B & B Equipment Co., Inc. v. Bowen, KCD29622

• Decision Date: 30 April 1979
• Docket Number: No. KCD29622,KCD29622
• Citation: 581 S.W.2d 80
• Court: Missouri Court of Appeals
• Parties: B & B EQUIPMENT CO., INC., a Missouri Corporation, Plaintiff-Respondent, v. John A. BOWEN, Defendant-Appellant.

Page 80

581 S.W.2d 80

B & B EQUIPMENT CO., INC., a Missouri Corporation, Plaintiff-Respondent, v. John A. BOWEN, Defendant-Appellant.

No. KCD29622.

Missouri Court of Appeals, Western District.

April 30, 1979.

David V. Bear, Columbia, for defendant-appellant.

Channing D. Blaeuer, Cynthia A. Suter, Moberly, for plaintiff-respondent.

Before SHANGLER, P. J., and WASSERSTROM and CLARK, JJ.

WASSERSTROM, Judge.

B & B Equipment Company, Inc. filed this suit to obtain a judgment declaring its right to terminate a contract under which defendant John A. Bowen was entitled to purchase 100 shares of the corporate stock. Bowen counterclaimed for a declaration that the contract is valid and subsisting and that he has a continuing right to purchase the 100 shares. The trial court rendered declaratory judgment as prayed by B & B, and Bowen appeals.

B & B is the successor to Braymen Tractor Company which was originally owned by Mr. and Mrs. L. D. Braymen. The Braymens took Robert J. Jaecques and William L. Hughes into the business in 1964, first as employees and then later as partners and finally as equal stockholders in a corporate form of doing business.

In 1968, L. D. Braymen wanted to retire and Jaecques and Hughes desired to find someone to take Braymen's place. At that particular time, Bowen who had had prior experience in the same line of business, was unemployed and available. Accordingly, on December 28, 1968, the parties entered into an oral agreement with Bowen under which Bowen would become an equal participant in the business in place of Braymen. Bowen, however, did not have sufficient funds to pay the value of Braymens' 100 shares of stock, which was agreed to be $15,000. The corporation therefore agreed to buy the stock from the Braymens for $15,000 and in turn to sell that stock to Bowen for the same sum. Bowen was to and did pay $2,500 direct to the Braymens. B & B gave the Braymens its note for $12,500, payable with interest of 6% Per annum. Bowen was to be entitled to all dividends on the 100 shares, and he agreed to pay back the dividends to B & B for application on the purchase price of the stock. When those payments for the stock totaled $12,500, plus whatever interest B & B had by then incurred to the Braymens, B & B was to deliver the 100 shares to Bowen. Under the agreement, Bowen was to assume as his primary responsibility all the corporate record keeping and bookkeeping, and he was in addition to devote his full time and attention to the corporate business in whatever capacity became necessary, including selling. The salaries of all three men were to be equal.

Promptly after the making of that agreement, Bowen did assume his new duties and at the beginning performed in a manner satisfactory to Jaecques and Hughes. Dividends were declared from 1969 to 1976 of which Bowen's share came to $7,156 and which were paid to him. He, in turn, repaid an equivalent amount on each occasion to be applied toward the stock purchase. However, starting in about 1972, Bowen began engaging in outside business activities and spent less time on his duties for B & B, with the result that Jaecques and Hughes became more and more dissatisfied with Bowen's performance. This dissatisfaction developed to the point that on April 27, 1976, a meeting was held between the three men in which Jaecques and Hughes informed Bowen that he was discharged. Approximately two or three weeks before that, B & B had paid a dividend for the year 1975, of which Bowen's share was $800, and at the time of the April 27 meeting Bowen had not yet repaid that sum to be credited on the stock purchase.

Following his discharge, Bowen retained counsel and on May 4 his lawyer wrote to the B & B attorney stating that Bowen would release any and all interest in the corporation for the sum of $82,350. On May 24, 1976, the corporation's attorney responded that B & B had elected to rescind the 1968 agreement and tendered to Bowen the sum of $9,656, representing the $2,500 paid by Bowen to the Braymens, together with the $7,156 dividends which Bowen had received from B & B and contributed toward payment of the stock. On June 2, 1976, Bowen's lawyer wrote rejecting the Corporation's tender and countered with a tender by Bowen of $5,344, plus whatever the amount of interest was that B & B had paid the Braymens, in exchange for which Bowen demanded the issuance to him of 100 shares of B & B stock.

The impasse thus created led to the present lawsuit. After hearing evidence without a jury, the trial court made findings of fact which included the following:

"6. That on or about April 27, 1976 Jaecques and Hughes fired defendant as an employee and officer in the business. This action resulted from dissatisfaction with defendant in not devoting his full time and best efforts to the interest of the business. That defendant over a period of time did not properly keep the books of the plaintiff's business and did not devote his full time to his responsibility in the business. That defendant, as of April 27, 1976, had not paid to plaintiff the $800.00 dividend to be applied on defendant's obligation to purchase stock. That such actions and omissions and failure to act and perform on part of the defendant constituted a breach of the terms and conditions of the contract between plaintiff and defendant.

"9. The court finds defendant did breach the conditions of the contract of December 28, 1968 as set out in paragraph 6 herein and that plaintiff was entitled to rescind the contract upon payment to defendant of the sum of $9,656.00 representing the total of the benefits received by plaintiff from defendant under said contract."

I. Sufficiency of the Evidence

Bowen's first point on appeal is that the trial court's determination is not supported by the evidence. Despite the phraseology of that point, the main thrust of Bowen's argument thereunder is that even if the evidence did support a finding that Bowen had breached the contract, nevertheless Bowen's default was not so serious as to warrant rescission. That contention really argues in slightly different form, the substance of what is presented in the argument advanced under Bowen's point 2 and that subject will be reserved for discussion under section II of this opinion. The discussion at this point will be confined to an inquiry as to whether Bowen did in fact breach the contract.

The disputed issues of fact in this regard are as follows: (A) whether Bowen's delay in repaying the $800 constituted a breach; (B) whether Bowen took business hours away from duties for the corporation in order to pursue outside business activities of his own; (C) whether Bowen performed his record keeping and bookkeeping in a satisfactory manner; (D) whether Bowen failed to lend sufficient help in sales activities, and (E) whether the other stockholders voiced their dissatisfaction to Bowen prior to the discharge, thus giving him adequate warning and opportunity to remedy the alleged defaults.

A. The $800 Repayment. Without dispute, B & B did pay Bowen a dividend of $800 about the middle of April, 1976, and Bowen had not tendered repayment of that amount toward the stock purchase up to the time of his discharge on April 27, 1976, nor had he repaid the $800 up to May 24, 1976, when B & B declared a rescission. However, by his letter dated June 2, 1976, Bowen did tender the full balance still owed by him on the stock purchase, which, of course, covered the $800 which he had received in April. The question therefore becomes whether Bowen's delay from April to June constituted a breach of agreement.

To be noted in this respect is that the agreement between the parties did not call for repayment within any definite specified time. Bowen testified that in fact there had been a delay of two or three weeks in prior years between the date upon which the dividend was paid and the date when he made repayment of a like amount to be credited against the stock purchase. Under these circumstances, and considering the confused situation caused by Bowen's discharge on April 27, 1976, it cannot be said that Bowen delayed an unreasonable length of time in making his tender. See Cochran v. Grebe, Mo.App., 578 S.W.2d 351 (1979). The portion of the trial court's finding is therefore disapproved which holds that Bowen's delay in this regard constituted a breach of the agreement. That disapproval, however, does not change the result, because there was other conduct constituting breaches of the agreement, discussed below.

B. Outside Business Activities. Jaecques and Hughes both testified that during the last four years before the discharge, Bowen had devoted an increasing amount of time to personal business activities of his own. They testified that he was engaged in the selling of real estate and that the B & B business phones were often times tied up by Bowen conducting his real estate business. They further testified that Bowen was gone from the business premises much of the time, Jaecques estimating that these absences would run as much as 50% Of the business hours. They also testified that Bowen spent some of his time at B & B using the company equipment to make ornamental rings. In addition to that, they testified that Bowen went to auctions of used farm equipment where he bought certain pieces of equipment which he then brought back to the B & B shop for reconditioning and that Bowen would then resell that equipment for his own account and profit.

Bowen did not wholly deny, but only tried to minimize, the foregoing testimony. He admitted that he had sold three farms and two houses during the years 1973 and 1974, and that he had made and received phone calls at the B & B offices in connection with his real estate activities. He denied that he had made any real estate sales after 1974, but his denial did not go so far as to say that he had not made attempts at sales in the subsequent period. He acknowledged that he had brought some personally...