Linda F. Swanberg, Respondent, vs. John Meyer, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

STATE OF MINNESOTA

IN COURT OF APPEALS

C8-00-655

Linda F. Swanberg,

Respondent,

vs.

John Meyer,

Appellant.

Filed November 21, 2000

Affirmed
Klaphake, Judge

Anoka County District Court

File No. C09811353

Kurt Robinson, 607 N.E. Highway 10, Suite 206, Blaine, MN  55434 (for respondent)

Kenneth M. Wasche, 14735 Highway 65 N.E., Suite 300, Ham Lake, MN  55304-6113 (for appellant)

            Considered and decided by Klaphake, Presiding Judge, Harten, Judge, and Anderson, Judge.

KLAPHAKE, Judge

            John Meyer appeals from a $70,955.67 judgment entered against him and in favor of respondent Linda F. Swanberg.  Swanberg sued Meyer to recover money that she claimed she had loaned to Meyer.  Meyer claimed that Swanberg had invested the money in his corporation, John Meyer Construction Company.  Because the evidence presented at trial amply supports the trial court's findings, we affirm.

ANALYSIS

            On appeal, findings made by a trial court will not be set aside unless clearly erroneous, with due regard given to the opportunity of the trial court judge to assess the credibility of the witnesses.  Minn. R. Civ. P. 52.01.  "Clearly erroneous" means "manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole."  Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975) (citation omitted).

            This standard applies to all factual findings, whether based on oral or documentary evidence.  Minn. R. Civ. P. 52.01.  We therefore afford the same deference to all findings, regardless of the underlying basis of evidentiary support, and will affirm unless "left with the definite and firm conviction the trial court made a mistake."  First Trust Co. v. Union Depot Place Ltd. Partnership, 476 N.W.2d 178, 182 (Minn. App. 1991), review denied (Minn. Dec. 13, 1991) (citation omitted).

            As a general rule, an action to recover money exists when one loans or advances money at the request of another, even if no date or method of repayment is specified.  Chamberlain v. Tyner, 31 Minn. 371, 372-73, 18 N.W. 97, 97 (1884).  In the absence of an agreement, the law will imply a promise or an obligation to repay.  Id.  Moreover, a corporate officer can be held personally liable on a promise to pay if the other party understands the money was lent to the individual and not the corporation.  See Hubbs v. Leach, 355 N.W.2d 470, 473 (Minn. App. 1984), review denied (Minn. Jan. 2, 1985).

The evidence at trial established that Swanberg had entered into a contract for deed to sell her property to Meyer's corporation.  The property contained three residential lots, and Swanberg was to receive payments when each lot was sold, for a total purchase price of $82,500.  As Swanberg received her first two payments, she turned most of the proceeds over to Meyer, at his request, so that he could finish houses he was building on the property.

            Meyer does not dispute that Swanberg lent money at his request; nor does he dispute the amount of money still owed Swanberg.  Rather, he argues that Swanberg invested the money in his corporation and that the trial court erred in finding that the transactions were personal loans to him.  He asserts that the overwhelming documentary evidence established that the check tranfers were between Swanberg and his corporation, and that the only evidence to support the trial court's findings is Swanberg's testimony that she believed or understood she was lending these sums of money to him personally and that she was dealing with him in his individual capacity.

However, Swanberg's belief that she was dealing with Meyer as an individual is supported by much more than a bald assertion on her part.  Swanberg testified she returned the checks from the first two closings to Meyer, after he told her that he needed the money to finish the houses he was building on the property.  Swanberg testified that she had no experience in real estate investment, that she did not expect to receive any interest on these loans, and that she believed that she would be repaid when the three lots were sold.  In addition, Meyer acknowledged that he approached Swanberg and that he did not discuss the possibility that she might not recover all of the money or that she might be making a risky investment.  Meyer further acknowledged that there was no written contract, corporate resolution, or other formality to evidence these transactions.

Given the disparate sophistication levels of the parties and the circumstances surrounding the transaction, the trial court was entirely free to accept Swanberg's claim that she lent the money to Meyer and not his corporation, and to reject Meyer's rather incredible claim that Swanberg was merely investing in his corporation.  The evidence amply supports the trial court's finding that an oral contract existed between Swanberg and Meyer individually, in which Swanberg agreed to loan certain sums of money to Meyer.

            Meyer further argues that the trial court's decision may have "some very perverse" consequences on the legal rules regarding corporate owner liability.  Meyer insists that no evidence was introduced to justify piercing the corporate liability shield in this case.  See Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  We disagree. The evidence showed that Meyer did not observe corporate formalities, that he was the sole officer and shareholder of his corporation, and that his corporation may have been "merely a facade" for his individual dealings.  Id. (setting out factors significant to first prong of analysis to determine whether corporate veil should be pierced). 

            Even more significant, the evidence suggests that rendering Meyer individually liable in this case "is necessary to avoid injustice or fundamental unfairness."  Id. (second prong of analysis).  Meyer carefully documented his corporation's payments to Swanberg under the contract for deed and then convinced her to return most of the proceeds to him, but gave her no security or other written obligation to evidence this indebtedness.  In addition, Meyer testified that he had no immediate plans to pay Swanberg, even though his corporation is solvent and he profited on the sale of the houses.  As the trial court concluded, "[e]quitable considerations dictate" that Swanberg receive judgment in this case.

            Affirmed.