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COURT OF
APPEALS DECISION DATED AND
RELEASED January
4, 1996 |
NOTICE |
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A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 94-3271
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
ROBERT
W. GULDBEK,
Plaintiff-Respondent,
v.
CURTIS
L. MARZAHL,
Defendant-Third Party
Plaintiff-Appellant-
Cross Respondent,
GARY
STELPFLUG,
Third Party Defendant-
Respondent-Cross Appellant,
FARMERS
HYBRID COMPANIES, INC.,
FH
FINANCIAL SERVICES, INC.,
Third Party Defendants.
APPEAL
from a judgment of the circuit court for Grant County: GEORGE S.
CURRY, Judge. Modified and, as
modified, affirmed.
Before
Gartzke, P.J., Dykman and Vergeront, JJ.
DYKMAN,
J. Curt L. Marzahl, a tenant-farmer, appeals from a judgment
for rent due for a pig farm and for the proceeds of the sale of pigs. The
issues raised are: (1) whether
there is credible evidence to support the award of rent; and (2) whether
the trial court erred in determining the proper division between Marzahl and
Gary Stelpflug of proceeds from the sale of the pigs. We conclude that credible evidence supports the rent award but
that the court made a miscalculation when it divided the proceeds of the pig
sales. Accordingly, we modify the
judgment and, as modified, affirm.
BACKGROUND
In
1988, Robert W. Guldbek leased his pig farm to a farmer, Curtis L.
Marzahl. The lease was for three years
and rent was set at five percent of the net sales of all pigs born and raised
on the farm. Marzahl also signed an
agreement to raise pigs for Farmers Hybrid Companies, Inc. (FHC). Under that agreement, Marzahl received
breeding stock from FHC, and was entitled to twenty-three percent of the sales
of the offspring which reached 220 to 260 pounds. FHC received eleven percent of the sales proceeds as rent for its
breeding stock and other services, and a feed supplier received the remaining
sixty-six percent.
Marzahl's
relationship with Guldbek deteriorated during the lease term, and although both
discussed renewing the lease or a sale of the farm to Marzahl, no agreement
materialized. Guldbek began an eviction
action against Marzahl, and Marzahl was forced to leave the farm on November 20,
1992. Gary Stelpflug, a neighboring farmer
who also rented another portion of Guldbek's farm, agreed to take over the pig
raising operation for FHC.
On
November 19, 1992, FHC and Stelpflug signed an agreement which reads in
pertinent part:
This letter of
agreement is to confirm that as of November 21, 1992, that Gary Stelpflug will
take over the FH Financial Services Six Twenty-One Swine Production Agreement
between FH Financial Services and Curt Marzahl dated September 1, 1990. A copy of the agreement is attached. Until the term of the agreement has been
fulfilled, Gary Stelpflug will accept and perform all the producer obligations
specified in this agreement. Gary
Stelpflug will receive the producer compensation specified in Section 5....
At about the same time, FHC and Marzahl signed an
agreement which reads:
This letter of
agreement is to confirm that as of November 21, 1992, that Gary Stelpflug will
take over the FH Financial Services Six Twenty-One Swine Production Agreement
between FH Financial Services and Curt Marzahl dated September 1,
1990. Any compensation paid to Curt
Marzahl after November 20, 1992 offspring sales will be agreed upon by all
parties (i.e. FH Financial Services, Curt Marzahl and Gary Stelpflug).
The
various parties disagreed about who owed whom what amounts of money, and
Guldbek began this action. His first
cause of action was against Marzahl in which he demanded $14,318 for damages to
the farm allegedly caused by Marzahl.
Guldbek's second cause of action was for rent. He asserted that he had not received five percent of the value of
the pigs on the farm as of November 20, 1992, and he demanded a declaratory
judgment requiring FHC to pay the five percent as the pigs were marketed. No demand was made of Stelpflug.
Marzahl
answered, denied Guldbek's assertions, and counterclaimed against Guldbek for
alleged breaches of the lease for reasons having to do with improvements and
work allegedly promised by Guldbek.
Marzahl also cross-claimed against FHC, alleging that up until November
20, 1992, he was entitled to twenty-seven percent of the value of the pigs he
turned over to Stelpflug, or $19,141.65.
Finally, Marzahl cross-claimed against Stelpflug for the same $19,141.65,
asserting that Stelpflug had received part of that sum from FHC, and would
receive the balance over time.
Stelpflug
answered, denying Guldbek's assertions.
He also denied the assertions in Marzahl's cross-claim. He filed a cross-claim against Marzahl,
asserting a contractual agreement with Marzahl to pay him four percent of the
net sales of the pigs for work on Marzahl's feed bins. Stelpflug also asserted that Marzahl had
failed to pay an electric bill and that Marzahl had mismanaged the herd of
pigs, causing Stelpflug to incur additional costs. He demanded about $17,600 plus an additional amount for economic
loss.
FHC
answered, denying any liability to Guldbek or Marzahl. It also cross-claimed against Marzahl for
indemnification should it be found liable to Guldbek.
Eventually
all parties agreed to the dismissal of Guldbek's claim for a declaratory
judgment against FHC. FHC then
cross-claimed against Marzahl and Stelpflug.
The cross-claim was, in effect, an interpleader. FHC asserted that it owed $17,861.41 to
someone—either Marzahl or Stelpflug, or Marzahl and Stelpflug. It was willing to pay into court $19,141.65
to be relieved of further participation in the lawsuit. FHC moved for judgment on its interpleader. None of the parties opposed FHC's motion,
and the trial court ordered FHC to pay $19,141.65 to the clerk of court. It then dismissed FHC from the action with
prejudice.
The
net effect of FHC's dismissal is important.
Afterward, the lawsuit involved Guldbek's claim for rent, and Marzahl's
and Stelpflug's claims against each other for the $19,141.65 plus other
damages. Most significantly, both
Marzahl and Stelpflug had given up their claims against FHC. Thus, had FHC's agreements with Marzahl and
Stelpflug required that it pay more than $19,141.65 to the two pig farmers, the
farmers would have no recourse against FHC.
Furthermore, Marzahl and Stelpflug had no agreement with each other as
to how they would be compensated for the part each played in raising the pigs,
or how they would divide any sum FHC might eventually pay.[1] Each had an agreement with FHC which each
believed governed what he would be paid.
But, as we have noted, FHC's dismissal from this case prevented them
from determining what each was due from FHC under the terms of each
agreement. The trial court was, therefore,
required to determine the various claims of Marzahl and Stelpflug in the
absence of any agreement between them as to how FHC's payment would be
divided. While each farmer might have
received more than he eventually did had he pursued his claims against FHC,
both chose to settle with FHC and litigate against each other.
GULDBEK'S CLAIM
The
controversy surrounding Guldbek's claim relates to the fact that Marzahl not
only raised pigs on the Guldbek farm, but also raised pigs on what the parties
call the "Cox farm." Guldbek
and Marzahl agree that rent was to be five percent of the proceeds from the
sale of pigs raised on the Guldbek farm only.
Guldbek asserts that a deposition of the president of FHC shows that
only the pigs raised on the Guldbek farm were included in FHC's accounting of
what it believed it owed the two farmers.
Marzahl
quotes at length from the FHC president's testimony to support his contention
that FHC included in its report proceeds from the sales of pigs raised on both
farms. He asserts that there was no
evidence or testimony contradicting his testimony that the proceeds from the
pigs he raised on the Cox farm were included in the total proceeds which he was
paid by FHC.
We
agree that the FHC president made no reference to the Cox farm, and that there
was no explicit testimony that FHC's records did not show proceeds from the
pigs raised on the Cox farm. But the
FHC president did testify that a summary sheet showed all of the sales
"From Mr. Marzahl's farm, right."
Further testimony referred to "the Marzahl farm" and
"that farm." This testimony
referred to "farm" in the singular.
It is undisputed that the Cox farm and the Guldbek farm were separate
farms. This is evidence from which the
trial court could have found that FHC's records were records of pigs produced
on the Guldbek farm and not the Cox farm.
Equally
important is the trial court's treatment of Marzahl's testimony. The court's decision noted: "The credible evidence does not support
a finding that these net sales included sales from the Cox farm." The key word in this sentence is
"credible." It is undisputed
that Marzahl testified that Cox farm sales proceeds were included in the FHC
total. But the court did not believe
that testimony. Had it believed
Marzahl, it would have made a finding in Marzahl's favor resolving the conflict
between the FHC president's testimony and Marzahl's testimony.
The
trial court is the ultimate arbiter of witness credibility. State v. Marty, 137 Wis.2d
352, 359, 404 N.W.2d 120, 123 (Ct. App. 1987).
The court drew an inference from the FHC president's testimony that if
the president had been testifying about the proceeds from pigs raised on two
farms, she would not have specifically referred to "the Marzahl farm"
or "that farm" in the singular.
Having drawn that inference, the court resolved the conflict between
that testimony and Marzahl's testimony by rejecting Marzahl's. As we have noted, that decision, depending
entirely on witness credibility, is not reviewable by an appellate court. We, therefore, conclude that there was
sufficient evidence to support the court's finding as to the correct amount of
proceeds from the sale of the Guldbek farm pigs and, therefore, the correct
amount of rent which Marzahl owed Guldbek.
INADEQUATE AWARD
Marzahl
asserts that the trial court erred by awarding him only $6,892.07 of the
$19,141.65 paid by FHC to the court. He
asserts that he was entitled to $20,103.48.
Nonetheless, he concedes that he cannot receive more than the amount the
court ordered FHC to pay, or $19,141.65.
We
quote the paragraph of the trial court's decision in which it explained how it
divided the amount FHC paid:
[FHC] paid
$19,144.65[2]
from the market price sale of the 1,383 swine, which would have been Mr.
Marzahl's compensation if he had been the producer at the time they were
sold. On November 20, 1992, 36
percent of production of the 1,383 swine was completed. (127,654 pounds is the total weight of 1,383
swine divided by 345,750 pounds—1,383 swine at "market" weight of 250
pounds. See testimony of G. Stelpflug
regarding "market" weight). Mr.
Marzahl did 36 percent of the work necessary to raise those 1,383 swine.
Much of the underlying data upon which the court relied
was contained in a memo dated November 20, 1992, written by Jerry Boyington, an
FHC employee. On that date, which was
also the date when Marzahl left the Guldbek farm and Stelpflug took over,
Boyington toured the farm, counted the pigs, and determined their fair market
value. He counted 1,383 pigs on the
Guldbek farm, ranging from 201 suckling pigs which he valued at $2,515 to three
225 pound finisher pigs, which he valued at $270. Boyington testified that the total weight of the 1,383 pigs was
127,654 pounds, and the total value of the pigs was $70,895. From that he subtracted $15.00 per pig for
702 slaughter weight pigs, those weighing between 162 pounds and 225 pounds. He considered the $15.00 to be the cost to
sell each of these pigs. The net value
of the pigs was, therefore, $60,365.[3]
Once
one understands the data used by the trial court, the formula by which it
determined Marzahl's share of the $19,141.65 is easily determined. The court concluded that when the pigs were
eventually sold, they would be sold at market weight, or about 250 pounds. The court then determined that the 1,383
pigs, when sold, would weigh about 345,750 pounds. From their birth until Marzahl left the farm, the pigs increased
in weight to 127,654 pounds. Dividing
127,654 by 345,750 equals .369. The
trial court multiplied $19,144.65 by thirty-six percent, the pigs' weight gain
under each farmer. It, therefore, gave
Marzahl thirty-six percent of that sum, or $6,892.07. It gave Stelpflug sixty-four percent of that sum, or $12,252.58.[4]
Marzahl
asserts a number of reasons why the trial court's calculations were erroneous. He asserts that § 9.2 of his agreement
with FHC governs his compensation. That
section provides in part:
Upon termination, Producer shall be entitled to receive
his percentage share of compensation as specified in Paragraph 5 above, arising
from the offspring produced and existing on the effective date of termination.
There
are several problems with this assertion.
First, § 9 of the agreement, is entitled "TERMINATION
PROVISIONS." Section 9.2 is
entitled "[FHC] TERMINATION
WITHOUT CAUSE." If the agreement
was terminated, FHC did not terminate it without cause. If FHC terminated the agreement, the reason
was because Marzahl could no longer perform his part of the agreement, having
been evicted from the Guldbek farm.
Under § 9.1 of the agreement, entitled "[FHC] TERMINATION WITH
CAUSE," Marzahl would be entitled to nothing. He cannot complain that the trial court gave him an award.
Second,
Marzahl and FHC did not terminate their agreement. They amended it in November 1992 when they both signed a letter
of agreement in which they agreed that Stelpflug would "take over"
Marzahl's agreement with FHC. The
agreement governed the pig operation on the Guldbek farm, and it continued to
govern that operation until the agreement terminated by its own terms. The only difference was the name of the
producer. Thus, Marzahl's reliance on
§ 9.2 of his agreement with FHC is misplaced.
Third
and more importantly, Marzahl does not explain how he could enforce a contract
he had with FHC against Stelpflug. Even
if we were to conclude that § 9.2 of Marzahl's agreement with FHC
determined Marzahl's damages, those damages would be owed by FHC. And Marzahl agreed that FHC, against which
he originally cross-claimed, could be dismissed from this action with
prejudice.
We
recognize that our interpretation of the contract which Marzahl had with FHC,
and its effect on the parties to this suit, is not the same as the trial
court's interpretation. But the
construction of an unambiguous contract is a question of law which we review de
novo. Wausau Underwriters
Ins. Co. v. Dane County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct.
App. 1987). Marzahl bases his claim on
the contract he had with FHC. We have
determined that this contract is inapplicable to his dispute with Stelpflug. We might conclude our analysis here, but for
Marzahl's assertion that there is no support in the record for the trial
court's method of dividing the $19,141.65.
We will consider this assertion.
Marzahl
argues that because the evidence shows that pigs do not gain weight on a
"straight line" basis from birth to market weight, the trial court's
analysis is flawed. Marzahl notes that
Boyington, who inventoried the pigs on November 20, 1992, considered feed
conversion ratios for various groups of pigs during their lives. He asserts that the court should have used
the value of the pigs on November 20 and
not their weight, to determine his compensation.[5]
Perhaps
Marzahl is correct that his contribution to the value of the pigs was more than
thirty-seven percent of $19,141.65. But
he then asserts that his award should be calculated pursuant to § 9.2 of
his agreement with FHC, an agreement we have already determined to be
inapplicable to Marzahl's dispute with Stelpflug.
In
response to Stelpflug's brief asserting that, in equity, he is entitled to the
entire $19,141.65, Marzahl argues that, in equity, he is entitled to the same
amount. Essentially, both parties are
asserting an unjust enrichment claim.
Unjust enrichment is an equitable doctrine which has three
elements: (1) the plaintiff
conferred a benefit upon the defendant; (2) the defendant had an
appreciation or knowledge of the benefit; and (3) the defendant accepted
or retained the benefit under circumstances making it inequitable for the
defendant to retain the benefit without payment of its value. Ramsey v. Ellis, 168 Wis.2d
779, 784-85, 484 N.W.2d 331, 333 (1992).
We
review decisions in equity for an erroneous exercise of discretion. Consumer's Co-op v. Olsen, 142
Wis.2d 465, 472, 419 N.W.2d 211, 213 (1988).
A discretionary decision must be based upon facts of record and
applicable law. Hartung v.
Hartung, 102 Wis.2d 58, 66, 306 N.W.2d 16, 20 (1981). It must be the product of a rational mental
process by which the facts of record and law relied upon are considered
together for the purpose of achieving a reasoned and reasonable
determination. Id. A reviewing court is obliged to
uphold a discretionary decision of the trial court if it can conclude ab
initio that there are facts of record which would support the trial court's
decision had discretion been exercised on the basis of those facts. Galuska v. Kornwolf, 142
Wis.2d 733, 737, 419 N.W.2d 307, 309 (Ct. App. 1987), review granted,
144 Wis.2d 955, 428 N.W.2d 553 (1988).
Stelpflug
does not contend that Marzahl conferred no benefit upon him. It would be difficult to do so. Stelpflug took over an ongoing pig producing
operation with 127,654 pounds of pigs.
Their value was estimated at $60,530.
This head start on finished pigs was a benefit to him. Stelpflug knew of this benefit. He inspected the Guldbek farm pig operation
on November 20, 1992. We agree with the
trial court's observation that:
"Just remember the Court of Appeals—I don't think there are any
farmers on the Court of Appeals ...."
But we have viewed a videotape of the November 20 inspection of the
Guldbek farm. While we may not grasp
the significance of everything shown by that videotape, it is readily apparent
that Stelpflug was aware that the pigs not owned by FHC would be of some value
to him.
The
third element of unjust enrichment is also met. Stelpflug accepted the 1,383 pigs from Marzahl under
circumstances where it would be inequitable were he not required to reimburse
Marzahl for the work he had done to raise the pigs from birth to the various
weights noted by Boyington. The only
question remaining is how much money should Marzahl receive.
The
benefit Stelpflug received is Marzahl's labor.
Marzahl does not assert that he should be paid for a set number of hours
at a set hourly rate. He bases his
claim on a contract provision which we have found inapplicable. Evidence of the value of his labor would be
difficult to use because each farmer claims the entire $19,141.65. The trial court could not know what effort
and hours of labor went into each farmer's part of the pig raising
operation. Because an unjust enrichment
claim looks at value of labor or goods contributed, Boyington's estimates of
the rate gain of the pigs at various times in their lives would not have much
to do with the value of Marzahl's services.
We recognize that efficiency is a factor in getting pigs to market more
quickly and that this factor has some value.
But we are not persuaded that this factor contributes much to a
determination of the fair price of Marzahl's labor. Marzahl will be paid a fair part of $19,141.65, and that may be
more or less than the total value of Marzahl and Stelpflug's services.
We
are left with the same problem that the trial court faced. Boyington's figures as to the value of the
Guldbek pigs is based upon finding a buyer for pigs of a size that are not
commonly sold. Using the assumed value
of the pigs on November 20, 1992, if a buyer could be found for them, and
comparing that value with the value of the pigs when marketed does not reflect
the value of Marzahl's labor any more than using their weight to do the same
thing. We do not know whether the
talent, time and effort to bring groups of pigs from birth to twenty or eighty
pounds is worth more or less than the talent, time and effort to raise pigs
from fifty or 100 pounds to 250 pounds.
Whether we look at this case de novo or for erroneous exercise of
discretion, the result is the same. We
can see no more accurate way to determine the equitable division of the
$19,141.65 than the way used by the trial court.
STELPFLUG'S
CROSS-APPEAL
We
have already dealt with most of the issues raised by Stelpflug in his
cross-appeal. He asserts that the trial
court erred by awarding any portion of the $19,141.65 to Marzahl because
Marzahl breached his lease with Guldbek and his contract with FHC. We agree that Marzahl did not vacate the
Guldbek farm at the end of his lease term and had to be evicted. We have explained why Marzahl did not breach
his contract with FHC. But we fail to
see why these factors have much to do with an unjust enrichment suit between
Marzahl and Stelpflug. The trial court
did not erroneously exercise its discretion by giving a portion of the
$19,141.65 to Marzahl.
Accordingly,
we modify the judgment to take into account the mathematical errors. Of the $19,141.65 which FHC paid to the
trial court, Marzahl is entitled to thirty-seven percent, or $7,082.41, and
Stelpflug is entitled to sixty-three percent, or $12,059.24. The judgment of the trial court is modified,
and as modified, affirmed.
By
the Court.—Judgment modified
and, as modified, affirmed.
Not
recommended for publication in the official reports.
[1] Marzahl and Stelpflug signed an agreement on
October 18, 1990, which concerned the four percent claim which Marzahl had
against Stelpflug for work on feed bins.
But this agreement did not attempt to divide the money owed by FHC
between Marzahl and Stelpflug.
Marzahl's appeal asserts that the trial court erred by giving him only
thirty-six percent of the $19,141.65.
We, therefore, need not consider this October 18 agreement further.
[2] By order dated November 4, 1993, the trial
court ordered FHC to pay $19,141.65.
When later dividing that amount between Marzahl and Stelpflug, however,
the court erroneously used a figure of $19,144.65. For the purposes of this appeal, we will use the correct amount,
or $19,141.65.
[3] Boyington used the figure of $60,530 as a net
value of the pigs. We deem the
difference between $60,365 and $60,530 as insignificant.