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492 N.W.2d 122

Williams Services v. Sherman

South Dakota Supreme Court

Decided November 10, 1992

South Dakota Supreme Court · decided 1992-11-10

Relies on Overvaag v. City of Dell Rapids, S.D. · Jennings v. Jennings · In Re Estate of Sedlacek v. Mount Marty Hospital Ass'n

Good law ✅— No negative treatment on recordhow we know

Decided 1992-11-10

How this case has been cited

Cited by 8 later decisions — most recently November 2025

7 state decisions

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Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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HENDERSON, Justice

¶1(specially concurring).

¶2Sherman would have the South Dakota courts believe that there is no relationship *128between two corporate entities. Wrong. Both corporations had the identical employer identification number, namely 83-0249568 reflected upon a 1986 U.S. Corporation Income Tax Return (for United Standard Distributors, Inc., Cheyenne, Wyoming) and a 1987 U.S. Corporation Income Tax Return (for United Standard Distributors, Inc., Omaha, Nebraska). See, Exhibits A and B on file herein. They constitute the “smoking gun” in this case of corporate fraud.

¶3This was a corporate shell-game. Sherman is trying to defraud creditors by frustrating collection of a judgment employing a would-be concept that, in actuality, the two entities are the same. Sherman owned 100% of the stock of a number of corporations. Within this umbrella of “alter ego,” we note the inclusion of United Distributors of Wyoming and United Standard Distributors of Nebraska.

¶4Sherman was disrespectful to the courts of South Dakota; when subpoenaed to produce records, he refused to do so. He testified falsely concerning the status of United Standard Distributors of Wyoming. Sherman argued in his brief that he committed no fraud. Here, the essence of his fraud was to testify that United Standard Distributors of Wyoming was a functioning corporation — that it was still in existence. However, Sherman knew (a) the said corporation had closed its bank account (b) failed to file any corporate records with the Secretary of State, as required by law (c) filed no tax return and (d) merged the assets into a non-bona fide corporation. When he raised his hand and took an oath to tell the truth, he knew that months prior thereto, he had implanted his new alter ego, corporate shell in Nebraska to remove the assets from the Wyoming corporation, and conclude its affairs.

¶5Piercing the corporate veil, acting as a Court of Equity, refusing to allow Sherman to use a corporate shell game to defraud creditors, the trial court entered an Amended Judgment. In South Dakota, a party seeking to rely on fraud for affirmative relief (here, Williams Service), has the burden of establishing fraud by a preponderance of the evidence. Jennings v. Jennings, 309 N.W.2d 809 (S.D.1981). It is obvious that Williams Service met that burden of proof. This Court has held that fraud under SDCL 15-6-60(b) abolishes the distinction between extrinsic and intrinsic fraud. Estate of Sedlacek v. Mount Marty Hospital Ass'n., 88 S.D. 333, 218 N.W.2d 875 (1974). Under this statute, we, on this Court, following stare decisis, will not disturb the discretion exercised by the trial court unless there exists an abuse of discretion. Overvaag v. City of Dell Rapids, 319 N.W.2d 171 (S.D.1982). Clearly, no abuse of discretion exists in this record. Surely, we should promote the ends of justice by estopping Sherman from using fraud as a weapon of unfairness.

¶6Concerning the contention of Sherman that Williams’ motion to vacate the judgment must fail because it was not filed within the one year time period, I generally agree with the discourse of the majority opinion; however, I wish to elaborate on my vote to express that pleadings in South Dakota are to be filed forthwith. To hold them in a lawyer’s office serves no beneficial purpose. It is sloppy procedure to hold original pleadings in a lawyer’s office and it triggers misunderstandings within the Bar and Bench. Judicial personnel’s efficiency and the client’s interests are best served by having a file which is complete in the county courthouse. Simply put, filing eliminates confusion. Failing to file original pleadings spawns more litigation and wastes the resources of the Unified Judicial System of this state. For all of these reasons, the Legislature passed SDCL 15-6 — 5(d) mandating that filings of pleadings be filed "... forthwith upon such service.”

SABERS, Justice

¶7(concurring specially).

¶8I write specially to attempt to confine the rule of this case to the facts of this case. Bad facts tend to make bad law. In my view, it would be a shame if this case becomes the method by which aggrieved parties unilaterally extend the time for appeal from an adverse decision.

¶9Plaintiff obtained a judgment against the defendant corporation but failed to present *129sufficient evidence of individual liability. Therefore, plaintiff failed to pierce the corporate veil and the trial court so held. No appeal was taken and the judgment was final. Yet, some 17 months later, motion papers are filed and 29 months later the judgment is opened to provide individual liability. Whatever happened to res judica-ta and stare decisis?

¶10This situation is somewhat similar to that of Gold Pan Partners, Inc. v. Madsen 469 N.W.2d 387 (S.D.1991), where I wrote:

The fact that the judgment from which Julie seeks relief was not entered against Julie, but in her favor and upon her petition, is also troubling. To read Rule 60(b) broadly enough to grant a party relief from a favorable judgment which the party previously pursued opens wide the door to abuse of the rule by those who simply change their mind about what they want after it is too late.

¶11Id. at 393 (citations omitted, emphasis in original omitted).

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