Henty Const. Co., Inc. v. Hall, 55474

• Citation: 783 S.W.2d 412
• Decision Date: 22 August 1989
• Docket Number: No. 55474,55474
• Parties: HENTY CONSTRUCTION COMPANY, INC., Appellant/Cross-Respondent, v. M. Thomas HALL and Sandra Hall, Respondents/Cross-Appellants.
• Court: Court of Appeal of Missouri (US)

Page 412

783 S.W.2d 412

HENTY CONSTRUCTION COMPANY, INC., Appellant/Cross-Respondent, v. M. Thomas HALL and Sandra Hall, Respondents/Cross-Appellants.

No. 55474.

Missouri Court of Appeals,

Eastern District,

Division Three.

Aug. 22, 1989.

Richard J. Magee, Daniel J. McAuliffe & Associates, Clayton, for appellant/cross-respondent.

Homer N. Mastorakos, Mastorakos & Dunne, Chesterfield, for respondents/cross-appellants.

HAMILTON, Judge.

Henty Construction Company, Inc. (hereinafter, Henty) sued Mr. M. Thomas Hall (hereinafter, Thomas Hall) and his wife, Mrs. Sandra K. Hall (hereinafter, Sandra Hall), for breach of their unconditional guaranty on a promissory note. The Halls filed a counterclaim alleging breach of contract and fraud in the inducement. Following trial, the jury returned a verdict in favor of Henty and awarding it damages in the amount of $34,000. Both sides appeal.

In its appeal, Henty contends the trial court erred in overruling its Motion for Judgment Notwithstanding the Verdict. In their cross-appeal, the Halls assert that the trial court erred (1) in sustaining Henty's Motion for Directed Verdict with respect to Count II of their counterclaim alleging fraud in the inducement and in refusing to submit to the jury an instruction on the affirmative defense of fraud in the inducement; (2) in overruling their objection to evidence of interest accruing on the promissory note after its date of maturity and, thereafter, in refusing to submit a withdrawal instruction concerning post-maturity interest; (3) in overruling their objection to evidence and to arguments by Henty's counsel regarding attorney's fees and costs incurred in connection with Henty's suit on the guaranty and in refusing, thereafter, to submit a withdrawal instruction concerning such evidence; (4) in overruling their objection to the testimony of two witnesses called by Henty on its claim for attorney's fees and costs; and (5) in overruling their Motion for Directed Verdict as to Sandra Hall. We affirm in part, reverse in part, and remand.

In 1973, Thomas Hall, an architect, contemplated building a professional condominium to offer physicians an opportunity to own rather than rent office space. Shortly thereafter, he incorporated Northwest Professional Condominium Corporation (hereinafter, Northwest) with Jack T. Kennebeck for the purpose of designing and constructing such office space. Thomas Hall became president and Jack Kennebeck became secretary of Northwest.

In 1974, Henty, a general contractor engaged in the construction of commercial buildings, contracted with Northwest to build a single-story medical office building. Northwest subsequently failed to make payments for certain authorized change orders.

Joseph Henty, president of Henty, and Thomas Hall initially met on September 11, 1975, to discuss payment of the change orders by Northwest. In return for an additional six months in which to pay for these change orders, Mr. Henty requested that Northwest sign a promissory note for the balance due. He mentioned that failure to pay the change orders would necessitate filing a mechanics lien. Mr. Hall testified that he disagreed with the amount requested by Henty, and he also informed Mr. Henty he was unable to make payments on the note. Although disputed by Mr. Henty, Mr. Hall further testified the parties agreed that Henty would refrain from filing a mechanic's lien and Mr. Hall would make business referrals to Henty in lieu of making payments on the note with his funds. Mr. Hall signed the note.

On September 17, 1975, Mr. Henty requested Mr. Hall to sign another promissory note with terms identical to the first and to obtain Mr. Kennebeck's signature on it because the signatures of both officers were necessary on a corporate note. In addition, Mr. Henty requested that Thomas and Sandra Hall execute a personal guaranty for payment of the note.

On September 17, 1975, Northwest made and delivered a promissory note to Henty in the amount of $33,315.85 payable within six months with interest at nine percent per annum. Payment of the note was unconditionally guaranteed by Thomas and Sandra Hall. Northwest failed to pay the note at maturity.

Thomas Hall proceeded to refer business to Henty, ceasing to do so when this litigation was filed.

On January 10 and September 19, 1978, Henty made written demand upon Thomas Hall for payment of the promissory note. Henty's attorney also made written demand upon the Halls for payment on March 4, 1982. The Halls dispute that demand for payment was made by Mr. Henty prior to suit.

During this period, Northwest filed for relief under the bankruptcy code. Thomas and Sandra Hall thereafter filed a proof of claim with the bankruptcy court, as guarantors, on behalf of Henty. On October 3, 1983, the bankruptcy court allowed this claim in the amount of $33,999.14, which included $33,315.85 for principal on the promissory note, and $5,683.32 for interest accrued as of April 19, 1978, the date Northwest filed for bankruptcy. On October 10, 1983, by order of the bankruptcy court on October 3, Henty received a dividend of $18,758.76.

Henty received no further payments on the note. It subsequently referred collection of remaining amounts due under the guaranty to its attorneys.

At trial, Henty adduced evidence to show a total of $54,782.73 due under the guaranty, representing $20,240.41 for principal, $23,626.32 for interest, and $10,916.00 for attorney's fees. The Halls disagreed with this amount and the allocation of it. The jury returned a verdict in favor of Henty on its claim under the guaranty and against the Halls in their counterclaim for breach of contract. It awarded Henty $34,000 without allocating this award among principal, interest, and attorney's fees.

As its sole point on appeal, Henty asserts that the trial court erred in overruling its Motion for Judgment Notwithstanding the Verdict. In reviewing such action by the trial court, we review the evidence, and all reasonable inferences therefrom in the light most favorable to the opposing party, giving the latter the benefit of all reasonable inferences drawn from the evidence, and disregarding the movant's evidence except as it aids the opposing party's case. Wells v. Orthwein, 670 S.W.2d 529, 532 (Mo.App.1984).

Although the parties disagreed on numerous issues, both legal and factual, the jury's verdict resolved all factual issues. By returning a verdict in favor of Henty on its claim for breach of the guaranty, the jury implicitly rejected the Halls' five affirmative defenses. ¹ In addition, it rejected the Halls' counterclaim alleging breach of contract. At the same time, the jury assessed damages of $34,000, less than the $54,782.73 requested by Henty.

In Campbell v. Kelley, 719 S.W.2d 769 (Mo. banc 1986), the Supreme Court, in reviewing a similar suit on a promissory note, stated as follows:

Once the jury determined the only issue submitted in favor of plaintiffs, the amount of principal and interest due became a mathematical calculation. Home Trust Co. v. Josephson, 339 Mo. 170, 95 S.W.2d 1148 (1936). When the amount of damages is not in controversy and the defenses fail as a matter of law, the trial court may direct a verdict for the plaintiff. Id. Although the Home Trust case dealt with a situation where the defenses failed as a matter of law, the same result may follow where the jury makes a finding in favor of plaintiff on the issue of liability but awards less damages than mandated under the agreement. Polen v. Kansas City Chip Steak Co., 404 S.W.2d 416 (Mo.App.1966); Allison v. Mountjoy, 383 S.W.2d 314 (Mo.App.1964). Where the note contains the rate of interest the court may calculate the interest due on the principal. Hamra v. Boone County Development Co., 602 S.W.2d 721 (Mo.App.1980). The terms of the note also provided for the award of attorney's fees, and plaintiffs presented undisputed evidence as to the amount of their attorney's fees. The court, as an expert on attorney's fees, may award reasonable amounts as a matter of law. Oberkrom v. Oberkrom, 608 S.W.2d 449 (Mo.App.1980); Carondelet Savings & Loan Association v. Boyer, 595 S.W.2d 744 (Mo.App.1980).... Once the jury found for plaintiffs, their damages in the form of principal, interest and attorney's fees followed as a matter of law. The court may calculate these amounts and enter judgment.

Id. at 771-72.

The case at bar tracks the situation in Campbell. Once the jury decided the liability issues raised by the Halls' affirmative defenses and counterclaim, the remaining issues in dispute are matters of law. The promissory note itself contains the rate of pre-maturity interest, readily calculable by the trial court. Post-maturity interest, unspecified in the note, is also calculable as a matter of law pursuant to Section 408.020 RSMo (1986). The trial court, moreover, as an expert in the determination of attorney's fees, may award a reasonable sum as a matter of law. Finally, in view of the jury's finding of liability, no evidence or inferences therefrom disclose a dispute with respect to the amount still owing on the principal. The only payment made on the principal was $13,075.44 applied from the bankruptcy dividend. Accordingly, the judgment of the trial court is reversed on this point and remanded for calculation of principal, interest, and attorney's fees.

In their cross-appeal, the Halls initially contend the trial court erred in sustaining Henty's Motion for Directed Verdict with respect to Count II of their counterclaim that alleged fraud in the inducement and in refusing to submit to the jury an instruction on the affirmative defense of fraud in the inducement. At trial, the Halls requested submission of MAI 32.22 [1978 Revision] Modified, which set forth their affirmative defenses, including fraud in the inducement. Although the trial court submitted an affirmative defense instruction, it altered the requested instruction by omitting the...