Case Name: HILLS OF REST MEMORIAL PARK, INC., Plaintiff and Appellant, v. David A. WITTE and Chapel Hill Funeral Home, Inc., Defendants and Appellees
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1988-08-24
Citations: 427 N.W.2d 848
Docket Number: No. 15771
Parties: HILLS OF REST MEMORIAL PARK, INC., Plaintiff and Appellant, v. David A. WITTE and Chapel Hill Funeral Home, Inc., Defendants and Appellees.
Judges: MORGAN and MILLER, JJ., concur.
Reporter: North Western Reporter 2d
Volume: 427
Pages: 848–853

Head Matter:
HILLS OF REST MEMORIAL PARK, INC., Plaintiff and Appellant, v. David A. WITTE and Chapel Hill Funeral Home, Inc., Defendants and Appellees.
No. 15771.
Supreme Court of South Dakota.
Argued Jan. 11, 1988.
Decided Aug. 24, 1988.
John E. Burke, Sioux Falls, for plaintiff and appellant.
Gary P. Thimsen of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendants and appellees.

Opinion:
HENDERSON, Justice (on reassignment).
ACTION/PROCEDURAL HISTORY
Plaintiff, Hills of Rest Memorial Park, Inc. (Cemetery), a non-profit corporation, which operates the Hills of Rest Memorial Park cemetery, appeals unfavorable judgments entered by the circuit court for Minnehaha County. The case arose from Cemetery's allegations, among others, that Defendant David Witte (Witte), now doing business as Chapel Hills Funeral Home, misappropriated and converted its trade secrets and personal property, usurped a corporate opportunity, and violated his fiduciary duty to Cemetery in purchasing railroad property adjacent to Cemetery's land. Cemetery later amended its complaint to add a claim that Witte caused unauthorized sales commissions to be credited to him in its records. Witte, in turn, filed a counterclaim for unpaid commissions.
The circuit court bifurcated the proceedings, holding two separate trials. Cemetery's equitable claims regarding the railroad property were tried to the court, resulting in a judgment directing Witte to transfer the railroad property to Cemetery, but ordering Cemetery to reimburse Witte for his expenses, comprising $7,138.19 in acquisition costs and $4,996.64 for maintenance and improvements. After trial on the actions at law, the jury issued verdicts in Witte's favor, and awarded him $59,-410.28 on his counterclaim for commissions accrued during his employment with Cemetery. The court allowed Witte to recover prejudgment interest and costs.
Cemetery appeals, asserting trial court error in five respects, thereby creating the issues herein.
ISSUES
1) Insufficiency of evidence to support the jury verdict;
2) Use of a jury instruction unsupported by evidence;
3) Erroneous and prejudicial evidentiary rulings;
4) Improper award of funds for maintenance and improvements to the railroad property; and
5) Prejudgment interest.
Cemetery argues that errors on Issues 1, 2, and 3 mandate a new trial on the merits of its causes of action at law. We agree and reverse on that basis. The trial court is affirmed on Issue 4, which applies only to Cemetery's equitable claims. We do not reach Issue 5, prejudgment interest, in light of our reversal on the first three issues.
FACTS
On May 10, 1978, Cemetery was put into receivership. Witte was appointed receiver, and served in that capacity until termination of receivership on May 1, 1979. Thereafter, by action of Cemetery's board of directors, Witte was employed as Cemetery's administrator. In March 1984, the board learned that Cemetery's financial statement, dated January 31, 1984, indicated that Cemetery owed Witte $100,336 in accrued sales commissions. At the time Witte resigned, January 3, 1985, Cemetery's records reflected an unpaid balance of $77,304.72. A review of the transactions underlying these commissions, undertaken by a member of the board, Richard Daniels, showed that this figure included commissions of $7,573.57, reportedly earned during the period of receivership, for which no authority existed, $4,224.07 in commissions on cancelled contracts, and $6,160.60 on payments not yet received by Cemetery. (These amounts, when deducted from the amount allegedly outstanding, $77,304.72, yield $59,346.48, a total lower than the jury award.) At trial, Witte conceded that additional commissions were based on sales of mausoleum spaces which were sold before the board authorized such commissions. Other alleged anomalies were discovered in Cemetery's review of its records. Contradictions in the minutes, prepared by Witte, of board meetings where the topic of commissions was discussed created confusion, as when the minutes of one board meeting showed Witte forswearing commissions for "pre-need" sales during an accounting period from February 8,1980 to April 15,1981, yet minutes of a later meeting reflected Witte as earning 15% commission on such sales. At trial, Witte relied primarily on an audit prepared by an accounting firm, employed by Cemetery, which verified the accuracy of Witte's claim to the full amount of commissions; however, letters from the firm to Cemetery advised that the audit was limited in scope. Admission into evidence of these letters, which were parts of the audit process, was denied by the trial court.
During Witte's term at Cemetery, two written employment contracts existed. The first, Exhibit No. 1 at trial, specified that he was to receive 15% commission on "pre-need" merchandise sales ("pre-need" denoting sales of cemetery merchandise for future use when the potential consumer is still alive, while "at-need" applies to merchandise purchased for those already deceased). This contract was signed June 22, 1979, and by its terms, was effective from May 1, 1979, until January 31, 1980. It contained provisions for annual review of its terms and renewal, but no such action was ever taken. At trial, evidence of variations in commission percentage, and the merchandise to which commissions applied, was developed by both sides. The second contract, dated August 20, 1984, provided that Witte was due 10% commission on sales of "pre-need" and "at-need" (for which no commission was earned previously) merchandise, and 5% commission on sales of mausoleum crypts. Over Cemetery's objections, the circuit court instructed the jury, by Instruction No. 14, that a presumption arises extending the terms of employment contracts beyond their expiration dates if employment relationships continue.
Shortly after Witte resigned as administrator, one of his employees, Gregg Anfin-son (who was employed by both Cemetery and Chapel Hill Funeral Home) gathered index cards (some 2,400, according to Witte), containing files on potential customers, belonging to Cemetery and took them to Witte's premises. Anfinson's deposition, read at trial, indicated that he copied the cards for Witte, using money provided by Witte. Witte denied knowledge of the copying, and testified that Anfinson had acted on his own. Witte returned 2,400 cards to Cemetery within five days. These acts formed the basis of Cemetery's allegations regarding trade secrets. Cemetery asserted that the cards taken were worth $10 each before being copied, and lost all value afterwards. Richard Daniels was allowed to testify as to the initial value of these cards (whose number he estimated at three to five thousand), but his testimony that their value was totally destroyed by the alleged copying was disallowed as speculative and lacking foundation.
The remaining facts relevant to Cemetery's appeal stem from its equitable claims arising from Witte's purchase of railroad property. Witte ascertained that property adjoining Cemetery's land was available for $55,000. He informed the board, which was unwilling to meet that price. Nonetheless, the board was interested in the property. Witte later learned that the railroad could offer only a quit-claim deed and would sell it for $5,500. Knowing that his employer was interested in the property, he purchased the property for himself and made various improvements. On February 2, 1987, the court entered judgment in favor of Cemetery on its claim for usurpation of corporate opportunity because it found that Witte had violated his fiduciary duty by not advising the board of directors of his ability to purchase the adjoining railroad property for less than $55,000 and by acquiring the property in his own name for $5,500. The court ordered Witte to transfer the property to Cemetery and ordered Cemetery to compensate Witte for his acquisition costs, including the purchase price, realtor fees, and taxes. The parties could not so agree, with respect to valuation of maintenance and improvements, and the trial court amended its judgment, adding $4,996.64 for additional expenses to the $7,138.19 initially awarded. Cemetery has appealed an award of these additional costs.
At trial on the causes of action arising at law, this jury verdict favored Witte, awarding him $59,410.28 on his counterclaim, and rejecting all Cemetery's counts. The trial court awarded Witte $22,530.33 in prejudgment interest, and $1,496.41 in costs. This appeal followed the trial court's denial of Cemetery's motion for a new trial. A trial court has broad discretionary power in granting a new trial on the basis of insufficiency of the evidence. We will not disturb that order, absent a clear showing of abuse of discretion. Lewis v. Storms, 290 N.W. 2d 494 (S.D.1980). A clear abuse of discretion, we hold, is demonstrated hereunder.
DECISION
I.Insufficiency of Evidence to Justify Verdict
Under Witte's own version of the facts, the award of damages exceeds his presentation to the jury. Witte cannot benefit by a version of facts more favorable to his own contentions than he himself has presented during testimony in his case. Swier v. Norwest Bank, 409 N.W.2d 121, 124 (S.D.1987) (Henderson, J., dissenting); Martin v. Martin, 358 N.W.2d 793, 802 (S.D.1984) (Henderson, J., concurring in part, dissenting in part); Connelly v. Sherwood, 268 N.W.2d 140 (S.D.1978); 30 Am. Jur.2d Evidence § 1087 (1967). See also Lalley v. Safway Steel Scaffolds, Inc., 364 N.W.2d 139, 141 (S.D.1985) (Henderson, J., concurring in result).
II.Instruction Not Supported by Evidence
Instruction No. 14 correctly recites the law under SDCL 60-1-5 pertaining to the expiration of agreements and a presumption of renewal for the same wages and terms of service where the parties continue in a relationship of employer and employee after the expiration of their agreement. The only wage agreement or contract entered into by these parties, which this jury could allude to in applying Instruction No. 14, was Exhibit No. 1. However, this instruction should not have been given because it did not have proper application to the facts; the evidence before the jury established that although an agreement existed between Witte and Hills of Rest, this agreement changed several times over. Trial courts can only present those issues to the jury, through their instructions, which find support by competent evidence in the record. Frazier v. Norton, 334 N.W.2d 865 (S.D.1983); Atyeo v. Paulsen, 319 N.W.2d 164 (S.D.1982). These various modifications to this original contract became the heart of the lawsuit and not an obligatory carry-over on the old contract under Instruction No. 14. These various modifications were reduced in writing by Witte and placed in the minutes of his employer-corporation. "A trial court is to present only those issues to the jury by way of instruction which find support by competent evidence in the record." Van Zee v. Sioux Valley Hosp., 315 N.W.2d 489, 492 (S.D.1982) (citing Wolf v. Graber, 303 N.W.2d 364 (S.D.1981); Olesen v. Snyder, 277 N.W.2d 729 (S.D.1979)). Instruction No. 14 simply did not find support "by competent evidence in the record." It was reversible error to give the instruction, for it postured the decision of the jury, in law, contrary to the facts which were tried before the jury.
III.Prejudicial Evidentiary Rulings
The trial court's rejection of Exhibits Nos. 25 and 26, offered by Cemetery, was an evidentiary ruling which impacted against Cemetery's case to such a degree that it caused an unfair result; both of these exhibits were pertinent letters containing facts that were in favor of Hills of Rest and against Witte, in this: Had these statements been presented to the jury, it would have reduced the authenticity of the accountants' claim that Witte's commissions were chargeable as reflected by statements of the accountants. Audits of accountants can be wrong, and such audits are only as reliable as the sources of information relied on by the accountants. These exhibits were the accountants' exploration of the scope and limitations of their methods. Prepared by Henry Scholten & Company accountants as part of the audit process carried out at Cemetery's request, they constitute business records admissible under SDCL 19-16-10. Exhibit No. 25 indicated that the information used in the audit was "the representation of the management of Hills of Rest Memorial Park, Inc.," i.e., Witte, who testified that this exhibit described what the accountants were hired, by him, to do. Exhibit No. 26 reflected that errors and irregularities could occur in the audits and yet the trial court withheld the letters from the jury. These audits are certainly not binding on any of the parties and when the accountants, themselves, reflect that there could be errors in the figures (the commissions being the heart of the lawsuit), a jury should know that the figures on the commissions are not absolutely a "given" on accuracy. Therefore, the trial court abused its discretion in rejecting this evidence. It was prejudicial error. Gross v. Gross, 355 N.W.2d 4 (S.D.1984); Rykhus v. Rykhus, 319 N.W.2d 167 (S.D.1982); Herndon v. Herndon, 305 N.W.2d 917 (S.D.1981).
We reject Cemetery's assertions of error regarding the additional expenses awarded in the equitable action. Witte is entitled to his reasonable expenses incurred in maintaining and improving his property. A contrary result would unjustly enrich Cemetery. Under our holding, Cemetery maintains title to the adjoining railroad property.
We do not reach the prejudgment interest issue. Judgment affirmed in part and reversed in part.
MORGAN and MILLER, JJ., concur.
SABERS, J., concurs specially.
WUEST, C.J., dissents.
Instruction No. 14:
Where after the expiration of an agreement respecting the wages and the term of service the parties continue the relation of Employer and Employee, they are presumed to have renewed the agreement for the same wages and term of service.