Opinion ID: 1663200
Heading Depth: 1
Heading Rank: 2

Heading: dismissal of the third-party action

Text: The trial court, after depositions had been taken and interrogatories served and answers to interrogatories refused (see below), ordered that the third-party complaint be dismissed without prejudice on the grounds that the Third Party action is not proper since there is no evidence that there is to be an implied bonus to be paid by the Plaintiff to Defendant in view of the clear and undisputed evidence of the expressed bonus policy by the Corporation. There is no evidence of any wrongdoing or other grounds which would form the basis of piercing the Corporate veil and holding the Plaintiff, Keith D. Danks personally liable for any bonus. There is some difference of opinion between the parties as to what this order means. Holland is apprehensive that the reference to the bonus policy by the Corporation constitutes a finding on the merits that no bonus was due Holland from anyone, and refers us to a letter in evidence, transmitting a bonus check, which includes these words: Please keep in mind that any bonus you receive this year will have no bearing on future years. It could be more or less, depending on sales and profits, efforts that you expend to earn profits, attitudes, honesty, and many other factors that I may notice and consider over the year. We do not so read the order. As we read it, the court referred to the bonus policy of the corporation only in order to emphasize that there was no evidence whatever of any obligation by Danks personally to pay a bonus. This conclusion is fortified by the fact that the court made the dismissal without prejudice (thereby permitting a separate action against Red River), and by the clear statement that there was no implied bonus to be paid by the Plaintiff [Danks] to Defendant [Holland]. As we read the order, the trial court held that the third-party action was improperly joined to the main action, since the main action was between Danks and Holland, while the third-party claim was one by Holland against one of the corporations and, so far as the record shows, was totally unconnected to the subject matter of the main action. Such a determination does not reach the merits of Holland's claim against one or both of the corporations. Third-party actions are authorized by Rule 14, N.D.R.Civ.P., if brought against a person not a party to the action who is or may be liable to [defendant] for all or part of the plaintiff's claim against him. Red River is not liable for all or any part of Holland's note to the bank, which was cosigned by Danks. Red River may or may not be indebted to Holland for a bonus for fiscal 1973. If it is so indebted, that debt is unconnected with the bank loan. The third-party claim is not derivative from, or dependent on, the main action. For a similar case, and a similar holding, see LaSalle v. Kane, 8 F.R.D. 625 (E.D.N.Y.1949). The suggestion was made on oral argument that the bank loan was to be paid out of future bonuses, but the record is devoid of evidence to sustain the argument. Third-party complaints, under Rule 14, are generally brought under theories of indemnity or contribution. The general purpose of Rule 14 is to avoid two actions which should be tried together to save the time and cost of a reduplication of evidence, to obtain consistent results from identical or similar evidence, and to do away with the serious handicap to a defendant of a time difference between a judgment against him, and a judgment in his favor against the third-party defendant. 3 Moore's Federal Practice ¶ 14.04, p. 14-189. Since the record indicates that the claim involved in the main action and the claim involved in the third-party complaint are totally unrelated, it was entirely proper for the court to dismiss the third-party action. Even if we were to disagree with the wisdom of the trial court's decision to dismiss the third-party action, we still would recognize that its decision to do so was made within a very broad area of discretion open to it. Wright & Miller, Federal Practice and Procedure: Civil § 1446. The trial court has the right to consider such factors as avoidance of circuity of action, additional complexity introduced into a relatively simple case, the availability of various defenses to different parties, whether the introduction of unrelated controversies would complicate the case to the prejudice of one of the parties, and even the timing of the making of the third-party complaint. 3 Moore's Federal Practice ¶ 14.05[1], pp. 14-193 to 14-196. We affirm the dismissal of the third-party action on the grounds stated. If the dismissal had been with prejudice and on the merits, a serious question might have been raised, since the third-party complaint appears to raise a fact question as to whether a bonus is payable by Red River or Hanson-Maves to Holland. Such a fact question has been presented in Simon v. Riblet Tramway Co., 8 Wash.App. 289, 505 P.2d 1291 (1973); and Thatcher v. Wasatch Chemical Co., 29 Utah 2d 189, 507 P.2d 365 (1973), among others. That fact question is not disposed of by the dismissal without prejudice, or by this appeal. We likewise agree with the trial court that nothing in the record justifies holding Danks personally liable for a bonus. Past bonuses had been paid by the corporations. While Danks, as executive officer, had decided on the amount of the bonus in each case, it never was his personal obligation to pay it. It is a commonplace that officers and directors are not personally liable for the ordinary debts of a corporation in the absence of fraud, other recognized extraordinary circumstances, or specific statutory provision imposing liability. Mere nonpayment by a corporation of a disputed item of bonus or salary is not sufficient, without more, to justify holding an officer, director, or principal owner (or one person who is all three) liable for the ordinary debts of a corporation. Holland asserts that Mahanna v. Westland Oil Co., 107 N.W.2d 353 (N.D.1960), permits the courts to ignore the existence of corporations and grant relief such as Holland seeks here. In Mahanna, we held that two corporations which were operated together, with one bank account and blended identities, could be treated as one corporation. If the question before us here was whether Red River and Hanson-Maves could be treated as one corporation, we might follow the rule of Mahanna. But the question before us is different. The question here is whether an officer of both corporations can be held personally liable on contracts of the corporations. We find nothing in the record to justify holding the officer liable. The two citations given by Holland to support his claim that he is entitled to pierce the corporate veil to reach Danks personally [ Hyde v. Hyde, 78 S.D. 176, 99 N.W.2d 788 (1959), and 19 C.J.S. Corporations § 839] indicate that corporate entities may be disregarded, and individuals controlling them reached, only in extraordinary cases where fraud or undue influence is shown. See also Schriock v. Schriock, 128 N.W.2d 852 (N.D.1964). Here, the record indicates no such flagrant wrongdoing, but only a disputed question of the right to a bonus which is claimed to be a portion of salary.