Don King Equip. v. Double D Tractor Parts

• Decision Date: 30 July 2003
• Docket Number: No. 25007.,No. 25012.,25007.,25012.
• Citation: 115 S.W.3d 363
• Parties: DON KING EQUIPMENT COMPANY and Don King, Plaintiffs-Appellants/Cross-Respondents, v. DOUBLE D TRACTOR PARTS, INC., David E. Eftink and Doris J. Eftink, Defendants-Respondents/Cross-Appellants.
• Court: Missouri Court of Appeals

115 S.W.3d 363

DON KING EQUIPMENT COMPANY and Don King, Plaintiffs-Appellants/Cross-Respondents, v. DOUBLE D TRACTOR PARTS, INC., David E. Eftink and Doris J. Eftink, Defendants-Respondents/Cross-Appellants.

No. 25007.

No. 25012.

Missouri Court of Appeals, Southern District, Division One.

July 30, 2003.

Rehearing Denied August 20, 2003.

James R. Robison, Robison & Robison, Sikeston, for appellants.

Mary Eftink Boner, Buerkle, Beeson, Ludwig, Jackson & Boner, L.C., Jackson, for respondents.

PHILLIP R. GARRISON, Judge.

This case involves cross appeals from a judgment entered in a contract dispute arising from the sale of a part of the business of Don King Equipment Co. ("King Equipment") to Double D Tractor Parts, Inc. ("Double D"). We affirm in part, and reverse in part.

King Equipment, owned by Don King ("King"), was in the business of the purchase and sale of new and used farm equipment, parts and salvage. On November 1, 1995, King Equipment and King ("Sellers") entered into a contract ("the contract") for a sale of part of that business to Double D, a corporation formed by David E. Eftink ("Eftink") and his wife, Doris ("the Eftinks"). The Eftinks were also parties to that contract in that they agreed to sign a promissory note to King Equipment for a part of the purchase price. The contract stated that Double D was purchasing the assets devoted to and a part of King Equipment's farm equipment parts operation, and that King Equipment would continue the business of the purchase and sale of farm equipment consisting of whole or complete units including combines, tractors, cotton pickers, grain heads, corn heads, and their attachments. Specifically, the contract contained the following under the heading "OTHER AGREEMENTS":

28. KING EQUIPMENT'S Continued Business. It is recognized by the parties that KING EQUIPMENT shall continue to conduct operations of a portion of its business referred to in the trade as "whole goods business", which shall be defined for the purposes hereof to mean that KING EQUIPMENT may continue to deal in the purchase and sale of new or used, complete or whole combines, tractors, cotton pickers, grain heads and corn heads, and their attachments. Such business shall not include the purchase of such whole or complete units for the purpose of salvage or salvaging parts therefrom, it being understood that the equipment parts and salvage portion of KING EQUIPMENT'S operation shall be conducted hereafter by BUYER. While the parties agree that KING EQUIPMENT shall be allowed to continue its business in the purchase and sale of whole farm equipment as defined, KING EQUIPMENT'S continued operation shall in no way extend to the purchase of insurance salvage parts or units, or to any parts or salvage operations of any kind within a one hundred fifty (150) mile radius of King Equipment's present location.

....

30. Covenant Not To Compete. The parties recognize that the BUYER, in acquiring the assets hereunder will continue activities the same or similar to a portion of KING EQUIPMENTS' [sic] prior business. Accordingly, to protect and preserve to BUYER the salvage and parts portion of that business, the assets of which are acquired hereunder, SELLERS, as well as the other officers and directors of KING EQUIPMENT shall not for a period of five (5) years from and after the date of this agreement, directly or indirectly, ... own, manage, operate, join in, control, or participate in the ownership, management, operation or control of any business, regardless of entity type, ... within a one hundred fifty (150) mile radius of KING EQUIPMENT'S existing business location in Sikeston, Missouri, which in any way engages in or participates in the parts or salvage parts or salvage or insurance salvage or parts business where such parts are purchased, sold or traded.

This appeal primarily involves the meaning of the words "attachments" and "salvage" as they relate to the provisions of paragraph 28 and 30.

Sellers filed a two-count petition against Double D and the Eftinks in September 1999. Count I was for a declaratory judgment in which it was alleged that King Equipment had reserved the right to continue in the "whole goods business" as defined in the contract, and that a dispute had arisen between the parties about the extent of King Equipment's right to do so. King Equipment sought a determination that it was not in violation of the contract, and a declaration of the rights and relations of the parties arising from that document. In Count II, Sellers sought a judgment for $68,400 as a result of Double D's alleged failure to honor an agreement between the parties by which Double D subsequently purchased land from King Equipment and, as part of that sale, agreed to provide $75,000 credit to King Equipment for its use in purchasing merchandise from Double D. King Equipment alleged that after $6,600 of that credit had been used, Double D refused to honor the remainder of the credit as a result of the dispute about the interpretation of the Covenant Not to Compete contained in paragraph 30 of the contract ("Covenant Not to Compete").

Double D and the Eftinks filed a "Counter-Petition" seeking an injunction and damages for Sellers' alleged violation of the Covenant Not to Compete. The trial court entered a preliminary injunction on September 3, 1999 against Sellers enjoining them "from in any way engaging in or participating in the parts or salvage parts or salvage or insurance salvage or parts business" involving a long list of parts utilized for a "[c]orn [h]ead," "[r]ow [c]rop [b]ean [h]ead," "[g]rain [h]eads," "[c]ombines," and "[t]tractors."

The preliminary injunction was dissolved on May 24, 2002, the same day the trial court entered the judgment from which these appeals flow.¹ In its judgment the trial court concluded that there was never a meeting of the minds of the contracting parties concerning what is "salvage," or about the Covenant Not to Compete, or about King Equipment's right to continue business. Based on that finding, the court ordered that the portions of the contract relating to the Covenant Not to Compete be stricken; since King Equipment financed the sale to Double D, the promissory note from Double D was ordered reduced by $200,000, being the principal amount of the purchase price relegated to that covenant. Double D was also given a judgment "for the interest paid at the promissory note rate of eight (8%) percent on said $200,000[ ] from [the date of the contract] to the date of [the judgment] in the amount of $136,370.79." The court also awarded Double D attorney fees of $16,250. With reference to the dispute about the credit for parts purchased from Double D, the court ordered Double D to abide by the terms of that agreement and to reinstate the credit to King Enterprises in the amount of $68,000. These appeals followed.²

Our review is pursuant to Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).³ The judgment of the trial court will be sustained unless there is no substantial evidence to support it, unless it is against the weight of the evidence or it erroneously declares or applies the law. Id. All evidence and permissible inferences favorable to the prevailing party are accepted as true; evidence and inferences to the contrary are disregarded. B-Mall Co. v. Williamson, 977 S.W.2d 74, 77 (Mo.App. W.D.1998).

APPEAL BY KING EQUIPMENT AND DON KING

In one of Sellers' points on appeal, they contend that the trial court erred in holding that there was not a meeting of the minds concerning the Covenant Not to Compete based on its finding that the parties were in disagreement as to the meaning of the provision. They argue that the fact that the parties disagree as to the meaning of a clause in the contract is not a basis for holding that the clause is invalid, and that there was evidence from which the court could have decided the meaning of the provisions. This point is well taken.

The trial court, in its judgment, quoted the provisions of the contract referred to above and noted the disagreement between the parties and their experts concerning the meaning of the term "attachments" in paragraph 28 of the contract. That provision defined "whole goods business" as meaning that King Equipment would continue to "deal in the purchase and sale of new or used, complete or whole combines, tractors, cotton pickers, grain heads and corn heads, and their attachments." The disagreement in the testimony extended to how to differentiate between "attachments" included as part of the "whole goods business" under paragraph 28, and "salvage" or "parts" referred to in paragraphs 28 and 30.

Under paragraph 28, King Equipment's continued business was not to include the "purchase of insurance salvage parts or units, or to any parts or salvage operations of any kind" within 150 miles and, under paragraph 30, Sellers were precluded from "[engaging] in or [participating] in the parts or salvage parts or salvage or insurance salvage or parts business" in which "such parts are purchased, sold or traded." The court referred to (1) testimony by King that he had intended that he would be able to continue selling all farm machinery type goods listed in a new John Deere dealers' catalog as "attachments," as well as whole goods, (2) Eftink's testimony that it was his intention that King would not sell certain specified types of items, and that "attachment" referred to tillage type equipment that is hooked behind a tractor, and (3) Eftink's testimony that King had violated the contract by, among other things, bidding on salvage and dealing in salvage units. The court also noted that the experts of both parties could not agree on what are "parts" and what are "attachments." The trial court concluded that there never was a meeting of the minds between the parties regarding what is "salvage" in that King testified it depends upon what the property is used for when sold to the ultimate purchaser, while...