Hamra v. Boone County Development Co.

• Decision Date: 20 May 1980
• Docket Number: No. 41265,41265
• Parties: Sam F. HAMRA, Jr., Respondent, v. BOONE COUNTY DEVELOPMENT COMPANY, a Missouri Corporation, Terry Porter, Paul Medley, and Ed Scott, Appellants.
• Court: Missouri Court of Appeals

Page 721

602 S.W.2d 721

Sam F. HAMRA, Jr., Respondent, v. BOONE COUNTY DEVELOPMENT COMPANY, a Missouri Corporation Terry Porter, Paul Medley, and Ed Scott, Appellants.

No. 41265.

Missouri Court of Appeals, Eastern District, Division Four.

May 20, 1980.

Motion for Rehearing and/or Transfer to Supreme Court Denied

June 20, 1980.

Application to Transfer Denied Sept. 9, 1980.

Carl F. Sapp, Sapp, Woods & Orr, Columbia, for appellants.

David Collins, Collins & Grimm, Macon, Brett & Erdel, Mexico, for respondent.

SMITH, Presiding Judge.

Defendants appeal from a judgment against them for $57,224 actual damages and $14,550 prejudgment interest.

Plaintiff's cause of action is based upon a contract with defendants whereby the latter agreed to pay plaintiff $25,000 if defendants obtained a franchise for a Hilton Motor Inn in Columbia, Missouri, an additional $25,000 if the inn was built, and "2% of construction costs for any motor inn facility which exceeds 100 rooms." Execution of the contract was conceded, as was the obtaining of the franchise, erection of the inn, that the inn contained 132 rooms and that defendants had refused to pay plaintiff the amounts called for in the contract. Defendants based their defense (and a counterclaim) upon alleged misrepresentations by plaintiff that he had a franchise for the inn in Columbia or that he had a "firm commitment" for one. The jury found for plaintiff on his claim and on the counterclaim and returned a verdict for $57,224. The court added to this prejudgment interest of $14,550.

Some factual background is required to understand defendants' contentions of error. Sam Hamra, a lawyer in Springfield, Missouri, became interested in the development of Hilton Motor Inns in Missouri. He acquired this interest through a friend, Dan O'Connell. O'Connell had become acquainted with Jim Cassell in the spring of 1971. Cassell was the midwest regional manager of Hilton Inns. He was the top man in the midwest region and answered directly to a senior vice-president of the company. Hilton was on an expansion program and Cassell was actively seeking to obtain quality franchises for Hilton Inns in the midwest, including Missouri. O'Connell had obtained franchises for Hilton in Michigan and Missouri and had worked closely with Cassell on those franchises and on others which he subsequently obtained. Hamra and O'Connell and a third party, Tom Kauflin, affiliated themselves to seek to obtain a franchise in Columbia, Missouri as well as some other Missouri cities. Hamra advised O'Connell that if he was going to spend his time and money in exploring these projects he needed assurances that Hilton would not allow someone else to go around Hamra and obtain the franchise. O'Connell, in Hamra's presence, called Cassell in Chicago and advised Cassell of Hamra's concern. In the conversation O'Connell asked Cassell if Hamra had the commitment for Columbia and Jefferson City. O'Connell testified that Cassell stated, "Yes, tell him he does not have to worry" and that O'Connell, immediately relayed this statement to Hamra. While still on the telephone and while holding the phone so Cassell could hear, O'Connell told Hamra "you have Mr. Cassell's firm commitment." Defendants objected to this testimony as hearsay. O'Connell further testified that when O'Connell was exploring the possibility of a franchise in a given city Cassell would make oral commitments that O'Connell would obtain the franchise if one was granted and that Cassell always kept his word.

After O'Connell's conversation with Cassell in Hamra's presence, Hamra devoted substantial time to exploring possibilities for a franchise in Columbia. He communicated directly and frequently with Cassell in these efforts. Ultimately Hamra was contacted by defendant Medley who expressed the desire of himself and his coventurers, Scott and Porter, also a lawyer, that Hamra examine a parcel of land owned by them as a possible site for a Hilton Inn in Columbia. At about this same time Hamra met Cassell personally for the first time at a party in Springfield and again raised his concern that after he had devoted his "time and effort on working on building Hilton Inns in other towns that you are not going to go around me for another group after I go in and do this work." Cassell replied to this: "Sam, this is the way I work with Dan and Tom, and you have my firm commitment for a franchise for the towns that you are working on." " That is something you don't need to worry about."

Following this conversation Hamra had several contacts with defendants concerning their site and in February arranged for Cassell to go to Columbia to examine that site as well as others. Cassell thereafter suggested that a feasibility study be conducted only on defendants' site. In March defendants began a course of conduct which inferentially at least, indicated an attempt to bypass Hamra and deal directly with Cassell. Hamra's associates at that stage indicated their lack of interest in continued dealings with defendants and Hamra bought out his associates' interest in Royalty International, the development and management company they had formed to develop Hilton Inns. Cassell continued dealing with and through Hamra. When defendants would not respond directly to Hamra he advised them in two letters that he had a "firm commitment" for the Hilton franchise in Columbia and would look for other sites if defendants continued to ignore him. Copies of these letters were sent by Hamra to Cassell. Defendants then began working with Hamra. Although the original discussions between Hamra and defendants had contemplated a lease of defendants' land to Hamra's company with Hamra to develop and manage the inn, in April defendants told Hamra they were going to develop the inn and he would not be a part of their development and management company. Further discussions ensued resulting in the execution on April 26, 1972, of the contract upon which suit was brought. In that contract Hamra agreed to cease any attempts to develop a Hilton Inn in Columbia and to endorse the application of defendants for a franchise. He did both and defendants obtained the franchise and constructed the Hilton Inn. Cassell died sometime prior to the trial.

Defendants' theory at trial was that Hamra misrepresented that he had a franchise for the Hilton Inn in Columbia or misrepresented that he had a firm commitment for one, and that these misrepresentations were the basis upon which defendants executed the contract. Hamra denied having represented he had a franchise, admitted having represented that he had a firm commitment for one, but denied that that representation was false.

Defendants' first contention is that the court erred in allowing the testimony concerning the telephone call between Cassell and O'Connell in which Cassell stated that Hamra had his firm commitment for a franchise in Columbia. Defendants contend that this testimony was hearsay. It was not. An essential element of a charge of misrepresentation, whether asserted as a claim or a defense, is that the representation was known to be false or was made without knowledge of its truth or falsity. Latta v. Robinson Erection Co., 363 Mo. 47, 248 S.W.2d 569 (Mo. banc 1952) (2). Whether, therefore, Hamra did or did not have a "firm commitment" for a franchise, evidence that he reasonably believed he had one was pertinent to the issue being tried. Cassell's position with Hilton was such that Hamra could reasonably believe he had a commitment if Cassell told him he did. Cassell's statement to O'Connell, which was immediately transmitted to Hamra, was relevant because it went to Hamra's reasonable belief of the truth of his representation. The fact that the statement was made and was transmitted to Hamra was relevant without regard to the truth of what Cassell said. Where a statement of a third party is offered because of the fact that the statement was made and is not offered for the truth of the statement, it is not subject to a hearsay objection. Bond v. Wabash Railroad Company, 363 S.W.2d 1 (Mo.1962) (3, 4). The court did not err in allowing the testimony.

Defendants' second contention involves a similar claim concerning a document furnished by Cassell to Hamra in April 1972, giving an estimated range of operating results for a Columbia franchise. Again, the document was not offered for the truth of its contents, but to establish that Cassell, as late as April, was dealing exclusively with Hamra in the development of the Columbia franchise. It was not error to admit that document into evidence. In addition, defendants have failed to preserve the point. The objection at trial was the general objection of irrelevancy without explanation. Such an objection preserves nothing. Teters v. K. C. Pub. Serv. Co., 300 S.W.2d 511 (Mo.1957) (2). On appeal and in the motion for new trial the exhibit is challenged as hearsay. That objection was not made at trial and defendants may not now premise error on a different ground. Browning v. City of St. Louis, 384 S.W.2d 868 (Mo.App.1974).

Defendants' next contention is that the court erred in giving plaintiff's converse instruction on defendants' counterclaim because it improperly used the words "if you do not believe" and used a conjunction to separate the two acts of fraud. We have considerable doubt that even if error were present we could find prejudice. The challenged converse arose on the counterclaim. Plaintiff's claim and defendants' counterclaim were mutually exclusive. No error is claimed in the instructions on plaintiff's claim so the jury's finding for plaintiff on his claim would preclude recovery by defendants on their counterclaim. At any rate we find no error.

Defendants' instruction on the counterclaim directed a verdict for defendants if the jury found (among other things) that plaintiff "represented that he had a Hilton Inn franchise or . . . represented that he had a firm commitment for a...