Austin & Bass Builders, Inc. v. Lewis

• Decision Date: 16 July 1962
• Docket Number: No. 49168,49168
• Citation: 359 S.W.2d 711
• Court: Missouri Supreme Court
• Parties: AUSTIN & BASS BUILDERS, INC., Respondent, v. Lawrence E. LEWIS and Ethel I. Lewis, Appellants.

Page 711

359 S.W.2d 711

AUSTIN & BASS BUILDERS, INC., Respondent, v. Lawrence E. LEWIS and Ethel I. Lewis, Appellants.

No. 49168.

Supreme Court of Missouri, En Banc.

July 16, 1962.

Motion for Rehearing Denied Sept. 10, 1962.

Lucian Lane and W. M. Thurman, Kansas City, for appellants.

Terry & Welton, Jack C. Terry and Gaylord Wilkins, Kansas City, for respondent.

EAGER, Judge.

This case was transferred here upon our order from the Kansas City Court of Appeals. Its opinion is reported at 350 S.W.2d 133. In that opinion the court affirmed a judgment for plaintiff in the sum of $6,000. The suit is one against a husband and wife for the breach of an alleged real estate contract. The instrument was dated April 8, 1959, and it recited the parties as 'Lawrence E. Lewis and Ethel I. Lewis (Husband and Wife)' as sellers and 'Austin & Bass Builder Inc.' as buyer; it was signed only by Lawrence E. Lewis, individually, and Kenneth Bass, individually. The property involved consisted of lots '9 thru 28 and 30 thru 34, Woodridge Subdivision, Independence, Missouri.' The contract recited a price of $31 per front foot, the making of a $1,000 deposit with sellers, and it contained the following provisions (among others): '* * * the balance to be paid in the following manner: Four Thousand and No/100 .......... Dollars $4,000.00 cash on delivery of deed as herein provided, and starting of improvements. Balance shall be paid at the rate of $31.00 per front foot at the closing of loan on constructed houses less $200.00 per lot which is the consideration paid in the down payment. The above sale is contingent on the approval of the Federal Housing Administration and all improvements in including streets, water, Gas and Sewers to the property line.

'All deferred payments to be represented by note--, secured by deed of trust or mortgage on above described property containing usual provisions, drawing interest from date of deed on the terms specified above.' The contract was admittedly prepared by Mr. Bass, a layman.

Mr. Lewis had been a builder of houses for 15 years; he had an eighth grade education, and had never attempted to write a real estate contract. His wife assisted to some extent in the business; she usually drew the checks, and also acted as bookkeeper, with some outside help; she had authority to sign checks, although the bank account was carried in the name of 'Lawrence E. Lewis, Contractor.' Lewis and his wife owned 40 acres of land at 39th and Noland Road in Independence and from this they had platted the subdivision in question. Bass and his partner Austin heard that Lewis had lots for sale and contacted him in March or early April 1959 on one or more occasions. While there is much controversy, generally, concerning all of their dealings, the parties did agree on a price per front foot for lots to be sold. Lewis testified that they offered to buy ten lots and make a deposit of $200 per lot on 15 more. On April 8, Mr. Bass appeared with the instrument in question which (for convenience but without assumption of validity) we shall call the contract. When Bass testified, he gave little or no explanation of what then occurred, except that the contract was signed; Lewis testified that the instrument did not represent the agreement they had previously discussed, that he so stated, and that he could not understand it; that he merely signed it at the insistence of Bass, who wanted something to show to a loan man who was to examine the property on the next day, and who said that they would get up a new contract within the next week. No one ever presented the contract to Mrs. Lewis for her signature or approval. Bass and Austin formed the plaintiff corporation after the date of the contract, its certificate of authority being dated April 29, 1959; at its first meetings the directors approved this contract. Bass testified that Lewis was told of the pending incorporation during the early negotiations.

After April 8, no new contract was prepared; according to Lewis the whole deal was still uncertain, including the number of lots to be purchased and the mode of payment. Bass had sundry dealings with the FHA, with material men, and loan agencies; he paid a fee on an application for ten FHA commitments; Lewis went with Bass to interview the FHA, and looked over certain 'plot plans'; certain engineering work was performed, partly for Bass and partly for Lewis. Bass had some house plans prepared by an architect. Lewis proceeded to put in streets, curbs, sewers, gas and water, incurring very substantial expense, allegedly nearly $30,000. All subdivision expense was paid by Lewis. At the end of July, no further specific steps had been taken to consummate the contract, either by tenders of additional money, a deed of trust or a warranty deed, and no abstract of title had been furnished. On July 30, Lewis contacted Bass concerning a letter from the FHA setting up certain additional requirements for the subdivision. At that time Lewis evidently told Bass that he might have to refinance the tract with a new deed of trust (there being an existing balance of some $5,000 on an old one); Bass testified that Lewis then said that if he did so he could not give clear title. Thereupon plaintiff's counsel wrote a letter to Lewis threatening suit. Further conferences were held in August, sundry proposals discussed, but nothing agreed upon. A controversy developed or continued, over the mode of payment and the security to be given, pending final FHA loans on completed houses. Bass testified that Lewis, and Mrs. Lewis, then required all cash. Mrs. Lewis denied taking any part, and Lewis testified that he only required a down payment and 'a mortgage on the lots until they are paid for.' The vagueness of the whole deal is well illustrated by Bass's testimony that,--'* * * we would only sign a deed of trust on the first ten lots because that(s) all we would get title to when we took over.' He so testified despite the fact that the contract for which plaintiff now seeks damages called for the sale and conveyance of 25 lots. On July 30, Mrs. Lewis, at her husband's direction, had mailed a check to Bass returning the $1,000 deposit, but she had forgotten to sign the check. This check was brought by Bass or Austin to one of the August conferences, was apparently left on the table in a restaurant, and was subsequently delivered to Lewis by the restaurant manner. This suit was filed in September. On January 10, 1960, after suit, a $1,000 cashier's check was sent by the Lewises to Bass, which was endorsed by the plaintiff corporation and deposited in its account. Incidentally, the ten FHA commitments issued for Bass were transferred by him to other lots which he subsequently purchased, and were there used. He testified that each of those lots cost him $610 more than the price fixed in the present contract.

Lewis did refinance the entire 40 acres with a loan of $40,000. His testimony and his theory was and is that he could always release any lot upon payment to the mortgagee of $1,250, which he did on some lots for his own purposes; also, that he was and had always been willing to convey the lots upon the down payment called for and a deed of trust on all lots conveyed. Apparently one chief bone of contention was that plaintiff could not get an FHA loan if there was a pre-existing deed of trust on the property. Under the view we take it will not be necessary to go into all the claims of performance and nonperformance, pro and con. So far as Mrs. Lewis was concerned, plaintiff relied solely upon the theory of agency and ratification,--i. e., that her husband was her agent in signing the contract, that she knew (or soon learned) of it, that she was present at some of the discussions, and that she deposited or drew the checks involved.

The amended petition was in three counts. All were based solely upon the written contract. The first, reciting that defendants had failed and refused to perform the contract, sought the return of the $1,000 deposit with interest, apparently by way of rescission. That count was dismissed at the trial, plaintiff having already accepted the return of the deposit. The second count recited an offer to sell the lots for $58,587.21, the execution of the written contract (attached as an exhibit), performance by plaintiff, the failure of defendants to perform by conveying the property, and plaintiff's special damages. The third sought punitive damages for the allegedly malicious and fraudulent acts of defendants in placing a $40,000 deed of trust on the tract after plaintiff had expended effort and money in reliance on the contract, thus...