Title: B & R Builders v. Beilgard

State: wyoming

Issuer: Wyoming Supreme Court

Document:

B & R Builders v. Beilgard1996 WY 64915 P.2d 1195Case Number: 95-223Decided: 05/01/1996Supreme Court of Wyoming
B & R BUILDERS, a partnership; and Dave Rosenbaum,

Appellants 
(Defendants),

 

v.

 

Steve 
BEILGARD,

 Appellee 
(Plaintiff).

 

Appeal from 
the District Court, Johnson County, John C. Brackley, J.

 

H.W. 
Rasmussen of Badley & Rasmussen, P.C., Sheridan, for appellants.

 

Greg L. 
Goddard of Goddard, Perry & Vogel, Buffalo, for appellee.

 

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR and LEHMAN, JJ.

 

GOLDEN, Chief 
Justice.

 

[¶1]            
Appellants Dave Rosenbaum (Rosenbaum) and B & R Builders appeal the 
district court's judgment after bench trial concerning partnership property and 
partnership accounting. 

 

[¶2]      The judgment of 
the district court is affirmed.

 

ISSUES

 

[¶3]            
Rosenbaum presents these issues:

 

I.             
The District Court erred when it ignored the clear and unambiguous 
language contained in the contract documents and relied on extrinsic evidence 
and parol evidence rather than enforcing the writings contained in the contract 
documents.

II.             
The District Court erred in its accounting by allowing Appellees credit 
for an appliance upgrade and rental payments.

III.             
The District Court erred in failing to recognize that the Appellees were 
prevented from presenting contradictory claims pursuant to the doctrine of 
judicial estoppel.

 

[¶4]            
Appellee Steve Beilgard (Beilgard) presents these issues:

 

Issue One: 
            
Did the District Court err when it relied on extrinsic and parole 
evidence to determine the intent of the partnership and the partnership 
assets?

Issue Two: 
            
Did the District Court err in its accounting by allowing appellee credit 
for an upgrade and rental payments?

Issue Three: 
            
Did the District Court err in finding that payment to independent counsel 
was a partnership asset?

 

FACTS

 

[¶5]      In October 1992, 
Rosenbaum purchased property located at 512 and 522 Tisdale in Buffalo, Wyoming 
for $20,000.00. Beilgard and Rosenbaum entered into an oral partnership 
agreement to improve and develop that property and to seek out other property to 
buy, develop, and sell. Rilda Beilgard, appellee's wife, acted as the bookkeeper 
for the partnership.

 

[¶6]      The Tisdale 
property consisted of two adjoining lots. A cabin located on the 522 Tisdale lot 
was rented at the time of purchase and remained rented. The 512 Tisdale lot was 
vacant at the time of purchase. Beilgard secured a building permit and, in 
February of 1993, the parties began building a house on it. In March of 1993, 
Beilgard signed a purchase agreement for another property (Ridgeway property) in 
Gillette, Wyoming. An attorney was hired to handle some matters in connection 
with this property. Before the sale closed, the partners approached Robert 
Alinder, president of Wyoming Bank and Trust, for a construction mortgage which 
would be used to continue building the 512 Tisdale house. Having represented 
themselves to Mr. Alinder as partners, Mr. Alinder requested a written 
partnership agreement as a condition for granting the loan request. The partners 
submitted an agreement for a partnership called B & R Builders and, 
following approval of the loan, opened a checking account in that name on March 
29, 1993.

 

[¶7]      The following 
day, the Ridgeway property was purchased. The Ridgeway property was later sold 
with only minimal improvement to Rosenbaum's sister for a $20,000.00 profit. 
Eighteen thousand dollars of that profit was paid against the construction 
mortgage. In May of 1993, while building the Tisdale house and remodeling the 
cabin, the parties hired two employees and obtained unemployment insurance 
identification numbers as "B & R Builders, Beilgard, Steve & Rosenbaum, 
David - Ptnrs." Construction on the Tisdale house was completed the following 
September and listed for sale at $112,500.00. Beilgard and his wife signed a 
purchase agreement to buy it for $110,000 less a contractor's fee of $20,000.00. 
Beilgard claimed Rosenbaum had agreed to the contractor's fee because Rosenbaum 
was unable to assist Beilgard with building the house. While waiting for a home 
loan, Beilgard agreed to make the bank payments of $340.00 per month in exchange 
for moving into the Tisdale house and later upgraded the appliances in the home. 
A lease between the parties was signed at a later date. Several months later 
when Beilgard had not completed the purchase, Rosenbaum took all of the 
partnership documents from Beilgard and then, without first advising Beilgard, 
sold the house to a couple for $93,000.00. The Beilgards moved out of the house 
after the sheriff served them with notice to vacate. Rosenbaum did not share the 
profits of that sale with Beilgard.

 

[¶8]            
Beilgard then learned that Rosenbaum had listed the cabin for sale. After 
a confrontation with Rosenbaum, Beilgard filed a lis pendens and a complaint 
against the partnership and Rosenbaum on June 13, 1994, seeking a declaration 
that a partnership existed, an accounting, a dissolution and winding up of 
affairs. Following bench trial, the district court found that a partnership was 
formed named B & R Builders for the purpose of buying and developing 
properties. Partnership assets were identified as the Ridgeway property in 
Gillette, the constructed residence on the lot at 512 S. Tisdale, and the 
remodeled cabin at 522 S. Tisdale in Buffalo, Wyoming. The court ordered B & 
R Builders to pay Beilgard $9,236.14 for his interest in the 512 Tisdale 
property, reimbursement of appliance upgrades and attorney fees on all 
partnership property which had already been sold and ordered the sale of 522 S. 
Tisdale property and division of its expenses and proceeds. This appeal 
followed.

 

DISCUSSION

 

Standard of 
Review

 

[¶9]      The district 
court's judgment was accompanied by findings of fact and conclusions of law. On 
appeal, the district court's findings of fact will not be overturned unless 
clearly erroneous and its conclusions of law will be reviewed de novo. Rolfe v. 
Varley, 860 P.2d 1152, 1156 (Wyo. 1993).

 

[¶10]   In determining whether sufficient 
admissible evidence supports the district court's findings, we assume the 
evidence in favor of the successful party is true, leave out of consideration 
entirely the evidence presented by the unsuccessful party which conflicts with 
the successful party's evidence and afford every favorable inference to the 
successful party's evidence which may be reasonably and fairly drawn from that 
evidence. Lutz v. Schmillen, 899 P.2d 861, 863 (Wyo. 1995).

 

Partnership 
Agreement

 

[¶11]   In this appeal, Rosenbaum does not 
contest the district court's conclusion that a partnership existed, but does 
contest the manner used by the court in determining the scope of the partnership 
agreement's term identifying its purpose. Rosenbaum contends that the district 
court erred in considering extrinsic evidence for determining the partnership's 
scope. In his view, the partnership agreement was unambiguous concerning the 
scope and purpose of the partnership and only its language should have 
determined these issues. Rosenbaum further contends that the district court's 
error in properly construing the agreement caused error in determining the 
assets and expenses. The district court was required to determine if a 
partnership existed, identify the partnership assets and expenses, and render an 
accounting. In this case, the district court determined that the partnership 
agreement memorialized the partnership previously entered into by the parties. 
The district court relied upon extrinsic evidence to determine the partnership's 
purpose, assets, and expenses.

 

[¶12]            
Wyoming adopted the Uniform Partnership Act in 1994. In the absence of 
express agreement, the Act indicates that it applies to all existing 
partnerships unless another section indicates otherwise, WYO. STAT. §§ 
17-21-103, 1003 (Cum.Supp. 1995), and that a partnership continues after 
dissolution until the winding up of business is completed, at which time the 
partnership is terminated. WYO. STAT. § 17-21-803 (Cum.Supp. 1995). Accordingly, 
we look first to the parties' agreement entitled "Partnership Agreement" which 
declares a partnership named B & R Builders. The next line 
states:

 

2. 
Purpose:

 

The purpose 
of the partnership shall be Sales and property management.

The district 
court found that the partnership's purpose "was to develop the Tisdale property 
owned solely by Rosenbaum - and perhaps buy and develop other properties." 
Rosenbaum contends the court erroneously considered extrinsic evidence in 
determining the partnership's purpose. Beilgard argues that given the 
partnership's name of "Builders," the agreement is ambiguous and the court 
properly considered extrinsic evidence to construe the meaning of "sales and 
property management."

 

[¶13]   In construing partnership 
agreements, we have said: 

 

A contract 
is ambiguous where it "is obscure in its meaning because of its indefiniteness 
of expression or because it contains a double meaning."

 

Rolfe, 860 P.2d  at 1158 (citation omitted).

 

[¶14]   In the context of determining 
whether a partnership existed, we have said that where a determination cannot be 
made by looking at the face of an instrument, a court may look outside its four 
corners and look at what the parties did and how they treated the arrangement 
between them. P & M Cattle Co. v. Holler, 559 P.2d 1019, 1023 (Wyo. 1977). 
On facts similar to this case, the Oregon Supreme Court said that although a 
written agreement may be ambiguous, the scope of the business subject to a 
partnership agreement can properly be proved by parol evidence. Harestad v. 
Weitzel, 272 Or. 199, 536 P.2d 522, 527 (1975).

 

[¶15]   These rules indicate that whether 
we determine that "sales and property management" is an indefinite term, parol 
evidence is proper in determining the scope of a partnership and the district 
court did not err in considering parol evidence to determine the partnership's 
scope. However, we do consider "sales and property management" to be an 
indefinite term. Only extrinsic evidence could explain that the partnership's 
purpose was to purchase and then sell real estate rather than another product 
and only extrinsic evidence could resolve that property management included 
purchasing and developing land.

 

[¶16]            
Rosenbaum's contention that WYO. STAT. § 17-21-204(d) establishes a 
statutory presumption against finding the Tisdale property to be partnership 
property and, instead, must be considered his separate property is unpersuasive. 
That statute states in relevant part:

 

(d) Property 
acquired in the name of one (1) or more of the partners, without an indication 
in the instrument transferring title to the property of the person's capacity as 
a partner or of the existence of a partnership and without use of partnership 
assets, is presumed to be separate property even if used for partnership 
purposes.

 

WYO. STAT. § 
17-21-204(d) (Cum.Supp. 1995). In this case, the statutory presumption is 
overcome by the evidence. In Lutz, this Court upheld a district court ruling 
that certain property was partnership property and not owned by the appellants 
individually. Lutz, 899 P.2d  at 866. A partnership agreement had been signed by 
the parties and, like Rosenbaum, the appellants in Lutz asserted that, since 
they had acquired financing and title to the property, the property was separate 
property rather than a partnership asset. Id. at 865. Lutz stated:

 

Courts have 
generally found that, when they are deciding whether property is partnership 
property, they must determine the parties' intent. The courts may consider the 
partners' acts and course of conduct in determining the partners' intentions 
with regard to specific property. The courts may also consider the use which has 
been made of the property. Finally, the courts can consider whether, at the time 
the property was acquired, the reason for the acquisition was to devote the 
property to partnership purposes.

 

Lutz, 899 P.2d  at 864 (citations omitted). In this case, considering the evidence in the 
light most favorable to Beilgard and leaving out entirely the evidence favorable 
to Rosenbaum, the record supports the district court's finding that the Tisdale 
property was partnership property. That evidence includes Mr. Alinder's 
testimony, the Beilgards' testimony, and the circumstances surrounding the 
parties' securing of the construction mortgage from the bank. There was no 
error.

 

Accounting

 

[¶17]            
Rosenbaum next contends that the district court erred in its accounting 
by allowing Beilgard a credit for rental payments. The district court found that 
the 512 Tisdale lease was a partnership asset for which Beilgard should have 
paid $3,600.00 to the partnership. Since Beilgard paid only $2,477.00, the 
difference of $1,123.00 should be divided between the two parties and 
Rosenbaum's distribution share would be $561.50. Rosenbaum represents to this 
Court that Beilgard's testimony reveals that Beilgard was to pay $600.00 per 
month rent as required by the lease and also to pay $340.00 per month to the 
bank. Our reading of his testimony, however, is that Beilgard believed the 
agreement to be only bank payments and not lease payments. The district court's 
findings of fact are entitled to our deference unless clearly erroneous. Since 
the findings indicate that the district court chose to rely upon the lease terms 
of $600.00 per month as evidence of the agreed upon rental payment amounts, no 
error has occurred.

 

[¶18]            
Rosenbaum next contends that the district court erred in its accounting 
by allowing Beilgard a credit for appliance upgrades. Relying upon the lease 
agreement, Rosenbaum contends that Beilgard can be reimbursed only for 
maintenance expenses and not for upgrade expenses. Paragraph thirteen of the 
partnership agreement, entitled "Limitations on partners," lists a number of 
actions one partner may not do without the consent of all partners. This 
paragraph contains nothing which might preclude upgrading appliances. In 
paragraph ten of its findings, the district court determined that Beilgard 
should recover $1,101.00 from the partnership due to the appliance upgrade on 
the Tisdale property. The partnership agreement does not discuss treatment of a 
partner's advances to the partnership. Accordingly, we look to the 
Act.

 

[¶19]   WYO. STAT. § 17-21-401 discusses a 
partner's rights and duties and states:

 

(d) A 
partnership shall repay a partner who, in aid of the partnership, makes a 
payment or advance beyond the amount of capital the partner agreed to 
contribute.

 

WYO. STAT. § 
17-21-401(d) (Cum.Supp. 1995).

 

[¶20]            
Settlement of accounts among partners is controlled by WYO. STAT. § 
17-21-808 which states in relevant part:

 

(a) In 
winding up the partnership business, the assets of the partnership shall be 
applied to discharge its obligations to creditors, including partners who are 
creditors. Any surplus shall be applied to pay in cash the net amount 
distributable to partners in accordance with their right to distributions 
pursuant to subsection (b) of this section.

 

WYO. STAT. § 
17-21-808(a) (Cum.Supp. 1995).

 

[¶21]            
Consequently, a partner is generally entitled to reimbursement for 
advances to the partnership made within the scope of the partnership. See 
generally Lutz, 899 P.2d  at 868 (relying upon similar wording in the repealed 
statute). The evidence supports the district court's determination that an 
advance was made to the partnership entitling Beilgard to reimbursement. There 
is no error.

 

Judicial 
Estoppel

 

[¶22]            
Rosenbaum contends that Beilgard was judicially estopped from receiving 
reimbursement for a $1,000 payment to an attorney in connection with the 
Ridgeway property and the district court erred in determining it to be a 
partnership expense. During trial, Rosenbaum closely questioned Beilgard 
regarding the attorney fee. Rosenbaum's questions suggested that Beilgard had 
retained the attorney for another matter. Beilgard's answers indicated that at 
one time, he and Rosenbaum met with the attorney in connection with the Ridgeway 
property. Rosenbaum had Beilgard look at an agreement which Beilgard identified 
as the one connected to the Ridgeway property and then sought to introduce the 
agreement into evidence. Beilgard objected to introducing the agreement because 
Rosenbaum could not establish the document's origin. Rosenbaum agreed that he 
could not tell the court from where the document had come. The objection was 
sustained based upon privilege and the agreement was not admitted into 
evidence.

 

[¶23]            
Rosenbaum contends that objecting to the agreement based upon privilege 
and then relying upon that agreement to gain reimbursement for a partnership 
expense are inconsistent claims barred by judicial estoppel. Rosenbaum asserts 
that if the fee is a partnership debt, then the agreement is the property of the 
partnership and the privilege goes to the partnership, not to the individual 
partner.

 

Judicial 
estoppel binds a party by his judicial declarations, and that party 

"may not 
contradict them in a subsequent proceeding involving [the] same issues and 
parties. . . . Under this doctrine, a party who by his pleadings, statements or 
contentions, under oath, has assumed a particular position in a judicial 
proceeding is estopped to assume an inconsistent position in a subsequent 
action."

 

Willowbrook 
Ranch, Inc., v. Nugget Exploration, Inc., 896 P.2d 769, 771 (Wyo. 1995) 
(citation omitted).

 

[¶24]   Under this definition, inconsistent 
claims made within a judicial proceeding do not create a judicial estoppel 
issue. See Zwemer v. Production Credit Ass'n of Midlands, 792 P.2d 245, 246 
(Wyo. 1990). The doctrine is not applicable.

 

[¶25]            
Affirmed.