Bayne v. Jenkins, 61295
Decision Date | 15 January 1980 |
Docket Number | No. 61295,61295 |
Citation | 593 S.W.2d 519 |
Parties | Blue Sky L. Rep. P 71,527 Elbert BAYNE et al., Plaintiffs-Respondents, v. W. K. JENKINS, Defendant-Appellant. |
Court | Missouri Supreme Court |
Landon H. Rowland, Roy C. Bash, Bruce G. Heavner, Kansas City, for defendant-appellant.
Jim Tom Reid, Kansas City, for plaintiffs-respondents.
This is an appeal in consolidated actions by seven husband-and-wife plaintiffs for sums due on their respective promissory notes given by defendant in connection with a sale of securities. Defendant admitted execution of the notes but asserted affirmative defenses under the Missouri Uniform Securities Act, §§ 409.101 Et seq., RSMo 1978, and counterclaimed for damages on the ground of fraud. The jury returned its verdict for the defendant on plaintiffs' notes and also on his counterclaim for the $140,000 in cash which he had paid plaintiffs pursuant to the disputed contract of sale of the securities. The trial court, however, entered judgments for plaintiffs totaling $360,000 on the promissory notes and against defendant on his counterclaims notwithstanding the verdicts. On appeal, the court of appeals affirmed. We sustained defendant's motion to transfer because of the general interest and importance of the corporate and securities questions presented and we will treat the case as though here on original appeal. Mo.Const. art. V, § 10.
Defendant (hereinafter "appellant") makes various contentions on appeal, but we must first address whether the trial court erred in setting aside the jury verdicts and entering judgment for plaintiffs (hereinafter "respondents"). On this question appellant, of course, is entitled to the evidence and inferences favorable to his verdicts, McAlister v. Urhahn, 492 S.W.2d 19, 20 (Mo.App.1973). We, therefore, will consider the evidence and reasonable inferences favorable to the jury's verdicts and disregard respondents' evidence except insofar as it supports the verdicts. Gregory v. Robinson, 338 S.W.2d 88 (Mo. banc 1960); Cathey v. DeWeese, 289 S.W.2d 51 (Mo.1956). As to the promissory notes, appellant asserted affirmative defenses under the securities law based on respondents making untrue statements of material facts or omitting to state material facts necessary to make the statements not misleading. As to the counterclaims, appellant based these on various fraudulent misrepresentations as to the losses of Clark Manufacturing Company ("CMC") subsidiaries, the financial condition of CMC parent company and the value and annual rainfall on a certain Mexican ranch.
With this broad sketch of appellant's claims, we have examined the record in detail and the jury reasonably could have found the following therefrom:
Clark Manufacturing Company was organized as a partnership in 1937 by respondents Otho Clark and Ocie Hughes. Over the years, the other male respondents joined the partnership. In 1963, CMC was incorporated and all of the former partners served on the company's board of directors until the company merged with Oil and Properties, Inc. ("O&P") in 1970, with CMC as the surviving corporation, and "went public" with more than 500 shareholders. Appellant Jenkins was a shareholder of O&P at the time the merger with CMC was proposed.
Appellant is a farmer, age 52 at time of trial, with a high school education and no training in accounting, bookkeeping or securities analysis, although he owned controlling interest in a bank in Ft. Scott, Kansas, however, before the circumstances giving rise to this suit. During the time relevant to this suit, he and his family were personally engaged in farming approximately 7,900 acres in Missouri and Kansas. Appellant's first experience in the purchase of corporate stock was in 1969. One of his first acquisitions was O&P stock. Appellant voted against the merger with CMC at the O&P shareholders' meeting and thereafter filed suit to enforce his appraisal rights. Appellant was represented in the appraisal action negotiations for settlement by one Harold Kyser, of Butler, Missouri, an attorney who had previously assisted appellant in purchasing several parcels of farm land and was compensated on a transaction basis.
In connection with the negotiations for the appraisal settlement, appellant was invited by the CMC directors to and did visit an 80,000 acre Mexican ranch previously owned by O&P and then owned by CMC. Appellant was furnished with materials describing the ranch, its annual rainfall, and its economic potential which were prepared by the CMC board of directors for the 1971 annual CMC shareholders' meeting. There was a proposal that appellant would manage the Mexican ranch as part of a settlement of his appraisal action. After seeing the ranch and discussing its potential with his son, who had a degree in agronomy, appellant attempted to purchase the ranch rather than agree to manage it for CMC. Further negotiations resulted in a settlement agreement in October of 1971, whereby appellant became a CMC shareholder owning six percent of the CMC common stock. Otho Clark, then CMC president and chairman of the board, had participated in negotiations for settlement of appellant's suit. Clark was impressed with attorney Kyser's performance in the negotiations on behalf of appellant.
At this same time, Clark was having difficulty retaining control of CMC decision-making. After the merger, the board of directors had been reduced from seven to five members, with two seats going to former directors of O&P. Clark later would testify that the merger was the worst thing that happened to CMC, in that the subsidiaries acquired began to break the company financially. Shortly after the merger, an effort had been made by the former O&P directors to remove Clark from the board of directors. Clark approached Kyser, met with him alone and then later with other directors, and decided to put Kyser on the CMC board of directors in an effort to regain control of CMC. Before the February 1972 shareholders' meeting, both factions within CMC attempted to get appellant's votes for their slate of candidates on the CMC board of directors. Appellant voted for the Clark-Kyser slate, which was elected, and Kyser became the only director paid for his services, at a rate of $200 per week for his consultation with Clark and other members of the board.
At the time of the February 1972 CMC shareholders' meeting, the corporation was engaged in the manufacture of small farm machinery. Wholly owned subsidiaries, acquired in the merger with O&P, included a truck line and a 1,000 acre cotton farm in California. Other assets included the Mexican ranch and a new venture, Clark-Bilt Homes, a subsidiary which manufactured modular homes. A packet of information and a letter from the board of directors was mailed out to CMC shareholders in connection with the February 3, 1972 shareholders' meeting. Appellant testified at trial that he relied upon the letter to shareholders and financial statements in this information packet in the purchase of respondents' securities a little more than a month following the shareholders' meeting.
Several weeks after Kyser had been elected to the CMC board and after many of the former CMC partners had concluded that their attempt to regain control had failed, Russell Beebe, a CMC director, a former CMC partner, and a Clark ally, approached Kyser about the possibility of selling the interests of the seven former partners for $500,000. Kyser next contacted Jenkins and asked him if he were still interested in buying the Mexican ranch. Kyser told appellant that the best way to acquire the ranch would be through acquiring controlling interest in CMC. When appellant responded positively, Kyser and respondent Beebe set up a meeting of the seven former partners for March 11, 1972, at the home of respondent Wintermeyer, a former CMC partner who had served on the board of directors and performed internal accounting services for CMC.
Appellant Jenkins testified that before his first meeting with respondents about the contract he studied the shareholder materials sent to him by CMC for the shareholders' meeting of the previous month. Appellant and respondents discussed CMC's financial condition in general terms and respondents assured him that the company would "run like a sewing machine" with an influx of capital and the replacement of the former O&P directors on the CMC board.
A contract previously prepared by Kyser, though not previously shown to appellant, was brought to the meeting and copies distributed to each of the former partners and appellant. Clark testified that he relied upon Kyser's advice to him that the contract with Jenkins for sale of the securities would be legal. The contract provided that the seven former partners would sell their 1,400,000 shares of common stock (which was approximately forty-two percent of CMC common stock), 96,799 shares of preferred stock, 1 (respondents had, on June 23, 1971, waived the conversion privilege of their preferred shares, a fact unknown to appellant), their debenture bonds and Class B bonds 2 for $500,000. The contract also contained a recital that appellant made an unsolicited offer for respondents' interests in CMC and a provision making the contract contingent on appellant's ability to secure an operating capital loan of $500,000 for CMC within 10 days. 3 This contract was signed by appellant and respondents, but the parties disputed the question of whether the Class B bonds provision was stricken before execution. 4 Appellant then took the contract to one Bruce Heavner, a Kansas City attorney, who had done legal work for Jenkins previously, to review the document and to secure an appraisal of the preferred stock, debentures and Class B bonds.
After the contract was signed, a supplemental agreement was executed. This agreement provided appellant with an extension of time to arrange the operating capital loan...
To continue reading
Request your trial-
Zakibe v. Ahrens & Mccarron Inc.
...highest trust and confidence and the utmost good faith is required of him in the exercise of the powers conferred on him.'" Bayne v. Jenkins, 593 S.W.2d 519, 532 (Mo. banc 1980) (quoting Gieselmann v. Stegeman, 443 S.W.2d 127, 136 (Mo. 1969)). An officer or director has a fiduciary duty to ......
-
Alcorn v. Union Pacific Railroad Co.
...for a particular case, contemplates that the jury will be properly advised by the argument of counsel concerning details. See Bayne v. Jenkins, 593 S.W.2d 519, 531 (Mo. banc 1980). Under the guidance of Rule 70.02(b),13 the trial court is to submit only ultimate factual issues to the jury, ......
-
Piva v. General American Life Ins. Co., WD
...delineate the substantive law, but must also be readily understood. That test appertains as well to a non-MAI instruction. Bayne v. Jenkins, 593 S.W.2d 519, 530[9, 10] (Mo. banc 1980). The structure of an improvised instruction, no less than an MAI model, must be "simple, brief, impartial, ......
-
Paglin v. Saztec Intern., Inc.
...by GOT, as Chartnet's minority shareholder, against Saztec, the majority shareholder, for breach of a fiduciary duty, see Bayne v. Jenkins, 593 S.W.2d 519, 532 (Mo. banc 1980) (stating that stockholders who act in concert to exercise control over a corporation are fiduciaries with respect t......
-
Section 8.5 Generally
...care in relying on any representation or lack of it, which is discussed in more detail in §§8.12–8.13 below. See, e.g., Bayne v. Jenkins, 593 S.W.2d 519, 529 (Mo. banc 1980) ("Silence can be an act of fraud where matters are not what they appear to be and the true state of affairs is not di......
-
Section 22 Common Law Fraud
...cause of action lies for common law fraud arising from a violation of the state securities laws. See, e.g., Bayne v. Jenkins, 593 S.W.2d 519 (Mo. banc 1980). As with other actions for common law fraud, the necessary elements are: [A] representation; its falsity; its materiality; the speaker......