing remarks, the court stated 
the basis for awarding appellee $12,500:

 
 
"THE COURT: All right. 
The agreement in this case that the parties entered at the time of their divorce 
provided that the Defendant will pay for the remodeling of the house to 
Plaintiff's satisfaction, not to exceed $10,000. In that regard, Mrs. Hurd 
testified that she had spent $3,000 but the remodeling wasn't complete. Mr. Hurd 
testified that in his estimation, it would cost $6,000 to do not only what was 
complete, but what Mrs. Hurd had done up to this point. In other words, a total 
figure of $6,000. 

 
 
"With respect to the 
shop, the agreement provided that the Defendant shall pay for the completion of 
the construction of a shop and storage building. Mr. Hurd testified that $12,000 
was paid for materials; $700 for labor; and Mrs. Hurd testified that $12,000 for 
material - She agreed with that, but she disagreed with the labor, indicating 
that she felt the labor was worth some $12,000. The Court notes the appraised 
value of that shop and further notes that appraisals are guestimates at the time 
that they are made. Educated guesses, to be sure, but nevertheless, guesses. The 
Court also notes the fact that it's in dispute whether or not - the exact 
amounts, if any, which Mr. Hurd paid Mrs. Nelson in cash. The Court believes 
that the sum of $12,000 for materials is reasonable and the sum of $8,000 for 
labor is reasonable; making a total of $6,000 in remodeling for the house, 
$20,000 for the completion of the shop, a total of $26,000. Now, the testimony 
was by Mr. Hurd that he paid $700 in labor for the shop. That's not disputed. 
Mrs. Nelson admits $800 for carpet as part of the remodeling costs and the sum 
of $12,000 is admitted for materials, making a total of $13,500. That leaves a 
difference between the cost of remodeling and completion of the shop and the 
materials and labor of some $12,500, which Mr. Hurd owes Mrs. 
Nelson."

 
 

[¶11.]  Appellant contends the court awarded 
appellee a windfall by awarding her damages for labor in the construction of the 
shop which was provided free of charge by members of appellee's church. It is 
generally recognized in tort law that compensation received by the plaintiff 
from a collateral source, wholly independent of the wrongdoer, cannot be 
deducted from the damages for which the defendant is liable. Such proposition is 
commonly referred to as the collateral source rule or 
doctrine.

 
 
"Under the collateral 
source rule or doctrine, which is a well-established rule in the law of damages, 
a wrongdoer is not entitled to have the damages to which he is liable reduced by 
proving that plaintiff has received or will receive compensation or indemnity 
for the loss from a collateral source, wholly independent of him, or, stated 
more succinctly, the wrongdoer may not be benefited by collateral payments made 
to the person he has wronged. This is an established exception to the general 
rule that damages in negligence actions must be compensatory. * * *" 25 C.J.S. 
Damages § 99(a), p. 1011 (1966).

 
 
"In tort cases, the 
plaintiff may receive benefits from a third party who is in no way connected 
with the defendant, and receipt of these benefits from the source collateral to 
the defendant has the effect of lessening the financial losses which the 
plaintiff would otherwise have suffered. Thus, if the basic goal of tort law is 
only that of compensating plaintiff for his losses, evidence of these benefits 
should be admitted to reduce the total damages assessed against the defendant. * 
* *" 22 Am.Jur.2d Damages § 206, p. 286 (1965).

 
 

[¶12.]  However, it is generally held that the 
collateral source doctrine is not applied to breach-of-contract actions unless 
the breach was of a tortious or willful nature. United Protective Workers v. Ford Motor 
Company, 223 F.2d 49 (7th Cir. 1955); and City of Salinas v. Souza & McCue Construction 
Company, 66 Cal. 2d 217, 57 Cal. Rptr. 337, 424 P.2d 921 (1967). The reason 
for such prohibition is because the collateral source rule is punitive, while 
contractual damages are compensatory in nature. As the court stated in Patent Scaffolding Co. v. William Simpson 
Construction Company, 256 Cal. App. 2d 506, 64 Cal. Rptr. 187, 191 
(1967):

 
 
"* * * The collateral 
source rule is punitive; contractual damages are compensatory. The collateral 
source rule, if applied to an action based on breach of contract, would violate 
the contractual damage rule that no one shall profit more from the breach of an 
obligation than from its full performance. An application of the collateral 
source rule is particularly indefensible in a situation in which the injured 
party potentially could make a treble recovery: one from his insurer, one from a 
defendant who has undertaken contractual liability for the loss, and one from 
the wrongdoer. * *"

 
 

[¶13.]  Courts have been reluctant to invoke the 
collateral source rule in contract cases. Daniel Construction Company, Division of 
Daniel International Corporation v. International Union of Operating Engineers, 
Local 513, 570 F. Supp. 299 (D.C.Mo. 1983); Grover v. Ratliff, 120 Ariz. 368, 586 P.2d 213 (App. 1978); Amos v. Stroud, 
252 Ark. 1100, 482 S.W.2d 592 (1972). See also Note, Unreason in the Law of 
Damages: The Collateral Source Rule, 77 Harv.L.Rev. 741 (1964). As the Patent 
Scaffolding case points out, if the rule is applied to a breach of contract 
action, such would violate the contractual damage rule that no one may profit 
more from the breach of a contractual obligation than from its full 
performance.

 
 

[¶14.]  Succinctly stated, an obligation in tort 
is not satisfied by payment from a collateral source while payment from a 
collateral source may satisfy a contractual obligation. In this case the 
obligation is not in tort nor strictly a contractual obligation, but rather an 
obligation imposed by a court order. The appellee's petition was based on the 
court's order rather than the stipulation. The stipulation of the parties merged 
into the court's order and took on greater dignity.

 
 

[¶15.]  The problem before the court is whether 
or not an obligation under a court's order satisfied in part from a collateral 
source relieves appellant from payment pursuant to the order under circumstances 
wherein both appellant and appellee benefit from the resources of the collateral 
source.

 
 

[¶16.]  The windfall here existed because of the 
gratuitous work of the church. Arguably, it could be allocated between appellant 
and appellee. However, because appellant failed to comply with the trial court's 
order he is in a poor position to ask for participation in this 
gratuity.

 
 

[¶17.]  We have found no authority on the precise 
problem here. However, it would be unjust and depreciate from the dignity of a 
court order if we were to allow appellant to violate the court's order, and as a 
consequence profit from his derelictions.

 
 
"Courts have inherent 
power to enforce their own judgments and should see to it that such judgments 
are enforced when they are called upon to do so. To deprive a court of power to 
execute its judgments is to impair its jurisdiction, and the general rule is 
that every court having jurisdiction to render a particular judgment has 
inherent power and authority to enforce it and to exercise equitable control 
over such enforcement. Thus, a court of equity has inherent power to enforce its 
decrees. A court of equity retains and possesses the power to control the manner 
of the execution of its decree, and has the inherent right to modify, by a 
subsequent order, the manner in which it shall be enforced. * * *" 46 Am.Jur.2d 
Judgments § 898, p. 1032 (1969).

 
 

[¶18.]  We think the court was correct in its 
enforcement of the previous decree. Having found no reversible error, the 
judgment is affirmed.

 
 

[¶19.]  Affirmed.

1 This case was filed as a 
petition for order to show cause why the terms of the decree should not be 
enforced. Therefore, the posture of this case is one to enforce a judgment, not 
one sounding purely in contract. We do not postulate how the result might 
differ, if at all, if the case was based solely on 
contract.

 
 

URBIGKIT, Justice, dissenting, 
with whom ROONEY, Justice, 
joins.

 
 

[¶20.]  I dissent from the majority decision 
which has the effect of awarding a judgment to an ex-wife for a cost which she 
neither incurred nor paid on an obligation derived from a property-settlement 
agreement incorporated in a divorce decree.

 
 

[¶21.]  Increasingly, a dichotomy is being 
effectuated in the law whereby an agreement in contemplation of divorce assumes 
a transitory status afforded by no other type of agreement. Care should be 
taken, or we will have extended the modification attributes of alimony and child 
support as afforded by statute and case law to property settlement agreements 
with the resulting effect that no permanency or finality in any regard will 
exist. Bjugan v. Bjugan, Wyo., 710 P.2d 213 (1985); Pavlica v. Pavlica, Wyo., 587 P.2d 639 (1978); Finkbiner v. 
Finkbiner, 340 F.2d 878 (10th Cir. 1965); Compton v. Compton, 101 Idaho 328, 612 P.2d 1175 (1980); Messersmith v. Messersmith, 68 Wn.2d 735, 415 P.2d 82 (1966).

 
 

[¶22.]  I cannot differentiate logically as to 
the essence of this agreement, whether it is enforceable by contempt or only 
attenuated with the normal attributes for contract enforcement by entry of a 
money judgment to be followed by execution. The essential difference is 
determined by the status of the contract provision as to whether it is alimony 
or property settlement and not the inclusion in the divorce result by separation 
agreement and merger into the decree. Schaffer v. Schaffer, 57 Or. App. 43, 
643 P.2d 1300 (1982).

 
 

[¶23.]  An agreement should not be changed in 
substantive terms by ancillary enforcement status.

 
 
"* * * The situation is 
not altered by incorporation of the agreement into a decree of court or by the 
merger resulting therefrom. [Citations.] The court looks through the decree to 
the agreement and determines the rights of the parties in this respect just as 
if there were no merger." Kelley v. 
Kelley, 151 Cal. App. 2d 228, 311 P.2d 90, 92 (1957).

 
 

[¶24.]  At issue in this case is the simple 
question: Did the husband, by property settlement agreement, undertake to pay 
not just cost but also for value added in the building-construction provision? 
Our quest is for the intention of the parties in making the agreement. 27B 
C.J.S. Divorce § 301(3), p. 415.

 
 

[¶25.]  The two provisions of the agreement as 
are in haec verba also included in the decree are:

 
 
"* * * pay for the 
remodeling of the house * * * at a cost not to exceed the sum of $10,000 * * 
*,"

 
 
and

 
 
"* * * pay for the 
completion of the construction of a shop and storage building * * 
*."

 
 

[¶26.]  I would not find the legal issues of 
either collateral source or windfall to be involved. Reliance on those theories 
in this case is misplaced. At issue is only the within intention of the parties 
as derived from a contractual dispute. There is, however, a differentiation to 
be found between cost and value. I would interpret the agreement to contemplate 
that the husband undertook to pay for the cost and by contrast the trial court 
determined and now this court would assess liability under the agreement based 
upon value 
added.

 
 

[¶27.]  At the trial, counsel talked about 
appraisal and "economic benefit" that should have been provided, and the court 
talked about what the labor was worth. Cost is what you have to pay; value is 
what you get. Cf. Horseshoe Estates v. 2M 
Company, Inc. Wyo., 713 P.2d 776 
(1986).

 
 

[¶28.]  The majority create an agreement that did 
not exist under the guise of a showcause enforcement proceeding after the court 
had adopted the property settlement agreement in its entry of the original 
divorce decree.1

 
 
"`* * * It must be 
construed and enforced according to the terms employed, and a court has no right 
to interpret the agreement as meaning something different from what the parties 
intended as expressed by the language they saw fit to employ.'" Thompson v. Thompson, 170 Mon. 447, 554 P.2d 1111, 1114 (1976), quoting from 17 Am.Jur.2d Contracts, § 242, p. 
627.

 
 
"That these agreements 
should be construed and interpreted as other contracts is no longer open to 
question. Bergman v. Bergman, 145 
Fla. 10, 199 So. 920." Underwood v. Underwood, 
Fla., 64 So. 2d 281, 287-288 (1953).

 
 
See also Wilson v. Teacher Retirement System of 
Texas, Tex.Civ.App., 617 S.W.2d 329 (1981); McCray v. McCray, Tex., 
584 S.W.2d 279 (1979).

 
 

[¶29.]  Whatever the ethics or morality concerns 
that may exist by virtue of the advantage to the ex-husband when Mrs. Nelson, in 
economic necessity, was given donated labor by her church, the majority is 
actually rewriting the agreement and the decree by providing for the payment of 
a nonexistent and a nonincurred cost. Do we determine liability in this case by 
the ascertainment of for whom the volunteer effort was afforded? Suppose that 
Mr. Hurd was a member of the Latter Day Saints Church and Mrs. Nelson was not, 
or that a couple of friends of Hurd had volunteered and with him the work was 
done: would the result then be different?

 
 
"As the English 
philosopher, Thomas Hobbs, said: `The definition of injustice is no other than 
the not performance of covenant.'" Brannon v. Adkins, 7 Ohio Misc. 18, 216 N.E.2d 71, 73 (1966).

 
 

[¶30.]  I would be more comfortable in this 
dissent if the words "cost of" had been included in the agreement provision "pay 
for the [cost of] completion," but that attribute is more suitably thereby 
defined as the intention of the parties than by rephrasing to state "pay for the 
[value of] completion," as is the premise of the wife's claim, first in the 
trial court and now resubmitted here. There is a difference between what is owed 
and what is enough in payment demand.

 
 

[¶31.]  The particular concern raised by the 
majority encompasses a new legal theory that a contract which may be 
additionally enforceable by contempt has a character as to its intrinsic terms 
which is different than if inclusion in the decree had never occurred. Differing 
from both parties and the majority of this court, I would find that this is not 
a divorce "discretion" decision at this time on the appealed question. A 
contract principle is involved, and it should be a contract decision, without 
rewriting the contract to be something that it never was.

 
 
"Questions relating to 
the construction and effect of separation agreements between a husband and wife 
are ordinarily determined by the same rules which govern the interpretation of 
contracts generally. Whenever a court is called upon to interpret a contract its 
primary purpose is to ascertain the intention of the parties at the moment of 
its execution. Bowles v. Bowles, 237 
N.C. 462, 75 S.E.2d 413 (1953); 24 Am.Jur.2d Divorce and Separation § 904 
(1966); 27B C.J.S. Divorce § 301(3) (1959)." Lane v. Scarborough, 284 N.C. 407, 200 S.E.2d 622, 624 
(1973).

 
 
See also Wine v. Wine, 14 Ariz. App. 103, 480 P.2d 1020 (1971); Cochrum v. Cochrum, 
162 Cal. App. 2d 825, 328 P.2d 1000 (1958); McNeill v. McNeill, Fla.App., 135 So. 2d 785 (1962); Vinci v. Vinci, 131 Ill. 
App.2d 496, 266 N.E.2d 379 (1970); Shultz 
v. Peters, 223 Ia. 626, 273 N.W. 134 (1937); Weeks v. Weeks, Miss., 403 So. 2d 148 
(1981); Wilson v. Woolf, Texas 
Civ.App., 274 S.W.2d 154 (1954); Kennedy 
v. Kennedy, Texas Civ.App., 267 S.W.2d 245 (1954).

 
 

[¶32.]  I would modify the judgment rendered in 
appellee's favor by reducing the judgment by $8,000, and would find the 
appellant liable to the appellee only in the amount of $4,500 on the contractual 
responsibilities which he assumed by property settlement 
agreement.

 
 

[¶33.]  The judgment should be affirmed in all 
other respects.

1 Evidence of cost of 
labor, except as it was derived from an appraisal and deduction of materials 
cost, was the following:

 
 
"Q. What do you figure 
that's worth [labor for shop cost]?

 
 
"A. [MRS. NELSON] I would 
guess in the range of 10, $12,000."

 
 
Later 
testimony:

 
 
"[MR. HURD] A 
professional contractor could probably do the job in a day and a half for the 
sum of, probably, 2500 to $3,000."

 
 
Finally, at hearing 
conclusion:

 
 
"[THE COURT] * * * [T]he 
sum of $8,000 for labor is reasonable."

 
 
This is the entire record 
upon which the decision was made and now comes to this court for consideration. 
Fortunately, we are not additionally required to consider the sufficiency of 
evidence for the determination of the amount of the judgment as that issue was 
not raised by appellant in this appeal.