Baker v. McCue-Moyle Development Co.

• Court: Missouri Court of Appeals
• Writing for the Court: MICHAEL J. HART; KAROHL, P.J., and LOWENSTEIN
• Citation: Baker v. McCue-Moyle Development Co., 695 S.W.2d 906 (Mo. App. 1984)
• Decision Date: 31 December 1984
• Docket Number: No. 46081,CUE-MOYLE,46081
• Parties: Robert M. BAKER, Plaintiff-Respondent, v. McDEVELOPMENT COMPANY, A General Missouri Partnership, Defendant-Appellant, v. HARDIN STOCKTON CORPORATION and Heritage 100 Real Estate, Inc., Intervenors-Respondents.

Page 906

695 S.W.2d 906

Robert M. BAKER, Plaintiff-Respondent, v. McCUE-MOYLE DEVELOPMENT COMPANY, A General Missouri Partnership, Defendant-Appellant, v. HARDIN STOCKTON CORPORATION and Heritage 100 Real Estate, Inc., Intervenors-Respondents.

No. 46081.

Missouri Court of Appeals,

Eastern District,

Division Five.

Dec. 31, 1984.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Feb. 13, 1985.

Case Transferred to Supreme Court

April 2, 1985.

Case Retransferred to Court of

Appeals Sept. 12, 1985.

Original Opinion Reinstated

Sept. 20, 1985.

Bradford A. Brett, Mexico, for defendant-appellant.

Louis J. Leonatti, Mexico, for Robert M. Baker.

Lewis Eugene Melahn, Mexico, for Hardin Stockton Corp. & Heritage 100 Real Estate.

MICHAEL J. HART, Special Judge.

Defendant-appellant McCue-Moyle Development Company (seller) appeals a judgment for specific performance of a real estate sales contract in favor of plaintiff-respondent Robert M. Baker (buyer). The court rendered an accounting for income and expenses during the period from the date it found closing should have occurred, August 8, 1980, to the date of actual closing under the order of specific performance, April 30, 1982. Seller's real estate agent, Hardin Stockton Corporation and the buyer's agent, Heritage 100 Real Estate, Inc., intervened for their sales commission. The trial court awarded the commission to intervenors and rejected defendant's counterclaim alleging negligence in handling the transaction. Defendant seller's counterclaim against the buyer to retain the down payment was denied.

The true dispute resulting in this litigation was between the general partners of McCue-Moyle Development Company, R.A. Moyle, General Contractor, Inc., a Missouri corporation (Roy A. Moyle, Sr., President) and McCue and Company Realtors, Inc., a Missouri corporation (Kenneth W. McCue, President). In 1978 the partnership undertook to construct Eastwood Apartments. The project was financed by the Farmers Home Administration (FMHA). The construction was plagued by cost overruns. Mechanics liens in the amount of $183,000 were filed against the property. The partners agreed to sell the project but disagreed on the sale price and terms of sale.

On behalf of the partnership Roy A. Moyle signed an exclusive listing agreement with Hardin Stockton Corporation for the sale of the project at a price of $1,100,000. McCue notified Moyle by letter that the listing agreement was acceptable. However McCue subsequently notified Hardin that he wanted $1,200,000 for the project. Thereafter the partners, Moyle and McCue, were not in harmony. Moyle remained a willing seller for the listing price and McCue an unwilling seller at that price.

Heritage 100 Real Estate, Inc. introduced defendant-respondent Robert M. Baker to the property and became his real estate agent. Baker conferred with FMHA about financing the purchase or assuming the existing loan on the project. His written offer in the amount of $1,100,000 was presented to Moyle and signed on behalf of the partnership on April 2, 1980. Hardin Stockton agreed to divide its listing contract commission with Heritage 100.

The terms of the sales contract provided that Baker would pay $4,000 down, assume three promissory notes of the partnership payable to FMHA, pay off existing mechanics liens, pay McCue-Moyle partnership $56,000 in cash and convey two residential properties to the partnership. The selling partnership was to provide the purchaser with $1,100,000 in title insurance, assign all leases with existing tenants and transfer tenant's deposits to the buyer. The two residential properties were to become the real estate commission to be divided between buyer and seller's agents.

The sale agreement provided that time was of the essence and set July 9, 1980 for closing. If title had not been perfected by that date but was perfected thereafter the sale was to be closed within five days after title had been perfected and approved by the buyer.

Seller's agent gave a copy of the sales contract signed by Moyle only to the buyer before McCue received a copy. The buyer filed a loan application with FMHA to assume the partnership's indebtedness and his application was approved by the local office subject to further approvals by state, district and national offices of FMHA. The buyer was notified orally on June 26, 1980 that these offices had authorized assumption of the loan and on September 11, 1982 he received written confirmation of acceptance.

At approximately the same time the buyer received the oral authorization of approval from FMHA, McCue directed his attorney to notify buyer's attorney that McCue had assumed the position that the sales contract was not binding on the partnership because McCue had not signed it, that the partnership was not bound by the listing agreement (the price had been changed), and that the seller's agent, Hardin, had not properly conducted itself toward McCue as a partner. McCue also informed FMHA of his position.

Moyle remained willing to close under the provisions of the sales contract. On July 25, 1980 the existing mechanics liens were paid in full, 95% of the funds were provided by FMHA and 5% by Moyle and wife.

During the last week of July 1980 it is clear that Moyle and Baker were proceeding toward a closing and that McCue was resisting a closing. Although paid, the mechanics liens remained of record and appeared as liens on an abstract of title delivered to the buyer's attorney on July 29, 1980.

On August 8, 1980 both Moyle and McCue appeared at the offices of the buyer's attorneys. The buyer was not personally present. Moyle produced a partnership Warranty Deed signed by Moyle only. McCue said that the deed had to be signed by both general partners and that he would consider signing the deed only if more money were offered. Moyle did not produce the mechanics lien releases, the $1,100,000 title insurance policy, the assignment of tenant's leases or the transfer of tenant's deposits. The tenants had not been notified to make rent payments to the buyer. The buyer testified at trial that had the deed been signed by both parties he was on that date ready, willing and able to perform his obligations under the sales contract. FMHA's written confirmation for the buyer's loan assumption was not yet available and was not received until September 11, 1982.

The buyer brought this suit for specific performance on November 5, 1980. He also asked for an accounting for the income and expenses after August 8, 1980. After a hearing the court entered a interlocutory judgment ordering specific performance of the contract. The court found that Moyle signed the sales contract without the knowledge or consent of McCue; that the buyer had no knowledge or reason to suspect that the partnership agreement provided that one partner could not bind the other without his consent; the sales contract was legally binding on the partnership when signed by Moyle; that the partnership made no legal tender on August 8, 1980 because the buyer did not have reasonable notice and opportunity to be present and that his refusal to accept the warranty deed was excused by McCue's failure to execute the deed. It also ordered an accounting of all income and expenses incurred in the operation of the apartment project from August 8, 1980 through April 30, 1982.

At a subsequent hearing on July 19, 1982 the court approved the following computation to arrive at the sum due the partnership as sellers upon the closing of the sale:

Purchase price                          $1,100,000.00
                Less
                Assumption by Respondent Baker
                  of three FMHA promissory notes        (  966,031.18)
                Real Estate conveyed for the
                  sale contract                         (   56,000.00)
                Assumption of Tenant Deposits           (    4,800.00)
                Increase in Cash from the Project
                  from August 7, 1980 to June 16, 1982  (   10,591.48)
                Payments to McCue and Company           (    4,000.00)
                Missouri Corporate Franchise Tax
                  For McCue and Company Realtors, Inc.  (     543.00)
                Payments to Breet and Erdel             (    8,562.24)
                Payment of McCue and Company's
                  Corporate Income Tax                  (    1,421.00)
                Fee to Moore, Horton & Company          (      343.50)
                Amount needed to fund accounts
                  under the FMHA loan agreements
                  as of July 26, 1982                   (   11,731.72)
                Balance required in FMHA accounts
                  as of August 7, 1980                  (   11,653.07)
                Respondent Baker's Downpayment          (    4,000.00)
                Title Insurance Premium                 (    2,325.00)
                Add
                9% interest on $56,000 from August
                  7, 1980 to July 26, 1982                   9,921.79
                July 1982 loan principal payment             1,370.00
                                                        --------------
                Cash due on closing                     $   18,648.60
                

The court concluded by ordering that the closing occur on July 26, 1982 under the provisions of the accounting. In so ordering the court considered the terms of the FMHA loan agreements which restricted the owner's return of initial investment to 8% per annum on its investment. The partnership's total equity in the project was $69,177.00 which therefore limited an annual return on investment to $5,534.00.

Plaintiff-appellant McCue on behalf of the partnership contends error claiming that the sellers did not legally tender performance on August 8, 1980; in refusing to accept in evidence an exhibit containing declarations against interest on the part of the purchaser on the issue of legal tender; and that the buyer's refusal to accept legal tender on August 8, 1980 terminated the sale contract and buyer's right to specific performance. Appellant partnership as seller also contends that the accounting ordered by the court is defective because the date chosen for the beginning of the accounting, August 8, 1980, had no legal significance, that it orders monies already received by the buyer as additional credits, and, that relevant evidence...