Allen Foods, Inc. v. Lawlor

• Decision Date: 21 January 2003
• Docket Number: No. ED 79967.,ED 79967.
• Citation: 94 S.W.3d 436
• Parties: ALLEN FOODS, INC., Respondent, v. Robert LAWLOR, Appellant.
• Court: Missouri Court of Appeals

94 S.W.3d 436

ALLEN FOODS, INC., Respondent, v. Robert LAWLOR, Appellant.

No. ED 79967.

Missouri Court of Appeals, Eastern District, Division Two.

January 21, 2003.

Heidi L. Leopold, Martin, Malec & Leopold, P.C., St. Louis, MO, for appellant.

Jane Cohen, St. Louis, MO, for respondent.

PAUL J. SIMON, Presiding Judge.

Robert Lawlor (defendant) appeals from the judgment of the trial court entered in favor of Allen Foods, Inc. (plaintiff) for breach of a promissory note.

On appeal, defendant contends the trial court erred in granting judgment against him because the promissory note lacks consideration in that: (1) it was not entered into for payment of an antecedent debt or any other valid consideration and is thus unenforceable and for the reason that alleged forbearance of criminal prosecution cannot support the note as same is against public policy and in violation of Missouri criminal statutes and (2) defendant signed the note as an individual, not as a corporate officer or on behalf of the corporation, and therefore, there was no separate consideration flowing to defendant. We reverse.

We will sustain the judgment of the trial court unless: (1) there is no substantial evidence to support it; (2) it is against the weight of the evidence; or (3) it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976).

In a suit on a note the holder makes a prima facie case by producing the note admittedly signed by the maker and showing the balance due. Sverdrup Corp. Politis, 888 S.W.2d 753, 755 (Mo.App. E.D. 1994). The burden then rests upon defendant to establish a lack of consideration, an affirmative defense, by clear, cogent and convincing evidence. Id.

Viewed in a light most favorable to the judgment, the record reveals the following: Defendant was an officer of K-Brew, Inc., owner of Kilabrew's restaurant/bar. K-Brew, Inc. and plaintiff maintained at least a five-year business relationship lasting until October 1999, during which Plaintiff, a food and equipment wholesaler, supplied goods and merchandise to K-Brew, Inc.

On April 26, 2000, defendant individually signed, as maker, a promissory note to plaintiff, which was accepted by Timothy W. Mahoney, plaintiff's credit manager. According to the note, defendant personally promised: (1) the full and prompt payment to plaintiff of $17,257.65, which was the unpaid balance of K-Brew, Inc.'s obligation to plaintiff, payable in 17 equal and consecutive bi-weekly installments of $1000 plus a final payment of $257.65, including principal and interest, with the first installment due May 12, 2000; (2) the entire unpaid principal balance together with all accrued interest, with the interest thereafter accruing on the unpaid balance at the rate of 18% per annum if default be made in the payment of any of the installments; and (3) all costs of collection, including reasonable attorney's fees if the note is placed in the hands of an attorney or collection agency to obtain payment.

On January 19, 2001, plaintiff filed a petition for breach of the promissory note attaching as exhibits copies of the promissory note and K-Brew, Inc.'s account balance. In the petition, plaintiff alleged: (1) from April 27, 2000 to July 12, 2000, defendant made payments on the account in the total of $8,372.43; (2) defendant failed to make any other payments on the note after all offsets and credits, there remains due and payable to plaintiff from defendant a balance of $8,293.63. The trial court entered a default judgment in favor of plaintiff because defendant failed to appear after being called three times. Defendant filed a motion to set aside the judgment, which was granted. He also filed his answer admitting that the promissory note was signed in April 2000, but denying his asserted liability under the note and alleging in part that there was inadequate consideration in that the amount claimed by plaintiff under the note was an antecedent debt owed by prior owners of K-Brew, Inc. and alleged an affirmative defense setting forth the following: (1) there is insufficient consideration to support the promissory note; (2) the promissory note is based on antecedent debt or debt incurred prior to April 2000, and that there is insufficient consideration in that respect; and (3) there is no consideration flowing to him to support the assumption of corporate debt.

The case proceeded to trial without a jury. Mahoney, the only witness, testified for plaintiff that defendant signed the promissory note on April 26, 2000, in his presence, for the amount still owed by K-Brew, Inc. He also testified that no additional food or otherwise was given to K-Brew, Inc. in reliance of the note and that defendant was "pretty much closing up shop at that point."

Mahoney also identified plaintiffs Exhibit F, four insufficient funds checks, which are not part of the record on appeal, that were "signed by defendant" and "returned from the bank on [defendant's] account." The checks were dated from ...