Williams Services v. Sherman

492 N.W.2d 122, 1992 S.D. LEXIS 150, 1992 WL 328910
CourtSouth Dakota Supreme Court
DecidedNovember 10, 1992
Docket17537
StatusPublished
Cited by6 cases

This text of 492 N.W.2d 122 (Williams Services v. Sherman) 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
Williams Services v. Sherman, 492 N.W.2d 122, 1992 S.D. LEXIS 150, 1992 WL 328910 (S.D. 1992).

Opinions

McKEEVER, Circuit Judge.

Rory Sherman (Sherman) appeals from an order by the trial court amending a judgment more than one year after it was entered. We affirm.

STATEMENT OF FACTS

Williams Service (Williams), a partnership, entered into a contract with United Standard Distributors of Wyoming (USD of Wyoming), a distributorship of water conditioning equipment, on February 22, 1985. The agreement provided that Williams would receive $165 for each water conditioning unit it installed and serviced for USD of Wyoming. On August 5, 1987, Williams commenced a debt collection action against USD of Wyoming and Sherman, the president and sole shareholder, for unpaid services performed according to contract terms in the amount of $5,505.

At trial, Sherman’s testimony established that USD of Wyoming was an active business entity which held regular corporate meetings, maintained corporate records and observed corporate formalities.1 Based upon this testimony the trial court declined to pierce the corporate veil and hold Sherman personally liable for the debt. Judgment was entered for Williams and against USD of Wyoming on September 21, 1988, for $5,505 plus costs and interest.

On December 27, 1988, Williams filed a' petition to enforce the judgment against USD of Wyoming in Douglas County, Nebraska. It also filed a motion to require an undertaking by USD of Wyoming, as well as a motion for order restraining USD of Wyoming and Sherman from disposing of any assets. The trial court granted these [124]*124motions. A subpoena was then issued requiring Sherman to appear at a debtor’s examination in his capacity as USD of Wyoming’s president. He failed to appear at the scheduled hearing.

On January 30,1989, Williams served but did not file a motion to amend judgment upon Sherman and his counsel. This motion sought to hold Sherman personally liable for the judgment because he allegedly transferred USD of Wyoming’s assets and property to United Standard of Nebraska (USD of Nebraska), a distributor corporation wholly owned by Sherman and incorporated in Nebraska, for the sole purpose of defeating the judgment. The motion was served again but not filed on February 16, 1989. Finally, on February 26, 1990, approximately seventeen months after the original judgment was entered, Williams filed its motions.

The trial court ordered Sherman to produce USD of Wyoming’s financial records on April 6, 1990. Williams renewed its motion to amend judgment on June 25,

1990. The trial court issued another order on August 24,1990, requiring USD of Wyoming and Sherman to produce additional financial information.

On November 6, 1990, Williams conducted a debtor’s examination of Sherman in his capacity as president of USD of Wyoming. Sherman’s testimony at the 1990 debtor’s examination revealed that USD of Wyoming transferred all of its assets to USD of Nebraska by April 17, 1987.2 His testimony also established that USD of Wyoming failed to generate any income since August 21, 1988, one month before judgment was entered against USD of Wyoming.

At the hearing on Williams’ motion to amend judgment, the court reviewed the debtor’s examination, heard Sherman’s testimony under oath and listened to counsels’ oral arguments. The trial court amended the judgment by memorandum letter opinion on March 8, 1991. The court concluded that Sherman “has been playing loose with the court” based upon the difficulties in obtaining USD of Wyoming’s financial information and Sherman’s testimony at the debtor’s exam. The judgment was amended to hold Sherman individually liable to Williams for the debt. It is from this judgment Sherman appeals.

DECISION

ISSUE

WHETHER THE TRIAL COURT ERRED IN AMENDING THE JUDGMENT TO HOLD SHERMAN PERSONALLY LIABLE MORE THAN ONE YEAR AFTER THE ORIGINAL JUDGMENT WAS ENTERED?

Analysis

Sherman contends that Williams’ motion to amend the judgment is based upon fraud, or, in the alternative, fraud upon the court and must be treated as a motion to vacate under SDCL 15-6-60(b) because Williams neither filed a motion for new trial nor appealed the trial court’s judgment. Sherman further contends that, as a motion to vacate, Williams’ motion must fail because it was not timely filed within the one year time limit requirement of SDCL 15 — 6—60(b)(3), and, in the alternative, Williams failed to establish that Sherman committed fraud upon the court, upon which a reasonable time limit for making the motion is allowed.

Williams contends that the motion was served within one year of the judgment’s entry thus satisfying both the one year and the reasonable time requirements of SDCL 15-6-60(b). In support of its motion to vacate, Williams contends that Sherman committed fraud upon the court, and the court properly exercised its discretion to amend the judgment and hold Sherman personally liable for the debt of his 100 percent owned corporation, USD of Wyoming.

In its motion to amend judgment, Williams asked the court to modify the judgment to hold Sherman personally liable [125]*125for the debt. Sherman’s testimony at trial established that USD of Wyoming held regular corporate meetings and maintained corporate records, that Sherman was 100 percent owner of the shares in USD of Wyoming, and that USD of Wyoming was an active corporate entity. However, difficulties encountered by counsel in obtaining information about USD of Wyoming’s financial affairs and the information elicited from Sherman at the debtor’s examination show that USD of Wyoming is no longer in existence. In fact, the bulk of USD of Wyoming’s assets were transferred into a new Nebraska corporation (USD of Nebraska), owned 100 percent by Sherman, on April 26, 1988. Based upon this information, the trial court found that Sherman “has been playing loose with the Court.”

The trial court, in response to the motion, vacated that portion of its original order finding no personal liability for Sherman to Williams. Vacation of judgments is governed by SDCL 15-6-60(b). The statute provides:

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
* * * * * *
(3) Fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;
* * * % * *
(6) Any other reason justifying relief from the operation of the judgment.3

A motion for relief based upon SDCL 15-6-60(b) is addressed to the sound discretion of the trial court and will not be disturbed on appeal except for abuse. Gustafson v. Gustafson, 453 N.W.2d 852 (S.D.1990).

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Williams Services v. Sherman
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Cite This Page — Counsel Stack

Bluebook (online)
492 N.W.2d 122, 1992 S.D. LEXIS 150, 1992 WL 328910, Counsel Stack Legal Research, https://law.counselstack.com/opinion/williams-services-v-sherman-sd-1992.