American Bank of Princeton v. Stiles

• Decision Date: 21 April 1987
• Docket Number: No. WD,WD
• Citation: 731 S.W.2d 332
• Parties: AMERICAN BANK OF PRINCETON, Respondent-Appellant, v. Harley STILES, Amber Stiles, Ed Stiles and Roxi Stiles, Appellants-Respondents. 38056.
• Court: Missouri Court of Appeals

Page 332

731 S.W.2d 332

AMERICAN BANK OF PRINCETON, Respondent-Appellant, v.Harley STILES, Amber Stiles, Ed Stiles and Roxi StilesAppellants-Respondents.

No. WD 38056.

Missouri Court of Appeals Western District.

April 21, 1987.

Motion for Rehearing and/or

Transfer to Supreme Court Denied

June 2, 1987.

Application to Transfer Denied

July 14, 1987.

Tom Oswald of Oswald & Cottey, P.C., Kirksville, for the Stiles.

Wendell K. Koerner, Jr., St. Joseph, for American Bank of Princeton.

Before LOWENSTEIN, P.J., and MANFORD and BERREY, JJ.

MANFORD, Judge.

This action originally appeared before this court as two separate appeals.The appeals were consolidated by an order of this court on April 25, 1986, and therefore the appeals are herein disposed of as one.

The action was brought by American Bank of Princeton (hereinafter plaintiff), ¹ in two counts: Count I for replevin of property secured under a note, and Count II for judgment on the note.The defendants, Harley Stiles, Amber Stiles, Ed Stiles and Roxi Stiles(hereinafter defendants), filed their answer and counterclaim alleging prima facie tort and intentional interference with a business expectancy.Plaintiff obtained summary judgment on its Counts I and II, and the court further awarded plaintiff attorneys' fees in the amount of $42,294.27.

The cause proceeded to trial on defendants' counterclaim.Defendants' count alleging prima facie tort was dismissed and the cause was submitted on intentional interference with a business expectancy.The jury returned a verdict in favor of defendants and awarded defendants $75,000.00 in actual damages, and $400,000.00 in punitive damages.The trial court entered its judgment on the verdict and both parties, following post-trial motions, filed their appeals.Affirmed in part and reversed in part.

Defendants challenge the trial court's order granting summary judgment on the note and on the replevin count, and raise three points which charge, in summary, that the trial court erred (1) in granting summary judgment because there remained genuine issues of material fact; (2) in overruling defendants' motion to strike the affidavits filed by plaintiff in support of its motion for summary judgment because the affidavits were defective and in violation of Rule 74.04(e); and (3) in overruling defendants' motion for leave to file answers to plaintiff's request for admissions out of time.

Plaintiff challenges the judgment of the trial court on defendants' counterclaim and raises eight points which charge, in summary, that the trial court erred (1) in overruling plaintiff's motion for a directed verdict because there was not sufficient substantial evidence to make a submissible case that plaintiff wrongfully interfered with a valid business expectancy; (2) in submitting an instruction on punitive damages because there was not sufficient substantial evidence to support the submission of a punitive damage instruction; (3) in submitting an instruction on punitive damages because said instruction improperly defined the degree of malice applicable to an action for tortious interference with a business expectancy; (4) in overruling plaintiff's motion in limine to exclude evidence of the summary judgment entered on plaintiff's petition because such evidence was not relevant to any issue of defendants' counterclaim and was highly prejudicial; (5) in admitting, over plaintiff's objection, defendants' ExhibitNo. 13, a listing of amounts of money received for cattle sold by defendants between January, 1984, and May, 1985, because such evidence was not relevant to any issue of defendants' counterclaim and was highly prejudicial; (6) in admitting, over plaintiff's objection, deposition testimony of defendants' witness concerning the witness' understanding and belief because such testimony constituted speculation, opinion and conclusion, and was not relevant; (7) in submitting defendants' verdict-directing instruction because there was not sufficient substantial evidence to support the submission of the instruction and because the instruction did not require the finding of a "valid" business expectancy; and (8) in excluding testimony of plaintiff's witness because such testimony was offered to show the state of mind of plaintiff's employees and did not constitute hearsay.

The pertinent facts are as follows:

DefendantHarley Stiles, and his wife, Amber Stiles, had started in the Angus cattle business in approximately 1967.They had a cow/calf operation in which they would breed heifers and cows and sell the calves.Harley had banked with plaintiff since he was in high school.To finance the cattle operation, defendants had an operating loan with plaintiff which was a line of credit against which advances would be made during the year as necessary for defendants' operation.When defendants sold cattle, they would apply the proceeds against the note.The note, which was renewed annually, was secured with a mortgage on personal property which included cattle, machinery, equipment, and feed on hand.The note was not secured by any real estate.The note carried a variable interest rate of 15% which was to be adjusted every quarter to 1/2% above plaintiff's "best commercial rate", to be determined by plaintiff.The note also provided that the maker would pay all costs of collection, including reasonable fees and expenses of attorneys.Defendants had also executed personal guaranties for the repayment of the note.

In 1979, Harley and Amber brought into the Angus business their son, Ed Stiles, and his wife, Roxi Stiles.Beginning in January, 1980, defendants submitted annual financial statements to plaintiff in the name of Stiles Angus Farms, a Partnership.Separate financial statements were also submitted by Harley and Amber, and Ed and Roxi.These financial statements were submitted every January and the operating note was renewed at that time.All documents connected with this line of credit were signed by Harley, Amber, Ed and Roxi Stiles, as partners.

The line of credit was renewed on January 11, 1983, at which time the line of credit was evidenced by a promissory note in the amount of $550,000.00.As of that date, $507,000.00 had been advanced.The major part of this was to refinance existing debt.On January 11, 1984, principal and accrued interest due under the note amounted to $619,000.00.

In November of 1983, the agricultural loan representative of plaintiff, Tony Hamilton, and two loan representatives from American National Bank of St. Joseph, made an annual inspection of defendants' operation.The St. Joseph representatives were involved because that bank had participated on the loan.At the date of the inspection, the loan account appeared to have a negative collateral margin, which means the collateral securing the note was valued at less than the amount of the note.

In January, 1984, Hamilton scheduled an appointment with defendants to review their account, which was the practice every January as the note became due.Harley and Ed went to the bank on January 12, 1984, at which time the note, which became due January 11, was in default.Instead of meeting with Hamilton, Harley and Ed met with Rex Brod, another agricultural loan representative.At that meeting the three prepared updated financial statements which were to be signed by the four defendants at a later date.

Both Harley and Ed testified that at the January 12th meeting, Brod told them that their account had been "classified" and that they would have to get authority from the board of directors to get any additional funds.Harley and Ed also testified that at this meeting, Brod told them to sell some cattle because the bank would not advance any more funds to purchase feed for the cattle.

On cross-examination, Harley and Ed testified that at the January 12th meeting, Brod had told them to sell cattle in order to have some cash to apply to the debt and also so that the size of the herd would be reduced, thereby lowering operating costs.Plaintiff later introduced evidence that defendants were advanced $10,000.00 for operating expenses on that day on a separate note.At this meeting, another appointment was scheduled for January 19, 1984.

At the January 19th meeting, Harley and Ed again met with Brod.Brod informed Harley and Ed that additional collateral was necessary in order to renew the note.Harley and Ed testified that Brod requested a 60-day deed of trust on real estate owned by Harley and Amber, which was unencumbered, in order to renew the note.Harley refused to give plaintiff a deed of trust.Harley and Ed testified that Brod again told them to sell cattle to make some payment on the debt and reduce the size of the herd.They testified that again, Brod told them that the bank would not give them any more money to purchase feed for the cattle.Plaintiff later introduced evidence that on January 19, 1984, defendants were advanced $15,000.00 for operating expenses on another, separate note.

Ed testified that because of Brod's request that defendants sell cattle, Ed contacted an Angus Association representative, John Barton, on January 16, 1984, to seek assistance in finding buyers for defendants' cattle.On January 23, Ed was put in touch with a cattleman in Oklahoma, Tom Price.Price was interested in purchasing 100 to 150 Angus cows which he planned to artificially inseminate to a Brangus Bull in which he had an interest.Ed and Price discussed a price range of $700.00 to $900.00 per cow.Price was not interested in immediate delivery of the cows because he did not have room for them in Oklahoma, but was moving his cattle operation to a larger farm in Kansas where he would have room for them.Price suggested to Ed that he was only interested in purchasing the cows if someone would pasture, feed, and care for them and artificially inseminate them until approximately October or November of 1984.Price proposed to pay a management fee of $7.50 per...