Hawkins v. Mall, Inc.
| Decision Date | 08 September 1969 |
| Docket Number | No. 52688,No. 1,52688,1 |
| Parties | Robert L. HAWKINS and Peggy J. Hawkins, Plaintiffs-Appellants-Respondents, v. The MALL, INC., Lee F. Sutliffe, Archie W. Eoff, Barbara Eoff, Southern Commercial and Savings Bank, and S & G Lessors, Inc., Defendants-Appellants-Respondents, and Max W. Lilley, Trustee, William H. Harrison, Warren H. Wemhoener, Republic Life Insurance Company, Title Insurance Corporation of St. Louis, First National Bank of St. Louis, Missouri, Mid-Continent Investment Company, Sam Dickey, Trustee, R. W. Hawkins, Sandra Ecker, and Pendleton Goodall, Jr., Trustee, Defendants-Respondents |
| Court | Missouri Supreme Court |
Joseph S. Levy, Paul Margolis, Jr., Frank B. Reiser, Levy & Craig, Kansas City, for plaintiffs-respondents, Robert L. Hawkins and Peggy J. Hawkins.
Neale, Newman, Bradshaw & Freeman, Flavius B. Freeman, Jerry L. Redfern, Springfield, for defendants-appellants, Archie W. Eoff and Barbara Eoff.
White & Dickey, Sam Dickey, Springfield, for appellants.
Lilley & Cowan, Max W. Lilley, Springfield, for defendant-appellant, The Mall, Inc.
Ziercher, Tzinberg, Human & Michenfelder, Erwin Tzinberg, Clayton, Mann, Walter, Burkhardt, Weathers & Schroff, C. Wallace Walter, Springfield, for defendants-respondents, Max W. Lilley, Trustee, Warren H. Wemhoener, Trustee, Republic National Life Ins. Co., Title Ins. Corp. and First National Bank in St. Louis.
WELBORN, Commissioner.
Plaintiffs Robert L. Hawkins and his wife, Peggy, owned the west 66 feet of Lot 4 of Davis Place in the City of Springfield. They had a 30-room motel on the lot, operated under the name 'The Hawks Motor Inn.' Defendants Archie Eoff and his wife, Barbara, owned Lots 1 and 2 of Davis Place, on which they had a restaurant and cocktail lounge known as 'Archie's Southern Mansion.'
In the latter part of 1961, Hawkins and Eoff began talking about a new motel restaurant and cocktail lounge on their properties. Hawkins had previously caused Southway, Inc. to be formed, a corporation in which the Hawkinses and their attorney, Wayne Walker, were the shareholders. The name of the corporation was later changed to 'The Mall, Inc.' Hawkins and Eoff agreed to use that corporation, then inactive, as the vehicle for their proposed enterprise. In February, 1962, the Hawkinses and Eoffs acquired for $60,000 Lot 3 of Davis Place. This lot was between the properties the parties owned in Davis Place. Hawkins and Eoff each contributed $10,000 to the purchase price and signed a mortgage for the $40,000 balance. Title to Lot 3 was taken in The Mall, Inc.
In July, 1962, Hawkins and Eoff signed a handwritten agreement on their enterprise, which stated, in part:
'Each party hereby agrees to build thru the Land Corp. a Cocktail Lounge, Restaurant and Motel * * *.'
A lease to the Turner property was entered into by The Mall, Inc., on July 31, 1962, with the Eoffs and Hawkinses as guarantors. Otherwise the July 26th agreement was not carried out.
According to Eoff, in August, 1962, the parties entered into a new agreement, in writing, but subsequently lost. According to Eoff, the terms of the agreement were that the interests of the parties in Lots 1, 2, 3 and 4 were to be transferred to the corporation, free of encumbrances, and Eoff would receive 51% of the stock and Hawkins 49%.
On October 2, 1962, a meeting of The Mall's board of directors was held in the office of attorney Walker. Walker resigned as director and Eoff was elected to replace him. The minutes of the meeting recited:
'The Chairman further advised that Archie Eoff had purchased 1500 shares of common stock in the corporation and had paid for same by transfer of certain real estate and other assets to the corporation.
'The Chairman advised that Robert L. Hawkins and Peggy J. Hawkins, his wife, had purchased 1500 shares of common stock in the corporation and had paid for same by transfer of certain real estate and other assets to the corporation.
'Upon motion duly made and seconded it was unanimously agreed that the Officers of the Board of Directors should issue the necessary stock certificates and show same issued upon the records of the corporation and that all stock certificates previously issued should be cancelled and placed in the Permanent Stock Record Book reflecting such cancellation.
'It was further decided that the Officers of the Corporation should secure from the said Archie Eoff and Robert L. Hawkins all required deeds of conveyances and other instruments of writing reflecting the transfer of real estate or other assets to the corporation in payment of the stock sold to them.'
A shareholders' meeting was held, on the same date, after the directors' meeting, at which resolutions to the same effect were adopted. The stock was not actually issued. No conveyances to The Mall, Inc. occurred at that time. The minutes of the meetings, prepared near the date of the meetings, were not signed until a year later.
In February, 1963, the Hawkinses and Eoffs purchased Lot 5 of Davis Place for $50,000. Each contributed $10,000 of the purchase price and joined in a note secured by a mortgage for the balance.
In March, 1963, a $500,000 loan was negotiated with Farm and Home Savings and Loan Association to finance the construction of a new restaurant and cocktail lounge and a 100-room motel with which The Hawks Motor Inn was to be operated. The note evidencing the debt and the deed of trust securing it were executed by The Mall, Inc., and the Eoffs and Hawkinses, individually. The deed of trust was for Lots 1, 2 and 3, and the west 1/2 of Lot 4. On the latter, the deed of trust was second to a deed of trust held by Systematic Savings and Loan Association, given to secure a $60,000 obligation of the Hawkinses.
The construction project got under way, with Eoff and Hawkins continuing to operate the Southern Mansion and The Hawks Motor Inn, respectively, for their individual accounts. Differences arose over the joint operation and, on March 20, 1963, the Hawkinses presented Eoff with a 'Buy or Sell Agreement or 50--50 Basis.' It provided that, until May 20, 1963, either party would have the right to buy out the other for $235,000, less existing loans, 'or Mr. Eoff may elect to proceed with the Hawkins on a 50--50 basis.'
On May 24, 1963, the Eoffs executed a quitclaim deed to The Mall, Inc., for Lots 1 and 2 of Davis Place. The deed recited that it was 'for the purpose of changing title only.'
Eoff was unable to accept the Hawkinses' offer to sell their interest in the enterprise, but with their disagreement continuing and with the construction cost obviously going to run in excess of the Farm and Home loan, Eoff sought to interest others in the project. Mr. Glenn Peterson, a representative of a company trying to sell furnishings for the new motel, knew of the differences between Hawkins and Eoff and suggested to Eoff that Mr. Lee F. Sutliffe of St. Louis might be interested in the project. Sutliffe had connections with a Lamplighter motel 'chain,' operating in several cities. Peterson called Sutliffe who expressed interest in the project and asked Eoff to meet him at the Springfield airport on Sunday, July 21, 1963. Eoff did so and Sutliffe flew to Springfield and obtained information which the architect had prepared on the cost of completing the job.
Sutliffe was associated with Dr. A. R. Sofio, a dentist in Omaha, Nebraska, in ownership of the stock of Anlee Investment Company, a Nebraska corporation. After getting data from Eoff, Sutliffe flew to Omaha and discussed the project with Doctor Sofio. On July 31, 1963, Sutliffe, accompanied by Doctor Sofio, returned to Springfield. They were met at the airport by Eoff who took them to The Hawks Motor Inn and introduced them to the Hawkinses. Negotiations began with the Hawkinses. Eoff was present briefly, but not for the greater part of the time. The negotiations resulted in an agreement which Sutliffe put in writing. The agreement was to enter into a formal agreement along the following lines:
'The purchaser, Anlee Investment Company, a Nebraska Corporation, will purchase the property known as The Hawks Motor Inn, 1839 East Sunshine, Springfield, Missouri, together with all of the stock and holdings of The Mall, Inc., a Missouri Corporation owned by Robert L. Hawkins and Peggy J. Hawkins, husband and wife, of Springfield, Missouri, according to the following terms.
'A. Purchase price to be $210,000.00, payable $50,000.00 in cash and the balance as follows:
'(1) Cash on closing $50,000.00;
'(2) Assume First Mortgage $60,000.00 subject to adjustment;
'(3) Note secured by second mortgage and personal endorsement $100,000.00 payable in 25 equal quarterly installments of $4,000.00 each, plus interest at 6% per annum on the unpaid balance.
'B. The note of Robert L. Hawkins and Peggy J. Hawkins in favor of The Mall, Inc. in the principal sum of $40,000.00 is to be forgiven and returned marked 'paid in full."
(The $40,000 note of the Hawkinses to The Mall, Inc., was an advance made by the corporation, with Eoff's approval, to Hawkins around June, 1963.)
The document was signed by the Hawkinses and Doctor Sofio signed on behalf of Anlee, 'Purchaser,' as its president, and Sutliffe as its executive vice-president. Above the execution by Anlee appeared the word 'Acknowledged' and below that word the signature 'Archie Eoff.'
Sutliffe returned to St. Louis. Having had legal training, he prepared a formal contract between Anlee Investment Company and the Hawkinses. The contract called for...
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