Summary 2007 WY 185

Summary of Decision issued November 16, 2007

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Case Name: Baker v. Ayres and Baker Pole and Post, Inc.

Citation: 2007 WY 185

Docket Number: 06-260

Appeal from the District Court of Uinta County, the Honorable Denis L. Sanderson, Judge

Representing Appellant (Plaintiff): Clark D. Stith, Rock Springs, Wyoming.

Representing Appellees (Defendants): Ford T. Bussart, Rock Springs, Wyoming.

Issues: Whether the district court erred by invoking promissory estoppel to defeat enforcement of a contract based upon pre-contract formation events. Whether the district court erred in imposing a constructive trust.

Facts/Discussion: This was a dispute over the proceeds of an insurance policy on the life of the late Alvin Baker. His widow, Appellant, contended that the district court misapplied claims of promissory estoppel and constructive trust when it awarded the insurance proceeds to Appellees.
Standard of Review: In reviewing a judgment in which the trial court has set forth findings of fact and conclusions of law, the Court reviews the conclusions of law de novo. The Court reviews findings of fact for clear error.
Promissory Estoppel: The trial court’s findings regarding Mr. Baker’s agreements prior to the 1993 Stock Purchase Agreement do not support the promissory estoppel claim asserted by the Appellees, and there is no evidence of any subsequent agreement. Having failed to establish the existence of a clear and definitive agreement, the first element of promissory estoppel, Appellees did not sustain that claim.
Constructive Trust: A constructive trust is an equitable remedy imposed to compel a person who unfairly holds a property interest to hold that property in trust for the person for whom, in equity and good conscience, it should be held. Unjust enrichment occurs when a party receives something of value without payment, which was accepted and used so as to unjustly enrich the recipient of the goods or services. To determine whether Appellant was unjustly enriched, the Court stated it was necessary to determine who paid the insurance premiums. The Court reviewed the record of the trial court regarding the payment of the insurance premiums. They were paid by Mr. Baker and not the Company therefore Appellant did not receive something of value without paying for it and was not unjustly enriched. Having failed to prove unjust enrichment, Appellees could not sustain their constructive trust claim.
The Court also questioned whether the equities in the case favored any of the parties. Neither Mr. Baker nor Mr. Ayres transferred their life insurance policy to the Company, or named the Company as beneficiary. It was not readily apparent that equity should enforce an obligation against the Bakers that the Ayres also failed to meet.
Remaining Issues: The Court stated it was unnecessary to resolve the evidentiary issues raised by Appellant because the evidence did not support the claims of the Appellees. The findings also failed to support claims of promissory estoppel and constructive trust.
Ms. Baker requested the trial court reinstate its previous judgment in favor of her. The record suggests it was not vacated or otherwise disturbed. The Court stated the trial court was in a better position to make that determination and may do so on remand. The Court also left the question of attorney’s fees for Appellant to the trial court.

Holding: The trial court’s findings regarding agreements made prior to the Stock Purchase Agreement did not support the promissory estopppel claim. Appellees failed to prove unjust enrichment so their claim of constructive trust failed. The Court reversed the judgment in favor of the Company and the Ayres and remanded to the trial court for entry of judgment in favor of Ms. Baker and for additional proceedings as may be needed to resolve the dispute.

Reversed and remanded.

J. Burke delivered the opinion.

J. Kite dissenting: The Justice did not agree that the district court’s findings failed to support the promissory estoppel claim. She would have held that a promissory estoppel claim based upon a prior agreement between two partners comprising a partnership was cognizable despite a later agreement between the soon to be shareholders to incorporate the partnership.
She stated the present case involved two agreements – the first between two partners in which they agreed to purchase insurance naming the partnership as beneficiary and the second between four corporate stockholders in which they agreed the corporation would procure insurance proceeds of which would be used to fund the buy/sell provision of the stock purchase agreement. She would hold that the existence of the 1993 stock purchase agreement did not extinguish a promissory estoppel claim based on the prior partnership agreement.
The Justice also disagreed with the majority’s conclusion that the district court erred in imposing a constructive trust. In her view, Ms. Baker received something of value without payment and was unjustly enriched when she received both the insurance proceeds and the payment for the value of the Baker’s corporate shares.

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