Farmland Industries, Inc. v. Bittner

• Decision Date: 12 March 1996
• Docket Number: No. WD,WD
• Parties: FARMLAND INDUSTRIES, INC., Appellant, v. Dale BITTNER, Respondent. 50994.
• Court: Missouri Court of Appeals

Page 581

920 S.W.2d 581

FARMLAND INDUSTRIES, INC., Appellant, v. Dale BITTNER, Respondent.

No. WD 50994.

Missouri Court of Appeals Western District.

March 12, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied April 30, 1996.

Louis Jay Wade, Kansas City, for appellant.

Mark Edward Kelly, Liberty, for respondent.

Before ELLIS, P.J., and HANNA and SPINDEN, JJ.

HANNA, Judge.

Farmland Industries, Inc. ("Farmland"), appeals from the trial court's judgment, which held that Farmland was equitably estopped from asserting that Respondent Dale Bittner's oral revocation of a guaranty agreement was invalid under the statute of frauds.

In January 1992, South Branch Fertilizer ("South Branch"), a partnership, submitted a credit application to Farmland to make purchases on open account. After reviewing this application, Allen Baeur, Farmland's credit manager, refused to extend credit to South Branch unless the partners, Galen Polt and Dale Bittner, personally guaranteed payment of all purchases. These guaranty agreements were signed and returned to Farmland by Bud Klug, the Farmland sales representative with whom Mr. Bittner regularly did business.

Paragraph 5 of the guaranty agreement provided that the guaranty could be revoked only by providing written notice to Farmland. Mr. Bittner did not have a copy of the agreement and merely glanced through it before signing it. None of the parties knew that the agreement could be revoked in writing only. After the partners, Mr. Polt and Mr. Bittner, executed the agreements, Mr. Baeur approved the application and extended credit to South Branch.

In the summer of 1992, South Branch was converted from a partnership into a corporation. In November 1992, Mr. Bittner transferred his shares of stock to Mr. Polt. Mr. Bittner testified that he told Mr. Klug on December 3, 1992, in a telephone conversation that South Branch had been converted into a corporation and that he had transferred his company stock to Mr. Polt. Mr. Bittner testified that he then requested, through Mr. Klug, that Farmland release him from the guaranty agreement. According to Mr. Bittner, Mr. Klug told him that he had been released from the agreement approximately one week later. Mr. Klug was unavailable and did not testify. Mr. Bittner never canceled the agreement in writing, as was required by the agreement.

Beginning in June 1993, South Branch made a series of purchases from Farmland resulting in an unpaid balance of $16,569.83. In June 1994, Farmland filed suit against South Branch, Mr. Polt, and Mr. Bittner seeking judgment for this unpaid balance plus interest, attorney's fees, and court costs. The court entered a default judgment against South Branch and Mr. Polt because they failed to answer or appear. ¹ However, the court entered judgment in favor of Mr. Bittner and against Farmland, finding that Farmland was equitably estopped from asserting the statute of frauds. Farmland appeals.

Our standard of review is governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976), and we must uphold the trial court's judgment unless it is not supported by substantial evidence, is against the weight of the evidence, or the court has erroneously declared or applied the law. Id. at 32.

In its first point on appeal, Farmland asserts that the oral revocation was invalid in that both the statute of frauds and the agreement itself required that any modification of this guaranty be in writing. In its second point, Farmland contends that Mr. Bittner was not entitled to plead equitable estoppel because he failed to read the agreement, which clearly states that any revocation of the guaranty had to be in writing. Because these arguments are interrelated, we consider them together.

The doctrine of equitable estoppel seeks to foreclose one from denying his own expressed or implied admission that has, in good faith and in pursuance of its purpose, been accepted and relied upon by another. Lake St. Louis Community Ass'n v. Ravenwood Properties, Ltd., 746 S.W.2d 642, 646 (Mo.App.1988). There are three essential elements to such a claim: (1) an admission, statement, or act inconsistent with the claim afterwards asserted and sued upon; (2) action by the other party on the faith of the admission, statement, or act; and (3) injury to such other party, resulting from allowing the first party to contradict or repudiate the admission, statement, or act. Missouri Highway and Transp. Comm'n v. Myers, 785 S.W.2d 70, 73 (Mo. banc 1990).

The doctrine of equitable estoppel is not a favorite of the law and will not be applied lightly. State ex rel. Sprouse v. Carroll County Comm'n, 889 S.W.2d 907, 911 (Mo.App.1994). It can only be used when each element clearly appears, and the burden of proof is upon the party asserting it to establish the essential facts by clear and satisfactory evidence. Lake St. Louis, 746 S.W.2d at 646.

The trial court found that Mr. Bittner acted reasonably when he requested of Mr. Klug that he be released from the agreement and in relying on Mr. Klug's statement to him that he had, in fact, been released. The court concluded that this reasonable, detrimental reliance required that Farmland be equitably estopped from asserting the statute of frauds in an effort to recoup its losses for credit extended to South Branch after Mr. Bittner had been told that he had been released from the agreement.

However, one cannot set up another's act or conduct as the ground of an estoppel when he knew or had the same means of knowledge as the other to the truth. Sprouse, 889 S.W.2d at 911. There can also be no estoppel when acquiescence by all concerned is due to a common mistake. Sutorius v. Mayor, 350 Mo. 1235, 170 S.W.2d 387, 396 (1943).

In this case, Mr. Bittner had the...