Clark v. Vaughan

• Decision Date: 05 November 1956
• Docket Number: No. 22409,22409
• Parties: D. W. CLARK, Respondent, v. R. H. VAUGHAN and Bettie J. Vaughan, Appellants.
• Court: Missouri Court of Appeals

Page 155

296 S.W.2d 155

D. W. CLARK, Respondent, v. R. H. VAUGHAN and Bettie J. Vaughan, Appellants.

No. 22409.

Kansas City Court of Appeals, Missouri.

Nov. 5, 1956.

Harry Howard, Kansas City, for appellants.

John L. Sheridan, Donald E. Raymond, Kansas City, Pew, Taylor, Welch & Sheridan, Kansas City, of counsel, for respondent.

DEW, Presiding Judge.

This is a suit on a note signed by the appellants, husband and wife, dated November 1, 1951, payable in installments to the respondent in the total principal sum of $2,900, plus interest. Appellants filed a counterclaim for refund of $100 cash paid by them to respondent, independently of the note. A jury was waived and the case was tried on May 21, 1955, to the Court. The judgment was for the respondent and against both appellants on the petition in the sum of $2,900 principal and $558.75 interest, a total of $3,458.75. The judgment was also in favor of respondent on the appellants' counterclaim.

The petition pleaded the terms of the note and alleged that it was past due and unpaid. A verified copy of the note was attached.

The answer alleged that appellants were at all times mentioned husband and wife; admitted the execution of the note, and, among other defenses, pleaded absence and failure of consideration. The answer tendered back to the respondent 'a certain certificate of stock', purporting to have been issued in consideration of the note. Appellants' counterclaim was to recover $100 in cash which was alleged to have been paid by them to respondent as a down payment on the price agreed upon for the purchase of corporate stock.

Respondent's reply was a general denial of new matter, but admitted the payment of $100 as part of the agreed purchase price of the stock.

At the trial the respondent introduced in evidence the above described note which showed installments accrued but showed no credits. Respondent then rested his case.

The appellants offered in evidence the contract for the purchase of the stock referred to, which contract the respondent admitted was the contract entered into by the parties for the sale and purchase of the stock, and admitted that the note was given for the remainder of the agreed purchase price. The parts of the contract pertinent to the points raised in this appeal are:

'This Agreement, made and entered into this 1st day of November, 1951, by and between D. W. Clark, of Kansas City, Missouri, party of the first part, and R. H. Vaughan and Betty J. Vaughan, of Kansas City, Missouri, parties of the second part:

'Witnesseth:

'1. That for and in consideration of the sum of Three Thousand ($3,000.00) to be paid as herein provided, the party of the first part agrees to sell and assign to the parties of the second part Three Hundred Thirty (330) fully paid and non-assessable shares of the common stock of K-9 Products Company, a corporation.

'2. That the purchase price of said shares shall be paid as follows: One Hundred ($100.00) Dollars to be paid in cash upon the signing of this contract, and Two Thousand Nine Hundred ($2,900.00) Dollars to be paid by the execution of the promissory note of the parties of the second part in said sum with interest thereon at the rate of five (5%) percent per annum, payable $300.00 on the 1st day of February, 1952, and $100.00 on the 1st day of each succeeding month until the entire sum is paid. Party of the first part agrees that in the event the entire principal amount of said note is paid within one year from the date of this agreement, parties of the second part will be released and discharged from any and all liability for interest on said note.

* * *

* * * 'In Witness Whereof, the parties have hereunto set their hands the day and year first above written.

'D. W. Clark (Signed)

'D. W. Clark

'Party of the First Part.

'R. H. Vaughan (Signed)

'R. H. Vaughan

'Betty J. Vaughan (Signed)

'Betty J. Vaughan

'Parties of the Second Part.'

The respondent was called as a witness by appellants' counsel and he testified that the note was given and $100 cash paid to him for the 330 shares of stock described in the contract. He was asked:

'Q. And that also the certificate of stock that was issued, you did follow up and issue, cause to be issued a certificate of stock? A. That is right.

'Q. In an effort to conform with your obligation under the contract to transfer and assign the shares of stock to him? A. He bought the stock, he and his wife, and it was issued to them, and he paid me a hundred dollars down and a note for $2,900 on the balance of it, certain terms and conditions.'

Appellants' counsel thereupon produced a certificate of stock and asked the witness if 'that is the certificate that was issued', and witness answered 'Yes.' Appellants' counsel then, without objection, introduced in evidence a certificate No. 9 dated November 1, 1951, for 367 shares of common stock of K-9 Products Company in the name of R. H. Vaughan, signed by the respondent as secretary, and by his brother Julian P. Clark, as president. Appellants then introduced in evidence a letter from the Secretary of State of Missouri to the effect that the company was incorporated February 26, 1951, and its charter was forfeited January 1, 1953, for failure to file annual registration report and antitrust affidavit for 1952.

Respondent, as a witness for the appellants, further testified that he had not solicited the purchase of his stock by the appellants, but that respondent's brother reported to him that appellant R. H. Vaughan was interested in a managerial position with the company and since respondent was not active in it but only held stock in it, had inquired if respondent would sell his stock. He said appellant R. H. Vaughan came to Kansas City and entered into negotiations to buy what stock respondent owned in the company. Thereafter, the terms were agreed upon, the papers drawn, and appellant R. H. Vaughan and respondent's brother took the papers to appellant Bettie J. Vaughan for her signatures.

Appellant R. H. Vaughan testified that after he signed the note and contract, he received through the mail the certificate of stock for 367 shares introduced in evidence by the appellants. He said his wife had never seen it until a few days before the trial. He said there were no other writings in the transaction. He was asked by his counsel:

'Q. Now this contract calls for 330 shares of stock, but the certificate is for 367 shares of stock. That difference of 35 shares, something like that, is accounted for---- A. Do you want me to account for them? I was to purchase that stock from Julian Clark on an entirely different basis, that is, we were to determine the price and I was to pay it out of profits.

'Q. That had nothing to do with this note? A. With this suit or this note, no.

'Q. A separate transaction? A. Yes, sir.'

Respondent offered no evidence in reburttal.

Apppellants' first and second points on this appeal may be stated in one, namely, that the consideration of the note failed because, under the contract with the appellants, husband and wife, the consideration for the note signed by appellants, was the promise of respondent to sell and assign the stock to both appellants, in which case their title would thereby be as tenants in the estate by the entirety, and the issue of stock to appellant R. H. Vaughan alone defeated their ownership in that capacity, to which they were entitled. They further point out that as far as the record shows, Bettie J. Vaughan never received anything in consideration for her execution of the note in evidence, nor in the performance of the contract.

When, at the close of all the evidence and at the request of the Court, counsel for appellants orally presented their theory of defense, the following occurred:

'Mr. Sheridan: (One of respondent's counsel) May I just say one thing? Plaintiff carried out his obligation under this agreement when he endorsed his stock in blank to this man and his wife, delivered it to them. Now, it is true that due to a request the corporation later issued a stock certificate just to him.

'Mr. Howard: It is not in evidence that he accepted the stock.

'Mr. Raymond: (One of respondent's counsel) Nothing in evidence that the stock didn't go to him and his wife.

'Mr. Sheridan: Consideration was the transfer of Mr. Clark's stock to Mr. Vaughan and his wife, which was done. The corporation later issued a new certificate of stock to Mr. Vaughan at Mr. Vaughan's request. The consideration for the note was...