Goldberg v. Charlie's Chevrolet, Inc., 47630
| Decision Date | 29 May 1984 |
| Docket Number | No. 47630,47630 |
| Citation | 672 S.W.2d 177 |
| Parties | Allen G. GOLDBERG and Daniel W. Gordon, Appellants, v. CHARLIE'S CHEVROLET, INC., Respondent. |
| Court | Missouri Court of Appeals |
Gary H. Feder, Clayton, for appellants.
Andrew G. Neill, St. Louis, for respondent.
Plaintiffs (purchasers) appeal from a judgment for defendant (seller) in a suit for return of purchasers' earnest money deposit in connection with a real estate sales contract. We affirm.
Sometime in February, 1981, purchasers contacted seller concerning property for sale in St. Louis. Purchasers sought the property, formerly used as an automobile showroom and repair facility, for a home improvement/hardware store. Following subsequent discussions, purchasers presented a sale contract to seller for purchase of the property and improvements at a price of $300,000. This agreement was entered into on March 19, 1981, and provided for closing on April 30, 1981.
The contract drafted by purchasers contained a financing contingency which provided that purchasers were to receive a "satisfactory inducement resolution by the Industrial Development Authority of the City of St. Louis ... for an issuance of a tax-exempt revenue bond in the amount of $605,000 ..." by April 27, 1981 or "... this contract shall be null and void and earnest money returned to purchaser." In accordance with the terms of the contract, purchasers tendered to seller earnest deposits amounting to $6,000.00.
Securing the necessary inducement resolution provided for in the contract required the purchasers to undertake several steps, the first of which was to obtain a commitment letter from a lending institution for purchase of the tax-exempt revenue bond. Purchasers negotiated with at least seven lending institutions between February and April, 1981. In their negotiations with each institution, purchasers sought a loan "package" amounting to $1,155,000.00. This consisted of the $605,000 revenue bond and another $550,000 loan to finance start-up costs associated with the venture.
On March 19, 1981, Northland Mark Twain Bank expressed interest in financing the revenue bond for acquisition of the property, but refused to consider the additional $550,000 financing sought by purchasers. Purchasers refused to consider anything other than the package financing arrangement, and thus failed to pursue this funding option.
On or about April 27, 1981, the date that the financing contingency expired, purchasers informed seller that financing was unavailable and that the contract was, therefore, null and void. Purchasers thereafter demanded return of their earnest money deposits, which seller refused.
On appeal, purchasers allege, in effect that the court erred in entering a judgment for seller because purchasers employed reasonable efforts to obtain financing and therefore their failure to satisfy the financing contingency cancelled the contract. As this case was tried without a jury, our standard of review is well settled. On appeal, we must sustain the trial court's judgment unless there is no substantial evidence to support it; unless it is against the weight of the evidence; unless it erroneously declares the law or erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.1976).
In the present case, the purchasers possessed an implied obligation to use reasonable efforts in pursuing the financing set forth in the contract. Edward L. Bakewell, Inc. v. Kroeger, 617 S.W.2d 447, 451 (Mo.App.1981). Contrary to purchasers' claims, seller was not required to raise this issue as an affirmative defense; seller in its answer denied all allegations in purchasers' petition, including that concerning reasonable efforts to secure the loan. Therefore, at trial purchasers bore the burden of proving that they exercised reasonable efforts to obtain the loan. Id. at 451.
Here, there is substantial evidence that purchasers did not use reasonable efforts to obtain the financing called for in the contract. Allen Goldberg, one of the two purchasers, testified that he sought loans from seven financial institutions, but each time for in excess of $1.1 million. This amount included the $605,000 revenue bond set forth in the financing contingency and the additional $550,000 loan. Purchasers maintain that their discussion with seller prior to entering into the contract...
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