Mundhenke v. Holm

2010 SD 67, 787 N.W.2d 302, 2010 S.D. 67, 2010 S.D. LEXIS 107, 2010 WL 3172172
CourtSouth Dakota Supreme Court
DecidedAugust 11, 2010
Docket25236
StatusPublished
Cited by10 cases

This text of 2010 SD 67 (Mundhenke v. Holm) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mundhenke v. Holm, 2010 SD 67, 787 N.W.2d 302, 2010 S.D. 67, 2010 S.D. LEXIS 107, 2010 WL 3172172 (S.D. 2010).

Opinion

GILBERTSON, Chief Justice.

[¶ 1.] William Mundhenke (Mun-dhenke) filed a complaint seeking an accounting, dissociation, and dissolution of a business he claimed was operated as a partnership with Steve Holm (Holm). Holm denied the existence of a partnership and argued that Mundhenke’s complaint was a request for legal relief for which a right to a jury trial existed, rather than a request for equitable relief for which there is no right to a jury trial. The circuit court denied Holm’s request for a jury trial on the issue of whether a partnership existed. Holm appeals. We reverse and remand.

FACTS

[¶ 2.] In the late 1980s, Mundhenke enlisted Holm and Terry Boyle (Boyle) to start a garbage hauling business in Aberdeen, South Dakota, to compete with Dependable Sanitation, an established local business. The three men operated the business without a written agreement or a definite term. Each performed an equal share of the work soliciting and servicing accounts and driving the garbage truck routes.

[¶ 3.] Mundhenke would later testify that despite each of the three men having a one-third share in the business, at his suggestion they decided to put the business in Holm’s name. The business was represented as a sole proprietorship in Holm’s name for the procurement of licenses, permits, and insurance. In addition, Holm filed his tax returns claiming the income, expenses, and depreciation generated from A-l’s business activities as a sole proprietor. Boyle subsequently withdrew from the business after six months.

[¶ 4.] After Mundhenke stepped away from day-to-day operations in 1990, Holm referred to Mundhenke as his “silent partner” or partner several times over the next few years. Mundhenke and Holm both represented that their informal arrangement involved Holm handling the day-today operations and Mundhenke as the “behind the scenes guy.”

[¶ 5.] In 2000 and 2002, Dependable Sanitation offered to purchase A-l. Mike Erickson, the owner of Dependable Sanitation, spoke with both Mundhenke and Holm about purchasing A-l. During the 2002 negotiations, Erickson met several times with Mundhenke and Holm both separately and together. During the negotiations and discussions, Holm did not indicate a desire to dissociate from the business or claim that Mundhenke no longer had a partnership stake in A-l.

[¶ 6.] In 2005, Mundhenke scheduled a meeting with Holm and an attorney to discuss incorporating A-l. At that meeting, Holm for the first time indicated his desire to dissociate from the business. Holm and Mundhenke could not agree in subsequent discussions on a division of assets and routes.

[¶ 7.] Mundhenke eventually filed a three-count complaint demanding an accounting (Count 1) and a dissociation, dissolution, and other equitable remedies under SDCL ch. 48-7A (Count 2). In his answer, Holm denied the existence of a partnership and demanded a jury trial on the matter. Mundhenke moved for summary judgment on the issue of whether a partnership existed and resisted Holm’s demand for a jury trial. Holm opposed the motion and argued a right to a jury trial existed on the factual issue of whether the partnership had been formed. In the alternative, Holm argued that Mundhenke sought a declaration that the partnership *305 existed and that the right to a jury trial existed for such declaratory judgment actions.

[¶ 8.] On July 10, 2008, the circuit court denied Mundhenke’s motion for summary judgment. It then entered its ruling on Holm’s demand for a jury trial on the issue of whether the partnership existed. The circuit court concluded that an equitable claim was before it despite the need to determine the factual issue of whether a partnership existed. Citing Meyer v. Lofgren, 949 S.W.2d 80 (Mo.Ct.App.1997), for the proposition that the determination of the existence of a partnership in a suit for an accounting is “part and parcel of the equitable proceeding,” the circuit court concluded no right to a jury trial existed and denied Holm’s demand for a jury trial.

[¶ 9.] On August 20 and 21, 2008, a bench trial was held on the matter. The circuit court entered its findings of fact and conclusions of law in which it determined a partnership existed between Mun-dhenke and Holm from the time the two men and Boyle started the business in the late 1980s up until 2005 when Holm for the first time expressed a desire to dissolve the business in the meeting with Mun-dhenke and the attorney. The circuit court further concluded Mundhenke was entitled to a full accounting of the income and expenditures, assets and liabilities, contributions of the partners, accrual and disposition of partnership property, and a settlement of partnership accounts.

[¶ 10.] Holm appeals raising the following two issues:

1. Whether the circuit court erred when it denied Holm’s demand for a jury trial.
2. Whether the circuit court erred when it concluded Mundhenke and Holm formed a partnership and that no de facto dissolution occurred before the 2005 meeting.

STANDARD OF REVIEW

[¶ 11.] A circuit court has broad discretion in an equitable action to determine whether to grant or deny a jury trial. Fox v. Burden, 1999 SD 154, ¶ 32, 603 N.W.2d 916, 924. We will not disturb the circuit court’s decision absent an abuse of discretion. Id.

ANALYSIS AND DECISION

[¶ 12.] 1. Whether the circuit court erred when it denied Holm’s demand for a jury trial.

[¶ 13.] Holm argues he had the right to a jury trial under Article VI, Section 6 of the South Dakota Constitution and SDCL 15-6-38(a) and (b) because the circuit court could not grant Mundhenke’s request for equitable relief until after the determination of the seminal factual issue of whether a partnership existed. Holm further argues the factual issue of whether a partnership existed was a request for the determination of a legal issue, and therefore, a request for legal relief and not equitable relief as found by the circuit court. Holm also argues that Mun-dhenke’s claim sounded at law and not equity because the South Dakota Legislature enacted a statutory scheme, SDCL 48-1-5 to -8 (since repealed), with rules or elements for determining the factual issue of whether a partnership existed. Mun-dhenke argues the issue of whether a partnership existed was incidental to the equitable relief he sought through an action for an accounting, dissociation, and dissolution. Mundhenke further argues that because his complaint requested an equitable remedy and not a legal remedy, it sounded only in equity for which a jury trial is a matter of judicial discretion.

[¶ 14.] Article VI, Section 6 of the South Dakota Constitution guarantees *306 a right to a jury trial in all cases at law. SD Const, art. VI, § 6. “ ‘The right, however, does not exist for all civil cases.’ ” First Nat. Bank of Philip v. Temple, 2002 SD 36, ¶ 10, 642 N.W.2d 197, 201 (quoting First W. Bank, Sturgis v. Livestock Yards,

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Cite This Page — Counsel Stack

Bluebook (online)
2010 SD 67, 787 N.W.2d 302, 2010 S.D. 67, 2010 S.D. LEXIS 107, 2010 WL 3172172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mundhenke-v-holm-sd-2010.