Around The World Importing, Inc. v. Mercantile Trust Co., N.A.

• Court: Missouri Court of Appeals
• Writing for the Court: STEPHAN; CARL R. GAERTNER, P.J., and SIMEONE
• Citation: Around The World Importing, Inc. v. Mercantile Trust Co., N.A., 795 S.W.2d 85 (Mo. App. 1990)
• Decision Date: 14 August 1990
• Docket Number: No. 57135,57135
• Parties: AROUND THE WORLD IMPORTING, INC., James Gerhardt, Bonnie Gerhardt, Marvin Westhoelter and Betty Westhoelter, Plaintiffs-Appellants, v. MERCANTILE TRUST COMPANY, N.A. and Susan T. McSwain, Defendants-Respondents.

Page 85

795 S.W.2d 85

AROUND THE WORLD IMPORTING, INC., James Gerhardt, Bonnie Gerhardt, Marvin Westhoelter and Betty Westhoelter, Plaintiffs-Appellants, v. MERCANTILE TRUST COMPANY, N.A. and Susan T. McSwain Defendants-Respondents.

No. 57135.

Missouri Court of Appeals,

Eastern District,

Division Four.

Aug. 14, 1990.

Arthur G. Muegler Jr., St. Louis, for plaintiffs-appellants.

David Wells, Michael Joseph Morris, John J. Carey, St. Louis, for defendants-respondents.

STEPHAN, Judge.

Appellants, Around the World Importing, Inc. ("ATW"), James Gerhardt, Bonnie Gerhardt, Marvin Westhoelter and Betty Westhoelter, brought an action in six counts against respondents, Mercantile Trust Company, N.A. ("Mercantile") and Susan T. McSwain. Count I was ATW's claim for negligence, Count II was ATW's claim for fraudulent misrepresentation, Count III was the Westhoelters' individual claim for negligence, Count IV was the Westhoelters' individual claim for fraudulent misrepresentation, Count V was the Gerhardts' individual claim for negligence and Count VI was the Gerhardts' individual claim for fraudulent misrepresentation. Appellants alleged that respondents had defrauded them and negligently performed an oral contract by recommending a Small Business Administration ("SBA") guaranteed loan, rather than some other form of financing.

The trial court submitted only Count II to the jury which returned a verdict in favor of respondents. The trial court then entered a clarifying order dismissing Counts III through VI. That judgment was appealed to this Court on July 8, 1988. The appeal was dismissed because the Circuit Court's order did not reflect a final judgment. Around The World Importing, Inc. v. Mercantile Trust Company, 771 S.W.2d 919, 922 (Mo.App.1989). On remand, and after a hearing, the circuit court entered an order, nunc pro tunc, sustaining respondents' motion for directed verdict at the close of all the evidence as to Counts I, III, IV, V and VI. This appeal followed.

ATW was formed in March 1980. Its purpose was to engage in the wholesale and retail sale of antique reproductions. The principals, Marvin Westhoelter and James Gerhardt, decided to form the business because of their combined experience. Westhoelter owned a retail antiques and used furniture store called Second Hand Rose. Gerhardt had previously formed a "successful" safety supplies company. They along with another associate, Ed Griesedieck, spent nearly two years investigating the proposed business. They also retained an attorney and an accountant to assist them.

Their investigation resulted in a written business proposal which included detailed financial and operating projections plus a narrative description of the proposed business. The business proposal specifically identified ten assumptions on which it was based, but it did not mention letters of credit or the importance of purchasing overseas.

In the fall of 1980, ATW decided to seek a start-up loan. Griesedieck telephoned Mercantile's chairman of the board and chief executive officer, Donald Lasater, an acquaintance of his, and requested an appointment to talk about a loan for ATW. Lasater met with Westhoelter, Gerhardt and Griesedieck on October 7, 1980. According to Griesedieck, the purpose of the meeting was "to introduce ourselves to [Lasater] and to obtain from him an introduction to some officer of the company that I thought would be handling the loan if in fact we were going to obtain a loan." The meeting lasted approximately fifteen minutes. Lasater then turned the ATW representatives over to John Vallina, a senior loan officer. Vallina eventually assigned the loan to Susan McSwain.

McSwain and Vallina agreed that ATW's loan request was "marginal," because ATW was a new company with no history, was thinly capitalized and highly leveraged, and had no hard collateral. Mercantile was only willing to offer the company a ninety percent SBA guaranteed loan. McSwain advised ATW's principals of this decision in November 1980.

There was an SBA restriction which prohibited borrowers from investing SBA guaranteed loan proceeds or depositing them into bank savings or checking accounts for extended periods of time. This meant that ATW could not use the SBA funds to collateralize international letters of credit because there is generally a four to eight week delay between the issuance of international letters of credit and ultimate payment thereon. ATW's principals, and its attorney, were aware of this prohibition against collateralizing letters of credit at least six weeks before the loan closed on February 26, 1981. As a further condition, Westhoelter, Gerhardt and their wives, who were also officers of the corporation, were required to sign personal guarantees.

ATW opened for business in April 1981, approximately one month after the loan closing. As a consequence of low sales and managerial problems, ATW lost substantial sums of money each month. On August 14, 1981, after several meetings and discussions with ATW's principals, McSwain concluded that it was necessary to stop funding the loan and assigned the unpaid balance to the SBA for collection. ATW ultimately closed its doors in April 1984.

ATW, Westhoelter and Gerhardt argue that they were misled by the bank. They state that it was made perfectly clear that it was necessary to purchase their goods from overseas in order to make the profit forecast in their business plan. International letters of credit were vital to the plan. They claim that McSwain told them she would arrange for letters of credit, but never did. They further argue that Mercantile orally contracted to provide them with financial planning services and that Mercantile negligently performed that contract by recommending the SBA loan.

When we review a directed verdict entered in a defendant's favor, we view the evidence and inferences in the light favorable to plaintiffs and disregard all contrary evidence and inferences. Sisters of St. Mary v. Blair, 766 S.W.2d 773, 774 (Mo.App.1989). If, however, reasonable grounds support the directed verdict, we will affirm the trial court's order. Id. Although the defendant's evidence is rejected unless it aids plaintiffs' case, plaintiffs still bear the burden of removing the case "from mere conjecture and to establish their case by substantial evidence having probative value or by reasonable inferences which can be drawn from [their] evidence." State ex rel. Missouri Highway and Transportation Commission v. Keeley, 780 S.W.2d 84, 87 (Mo.App.1989), quoting from Gordon v. Oidtman, 692 S.W.2d 349, 352 (Mo.App.1985).

In their first point, appellants assert that the trial court erred in issuing its nunc pro tunc order, after remand, sustaining respondents' motion for directed verdict at the close of all the evidence as to counts I, III, IV, V and VI. They argue that the order was an improper use of the nunc pro tunc procedure, because: 1) the trial court actually overruled respondents' May 26, 1988 motion for directed verdict at the close of all the evidence, so there was no clerical error to correct; 2) there is nothing in the record to support the nunc pro tunc order; 3) the nunc pro tunc order improperly attempts to change the trial court's action and exercise of judicial discretion on May 26, 1988; and 4) the nunc pro tunc order relates to the exercise of judicial discretion affecting the substantial rights of the parties instead of the ministerial correction of the trial court's records to reflect the judicial determination actually made.

The purpose of a nunc pro tunc amendment is to make the record conform to what was actually done where there is a basis in the record for the amendment. Brunton v. Floyd Withers, Inc., 716 S.W.2d 823, 826 (Mo.App.1986). The function of such an amendment is to correct clerical omissions, mistakes or misprisions to make the record speak the truth by evidencing an act done or a judgment actually rendered at a prior time but not carried into or properly recorded in the record. State ex rel. Missouri Highway and Transportation Commission v. Roth, 735 S.W.2d 19, 21 (Mo.App.1987). They do not lie to correct judicial errors, mistakes or oversights, or to create a new record or to enter a judgment never made or one different from that actually rendered, albeit the judgment rendered was not the judgment the judge intended to make. Id.

As stated previously, the July 1, 1988 order dismissing Counts I, III, IV, V and VI, was not final. Around the World Importing, 771 S.W.2d at 922. At any time before final judgment a court may open, amend, reverse or vacate an interlocutory order. Woods v. Juvenile Shoe Corporation, 361 S.W.2d 694, 695 (Mo.1962). In State ex rel. Schweitzer v. Greene, 438 S.W.2d 229, 232 (Mo. banc 1969), the rule was stated as follows:

Logic and justice would seem to indicate that a trial court should be permitted to retain control of every phase of a case so that it may correct errors, or, in its discretion, modify or set aside orders or judgments until its jurisdiction is extinguished by the judgment becoming final and appealable.

Missouri does not follow the doctrine that a motion once ruled on cannot be reconsidered. Richey v. Meter Investments, Inc., 680 S.W.2d 381, 384 (Mo.App.1984). To do so would mean that a trial court could never correct what it ultimately concludes to have been a mistaken judgment even when its jurisdiction over the case remains intact. Id.

The trial court still had jurisdiction over this case. The trial court held a hearing and determined that the motion for directed verdict at the close of all the evidence should be sustained. If it was erroneous to designate the order nunc pro tunc, the error was harmless because the trial court followed proper procedure. We are not required to reverse a judgment unless the error thus committed materially affected the merits of the action under review. Roque v. Kaw Transport Company, 697 S.W.2d 254, 256 (Mo.Ap...