DeFabio v. Mackey

• Court: Missouri Court of Appeals
• Writing for the Court: SMITH
• Citation: DeFabio v. Mackey, 493 S.W.2d 355 (Mo. App. 1973)
• Decision Date: 27 March 1973
• Docket Number: No. 34517,34517
• Parties: Daniel DeFABIO, Sr., et al., Plaintiffs-Respondents, v. Marion MACKEY et al., Defendants, Marion Mackey et al., Defendants-Appellants. . Louis District, Division Two

Page 355

493 S.W.2d 355

Daniel DeFABIO, Sr., et al., Plaintiffs-Respondents, v. Marion MACKEY et al., Defendants, Marion Mackey et al Defendants-Appellants.

No. 34517.

Missouri Court of Appeals, St. Louis District, Division Two.

March 27, 1973.

Lewis, Rice, Tucker, Allen & Chubb, Robert S. Allen, St. Louis, Schaper & Woods, Bowling Green, for plaintiffs-respondents.

Charles Clayton, St. Louis, for defendant.

Fazenda Mabrni, Ltd., Coburn, Croft, Shepherd & Herzog, G. Lane Roberts, Jr., St. Louis, Van Matre & Van Matre, Mexico, for defendants-appellant.

SMITH, Presiding Judge.

Defendants appeal from a judgment in a court tried case in favor of plaintiffs in the total amount of $125,000 ¹ plus interest from April 21, 1967. Plaintiffs sought this recovery upon a theory of rescission based upon misrepresentations made to them by defendants prior to and during a purchase of approximately 527,000 acres of Brazilian land known as 'Anta.' We are considerably helped by an extensive and thorough opinion of the trial court and excellent briefs by both sides.

We review this matter de novo, giving deference to the opportunity of the trial court to judge the credibility of the witnesses and reverse only if the findings of the trial court are clearly erroneous.

In the early part of 1967, defendants Mackay, Bradley and Nichols ² became interested in the purchase of land in Brazil. They admittedly formed a joint venture among themselves to purchase land in Brazil. Bradley, Mackey, Mackey's son and Nichols' son made a trip to Brazil for the purpose of investigating the possibilities of such purchase. While there they contacted a Brazilian real estate agent who indicated the availability of a tract in the State of Bahia, Brazil, comprising approximately 540,000 acres. Some negotiation took place and the agent advised the party that the entire tract would be available at thirty-three cents an acre. Smaller acreage in the same area was selling for $1.00 to $2.00 per acre. A 'gentleman's agreement' was arrived at that defendants would let the agent know by April 1, 1967, whether they would purchase at this price. Although this agreement was referred to by defendants as an option it was oral and without monetary consideration. Defendants admitted it was handled in this fashion because neither side wanted to be bound. In legal contemplation this agreement was only an offer which could be withdrawn prior to acceptance by defendants.

Following the agent's offer the party returned to the Clarksville, Missouri area without having seen the land. Defendants borrowed $50,000 from the Kinderhook Bank in Kinderhook, Illinois. This money was deposited in the account of Marmac Realty Co.--d/o Brazil. Marmac is a Mackey controlled company. Ultimately this money was used to purchase a different tract of land in Brazil and none of it was expended for the purchase of Anta. Mackey was regarded generally and by plaintiffs particularly as a shrewd and successful business man with a capacity for money making investments. He was personally known to each of the plaintiffs. As was to be expected, word of the Brazilian land venture got around in the Clarksville area. There is some dispute whether interest was solicited by defendants or whether plaintiffs took the lead in attempting to participate. On the record before us we think it is safe to say that defendants made no effort to keep the venture secret and did nothing to discourage investor interest in the project, and further that plaintiffs were not reluctant to participate in the prospective largess envisaged from this venture.

Following the initial trip and several conversations, discussions, and meetings each of the plaintiffs put up one-third of their eventual total commitment, ³ which was deposited in the Marmac Brazil account. Upon payment of this one-third each plaintiff received a receipt, which except for the name, amount and acreage were identical, as follows:

'Received of _ _ of _ _ $_ _ for _ _ undivided acres in a tract of land located in the State of Bahia in Brazil, South America, Known as 'Anta.' This payment is for earnest money, the balance of $_ _ will be due when title or deed is ready for transfer.'

The total commitment for each plaintiff was $1 per acre. In total, commitments were obtained (other than from defendants) for one-third of the total acreage in the entire tract. After these commitments were obtained Bradley and Mackey returned to Brazil to complete the purchase of 'Anta.' Demand was made upon the plaintiffs and the other non-defendant investors to come up with their remaining balance, which after some additional conversation and meetings was done. This money, $170,000, was transferred to Brazil on March 27, 1967, and the purchase was consummated the next day. Deed was taken in the name of a corporation, Fazenda Mabrni, Ltd., then in formation, and ultimately incorporated in Missouri. The total purchase price of the Anta tract (finally established at 527,345 acres) was $170,000. Plaintiffs and the other non-defendant investors were to have a one-third interest in the entire tract, defendants were to have a two-thirds interest. On April 15, 1967, all of the parties with an interest in Anta held a meeting for the purpose, at least in part, of setting up the structure under which the holding and development of Anta would proceed. During a discussion of capitalization Mackey denied that the land had cost a dollar an acre and refused to state how much it had cost. Plaintiffs for the first time became aware that the land had cost less per acre than their contributions but did not find out until discovery procedures in this suit the actual purchase price. Demand for rescission was made, refused and this suit followed. From the above recitation it is apparent that plaintiffs (and other non-joined investors) furnished the entire purchase price for Anta and received a one-third interest therein. Defendants contributed none of the purchase price and received a two-thirds interest. It is clear that none of the plaintiffs had been misled as to Mackey's business acumen.

Defendants contend that while, as between themselves, they were joint venturers, their transaction with plaintiffs was simply a purchase by plaintiffs of land from defendants and that no obligation to disclose the price at which they purchased the land existed. They find support for this position predominantly in the receipt (heretofore set out) given by defendants to plaintiffs at the time the original one-third was paid by plaintiffs. Plaintiffs seek to avoid pigeonholing the transaction and urge instead that defendants occupied a fiduciary relationship to plaintiffs which imposed an absolute obligation of disclosure. Essentially their theory is bottomed upon joint venture although they also advance a joint purchase and principal-agent relationship.

Joint venture is an association of two or more persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge. 'It can arise only by contract or agreement between the parties . . . But the joint adventure may be established without any specific...