Butler v. Westgate State Bank

• Decision Date: 15 June 1979
• Docket Number: No. 49696,49696
• Citation: 596 P.2d 156,3 Kan.App.2d 403
• Parties: Thomas E. BUTLER, Appellant and Cross-Appellee, v. WESTGATE STATE BANK, Appellee and Cross-Appellant.
• Court: Kansas Court of Appeals

Page 156

596 P.2d 156

3 Kan.App.2d 403

Thomas E. BUTLER, Appellant and Cross-Appellee, v. WESTGATE STATE BANK, Appellee and Cross-Appellant.

No. 49696.

Court of Appeals of Kansas.

June 15, 1979.

Review Granted Sept. 11, 1979.

Syllabus by the Court

1. Where the evidence pertaining to the existence of a contract or its terms is conflicting or admits of more than one inference, a question is presented for the trier of facts. The controlling question of whether a binding contract was entered into depends upon the intention of the parties and is a question of fact.

2. In order for an agreement to be binding, it must be sufficiently definite as to its terms and requirements as to enable a court to determine what acts are to be performed and when performance is complete, but the law will favor upholding a contract against a claim of uncertainty where one of the parties has entirely or partially performed his part of the contract.

3. If the parties have concluded a transaction in which it appears that they intend to make a contract, the court should not frustrate their intention if it is possible to reach a fair and just result, even though this requires a choice among conflicting meanings and the filling of some gaps that the parties have left.

4. After the plaintiff has reason to know that a breach has occurred, he is expected to take such steps to avoid harm as a prudent person would take. He cannot get damages for harm that could thus be avoided. However, it is not reasonable to expect the plaintiff to avoid harm if at the time for action it appears that the attempt may cause other serious harm. He need not enter into other risky contracts, incur unreasonable inconvenience or expense, disorganize his business, or put himself in a humiliating position or in one involving loss of honor and respect.

5. Mitigation of damages is an affirmative defense and the burden of proving a failure to mitigate losses devolves upon the party who asserts it.

6. Past profitability of a particular business is not the only method of proving lost future profits. The evidence necessary in establishing lost future profits with reasonable certainty must depend in a large measure upon the circumstances of the particular case. What is required is that the court or jury be guided by some rational standard; a court should approach each case in an individual and pragmatic manner, and require the claimant to furnish the best available proof as to the amount of loss that the particular situation admits.

7. Even if the particular partnership or company involved is new or untried, if the general business which the partnership or company will carry on is established, a person with experience in the business may be competent to give an opinion as to future profits based on the profitability of comparable businesses.

8. If businesses are reasonably similar, and a qualified expert is of the opinion that the profitability of one tends to show the profitability of the other, it is better to leave the dissimilarities to examination and cross-examination than to exclude the testimony.

9. A party cannot be awarded as damages both lost profits and the out of pocket expenses he would necessarily have incurred in earning those profits.

10. In an action against a bank for damages for breach of an alleged contract to make a loan it is Held : (a) there was sufficient evidence to support the jury's finding of a binding contract to make the loan; (b) the evidence supported the jury's award for lost future profits and it was error for the trial court to set aside that award on a motion for judgment notwithstanding the verdict; and (c) plaintiff is entitled to judgment on the jury's verdict for the lost profits awarded him, but not for his out of pocket expenses.

David L. McLane, Pittsburg, for appellant and cross-appellee.

Eileen Hiney, of McDowell, Rice & Smith, Kansas City, for appellee and cross-appellant.

Before FOTH, C. J., and PARKS and SWINEHART, JJ.

FOTH, Chief Judge:

This is an action by Thomas E. Butler against the Westgate State Bank for damages for breach of an alleged contract to make a $30,000 loan. Plaintiff proposed to use the loan proceeds to purchase a franchise for the production and sale of area telephone directories in the metropolitan Kansas City area. A jury awarded plaintiff $47,600, specifying in answer to a special question that $40,000 of that amount was for lost profits.

On the bank's post-trial motion the court entered judgment for plaintiff, notwithstanding the verdict, in the amount of $7,600 for plaintiff's out of pocket expenses. According to a breakdown provided by the jury this included a $5,000 loan made by defendant bank and repaid, $100 in interest, $1,500 lost wages for one month, and $1,000 in miscellaneous expenses. Eliminated was the $40,000 in lost profits, calculated by the jury as $20,000 for two books to be earned over two years. Plaintiff appeals from the remittitur of the $40,000; defendant cross-appeals from the judgment for $7,600.

I.

A. The primary argument on the cross-appeal is that there was insufficient evidence to show that the bank ever made a binding agreement to loan plaintiff the $30,000. The bank raised this issue by a motion for directed verdict at the close of plaintiff's case, and again by its motion for judgment n. o. v. The trial court, at least as to the $7,600, denied both motions. On appellate review a district court's ruling on such motions will not be set aside if the ruling is supported by substantial competent evidence. Apperson v. Security State Bank, 215 Kan. 724, 732-33, 528 P.2d 1211 (1974); Fisher v. Sears, Roebuck & Co., 207 Kan. 493, 485 P.2d 1309 (1971). The appellate court is required to resolve all facts and inferences reasonably drawn from the evidence in favor of the party against whom the motions were made. Where the evidence is such that reasonable minds could reach different conclusions thereon, an appellate court must uphold the lower court's denial of the motions. Simpson v. Davis, 219 Kan. 584, 589, 549 P.2d 950 (1976); Ellis v. Sketers, 1 Kan.App.2d 323, Syl. P 4, 564 P.2d 568, Rev. denied 223 Kan. clxxi (1977).

Taking the evidence in the light most favorable to plaintiff, it showed the following:

In late 1971 the plaintiff went to work for a company called "Better Business Pages," which was in the business of producing, selling and distributing so-called "area-wide telephone directories." He was originally employed as a commissioned salesman in the Kansas City area to sell advertising space in the directory to local merchants. The directories themselves were distributed free of charge to area residents.

After completing the sales campaign for the directory in the Wyandotte County area, plaintiff was promoted to sales manager and underwent management training in the company's home offices in Texas. He then returned to the Kansas City area and managed the company's sales force for the directory to be produced for the area in Clay-Platte County, Missouri. Upon completion of the Clay-Platte sales campaign Butler and his sales force began selling their advertising in Johnson County. There were to be three "books" or directories in the Kansas City area, and with each sales campaign taking approximately four months, he anticipated keeping his sales crew gainfully employed the year round.

Approximately half-way through the Johnson County campaign the Better Business Pages owner became involved in litigation with one of its franchise holders, a Mr. George Schuler of Plano, Texas. Schuler successfully concluded the litigation by acquiring virtually all the assets of Better Business Pages, including their various franchises. Schuler decided to discontinue the Kansas City operations and to sell the franchise for this area.

In the late summer of 1972 plaintiff and Schuler discussed the possibility of plaintiff's purchasing the Kansas City area franchise. After further discussions Schuler agreed to sell the Kansas City franchise to plaintiff for $30,000.

Butler telephoned the defendant bank in Kansas City, Kansas, where he had previously borrowed money and conducted his banking business for several years. He talked with Mr. Keith Abram, with whom he had previously dealt, and told him "how much and what it was for." Mr. Abram, a loan officer of the defendant bank, was familiar with the directory since the bank had purchased advertising in prior publications.

Abram advised the plaintiff of what information the bank would need to consider the loan, including facts and figures concerning the business, and also information from plaintiff's attorney concerning his late father's estate, from which he expected a sizeable inheritance. Plaintiff spoke to his attorney who forwarded the requested items, and Schuler obtained the information regarding the franchise operation. Later plaintiff relayed this information to Abram.

At the time of the second telephone conversation Abram indicated, after noting the information supplied by Schuler, that he would have to "present it to his people" before making a commitment, probably referring to the bank's board of directors.

The following day, in a third conversation with Abram, Butler was told "that there was no problem on the loan," that he could get $5,000 for the agreed down payment, and that "they had approved the loan for the entire amount but I would have to come up there to sign the papers" and work out other details. There was discussion regarding repayment whether it should be a ninety day note or repaid over a longer period such as two years.

During the second telephone conversation with Abram, George Schuler was also on the phone, and himself conversed with the loan officer. He gave Abram a "brief history of our company and who I was and how I got to where I was, who my bank was, who my accountant was, who my attorney was." He also provided the name and phone number of the attorney for the previous owner of...