author: R. A. RANDALL, Judge.

text:
    NEW MARKET TOWNSHIP, Appellant, v. CITY OF NEW MARKET, Respondent.
    No. C9-02-37.
    Court of Appeals of Minnesota.
    Aug. 6, 2002.

      Robert A. Nicklaus, Eric J. Braaten, Nicklaus, Braaten & Hollenhorst. PLLC, Chaska, MN, for appellant.
    Thomas M. Scott, Campbell Knutson, Eagan, MN, for respondent.
    Considered and decided by RANDALL, Presiding Judge, STONEBURNER, Judge, and FOLEY, Judge.

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

R. A. RANDALL, Judge.

New Market Township, brought an accounting action in the district court (1) seeking to recover a $240,000 contribution to the City of New Market for construction of a fire hall and (2) alleging an overpayment under the township/city fire service contracts. The district court, following a bench trial, found in favor of the city and, in January 2001, denied the township’s motion for judgment notwithstanding the verdict. The township appeals alleging that (a) the township was not authorized to contract with the city to build and fund a fire hall; (b) the city breached the agreement by profiting from the surplus created by excess levies and by unauthorized spending of capital-fund contributions; (c) the city owes damages for breach of contract, unjust enrichment, or restitution; and (d) the court erred in allowing an agreement as evidence of an enforceable contract. We affirm.

FACTS

Appellant township and respondent city have entered into an annual fire service contract since the 1980⅛ whereby the city volunteer firemen provided fire and emergency services for New Market Township (township), City of Elko, Cedar Lake Township, and the City of New Market (city). The township is ten times more populated than the city and accounts for approximately 75% of the fire and emergency calls.

In 1991 and the following years, city firemen discussed building a new fire hall (in the City of New Market) at the annual township meeting. At the 1994 annual meeting the township electors were updated on the fire hall’s progress and informed that the cost projection to build the fire hall was between $800,000 and $600,000. The electorate passed two motions at the meeting authorizing a joint-powers agreement and authorizing bonding by the township for $250,000 toward the construction costs of the city’s fire hall. The township in 1995 entered into a building agreement with the city whereby the township agreed to pay the $250,000 toward construction costs. Included in the building agreement were provisions for 20 years of fire service for the township and, if the city terminated services, the city would repay the township on a pro rata basis. The building agreement was also approved at a council meeting by the City of New Market.

The annual fire-service contracts provided that the township would contribute funds for fire services and toward building a fire hall. The 1995 fire-service contract contained a provision to contribute $250,000 to the construction of the New Market Area Hall and referenced the building agreement.

At the 1996 annual meeting, the township electors voted to approve the 1996 fire-service contract. In 1996, the township paid $240,000 toward constructing the fire hall, which was completed in 1996. The area hall building housed the fire department, a common area, and a city hall. In 1997, rent payments were approved to cover the cost of utilities. The road and bridge fund and excess money from the fire-service contracts paid for the fire hall and eliminated the need for the township to borrow funds.

In 1998, after a petition filed by the township electors at the annual meeting, the state auditor audited the township’s and city’s records. The auditor concluded that although the electors’ actions at the 1994 annual town meeting could be construed as an agreement to commit $250,000 for constructing the building, the electors did not specifically approve a debt or levy for that amount. The report further determined that road and bridge funds were used to build the fire hall. The auditor’s report discussed the township’s possible recoupment of road and bridge funds and seeking an ownership interest in the building. The report stated:

[W]e recommend that the Town consider seeking legal counsel concerning possible avenues of recovering Road and Bridge funds paid over to the City Fire Hall, and that it seek an ownership interest and/or a renegotiation of its lease with the City.

ISSUE

I. Did the township electors authorize the town board to enter into an agreement to construct and fund a fire hall?
II. Did the township electors authorize a levy of $240,000 toward construction costs to build the city’s fire hall?
III. Was a surplus created that breached the fire-service contracts and unjustly enriched the city?
IV. Did the city breach its fire-service contracts with the township by unauthorized spending of designated capital fund contributions?
V. Did the district court err in allowing the March 7, 1995, building agreement into evidence?

ANALYSIS

An appellate court will not set aside a trial court’s findings of fact unless they are clearly erroneous. Minn. R. Civ. P. 52.01; Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 102 (Minn.1999). A reviewing court, when applying Minn. R. Civ. P. 52.01, views the record in a light favorable to the district court. Rogers v. Moore, 603 N.W.2d 650, 656 (Minn.1999). If the trial court’s findings are reasonably supported by the evidence, they are not clearly erroneous and must be affirmed. Citizens State Bank v. Leth, 450 N.W.2d 923, 925 (Minn.App.1990).

I. Fire hall

The key issue in this ease is whether the township and the electorate had the necessary information needed to make an informed decision to authorize the expenditures of funds to contribute toward the fire hall. Minn.Stat. § 365.10, subd. 6 (2000), governs constructing town buildings and provides:

The electors may let the town board buy or build a town hall or other building for the use of the town. The electors must decide the amount of money to be raised for that purpose.

The township first argues that the electorate did not authorize the town board to build a “combined city and fire hall or issue General Obligation or revenue Bonds” to construct the fire hall. The city argues that the electors at the 1994, 1995, and 1996 annual meetings both approved and authorized the township to contribute toward building the fire hall.

The record supports the district’s court’s findings that the township board was authorized to enter into a contract with the city to build a fire hall. The district court found:

[a]t the March 8, 1994 annual meeting the township’s electorate “unanimously approved two related motions authorizing the Township to participate with the City on the fire hall and authorized the Township to borrow up to the necessary amount to provide funds for the fire department to begin construction.

The minutes from the March 8, 1994, township meeting state that Fire Chief Gary Erickson discussed the “progress of the New Fire Hall” and estimated that the costs would be between $300,000 and $600,000 and that the township would have to contribute approximately $250,000 toward the cost of construction. According to the minutes of the 1996 annual meeting, Chief Erickson and John Fuller represented the fire department and told the electorate that “the name of the new fire hall shall be New Market Area Hall.” The minutes also show a discussion that “City money, Fire Fund money, and Pull Tab money” would be used to finance construction before the township would be asked to contribute any of the $250,000. The minutes show that the electors discussed “the Capital Fund of New Construction” with the Fire Department members. A motion was made to accept the Capitol Fund of New Construction and the motion carried. The record further shows that the township’s actual contribution of $240,000 was in line with Chief Erickson’s original $250,000 estimate and less than the cost to the township of providing its own fire protection.

The township’s 20-year renewable fire-service contract with the city supports the district court’s findings that the township authorized building and financing the' fire hall. The 1995 and 1996 fire-service contracts contained a provision whereby the township agreed “[t]o pay the City $250,000 to help finance the construction of a fire station.” The agreements further provided for a pro rated refund “[i]f the City refuses to enter into contracts in future” years to provide fire-protection services. The township minutes and the fire-service contracts support the district court’s conclusion that the township’s electorate was informed when it authorized the township to enter into an agreement with the city to build and fund a fire hall.

II. Tax levies

The township next argues that the electors did not authorize a levy of $240,000 to build the fire hall. We disagree.

The district court found:

In its annual meetings, the Township electors authorized annual levies for fire services in amounts that exceeded the annual fire contract expenditures by a substantial amount. The excess levies for the fire fund eliminated the necessity of the Township to borrow to pay the amount owed to the City in 1996 and 1997.

Beginning July 1996, the city received five payments, totaling $240,000 from the township towards the building as follows: a payment of $102,750 on July 8, 1996; a payment of $36,100 on August 21, 1996; a payment of $26,750 on October 7, 1996; a payment of $61,000 on November 19, 1996; a payment of $13,400 on January 17, 1997. The $240,000 that the township paid came from the road and bridge component of the general fund and from amounts that exceeded the annual fire-service contract expenditures. As a result, the township did not borrow any funds to construct the fire hall. We conclude again that the district court’s findings that the electorate authorized constructing and paying for the fire hall are not clearly erroneous and are supported by the record.

III. Surplus

The township claims, pursuant to the state auditor’s report, that a “surplus” was created that violated the fire-service contracts and unjustly enriched the city. The city argues that there was no profit and that the auditor’s report determination of a surplus was due to the auditor’s re-categorizing many of the expenditures. The district court found that

the Township did not make any overpay-ments for fire and emergency for the years 1992 through 1996. The Township paid the amount it'agreed to pay each year under its contracts with the City.

Appellant’s contention that there was a profit resulting from excess monies paid to the city under the fire-service contracts is without merit. The township relies heavily on the state auditor’s report that states there was a “surplus or profit” in the amount of $105,030. First, when the audit was performed, the auditor did not have all of the city records, used only the information from the city’s reporting form that is provided to the state, and did not have the minutes of the township’s 1994 annual meeting.

Second, the record shows that the cost of replacing and maintaining fire equipment was built into the fire-service contracts, which resulted in peaks and valleys in income and disbursements. When replacement and maintenance costs were low there was extra money in the account. In other years, expenditures were greater than revenues, resulting in using the extra funds from previous years. This record shows no unjust enrichment to the city and does not support the township’s claim to restitution.

IY. Unauthorized spending

The township argues that the city improperly used the capital fund to buy or replace equipment, which violated the fire-services contract that required the city to gain approval from the township for every expenditure it made. The district court found that there is no evidence to suggest that the expenditures for the fire hall and equipment were unauthorized. We agree.

The township’s contention that the city was not authorized to buy, replace, or maintain equipment without the township’s approval of each expenditure is without merit. In January 1997, the city established a capital-improvement account for fire-related expenses, which it administers. The 1996 fire-service contract between the city and township provided that “[t]he capital fund is to be used for additional or replacement equipment or * * * or [to] repair or modifications for buildings.” The 1997 contract provided that money shall be paid into a capital-improvement account “for the payment of all items related to fire protection including the repair, replacement and maintenance” of the fire hall and fire equipment. The township approved each fire-service contract at the annual meeting. The fire-service contracts for the years 1995, 1996, and 1997 required the township to pay $70,760.40 for capital improvements. The township failed to make the 1995 payment and contributed only $40,155.20, which the city deposited in the capital-improvement account. The record shows that between 1996 and 1998, the township contributed a total of $61,388.20, which was deposited in the capital-improvement account for the fire department and was used for fire-related expenses, such as the purchase of a fire truck and a fire cascade system. It would be bizarre to require the city, the entity providing the fire-protection service, for a negotiated fixed cost, to have to go back to the entity receiving protection and have each and every individual expenditure approved. We will not read that into the contract. We conclude that the district court’s finding that the expenditures were authorized was proper.

This case is not one where the township wanted to rescind a contract that it had just signed, where no money had been paid to construct the fire hall, and the fire hall had not been started. Rather, this was a completed transaction where both parties were content with the agreement (for years) until a state auditor’s report criticized the township for its accounting practices. The state auditor’s conclusion as to surplus, capital expenditures, and depreciation does not necessarily mean the same thing to two municipalities that are negotiating at arm’s length, as it does to an auditor. We note that the makeup of the town board changed almost completely after the contracts were signed and after the city and the township had been operating under them for a number of years. An audit was requested, not by the old township board, but instead by the new board, which was motivated to start this litigation by the state auditor’s report. The audit was done with incomplete records and four years after the first contract at issue was negotiated and three years after the building was completed and paid for. Pending this litigation, the city continues to provide fire-protection services to the township under negotiated contracts.

Y. Evidentiary issue

The township contends that the district court erred when it received and considered the March 7, 1995, building agreement. The township objected to admitting the building agreement when David Frame was testifying in his capacity as chairman of the board at February and March 1995 board meetings about whether the other two members agreed with the terms of the contract. The court had allowed Frame’s testimony, as non-hearsay, because he was acting in his capacity as chair of the governmental board that discussed the building agreement. The district court overruled the defense’s objection and allowed the agreement and allowed the accompanying testimony and documents into evidence stating, “For the same reasons given earlier, I’m going to receive Exhibit 1 and overrule the objection.” The court had overruled a previous objection made by the township to admitting Frame’s testimony regarding whether the town board agreed with building contract terms on the same grounds and stated,

[I]t seems to me that those who are in a position to know that accounted on behalf of the Town Board and executing documents and so on should be able to testify on the basis that they did these things.

The district court’s evidentiary rulings were well within its discretion. Evidentiary rulings will not be reversed unless an abuse of discretion or based on an erroneous view of the law. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn.1990). “A party is not entitled to reversal of a judgment based on an erroneous evi-dentiary ruling unless the party demonstrates that the error was prejudicial.” Cloverdale Foods of Minn., Inc. v. Pioneer Snacks, 580 N.W.2d 46, 51 (Minn.App.1998) (citation omitted).

In this case, Frame signed the agreements in his capacity as chairman of the board and was present when the board discussed the building agreements. The evidence was relevant to the parties’ understanding of the agreement as shown by their subsequent conduct.

DECISION

Fire-service contracts referencing constructing and financing a fire hall and minutes of town meetings discussing and voting to build and fund a fire hall were sufficient evidence to support the district court’s findings that the township electorate authorized the contribution toward the city’s fire hall for purposes of the city continuing to provide fire protection to the township.

Fire-service contracts providing for funds to be deposited into a capital account and to be used for fire-related expenditures were sufficient evidence for the district court to conclude that the city was authorized to spend money from the account.

The district court properly allowed a building agreement into evidence that was relevant to the parties’ understanding. The person who signed the agreement could testify.

Affirmed.

      . For example, in 1993, the city received $27,750 from the township, but spent $61,939; in 1994, the city received $65, 658 and spent $152,005 and in 1995, the revenues were $72,295 and actual expenditures were $78,558.

      . The state auditor’s report, which audited the township's financial statements for the years 1992 through 1996, was signed on February 23, 1998.


source: Caselaw Access Project

author: GORS, Acting Justice (on reassignment). KONENKAMP, Justice

license: Public Domain

text:
    2002 SD 80
    NATURE’S 10 JEWELERS, A Sam Savage Company, Inc., and Sam Savage, Individually, Plaintiffs and Appellants, v. Brian GUNDERSON, Defendant and Appellee, and Nature’s 10, Inc., a South Dakota Corporation; Mylan Ventures, Ltd., a North Dakota Corporation; Frank Barnes; Jerry Haack; and Barney Schumacher, Defendants.
    No. 21962.
    Supreme Court of South Dakota.
    Argued Jan. 10, 2002.
    Reassigned on March 01, 2002.
    Decided July 10, 2002.
    Rehearing Denied Aug. 13, 2002.
    Ronald A. Parsons, Jr., Steven M. Johnson of Johnson, Heidepriem, Miner, Mar-low and Janklow, Sioux Falls, South Dakota and Matthew McCaulley of Hynes & McCaulley, LLC, Sioux Falls, South Dakota, Attorneys for plaintiffs, and appellants.
    Tina M. Hodne of Berenstein, Moore, Berenstein, Heffernan & Moeller, LLP, Sioux City, Iowa, Attorneys for defendant Brian Gunderson.
   GORS, Acting Justice (on reassignment).

[¶ 1.] Sam Savage (Savage) and Rossi Fine Jewelers (Rossi) each separately sued Nature’s 10, Inc. (Nature’s 10), and various directors and officers. In both cases, the trial court ruled that federal law and the contracts between the parties mandated arbitration in both cases. We hold that the contract between Savage and Nature’s 10 is void, and therefore compulsory arbitration is not required. We reverse. (In a separate decision, we decide that the same arbitration clause in the contract between Rossi and Nature’s 10 is valid and requires compulsory arbitration.)

FACTS

[¶ 2.] Defendant Nature’s 10 was incorporated in South Dakota in 1995. In 1996, defendant Mylan Ventures, Ltd., (Mylan) a Wyoming corporation, purchased Nature’s 10. The remaining defendants, Mike Alva-no, Frank Barnes, Kirk Gardner, Brian Gunderson, Jerry Haack, Barney Schu-macher and Randy Slaybaugh were either directors or officers of Nature’s 10 or My-lan during the time of the transactions described here. Some of the individual defendants appeared in circuit court, yet only Brian Gunderson responded to the plaintiffs appeal.

[¶ 3.] Nature’s 10 held itself out as a franchiser offering potential franchisees an opportunity to participate in retail sales of various articles of jewelry at discounted prices. Nature’s 10 stores were advertised as marketing diamonds obtained from Nature’s 10’s own mines, cut in its own facilities and offered at lower prices to franchisers. Nature’s 10 was registered to sell franchises with the South Dakota Division of Securities.

[¶ 4.] On August 27, 1997, the South Dakota Division of Securities notified the defendants that the Nature’s 10 franchise registration had expired. Then on October 1, 1997, the Division withdrew the company’s registration number effective July 29, 1997. Defendants were warned that the company “will no longer be engaged in the offer or sale of franchises in South Dakota.”

[¶ 5.] Plaintiff Sam Savage (Savage), a Florida resident, had previously been in the jewelry business and was interested in operating a jewelry franchise store. Savage negotiated with Nature’s 10 and signed a franchise agreement with the company on December 19, 1997 — moré than four months after Nature’s 10 was no longer authorized to sell franchises. After signing the franchise agreement, Savage made additional, substantial investments and opened his Nature’s 10 franchise store in Naples, Florida in April of 1998. On May 14, 1998, Nature’s 10 was formally dissolved as a corporation by the South Dakota Secretary of State. Savage closed his store in January of 1999 after losing several hundred thousand dollars.

[¶ 6.] Nature’s 10 offered “manufacturer-direct purchasing” with “a continuous supply of discounted wholesale diamonds from the company’s own mines” cut in their own facilities. Nature’s 10 promised the following to Savage:

• Nature’s 10 would allow Savage to provide diamonds to insurance companies that were replacing jewelry lost by or stolen from their insureds.
• Nature’s 10 would provide Savage initial training in the operation of a franchise.
• Nature’s 10 would develop and administer a corporate awards program.
• Savage would receive company-administered updates and maintenance for a computerized inventory catalog of jewelry designs.
• Nature’s 10 would establish a toll free telephone service number to provide information and assistance.
• Nature’s 10 would provide training for bookkeeping, accounting, inventory control and other procedures for the operation of a franchise.

[¶ 7.] Nature’s 10 had no diamond mines, no cutting facilities and no diamonds. There was no insurance jewelry replacement program, no coordinated advertising and strategies, no franchise training, no corporate awards program, no computerized inventory catalog of jewelry designs, no toll free service number, no training and support for bookkeeping, accounting, inventory control and other procedures. Nature’s 10 provided none of the guaranteed franchise products and services. In short, the things that Nature’s 10 promoted did not exist and the things that Nature’s 10 promised were not provided. Savage was forced to close his business at a substantial loss.

[¶ 8.] In his lawsuit, Savage alleged breach of contract, failure of consideration, breach of implied duty of good faith and fair dealing, actual fraud, constructive fraud, deceit, misrepresentation in the sale of a franchise, piercing the corporate veil to impose personal liability on the directors and officers, and three additional counts alleging specific franchise statute violations. Rossi filed a similar lawsuit. On October 6, 2001, Savage and Rossi moved to consolidate their actions. The parties then stipulated that the actions would be consolidated for discovery purposes. Defendants moved for compulsory arbitration in accordance with a clause in the franchise agreements. Although Savage opposed the motion, the trial court entered an order requiring arbitration. Savage appeals.

[¶ 9.] The franchise agreement between Nature’s 10 and Savage contained the following arbitration clause:

Any monetary claim arising out of or relating to this Agreement, or any breach thereof ... shall be submitted to arbitration in [Union] County, South Dakota, in accordance with the rules of the American Arbitration Association and judgment upon the award may be entered in any court having jurisdiction thereof and shall be final, binding and unappealable....

The trial court held that this provision and federal law required compulsory arbitration.

STANDARD OF REVIEW

[¶ 10.] Written contracts are reviewed without any presumption in favor of the trial court’s interpretation. Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 12, 585 N.W.2d 819, 822. Contract interpretation is a question of law. Id.

ANALYSIS AND DECISION

[¶ 11.] This Court has consistently favored the resolution of disputes by arbitration, Thunderstik Lodge at ¶ 14, as we have done in Rossi v. Nature’s 10, 2002 SD 82, ¶ 14, 648 N.W.2d 812, which is the companion to this case. The purpose of arbitrating disputes is to provide a relatively quick and inexpensive resolution without the cost and delay that may come with legal proceedings. Rossi at ¶ 8; Thunderstik Lodge at ¶ 14. There is an overriding policy favoring arbitration when a contract provides for it. Id. In addition, South Dakota has adopted the Uniform Arbitration Act. SDCL 21-25A-1 provides:

A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract.

If there is doubt whether a case should be resolved by traditional judicial means or by arbitration, arbitration will prevail. Thunderstik Lodge, 1998 SD 110 at ¶ 15, 585 N.W.2d at 822 (citing City of Hot Springs v. Gunderson’s, Inc., 322 N.W.2d 8, 10 (S.D.1982)).

[¶ 12.] However, in this case, there was no valid contract. The franchise agreement, which was entered into between Savage and Nature’s 10 several months after the franchise registration expired, was void, not voidable. A void contract is invalid or unlawful from its inception. It is a “mere nullity, and incapable of confirmation or ratification.” Black’s Law Dictionary at 1573 (6th ed.1990). A voidable contract, on the other hand, is a valid contract that can be “legally voided at the option of one of the parties.” Id. at 1574. Here, the franchise agreement between Savage and Nature’s 10 was signed in violation of SDCL 37-5A-6. This statute provides that “[n]o person may offer or sell any franchise ... unless there is an effective registration statement on file.... ” Because there was no effective registration statement on file, the agreement between Nature’s 10 and Savage was unlawful from its inception. SDCL 53-9-1. An unlawful contract is void. SDCL 53-5-3 and 20-2-2; Green v. Mt. Diablo Hosp. Dist., 207 Cal.App.3d 63, 254 Cal.Rptr. 689, 697 (1989) (stating “illegality serves to void the entire contract”).

[¶ 13.] While there may be a policy favoring arbitration when a contract provides for it, you cannot arbitrate a felony. In Party Yards, Inc. v. Templeton, the Fifth District Florida Court of Appeals said: “A claim that a contract is illegal and, as in this case, criminal in nature, is not a matter which can be determined by an arbitrator. An arbitrator cannot order a party to perform an illegal act.” 751 So.2d 121, 123 (Fla.Dist.Ct.App.2000). In this case, the defendants contracted with Savage in violation of state law. None of the promises were fulfilled. The corporation evaporated. This Court will not permit the individuals , who committed the illegal acts on behalf of the corporation to benefit from the arbitration clause in the illegal contract.

[¶ 14.] GILBERTSON, Chief Justice, and AMUNDSON, Justice, concur.

[¶ 15.] SABERS and KONENKAMP, Justices, dissent.

[¶ 16.] ZINTER, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.

KONENKAMP, Justice

(dissenting).

A.

[¶ 17.] Few rules are more settled than the one that requires appellate judges to limit themselves to reviewing issues the parties preserved below and raised on appeal. Here, the Court departs from that reliable process by raising its own challenge to the trial court’s decision. In doing so, the majority makes findings of fact and considers a question not broached in the trial court and not brought to us for decision. Moreover, to reverse the trial court in this case, the majority raises an affirmative defense on plaintiffs’ behalf. A claim that a contract is void or voidable is an affirmative defense that must be pleaded and proved by the party seeking to avoid the contract. Fees v. Mutual Fire and Auto. Ins. Co., 490 N.W.2d 55, 58 (Iowa 1992). See also American Property Services v. Barringer, 256 N.W.2d 887, 890 (S.D.1977).

[¶ 18.] The notion that appeals courts should address only the questions presented to them has a long and stable lineage. Indeed, the spirit of the appellate function abides within the bounds of the controversy under review, leaving for legislators and executives the broader questions the constitution empowers them to pursue. We should rarely “venture opinions regarding issues that have never been briefed, argued, or even adverted to in the course of the proceedings.” Seal-Flex, Inc. v. Athletic Track & Court Constr., 172 F.3d 836, 852 (Fed.Cir.1999) (Bryson & Newman, JJ., concurring). Certainly, we have held on occasion that a trial court may be affirmed on any theory, even one not raised. But it is unusual for an appellate court to conceive new arguments raised by neither side to justify reversing a trial court.

[¶ 19.] It is not, of course, an inflexible rule that an appellate court will never consider issues not argued at trial.

There may always be exceptional cases or particular circumstances which will prompt a reviewing or appellate court, where injustice might otherwise result, to consider questions of law which were neither pressed nor passed upon by the court or administrative agency below.
Rules of practice and procedure are devised to promote the ends of justice, not to defeat them. A rigid and undeviating judicially declared practice under which courts of review would invariably and under all circumstances decline to consider all questions which had not previously been specifically urged would be out of harmony with this policy. Orderly rules of procedure do not require sacrifice of the rules of fundamental justice .... [Various] decisions ..., while recognizing the desirability and existence of a general practice under which appellate courts confíne themselves to the issues raised below, nevertheless do not lose sight of the fact that such appellate practice should not be applied where the obvious result would be a plain miscarriage of justice.

Hormel v. Helvering, 812 U.S. 552, 557-58, 61 S.Ct. 719, 721-22, 85 L.Ed. 1037, 1041 (1941).

[¶ 20.] In this commercial dispute between business parties, what fundamental injustice will occur if they are required to proceed to arbitration? And even if one were to concede that this is truly an exceptional case, requiring appellate court intercession, then, at the very least, in the interest of basic due process and simple fairness, we should give the adversely affected party here an opportunity to respond, or we should remand this new question to the trial court for further consideration.

[1121.] In our system of justice, litigants are entitled to notice that an issue is under consideration and to an opportunity to present evidence and argument. Unfortunately, the majority seems to see no need of any further contribution from the actual parties to this controversy. So much for the rule that if there is any doubt whether a case should be resolved by traditional judicial means or by arbitration, arbitration will prevail. Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 14, 585 N.W.2d 819, 822 (citing Tjeerdsma v. Global Steel Bldgs., Inc., 466 N.W.2d 643, 645 (S.D.1991); City of Hot Springs v. Gunderson’s, Inc., 322 N.W.2d 8, 10 (S.D.1982)). And so much, too, for the proposition that failure to raise an issue at trial is considered a waiver.

B.

[¶ 22.] If the claim had been properly raised that the franchise agreement is void, then there is an established procedure in federal precedent for dealing with that question. It is uncontested that the Federal Arbitration Act (FAA) is the controlling law. In Prima Paint Corporation v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and Southland Corporation v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984), the United States Supreme Court handed down definitive interpretations of the FAA. In Prima Paint, the Court held that a claim of fraud in the inducement of a contract “is for the arbitrators and not for the courts.” 388 U.S. at 400, 87 S.Ct. at 1804, 18 L.Ed.2d at 1275. In South-land, it declared that any state law that undercuts the enforceability of arbitration agreements violates the Supremacy Clause of the United States Constitution. 465 U.S. at 16, 104 S.Ct. at 861, 79 L.Ed.2d at 15-16.

[1123.] With Prima Paint and South-land in mind, we can now consider relevant state laws. SDCL 53-9-1 provides:

A contract provision contrary to an express provision of law or to the policy of express law, though not expressly prohibited or otherwise contrary to good morals, is unlawful.

Furthermore, SDCL 37-5A-6 provides:

No person may offer or sell any franchise in this state unless there is an effective registration statement on file in accordance with the provisions of this chapter or unless the franchise or transaction is exempted under §§ 37-5A-11 to 37-5A-14, inclusive.

It is uncontested that the franchise agreement here was completed and memorialized by a document signed by both parties only after the State of South Dakota had withdrawn the registration of Nature’s 10 as a franchisor.

[¶ 24.] A contract is void ab initio “if it seriously offends law or public policy in contrast to a contract which is merely voidable at the election of one of the parties.” Black’s Law Dictionary 1574 (6th ed.1990). Although the “franchise” agreement was signed in violation of SDCL 37-5A-6 and is therefore “unlawful” according to SDCL 53-9-1, neither party has shown that it “seriously offends law or public policy” or has sought to have it declared void.

[¶ 25.] In Scanlon v. P & J Enterprises, the Michigan Court of Appeals had occasion to consider a similar question. 182 Mich.App. 347, 451 N.W.2d 616, 617-(1990). In that case,

[a]ppellees sued appellants claiming that appellants had violated the Michigan Franchise Investment Law ... in connection with selling appellees their “Fantastic Sam’s” beauty parlor franchises. Appellees also alleged various common-law claims for breach of contract, fraud, negligence and tortious interference with a business relationship. Appellees sought rescission of the franchise agreements and monetary damages.

Id. In following the decision in Prima Paint, the Scanlon court concluded that “the federal courts have uniformly held that even a claim of fraud in the inducement of an entire contract containing an arbitration clause is to be referred to arbitration under the [FAA].” 451 NW2d at 618. Furthermore, the Florida Supreme Court, in Seifert v. U.S. Home Corp., noted that

the phrase “arising out of or relating to” the contract has been interpreted broadly to encompass virtually all disputes between the contracting parties, including related tort claims. See Southland Corp. v. Keating, 465 U.S. 1, 15 n. 7, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984) (involving claims for fraud, misrepresentation, breach of contract, breach of fiduciary duty, and violation of state franchise investment law); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 406, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) (holding that contractual language “[a]ny controversy or claims arising out of or relating to this Agreement, or breach thereof’ is “easily broad enough to encompass” claim for fraud in inducement of contract). The addition of the phrase “relating to” to the phrases “arising out of’ or “under,” has been construed as broadening the scope of the arbitration provision. See American Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.1996) (characterizing phrase “arise out of or related to” as broad arbitration clause “capable of an expansive reach”).

750 So.2d 633, 637 (Fla.1999). All the claims advanced by plaintiffs fall under these principles.

[¶ 26.] To complete the analysis, we must turn to the distinction between “void” and “voidable” contracts. This distinction is relevant because the FAA requires that a court be “satisfied the making of the agreement for arbitration ... is not in issue.” 9 USC § 4. If the making of the agreement to arbitrate is placed in issue, the court must set the issue for trial. Sphere Drake Ins. Ltd. v. Clarendon Nat. Ins. Co., 263 F.3d 26, 30 (2nd Cir.2001). However, the party putting the arbitration agreement into issue must present “some evidence” in support of its claim before a trial is warranted. Id. (citing Interocean Shipping Co. v. Nat’l Shipping & Trading Corp., 462 F.2d 673, 676 (2nd Cir.1972)).

While the teachings of Interocean and Prima Paint may appear conflicting, they can be sensibly harmonized by understanding that their outcomes implicitly — if not explicitly — rely on the distinction between void and voidable contracts, a distinction already recognized in at least two other circuits.

Id. at 31. The Sphere Drake court then points out that Interocean provides a good example of a void contract, Prima Paint of a voidable contract. Id.

Under Interocean, a party alleging that a contract is void — and providing some evidence in support — is entitled to a trial on the contract’s arbitrability.... And, under Prima Paint, a party is not entitled to a trial on the arbitrability of a voidable contract unless the party alleges that the arbitration clause itself is voidable and provides some evidence in support of its allegation.

Id. at 31-32. The Sphere Drake court concludes the discussion as follows:

If a party alleges that a contract is void and provides some evidence in support, then the party need not specifically allege that the arbitration clause in that contract is void, and the party is entitled to a trial on the arbitrability issue pursuant to 9 USCA § 4 and the rule of Interocean. However, under the rule of Prima Paint, if a party merely alleges that a contract is voidable, then, for the party to receive a trial on the validity of the arbitration clause, the party must specifically allege that the arbitration clause is itself voidable. Accordingly, to defeat the arbitration clauses in the contracts at issue, Sphere Drake must allege that the contracts as a whole are void or that the arbitration clauses in the contracts are voidable. Of course, it is not enough for Sphere Drake to make allegations — Sphere Drake must also produce some evidence substantiating its claim. See Interbras Cayman Co. v. Orient Victory Shipping Co., S.A., 663 F.2d 4, 7 (2nd Cir.1981) (per curiam).

Id. at 32. In our case, plaintiffs never even argued — much less produced evidence to show — that the contract is void. Nor have they argued that the arbitration clause itself is voidable. Under these circumstances, we should presume that the arbitration portion of the contract between the parties is enforceable.

[¶ 27.] Our concern should not end at this point, however. Although it is an incorrect supposition that arbitration results in an inadequate remedy for parties who do not wish to arbitrate, we should look for assurance that adequate remedies are available through arbitration. As the Eleventh Circuit wrote in a similar case on choiee-of-forum clauses, we will declare an arbitration clause unenforceable “when the remedies available in [that forum] are so inadequate that enforcement would be fundamentally unfair.” Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285, 1297 (11thCir.1998). Here, plaintiffs have produced no evidence to show that the remedies available to them under arbitration are inadequate or fundamentally unfair.

[¶ 28.] We should affirm the trial court’s ruling that this case be submitted to compulsory arbitration.

[¶ 29.] SABERS, Justice, joins this dissent.

      . By contrast, Rossi signed a franchise agreement with Nature's 10 on April 10, 1997, while Nature's 10 was still authorized to sell franchises.

      . The document actually mentions "Wood-bury County, South Dakota,” but the trial court found that "Union County, South Dakota,” was intended.

      . Although the trial court entered no findings of fact on the legitimacy of the defendants’ franchise offering, the majority registers a litany of fact findings on this issue. In effect, the Court assumes that all plaintiffs' assertions are true. On appeal, plaintiffs submitted the following single issue: "Did the circuit court err in holding that defendants could enforce an arbitration clause, despite a waiver of arbitration rights, related to claims and defendants not implicated by a franchise agreement between the plaintiff and one of the defendants?” The briefs do not even mention the possibility, let alone argue, that the agreement was void or voidable.

      . Until today, affirmative defenses have been considered waived unless the asserting party has affirmatively pleaded and proved them at trial. SDCL 15-6-8(c); Kier v. Kier, 454 N.W.2d 544, 546 (S.D.1990); Oesterling v. Oesterling, 354 N.W.2d 735, 736 (S.D.1984). Many cases have held that voidness, illegality, and invalidity of a contract are affirmative defenses. McCabe/Marra Co. v. Dover, 100 Ohio App.3d 139, 652 N.E.2d 236 (1995) (illegality or invalidity of a contract is an affirmative defense that must be pleaded and proved by the party seeking to avoid the contract); Rice v. James, 844 S.W.2d 64 (Mo.Ct.App.1992) (illegality of a contract is an affirmative defense that must be pleaded and proved by the party seeking to avoid the contract); MJR Corp. v. B & B Vending Co., 760 S.W.2d 4 (Tex.App.1988) (illegality of a contract is a defensive issue to be pleaded and proved by the defendant in a suit over breach of contract).

      . Although plaintiffs' brief twice mentions the fact that the agreement was signed sifter South Dakota had withdrawn permission for Nature’s 10 to offer franchises, such passing references do not suffice to bring the issue before this Court. The issue must be presented, considered, and decided in the trial court. Cavic v. Pioneer Astro Indus., Inc., 825 F.2d 1421, 1425 (10th Cir.1987) (citation omitted). In our case, the trial court made no mention of this issue and understandably so because the issue was never broached.

      . Because the franchise agreement was between South Dakota parties and out-of-state parties, the agreement affected interstate commerce and fre FAA governs. 9 USC §§ 1-14.

      . The language of the arbitration clause under consideration in Scanlon was essentially the same as the one here.


author: KONENKAMP, Justice.

text:
    2002 SD 82
    ROSSI FINE JEWELERS, INC., d/b/a Nature’s 10 Jewelers, Dubois Mall, Plaintiff and Appellant, v. Brian GUNDERSON, Defendant and Appellee, and Nature’s 10 Jewelers, Inc., a South Dakota Corporation; Mylan Ventures, Ltd., a North Dakota Corporation; Mike Alvano; Frank Barnes; Kirk Gardner; Jerry Haack; Barney Schumacher; and Randy Slaybaugh, Defendants.
    No. 21961.
    Supreme Court of South Dakota.
    Argued on Jan. 10, 2002.
    Decided July 10, 2002.

      Ronald A. Parsons, Jr., Steven M. Johnson of Johnson, Heidepriem, Miner, Mar-low and Janklow, Sioux Falls, South Dakota, Matthew S. McCaulley of Hynes & McCaulley, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.
    Tina Hodne of Berenstein, Moore, Ber-enstein, Heffernan & Moeller, Sioux City, Iowa, Attorney for defendant and appellee.
   KONENKAMP, Justice.

[¶ 1.] In this appeal, we decide whether a contract clause requires compulsory arbitration. The trial court ruled that federal law mandates arbitration. We affirm.

Background

[¶ 2.] Defendant Nature’s 10, Inc., was incorporated in South Dakota in 1995. In 1996, defendant Mylan Ventures, Ltd., a Wyoming corporation, purchased Nature’s 10. The remaining defendants, Mike Alva-no, Frank Barnes, Kirk Gardner, Brian Gunderson, Jerry Haack, Barney Schu-macher, and Randy Slaybaugh, were either directors or officers of Nature’s 10 or Mylan during the time of the transactions described here. Some of the individual defendants made an appearance in circuit court, but only Brian Gunderson responded in this appeal.

[¶ 3.] Nature’s 10 held itself out as a franchisor offering to potential franchisees an opportunity to participate in retail sales of various articles of jewelry at discounted prices. Nature’s 10 stores were advertised as marketing diamonds obtained from the franchisor’s own mines, cut in its own facility, and offered at lower prices to consumers. Plaintiff Rossi Fine Jewelers, Inc., operated a retail jewelry store in Dubois, Pennsylvania. Rossi negotiated with Nature’s 10, signed a franchise agreement on April 10, 1997, and paid a franchise fee of $27,000. After signing the franchise agreements, Rossi made additional, substantial investments, with a view to establishing a Nature’s 10 franchise store.

[¶ 4.] In a companion case, which we also decide today, Nature’s 10 Jeweler’s v. Nature’s 10, Inc., 2002 SD 80, 648 N.W.2d 804, plaintiff there, Sam Savage, also entered into a franchise agreement with the same company. That franchise agreement contains the following arbitration clause:

Any monetary claim arising out of or relating to this Agreement, or any breach thereof ... shall be submitted to arbitration in [Union] County, South Dakota, in accordance with the rules of the American Arbitration Association and judgment upon the award may be entered in any court having jurisdiction thereof shall be final, binding ... and unappealable....

A corresponding franchise agreement between Nature’s 10 and Rossi was never entered into the record, but since Nature’s 10 made use of a standardized franchise agreement, the trial court found that the same arbitration clause would have been in the Rossi agreement, the existence of which is not in dispute.

[¶ 5.] Rossi continues to operate his store, though it may now be a franchise without a franchisor, for in May 1998 Nature’s 10, Inc., was formally dissolved as a corporation by the South Dakota Secretary of State. Earlier, on August 27, 1997, the South Dakota Division of Securities had notified defendants that the Nature’s 10 iranchise registration had expired. Then, on October 1, 1997, the Division formally withdrew the company’s registration number, effective July 29, 1997. Defendants were warned that the company “will no longer be engaged in the offer or sale of franchises in the State of South Dakota.” Thus, Rossi paid his franchise fee four months before Nature’s 10 was no longer allowed to sell franchises.

[¶ 6.] In his complaint, Rossi alleged the following: (1) breach of contract, (2) failure of consideration, (3) breach of implied duty of good faith and fair dealing, (4) actual fraud, (5) constructive fraud, (6) deceit, (7) misrepresentation in the sale of a franchise, and (8) personal liability of directors and officers. Defendants moved for compulsory arbitration in accordance with the clause in the franchise agreement. The circuit court granted the motion. Rossi appeals on the following questions: (1) Did defendants waive arbitration rights? (2) Are all defendants covered under the arbitration clause? (3) Are all of Rossi’s claims to be resolved under arbitration?

Analysis and Decision

[¶ 7.] We have consistently favored the resolution of disputes by arbitration. Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 14, 585 N.W.2d 819, 822. The purpose for arbitrating disputes is to provide a relatively quick and inexpensive resolution without the cost and delay that may come with legal proceedings. Id. There is an overriding policy favoring arbitration when a contract provides for it. Id.

[¶ 8.] Moreover, South Dakota has adopted the Uniform Arbitration Act. See SDCL § 21-25A-1, which provides:

A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract.

If there is doubt whether a case should be resolved by traditional judicial means or by arbitration, arbitration will prevail. Thunderstik Lodge, Inc., 1998 SD 110 at ¶ 15, 585 N.W.2d at 822 (citing City of Hot Springs v. Gunderson’s, Inc., 322 N.W.2d 8, 10 (S.D.1982)).

1. Waiver of Arbitration

[¶ 9.] An arbitration agreement may be waived. Tjeerdsma v. Global Steel Buildings, Inc., 466 N.W.2d 643, 645 (S.D. 1991). Since there is a dominant policy favoring arbitration, however, waiver cannot be lightly inferred. Id. The question whether one has waived one’s right to arbitrate turns on the significance of the action taken in a judicial forum; this question is one for a court to decide. Id. Courts apply a two-part test for deciding whether arbitration has been waived. There must be (1) conduct or activity inconsistent with the right to arbitration and (2) prejudice to the party claiming waiver. Id. Mere delay in seeking a stay of litigation without some resultant prejudice to a party cannot be deemed a waiver. Id. However, delay and the extent of the moving party’s trial-oriented activity are material factors in assessing a claim of prejudice. Id. Prejudice may also result from lost evidence, duplication of efforts, or the use of discovery methods unavailable in arbitration. Id.

[¶ 10.] In our case, Rossi has not shown that evidence was lost, efforts were duplicated, or discovery methods unavailable in arbitration were used. We therefore consider delay and the extent of the moving party’s trial-oriented activity. Rossi brought his suit on July 2000. Gunderson moved to compel arbitration with Rossi in November 2000, and other defendants joined the motion that same month. This delay of three to four months would be significant only if accompanied by extensive trial-oriented activity by defendants. The trial court found that defendants’ pretrial activity had not been extensive. Our review of the record convinces us that the trial court’s determination was correct, and we therefore hold that defendants did not waive their right to arbitrate.

2. Defendants Covered under Arbitration Clause

[¶ 11.] Rossi argues that some defendants are not covered under the arbitration clause. Those defendants are My-lan, the purchaser of Nature’s 10, and various officers of the two companies. As the successor to Nature’s 10, Mylan is bound by the obligations incurred by that company; the individual defendants are properly included only in their capacities as officers or directors. In accordance with the Federal Arbitration Act,

[t]he Federal courts have consistently afforded agents the benefit of arbitration agreements entered into by their principals to the extent that the alleged misconduct relates to their behavior as officers or directors or in their capacities as agents of the corporation. The rule is necessary not only to prevent circumvention of arbitration agreements, but also to effectuate the intent of the signatory parties to protect individuals acting on behalf of the principal in furtherance of the agreement.

Hirschfeld Productions v. Mirvish, 88 N.Y.2d 1054, 1056, 673 N.E.2d 1232, 1233, 651 N.Y.S.2d 5, 6 (N.Y.1996). Furthermore, “[i]t would be manifestly unfair to allow [plaintiffs] to assert claims arising out of agreements against nonsignatories to those agreements without allowing those [defendants] [also to] invoke the arbitration clause contained in the agreements.” A.L. Williams & Assoc., Inc. v. McMahon, 697 F.Supp. 488, 494 (N.D.Ga.1988). Nor should plaintiffs be able to “avoid the arbitration for which [they] had contracted simply by adding a nonsignato-ry defendant, lest the efficacy of contracts and the federal policy favoring arbitration be defeated.” Cosmotek Mumessillik Ve Ticaret Ltd. Sirkketi v. Cosmotek USA, Inc., 942 F.Supp. 757, 759 (D.Conn.1996). This rule applies especially when all the claims against the nonsignatory defendants are based on alleged substantially interdependent and concerted misconduct by both the nonsignatories and one or more of the signatories to the contract. MS Dealer Service v. Franklin, 177 F.3d 942, 947 (11thCir.1999). We hold, therefore, that insofar as there is a valid franchise agreement containing an arbitration clause, all named defendants are covered under that clause.

3. Claims to be Resolved by Arbitration

[¶ 12.] Rossi asserts that at least some of his claims do not fall within the arbitration provision of his franchise contract. It is uncontested that the Federal Arbitration Act (FAA) is the controlling law on this issue. In Prima Paint Corporation v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and Southland Corporation v. Keating, 465. U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984), the United States Supreme Court handed down definitive interpretations of the FAA. In Prima Paint, the Court held that a claim of fraud in the inducement of a contract “is for the arbitrators and not for the courts.” 388 U.S. at 400, 87 S.Ct. at 1804, 18 L.Ed.2d at 1275. In Southland, it declared that any state law that undercuts the enforceability of arbitration agreements violates the Supremacy Clause of the United States Constitution. 465 U.S. at 16, 104 S.Ct. at 861, 79 L.Ed.2d at 15-16.

[¶ 13.] With Prima Paint and South-land in tow, we now consider relevant state laws. SDCL 53-9-1 provides:

A contract provision contrary to an express provision of law or to the policy of express law, though not expressly prohibited or otherwise contrary to good morals, is unlawful.

Furthermore, SDCL 37-5A-6 provides:

No person may offer or sell any franchise in this state unless there is an effective registration statement on file in accordance with the provisions of this chapter or unless the franchise or transaction is exempted under §§ 37-5A-11 to 37-5A-14, inclusive.

It is uncontested that the franchise agreement between Nature’s 10 and Rossi was completed while Nature’s 10 was registered as a legal franchisor under South Dakota law. And although no written document memorializing this agreement has been entered into the record, the trial court found, as a matter of fact, that such a document, including an arbitration clause, had been signed by both parties. Since no evidence appears that arbitration is incapable of resolving these disputes, and since the Federal Arbitration Act favors arbitration and any doubts on whether a claim falls within the scope of an arbitration agreement are to be resolved in favor of arbitration, “a court should not deny a motion to compel arbitration unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue.” Pennzoil Company v. Arnold Oil Company, Inc., 30 S.W.3d 494, 498 (Tex.App.2000) (internal citations omitted). Because we have no such assurance and because the legality of the agreement between Nature’s 10 and Rossi is undisputed, its terms are to be enforced as written. Accordingly, we affirm the trial court’s judgment that the parties must proceed to compulsory arbitration on all claims.

[¶ 14.] GILBERTSON, Chief Justice, and SABERS and AMUNDSON, Justices, and GORS, Acting Justice, concur.

[¶ 15.] ZINTER, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.

      . The document actually mentions "Wood-bury County, South Dakota," but the trial court found that "Union County, South Dakota,” was intended.

      . Because the franchise agreements were between South Dakota parties and out-of-state parties, they affect interstate commerce and the FAA governs. 9 USC §§ 1-14.

      . The latter holding was helpfully rephrased by Justice Stevens in his concurrence: "[t]he Court holds that an arbitration clause that is enforceable in an action in federal court is equally enforceable if the action is brought in state court.” Southland, 465 U.S. at 17, 104 S.Ct. at 861, 79 L.Ed.2d at 16 (Stevens, J., concurring).


author: KONENKAMP, Justice. SABERS, Justice

text:
    2002 SD 81
    Kelli BUISKER, personal Representative of the Estate of Heidi Jo Aldentaler, Plaintiff and Appellant, v. Margaret THURINGER, Defendant and Appellee.
    No. 22059.
    Supreme Court of South Dakota.
    Considered on Briefs March 25, 2002.
    Decided July 10, 2002.

      H.I. King of Tonner, Tobin & King, Aberdeen, South Dakota, Philip W. Morgan, Britton, South Dakota, Attorneys for plaintiff and appellant.
    Daniel R. Fritz, Aberdeen, South Dakota, Attorney for defendant and appellee.
   KONENKAMP, Justice.

[¶ 1.] In this wrongful death action, we conclude that the trial court erred in refusing to instruct the jury on the gratuitous employee doctrine and erred in refusing to grant a new trial when extraneous information was conveyed to the jury by the bailiffs spouse. We reverse and remand for a new trial.

A.

Background

[¶2.] Margaret Thuringer owned an old house trailer that had been sitting unused on her property. Margaret’s daughter, Delaine Aldentaler, had recently leased a lot on Buffalo Lake and agreed, at her mother’s insistence, that the trailer should be moved onto the lakeside property for a family vacation cabin. Not wishing to pay a professional to disconnect the addition to the trailer, Margaret sought the help of Harley Hoisington, a handyman, who agreed to help family members with the project. Harley had often assisted Margaret with chores during her husband’s last illness and after his death. He and his friend, Sandra Madsen, had helped Margaret dismantle two log cabins on her property. Despite his having assisted Margaret in the past, Harley was reluctant to work on disconnecting the addition, and he agreed only after Margaret had asked him repeatedly to do so.

[¶3.] On the appointed day, Harley and Sandra arrived at Margaret’s home and found Delaine and her daughter, Heidi Aldentaler, already there. After eating lunch together, all went to the site to begin work. None of those involved had any experience with uncoupling an addition the size and weight of the one here. It was not simply a matter of taking the addition itself apart, but of removing it as a unit to be reattached to the trailer when both had been moved to the lake.

[¶ 4.] As they removed some of the supports, Margaret sat by, observing and offering suggestions. According to her daughter, Delaine, Margaret was “supervising the removal.” Margaret had been present when the addition was built, so she purportedly understood how it was fastened to the trailer. Suddenly, the addition came loose, Sandra gave a warning cry, and the structure rolled over on top of Heidi, crushing her skull and killing her instantly.

[¶ 5.] Heidi Aldentaler’s Estate (plaintiff) brought a wrongful death action against Margaret Thuringer. At trial, there was conflicting testimony about Heidi’s actions and her position just before the addition gave way. Sandra told a deputy sheriff who came to investigate that Heidi had braced herself to try to hold the addition in place. Later, Sandra testified that the deputy had misunderstood her and that it was Sandra herself who had attempted to hold the addition in place. The coroner testified that the position of Heidi’s body was consistent with her having tried to keep it from rolling over.

[¶ 6.] During the trial, a trooper with the South Dakota Highway Patrol gave Dale Freeman, one of the jurors, a ride to the courthouse. The trooper was married to the bailiff on the trial, and during the ride, the trooper mentioned that Margaret had liability insurance and asserted that the purpose of the suit was to enforce a judgment against an insurance company. In jury deliberations, Freeman shared with his fellow jurors what he had heard from the trooper. In his later affidavit, Freeman explained that, after revealing the information from the trooper, most of the jurors “seemed to be of the impression that this put the family all in cahoots with each other, including [Margaret], so that they should receive nothing from us.” The jury returned a verdict for defendant. Plaintiffs motion for a new trial was denied.

[¶ 7.] On appeal, plaintiff raises the following issues: (1) Did the trial court err in giving jury instructions on contributory negligence and assumption of the risk? (2) Was the trial court’s use of jury instructions varying from current pattern jury instructions reversible error? (3) Did the trial court err in denying plaintiffs request for jury instructions on gratuitous employee and respondeat superior? (4) Did the trial court err in denying plaintiffs motion for a new trial?

B.

Contributory Negligence and Assumption of the Risk

[¶ 8.] Heidi Aldentaler’s young life was cut short while helping her family with what turned out to be a more hazardous task than anticipated. For the jury, the primary fact question was whether she was killed purely through the negligence of others or whether her death occurred partly by her own negligence or her assumption of the risk. Over plaintiffs objection, the trial court gave instructions on both contributory negligence and assumption of the risk.

[¶ 9.] The record shows that there were conflicting accounts of Heidi’s response to Sandra’s cry of danger. Competent evidence in the record supports the view that Heidi may have attempted to prevent the fall of the addition. Taking that view, the jury could have decided that, in not springing out of the way, Heidi was either negligent or assumed the risk of trying to hold up the addition and thus contributed to her own death. Accordingly, the trial court did not err in giving instructions on contributory negligence and assumption of the risk.

[¶ 10.] Plaintiff next contends that the court erred in giving former pattern jury instructions on contributory negligence and assumption of the risk, instead of the more current revised pattern instructions. These instructions were revised to simplify and modernize the language, not to change the law. No prejudice appears to have occurred from having used the older instructions. Accordingly, it was not reversible error that the trial court gave them, though we prefer that courts use the most recent pattern instruction, unless a court concludes that the latest version incorrectly states the law.

C.

Gratuitous Employee and Respondeat Superior

[¶ 11.] Plaintiff argues that the trial court erred in refusing to instruct the jury on the law regarding gratuitous employees and respondeat superior. By statute, South Dakota recognizes the status of gratuitous employees. SDCL 60-3-1 provides:

One who undertakes to do a service for another without consideration is not bound to perform the same unless it is entrusted to him at his own request in which case he must perform fully. If he commences performance he must use slight diligence and care at least. In other cases a gratuitous employee may relinquish the employment at any time.

This statute defines the standard of care for the work performed by gratuitous employees but does not define what exactly constitutes a gratuitous employee. According to the Restatement (Second) of Agency, “[o]ne who volunteers services without an agreement for or expectation of reward may be a servant of the one accepting such services.” § 225 (1958) (emphasis added). Furthermore, South Dakota law “contemplates that one who undertakes to do a service for another at the other’s request but without consideration is a gratuitous employee while engaged in the performance of such service.” Schmeling v. Jorgensen, 77 S.D. 8, 13-14, 84 N.W.2d 558, 561 (1957). Certainly, then, for a person to be “gratuitous employee,” the employer must have requested the employee’s “service.”

[¶ 12.] It is undisputed that Harley Hoisington had no agreement for or expectation of recompense for his assistance in this project. But was he performing a service as an employee? The Restatement defines “servant” as “an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.” § 2(2). According to the testimony of her daughter, Margaret was “supervising the removal.” Margaret supposedly had knowledge of how the addition was built and thus could help in telling Hois-ington how to disconnect it. In South Dakota, we have consistently held that the right to control the means and methods used by the worker in the performance of the job is the primary element in determining whether an employer-employee relationship exists. Egemo v. Flores, 470 N.W.2d 817 (S.D.1991); Halverson v. Sonotone Corp., 71 S.D. 568, 27 N.W.2d 596 (1947). It is a question of fact whether an employer-employee relationship existed. Steen v. Potts, 75 S.D. 184, 189, 61 N.W.2d 825, 828 (1958). We conclude that there was evidence in the record to support the submission of that question to the jury and that the trial court erred in refusing jury instructions on the gratuitous employee doctrine and respondeat superior. Nelson v. Nelson Cattle Co., 513 N.W.2d 900 (S.D.1994) (negligent supervision); Bass v. Happy Rest, Inc., 507 N.W.2d 317 (S.D.1993) (respondeat superior).

D.

Extraneous Information Conveyed to Jurors

[¶ 13.] Plaintiff argues that the jurors’ knowledge of Margaret’s liability insurance requires a new trial and that the court erred in not so ordering. SDCL 19-14-7 (Rule 606(b)) provides, in pertinent part, that “a juror may testify on the question whether extraneous prejudicial information was improperly brought to the jury’s attention or whether any outside influence was improperly brought to bear upon any juror.” See State v. Boyles, 1997 SD 99, 567 N.W.2d 856. Therefore, when a party attempts to impeach the verdict on the basis of juror misconduct and relies on testimony from a juror, that party must show evidence of extrinsic interference with the deliberations of the jury. In reviewing reasons “held adequate to set aside a verdict” for jury misconduct, we have found “some common patterns.” Buchholz v. State, 366 N.W.2d 834, 839 (S.D.1985).

[¶ 14.] One example of extrinsic interference is information introduced to the jury from outside the trial process. Id. The affidavit of Juror Freeman reveals that the jury was improperly exposed to an external fact. SDCL 19-12-13 provides:

Evidence that a person was or was not insured against liability is not admissible upon the issue of whether he acted negligently or otherwise wrongfully. This section does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.

Undoubtedly, it is unusual that a plaintiff would argue that a jury’s hearing of liability insurance would prejudice the plaintiffs case. As we explained in Atkins v. Stratmeyer, the rule against the mention of insurance “evolved as a way to protect defendants from the possibility that a jury may be influenced in its findings of liability or damages by the mention of insurance.” 1999 SD 131, ¶ 12, 600 N.W.2d 891, 896. Indeed, “[t]he eases reversed because a plaintiff has revealed a defendant’s insured status are legion and need not be cited.” Arbach v. Gruba, 89 S.D. 322, 327, 232 N.W.2d 842, 845 (1975). However, “the fact that a plaintiffs use of this information is consistently error is no reason for holding that a defendant’s use of the same prejudicial statement is consistently permissible.” Id. Here, defendant’s counsel was scrupulous, as was plaintiffs counsel, in not mentioning liability insurance, but the fact remains that plaintiffs case, according to Freeman’s affidavit, was undermined by this extraneous information.

[¶ 15.] Freeman’s affidavit surmounts the first two difficulties facing a party attempting to set aside a jury verdict for extrinsic interference: the affidavit is itself “evidence competent to attack the verdict” and establishes “the existence of a recognized ground to overturn the jury’s verdict.” Buchholz, 366 N.W.2d at 838. Still, there must also be a showing that the party seeking to set aside the verdict was prejudiced by the misconduct. Id. The test is whether the extraneous matter had a tendency to influence the jury in arriving at its verdict in a manner inconsistent with the evidence and the instructions of the court. See Panko v. Flintkote Co., 7 N.J. 55, 80 A.2d 302 (1951).

[¶ 16.] According to Freeman’s affidavit, many of the jurors, after learning what the highway patrolman had told Freeman, “seemed to be of the impression that [the existence of liability insurance] put the family all in cahoots with each other, including [Margaret], so they should receive nothing from us.” As learning through an extraneous source that a defendant has liability insurance may influence a jury to vote against the defendant regardless of the evidence, so gaining that information through such a source may influence a jury, in a case between parties supposedly “in cahoots” with one another, to punish, not only the plaintiff, but, as here, the entire family, by voting for the defendant regardless of the evidence. What is striking about the circumstances confronting us here is that, as the record shows, it is the affidavit of a juror who voted for the defendant that attests that many jurors believed the parties to be “in cahoots.” It is true that these jurors took supposedly objective information and formed their own subjective beliefs about it. Yet it was this outside information, from what may have seemed to be an authoritative source, that tended to influence the jurors in deciding in a manner inconsistent with the instructions if not the evidence as well.

[¶ 17.] We reverse and remand for a new trial.

[¶ 18.] GILBERTSON, Chief Justice, and AMUNDSON, Justice, and GORS, Acting Justice, concur.

[¶ 19.] SABERS, Justice, concurs specially.

[¶ 20.] ZINTER, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.

SABERS, Justice

(concurring specially).

[¶ 21.] I concur in all respects except that I write specially on Issue C. Gratuitous Employee and Respondeat Superior, to point out that on this record:

Margaret Thuringer is the owner and employer;
Harley Hoisington, and his friend, Sandra Madsen, are her agents and appear to be gratuitous employees;
Heidi Aldentaler, along with her mother, Delaine Aldentaler, appear to be gratuitous employees.

[¶ 22.] On retrial, the questions of negligence, contributory negligence and assumption of the risk must be measured under the gratuitous employee doctrine of SDCL 60-3-1, Schmeling, 77 S.D. 8, 84 N.W.2d 558, and Smith v. Community Co-operative Association of Murdo, 87 S.D. 440, 209 N.W.2d 891 (1973), and the employer would be bound by her own negligence, if any, and the negligence, if any, of her agents, Harley Hoisington and Sandra Madsen. See also Nelson v. Nelson Cattle Co., 513 N.W.2d 900 (S.D.1994).

      . We review the jury instructions by construing them together; the instructions are not erroneous if, when so construed, they provide a full and correct statement of the law applicable to the case. Frazier by and through Frazier v. Norton by and through Norton, 334 N.W.2d 865, 870 (S.D.1983). Only those instructions that have support in the evidence should be given to the jury. State v. Weisenstein, 367 N.W.2d 201, 206 (S.D.1985).

      . The jurors voted 10 to 2 for the defendant.


author: PER CURIAM.

text:
    2002 SD 79
    Leroy Douglas ALTMAN, Petitioner and Appellee, v. Debra RUMBOLZ, Respondent and Appellant.
    No. 22114.
    Supreme Court of South Dakota.
    Considered on Briefs March 25, 2002.
    Decided July 10, 2002.
    Kenneth D. Bertsch of Bertsch Law Firm, Menno, South Dakota, Attorney for petitioner and appellee.

      Patrick W. Kiner, Mitchell, South Dakota, Attorney for respondent and appellant.
   PER CURIAM.

[¶ 1.] Debra Rumbolz appeals an order modifying a protection order that was previously entered against her. We affirm in part and reverse in part.

FACTS

[¶ 2.] Rumbolz and LeRoy Altman are residents of Mitchell. Rumbolz was Altman’s live-in girlfriend for a period of time and also worked for him in his used car dealership in Mitchell. The parties’ relationship ended in early 2000. Bad feelings persisted after their break-up. These feelings manifested themselves in various acts of antagonism between the parties. In August 2000, Altman filed a petition for a protection order from Rumbolz alleging numerous incidents of harassment and intimidation by her including: as many as fifteen to forty phone calls from her per day; a number of anonymous hang-up calls; numerous “drive-bys” past his home and his business; a verbal assault in his church; complaints to regulatory agencies with authority over his business; being watched at his business from a nearby restaurant; numerous incidents of being followed; and, receipt of a number of notes and letters from Rumbolz on his car windshield.

[¶ 3.] Altman’s petition was heard on September 25, 2000 and, on October 10, the trial court entered a protection order finding that Rumbolz had “willfully, maliciously, and repeatedly followed or harassed” Altman. The order was made effective until September 24, 2001 and contained the following pertinent provisions:

1. that [Rumbolz] is restrained from willfully, maliciously, and repeatedly following or harassing [Altman];
2. that [Rumbolz] not come within a distance of 1000 feet from [Altman’s] residence ...;
3. That [Rumbolz] not come within a distance of 300 feet from the edge of [Altman’s] place of business ...; and
4. That [Rumbolz] not personally or through third parties, have contact of any kind (physical, verbal, written, telephonic or any other contact) with [Altman] in any manner or form.

[¶ 4.] Altman’s protection order was served on Rumbolz on October 17, 2000, but Rumbolz’s pattern continued. On May 16, 2001, Altman filed a motion to modify the protection order alleging numerous incidents of continued harassment by Rumbolz. Altman sought a more specific protection order containing precise descriptions of the prohibited conduct.

[¶ 5.] A hearing on Altman’s motion to modify was held on June 25, 2001. Altman represented himself during the hearing and Rumbolz was represented by attorney Patrick Kiner who is also a part-time magistrate judge in the First Judicial Circuit. In addition to offering testimony and evidence on the continued acts of harassment by Rumbolz, Altman also raised allegations that Kiner was exercising his influence as a magistrate to keep certain witnesses from testifying on his behalf. Kiner denied these allegations and denied even knowing the witnesses Altman referenced. At the close of the hearing, the trial court entered oral findings and conclusions on the record and granted Altman’s petition for modification of the protection order. Accordingly, an amended protection order was entered on July 10, 2001. The order extended the prior protection order until September 24, 2003 and contained the following pertinent provisions in addition to those previously established:

5. That [Rumbolz] shall not make any comments with any persons concerning any of the business relationships or business activities of Petitioner, LeRoy Douglas Altman. Such comments are not limited to, but include, the following: That if she notices somebody looking at [Altman’s] automobiles, looking at his merchandise or his business, [Rumbolz] is prohibited from making any comments in any manner, shape or form to said person regarding [Altman’s] business or automobiles;
6. That [Rumbolz] shall not be within 300 feet of Petitioner, LeRoy Douglas Altman, at any time or place. If [Rumbolz] is conducting legitimate business in any store or dining at a restaurant, [Rumbolz] does not need to leave such store or restaurant when [Altman] enters. However, if [Rumbolz] enters any store or restaurant where [Altman] is present, [Rumbolz] must not enter such store or restaurant or upon discovering [Altman’s] presence, immediately leave;
7. This Order of Protection shall also apply to [Altman’s] daughter, Jennifer Altman, and [Altman’s] fiancée, Sue Friedman. All of the above conditions restricting contact with [Altman] also apply to contact with [Altman’s] daughter and fiancée; and
8.Patrick W. Kiner, attorney for [Rumbolz], shall not participate in any further proceedings in this matter.

Rumbolz appeals.

ISSUE ONE

[¶ 6.] Did the trial court abuse its discretion in granting Altman’s motion to modify the protection order against Rumbolz?

[¶ 7.] This Court outlined the standards for reviewing decisions on motions to modify protection orders in Sjomeling v. Stuber, 2000 SD 103, ¶¶ 11-12, 615 N.W.2d 613, 616:

[Protection] orders are a form of injunction.
Granting or denying an injunction rests in the sound discretion of the trial court. We will not disturb a ruling on injunctive relief unless we find an abuse of discretion. An abuse of discretion can simply be an error of law or it might denote a discretion exercised to an unjustified purpose, against reason and evidence.
Generally, an injunction may be modified only on a showing of changed conditions. (citations omitted).

[¶ 8.] Rumbolz argues that the trial court abused its discretion in modifying the protection order previously entered against her because there was no showing of changed circumstances since the prior protection order proceedings. In that regard, Rumbolz specifically asserts there was no showing of any continued stalking or harassment after the prior proceedings.

[¶ 9.] The trial court made the following oral findings relative to its modification of the protection order:

It doesn’t make sense to this court that Ms. Rumbolz some time during October of 2000 should have been making contact with Ms. Cole about Mr. Altman’s tax returns, and that’s what I’m very clearly left with from the testimony that, despite the manner in which Ms. Cole testified, occurred.
It doesn’t make sense to me, despite Ms. Rumbolz’ testimony, that she really is in good faith pursuing the automobile business in a way that will cause her to be at the same auto auctions which she knows Mr. Altman would show up because she knows his business over the years, and it doesn’t appear to me from the testimony and my own common sense that that’s the type of business interest that she needs to pursue for her own private gain. I can’t say she doesn’t make some money but the testimony seems to indicate it was for some other reason she got herself involved with it.
There are certain things that can just occur in life but some of the meetings that these people continue to be involved with seem to be more than just chance, from the court’s point of view.

[¶ 10.] These findings are reviewed under the clearly erroneous standard. See Marks, 2001 SD 122 at ¶ 9, 635 N.W.2d at 280. They are supported by testimony and evidence in the record that, at about the time of the prior protection order proceedings, Rumbolz made contact with Bonnie Cole, a person against whom Altman had a pending lawsuit, and offered to provide Cole with copies of Altman’s tax returns. They are also supported by record testimony that Rumbolz had periodically forced encounters with Altman, Altman’s daughter and his fiancée at stores, restaurants and other public locations in the Mitchell area. Finally, the findings are supported by record evidence and testimony concerning Rumbolz’s attendance at some automobile auctions where she knew Altman would be. The findings themselves are sufficient to establish Rum-bolz’s continued stalking and harassment of Altman, his daughter and fiancée despite the prior protection order proceedings. These are sufficient changed circumstances to warrant modification and extension of the prior order. No abuse of discretion in the modification is shown.

ISSUE TWO

[¶ 11.] Did the trial court abuse its discretion in denying Rumbolz’s request for a protection order?

[¶ 12.] Rumbolz argues that the trial court abused its discretion in denying her request for a protection order against Altman. Although her brief asserts that the hearing in this case considered her request and the hearing transcript makes brief references supporting this assertion, there are no pleadings whatsoever in the record concerning a request for a protection order by Rumbolz. Nevertheless, even assuming the issue was tried by the consent of the parties, the record would reflect no abuse of discretion in the denial of Rum-bolz’s request.

[¶ 13.] Upon review of a matter tried to the court, the evidence and inferences therefrom must be viewed in a light most favorable to the trial court’s determination with due regard for its authority to determine the credibility of witnesses, the weight to be accorded their testimony and the weight of the evidence. See Gross v. Connecticut Mut. Life Ins. Co., 361 N.W.2d 259, 273 (S.D.1985). If there is competent and substantial evidence to support the trial court’s decision, it must be upheld. Id. Rumbolz’s argument merely sets forth the evidence and testimony supportive of her request for a protection order with no regard to the evidence and testimony supportive of Altman’s request. This violates the principles cited above and yields no basis for finding an abuse of discretion in the denial of Rumbolz’s request.

ISSUE THREE

[¶ 14.] Did the trial court err in ordering attorney Kiner not to participate further in this case?

[¶ 15.] As her last issue, Rumbolz contends that the trial court erred in entering the provision of it’s amended protection order prohibiting attorney Kiner from further participation in this case. Rumbolz argues that part of the trial court’s order violates state constitutional guarantees of due process and equal protection of the law and the open courts provision.

[f 16.] Authorities support a trial court’s ability to order a party’s attorney to withdraw from a case in the face of a conflict of interest or some other ethical problem with the attorney’s continued representation. See e.g. People v. Reed, 298 Ill.App.3d 285, 232 Ill.Dec. 529, 698 N.E.2d 620, 627-628 (1998); Dieck v. A.B. Volvo Penta, Sweden, 577 So.2d 297, 298-299 (La.Ct.App.1991). These same authorities suggest, however, that absent any apparent conflict or impropriety,' an evidentiary hearing on aHegations in this regard, with the burden of proof on the protesting party, is the preferred manner of proceeding. See id. No such procedures were followed here. There was no notice prior to the hearing on modification of the protection order that Kiner’s continued representation of Rumbolz would be at issue. During the course of the hearing itself, Altman simply raised vague allegations that Kiner was somehow using his position as a part-time magistrate to influence the nonappearance of some of Altman’s witnesses. Altman made no showing in this regard and offered no evidentiary support whatsoever for his contentions. Kiner denied the allegations or knowing the witnesses in question and the trial court entered the following oral findings supportive of his actions:

I don’t, first of all, find [Kiner’s] done anything wrong whatsoever; as a matter of fact, you made accusations against him that appear to obviously not have been true, and they are a personal attack on him that allege, in essence, an abuse of his position and there’s been absolutely no basis to that, that I have seen, and such an attack is an attack on the integrity of our court system and you haven’t proven it.... [T]here’s no showing that anything wrong has been done[.]

[¶ 17.] Notwithstanding these findings, the trial court prohibited Kiner from further participation in this case, stating:

I am going to order in this particular case because of the peculiar circumstances of Pat Kiner being an attorney and a magistrate judge, and ... because the appearance of propriety is more important even than whether somebody really has done something wrong or not, ... in any further proceedings in this case I’m going to not allow Mr. Kiner to participate and that’s just because the integrity of this whole process is best served in that fashion. I don’t know of any objection that was ever made until we got here today for the hearing that I thought was, you know, would go to that issue.

[¶ 18.] While we share the trial court’s concern with the appearance of impropriety, we find no such appearance here where the practice of law by a part-time magistrate is expressly permitted by law (see SDCL 16-12A-28 & 28.1) and where there has been no showing of any conflict of interest or other impropriety in the magistrate’s conduct as an attorney. Accordingly, that portion of the protection order prohibiting Kiner from further participation in this case must be reversed.

[¶ 19.] Affirmed in part and reversed in part.

[¶ 20.] GILBERTSON, Chief Justice, and SABERS, AMUNDSON and KONENKAMP, Justices, and GORS, Acting Justice, participating.

[¶ 21.] ZINTER, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.

      . Rumbolz has consistently denied these allegations and countered with the contention that it is Altman who is stalking her. Although the record is not clear on the matter, at one point, Rumbolz apparently obtained a protection order against Altman that expired. That order is not at issue in this appeal.

      . The trial court entered no written findings or conclusions other than a short line in its amended order that "[Rumbolz] has willfully, maliciously, and [repeatedly] followed or harassed [Altman].” It also entered no memorandum decision. This Court has clearly expressed its preference for formal written findings and conclusions in the present context. See Marks v. Clark, 2001 SD 122, ¶ 12, 635 N.W.2d 278, 281 (trial judge's expression of opinion extraneous to his decision constitutes no proper part of record on appeal). Nevertheless, despite similar expressions in other types of cases, this Court has reviewed oral findings and conclusions made on the record where they leave no doubt as to the basis of the court’s decision. See e.g. State v. Hartley, 326 N.W.2d 226, 228 (S.D.1982)(whether findings and conclusions are formally entered or orally made on the record, they must be such that there is no room for speculation and conjecture concerning what the trial court found or concluded).

      . See SDCL 15-6-15(b)(issues not raised by the pleadings but tried by express or implied consent of the parties are treated in all respects as if they were raised in the pleadings).