Dillard v. Earnhart

Decision Date14 September 1970
Docket NumberNo. 1,No. 54549,54549,1
Citation457 S.W.2d 666
PartiesRalph DILLARD and Dorothy Dillard, and John Caraway, Plaintiffs-Appellants, v. Clyde Lewis EARNHART, Jr., Clyde Lewis Earnhart, Sr., and Mattie G. Earnhart, his wife, and James E. Miller, Trustee, Defendants-Respondents
CourtMissouri Supreme Court

Robert Stemmons, Mt. Vernon, for plaintiffs-appellants.

Neale, Newman, Bradshaw & Freeman, Jean Paul Bradshaw, Warren S. Stafford, Jerry L. Redfern, Springfield, for defendants-respondents.

WELBORN, Commissioner.

Appeal by plaintiffs from adverse judgment in their action to set aside a deed of trust, or, in the alternative, for damages for breach of warranty against encumbrances.

In the spring of 1966, defendant Clyde Lewis Earnhart, Jr., then 36 years of age, with $4,000 supplied by his parents, defendants Clyde Lewis Earnhart, Sr., and Mattie G. Earnhart, purchased a tavern in Marionville. Clyde, Jr. gave his parents his note for the purchase price. Near the time of the purchase, Clyde, Jr. became a party to a marriage of three weeks' duration. Upon the suggestion of the attorney who represented him in divorce proceedings, Clyde, Jr., on May 26, 1966, executed a deed of trust on the tavern to James E. Miller as Trustee, to secure a $4,000 note from Clyde, Jr. to his parents. The deed of trust was recorded on the date of its execution.

Clyde, Jr. operated the tavern approximately four months, when he became tired of the tavern business. He closed the business and decided to sell it.

Plaintiff Ralph Dillard was a bartender and tavern operator in Springfield. He had recently sold a tavern he owned and operated. Sam Smith told Dillard of the tavern in Marionville being for sale. On August 30, Dillard, accompanied by Sam Smith and Russ Felker, drove to Republic where Clyde, Jr. was working at his father's service station.

Clyde, Jr. went with Dillard and his companions to look at the tavern. Clyde, Jr. asked $3,500 for it. Dillard offered $3,000, but finally agreed to the $3,500 price. Dillard gave Clyde, Jr. $100 earnest money and told him: 'I will have the other $3,400 tomorrow.' According to Dillard, he also asked, 'Do you want me to get a cashier's check?' and Clyde, Jr. replied, 'No, I want the long green, I am going to Louisiana and get a Cajun queen.' (Clyde, Jr. denied that he made such a remark.)

The four returned to Republic and told Clyde, Sr. of the projected sale. Clyde, Sr. told Dillard that he and his wife had a deed of trust on the property.

Arrangements were made for Clyde, Jr. to come to Springfield the next day. According to Dillard, Clyde, Sr. said: 'There is no problem, while Joe is coming to Springfield, I will go to Mount Vernon and release the mortgage.' According to Clyde, Sr., he was agreeable to accepting $3,500 in satisfaction of the mortgage, but, 'at no time I never did tell him I would release it unless I got my money.'

The next morning, Clyde, Sr. went to the Recorder's Office in Mount Vernon to release the deed of trust. He was unable to do so, however, because he did not have the certified note which the deed secured. He returned home without releasing the deed of trust.

In the meantime, Clyde, Jr. had gone to Springfield to close the sale. He was to meet Dillard at the Blue Ribbon Grill and Bar between noon and one o'clock. The two met there at around 12:30. Dillard said Clyde, Jr. was there when he arrived. Clyde, Jr. said Dillard was in the bar when he got there. The two waited for Sam Smith to appear because Smith was to be a partner with Dillard in the operation. Sam appeared after a time and told Dillard that he couldn't come up with his share of the purchase price. Dillard was ready to go through with the deal and suggested that they go to Parker Moon's office and have Mr. Moon, an attorney, prepare the deed and bill of sale. Dillard and Earnhart went to Moon's office. Moon agreed to prepare the deed and bill of sale. Because he had to see the owner of the Blue Ribbon Grill, Moon arranged to bring the papers there upon their completion.

Dillard and Clyde, Jr. returned to the Blue Ribbon Grill. After about an hour and a half, Moon arrived at the Blue Ribbon Grill with the deed and bill of sale. He, Dillard and Clyde, Jr. sat in a booth where the instruments were examined and explained to the parties. Mr. Moon described the closing as follows:

'I showed them to Mr. Earnhart, had him read it to make sure everything was right. I asked him where the abstract was, I also said, 'Mr. Dillard, you ought to have the abstract examined before you close this deal.' Clyde Earnhart thought everything was all right except the false mortgage on the place which he had given his Dad to protect him against one of his wives that sued him for divorce. I asked if there was going to be any trouble over there, they said no, they didn't think so. There wasn't any consideration for the mortgage. I said, 'That is not very good business but if that is the way they wanted to close it O.K.' Then they went ahead, he signed his name, then he said he wanted money in cash so Mr. Dillard gave it to him in cash. I said, 'That is quite a bit of cash there.' I think it was around $3200.00, I don't remember around thirty-two hundred and something, I don't remember the exact amount. Anyway he counted it out there, then I told Clyde, 'This is quite a bit of money to be carrying around, you had better let me take you down to the Citizens Bank about a block and a half away and get a cashier's check or make a deposit or I will give you my check, you shouldn't be carrying money around.' He said he was twenty-one and knew what he was doing, he wanted the money, that was it and I left.'

Dillard left the Blue Ribbon shortly after Mr. Moon.

There is no necessity for resolving the conflict in testimony as to what Clyde, Jr. consumed at the Blue Ribbon. He testified that he drank beer and Vodka Collins and became ill and intoxicated. Dillard and Moon said they saw Clyde, Jr. drink only coffee and that he was not intoxicated.

According to Dillard and Earnhart, Sam Smith had joined them in a booth upon their return from Moon's office and was still with them when Moon arrived and the deal was closed. Moon said that Smith was not in the booth, although he did see him nearby.

After Moon and Dillard had left the Blue Ribbon, Smith picked up some dice which, according to Earnhart, Smith had 'laying there ready' and said, 'Let's roll.' The dice were rolled and Earnhart lost $300 to Smith while they were sitting in the booth. Earnhart, Smith and a third person then went to Smith's motel room where the dice game continued and Smith eventually won the $3,400 (less Moon's fee) which had been paid to Earnhart.

Clyde, Jr., returned to his parents' home at around eleven o'clock. He spoke to his father and without the latter's knowledge took a pistol and departed. On September 1, Clyde, Jr. was arrested in an abortive attempt at a bank robbery in Rolla.

On the day after the closing of the transaction, Dillard went to Earnhart, Sr.'s service station in order to get the key to the tavern. He was told that Clyde, Jr. had left. Dillard did not get the key. The mortgage was not discussed. Dillard also went back to the following day to get the key but failed to obtain it. He saw Earnhart, Sr. again, but the mortgage was not mentioned.

The following week, Dillard went to Mount Vernon to record his deed. The recorder told him that Mr. Earnhart had come over on August 31, but had brought the wrong paper and the deed of trust had not been released. On Moon's advice, Dillard recorded his deed. He returned by way of Republic where Earnhart, Sr. told him that he had no intention of releasing the deed of trust, that Dillard was the cause of Earnhart, Jr. getting into trouble. Dillard never did get the key to the tavern and finally took possession by breaking in.

In February, 1967, Dillard sold the tavern to plaintiff John Caraway. Caraway was fully informed of the situation involving the deed of trust. Caraway testified that he valued the property at $3,000 but gave no testimony as to the consideration he paid.

On September 29, 1967, Dillard and his wife and Caraway brought suit against the Earnharts. Count I of the petition sought cancellation of the deed of trust on the grounds that the Earnharts had falsely and fraudulently represented to Dillard that the deed of trust would be released upon his purchase of the property and that he would receive merchantable title to the land, free and clear of encumbrances. Count II sought $20,000 actual and $20,000 punitive damages against Earnhart, Jr. for fraudulent and malicious breach of the covenant against encumbrances in his deed to Dillard.

The defendants denied the allegations of fraud, alleged affirmatively that the deed from Earnhart, Jr. was void because the grantor was incompetent by reason of intoxication induced by Dillard at the time the deed was executed and that the deed was the product of a...

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    ...and a failure of performance is insufficient to establish this intent or to shift the burden of proof." Id. (citing Dillard v. Earnhart, 457 S.W.2d 666, 671 (Mo.1970)). There is no proof in this case, as opposed to mere conclusory assertions, of a current intention not to perform by Sam Ger......
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