Hartley Realty Co. v. Casady

• Court: Missouri Court of Appeals
• Writing for the Court: PER CURIAM; BROADDUS and HUNTER, JJ., and SAM C. BLAIR
• Citation: Hartley Realty Co. v. Casady, 332 S.W.2d 291 (Mo. App. 1960)
• Decision Date: 01 February 1960
• Docket Number: No. 23043,23043
• Parties: HARTLEY REALTY COMPANY, a Corporation, Respondent, v. John CASADY, Appellant.

Page 291

332 S.W.2d 291

HARTLEY REALTY COMPANY, a Corporation, Respondent, v. John CASADY, Appellant.

No. 23043.

Kansas City Court of Appeals, Missouri.

Feb. 1, 1960.

Russell N. Pickett, Eugene E. Andereck, Phil Hauck, Pickett, Andereck & Hauck, Trenton, for appellant.

Herbert S. Brown, Trenton, for respondent.

MAUGHMER, Commissioner.

In this case there was a jury verdict for defendant on plaintiff's petition and for plaintiff on defendant's counterclaim. Judgment in accordance with the verdict was duly entered. The court thereafter set aside the judgment on the petition for defendant and entered judgment for plaintiff in the sum of $3,000. The court also enjoined defendant from operating as a real estate broker and salesman in the Grundy County area prior to June 11, 1959.

On August 30, 1950, R. E. Broyles and Carl Hartley, two young men not long out of the University of Missouri School of Agriculture, and desiring to associate together at Trenton, Grundy County, Missouri, as brokers and salesmen of real estate, incorporated the proposed business venture as Broyles and Hartley, Inc. In August, 1952, Mr. Broyles sold his entire interest in the business to Mr. Hartley. The corporate name was thereupon changed by amendment to Hartley Realty Company. Thereafter on May 24, 1956, Mr. Broyles repurchased the business. According to the record Hartley Realty Company continued to exist as a corporate entity, but in advertising and generally otherwise, Mr. Broyles operated the enterprise under the trade name of 'Bob Broyles Land and Loan Company'.

The defendant John Casady, 60 years of age at the time of trial, was a native of and had always resided in North Central Missouri. Before 1955, his business had been farming and distributor by tank wagon of petroleum products in rural areas. He had never completed the 8th grade of school and in 1955, after major surgery, determined to change to a less physically demanding occupation. He moved to Trenton, bought a home there through the Hartley Agency and planned to engage in the real estate business. Learning of this intention, Mr. Hartley invited and urged him to work for the Hartley Realty Company as a salesman. It is undisputed that Mr. Hartley told the defendant Casady that he could not be licensed as a real estate broker unless he had first served a six months' apprenticeship as a salesman working with a licensed broker. Mr. Hartley repeatedly urged Casady to become his employee and prepared a written contract therefor. In addition to setting forth the details of the proposed employment this contract provided that Casady should not engage in the real estate business in Grundy or surrounding counties within three years after termination of such employment, and carried a $3,000 liquidated damages penalty if he did so engage. Hartley continued to urge Casady to sign the contract and commence working for him. Defendant demurred and finally, on August 23, 1955, Hartley took him to the law offices of a practicing attorney in Trenton. This practicing attorney had acted as Mr. Hartley's lawyer when the business was originally incorporated but he was also the defendant Casady's nephew. He endorsed Hartley's statement that a six months' apprenticeship was a prerequisite requirement for taking the examination for a real estate broker's license. This lawyer testified at the trial. He freely admitted his error in making such statement and declared simply that he just assumed Hartley 'knew what he was talking about'. In any case, a few minutes later, defendant signed the contract and admittedly knew it contained the restriction and penalty provision.

Casady immediately thereafter entered upon his work as salesman for the plaintiff Hartley Realty Company, and was instrumental in effecting some sales. In the spring of 1956, on a chance visit to Jefferson City, Mr. Casady learned from John W. Hobbs, Secretary of the Missouri State Real Estate Commission, that it was not necessary to serve a six months' apprenticeship before being examined for a broker's license. He, therefore, in the spring of 1956, took the examination, was successful and was duly licensed. Within a few weeks after May 24, 1956, when Broyles bought the business, and on June 11, 1956, Casady quit. According to the evidence he had some discussion with Mr. Broyles about moving to Smithville, but he did not do so and almost immediately started his own real estate business in Trenton. He was at least moderately successful and received some sales commissions.

Plaintiff's petition asked judgment for the stipulated $3,000 penalty and an injunction restraining defendant from engaging in the real estate business. The defense was fraud and misrepresentation on the six months' apprenticeship issue, and a counterclaim for $1,728.50 actual damages (the sum defendant allegedly lost through having had to share his earned sales commissions with plaintiff company), and $3,000 punitive damages. The court submitted defendant's defense, that is, the issue of fraud and misrepresentation to the jury, and the jury returned its verdict for the defendant. Judgment for defendant on plaintiff's petition was duly entered. All after trial motions were overruled except plaintiff's motion for new trial as to the issues raised by its petition, its motion to set aside the verdict thereon and plaintiff's motion for directed verdict and judgment, as submitted at the close of the evidence and after verdict, were each sustained and the court entered judgment for plaintiff on Count 1 of its petition in the sum of $3,000. There was likewise a finding for plaintiff under Count 2 for injunctive relief and defendant was enjoined from engaging in the real estate business in Grundy and surrounding counties prior to June 11, 1959 (three years after his employment with plaintiff was terminated). This injunction feature which expired June 11, 1959, is, of course, now a moot question.

Defendant perfected his appeal and charges the trial court erred (1) In setting said the jury verdict, thereby ruling, as a matter of law, that plaintiff's misrepresentations, even if proved, did not amount to a valid legal defense; (2) In ruling such misrepresentations to be a misstatement of law rather than a misrepresentation of fact, and (3) In admitting the real estate salesman contract in evidence since it was not signed by authority of plaintiff's Board of Directors, but only by Hartley, the president, and that it was, therefore, the president's personal, rather than the company act.

We believe that the contract was properly received in evidence and that it was a contract of the Hartley Realty Company. We think, too, that the alleged misrepresentations were misstatments of law rather than of fact. There is really no dispute as to the facts in this case. There can be no question but that Mr. Hartley many times told defendant that he could not secure a real estate broker's license without serving the six months' apprenticeship. It is also freely admitted that the defendant refused to sign the contract until he was told by the lawyer that such was the law. It seems to us that this case must be decided by a determination as to the legal effect of such admitted misrepresentations.

'As a rule false representation, to constitute fraud, vitiating a contract,...