Historic Hermann, Inc. v. Thuli

• Decision Date: 05 June 1990
• Docket Number: No. 57354,57354
• Citation: 790 S.W.2d 931
• Parties: HISTORIC HERMANN, INC., A Not-For-Profit Corporation, Plaintiff-Appellant, v. Mildred C. THULI, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 931

790 S.W.2d 931

HISTORIC HERMANN, INC., A Not-For-Profit Corporation Plaintiff-Appellant, v. Mildred C. THULI, Defendant-Respondent.

No. 57354.

Missouri Court of Appeals,

Eastern District,

Division Five.

June 5, 1990.

John Berkemeyer, Michaelene Palladino, Hermann, for plaintiff-appellant.

John Woodward, Steelville, for defendant-respondent.

JOSEPH J. SIMEONE, Senior Judge.

This is an action for specific performance for certain real property in Hermann, Missouri filed by the alleged purchaser, Historic Hermann, Inc. against respondent, Mildred C. Thuli. The appeal is by Historic Hermann, Inc. from a judgment rendered on August 18, 1989, in favor of defendant-respondent, Mildred C. Thuli. The judgment of the chancellor found that (1) since Historic Hermann, Inc. was not bound by the contract of sale because of no mutuality of obligation between the parties to this action, neither was the respondent bound thereby, and (2) even if there were a valid and binding contract between the parties for the sale of the real property, a clause in the contract constituted a condition precedent to Ms. Thuli's obligation to perform, which was neither waived nor satisfied, so that the contract did not become effective.

This is a court-tried, equity case. Our review is proscribed by the principles set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976), which requires that the judgment is to be affirmed unless there is no substantial evidence to support it, or unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. The power of the appellate court to set aside the judgment on the ground that it is against the weight of the evidence is to be exercised with caution and with the firm belief that the judgment is wrong. Under this standard of appellate review, we affirm.

This proceeding began with the filing of a petition for specific performance by Hermann Revitalization Project. An amended petition was filed on August 25, 1988 in the name of appellant Historic Hermann, Inc. The amended petition alleged that Historic Hermann, Inc. entered into a contract on October 16, 1986 for the sale of real estate owned by Mildred Thuli and that Historic Hermann acted under the name of Hermann Revitalization Project, with Patrick H. Steele, as director thereof. The amended petition alleged that the contract of sale was to be closed by November 28, 1986, but that Mildred Thuli refused to close, although requested to do so. The petition prayed that Ms. Thuli be required to execute a warranty deed.

An evidentiary hearing was held on October 3, 1988 at which the following facts were adduced.

The Hermann Revitalization Project is a coordinated community revitalization project which began in July, 1984 and is approved by the Neighborhood Assistance Program. The Project grew out of a series of meetings of concerned citizens. It is not a corporation, has no membership, and is not registered as a corporation or association with the State of Missouri. It was established by an application filed with Economic Development Agency of the Neighborhood Assistance Program. The Project renovates and rehabilitates buildings, and in general attempts to promote the City of Hermann. Patrick H. Steele is the director or manager of the Project. He worked with various individuals and organizations including the bank, the Chamber of Commerce and a winery. Steele, at one point, had a contract of employment with the Neighborhood Assistance Program with power to negotiate projects, and rent or purchase property on behalf of the Steering Committee of the Neighborhood Assistance Program. He had no employment contract with Historic Hermann, Inc.

Historic Hermann, Inc. is a corporation organized under the laws of Missouri. It authorized the preparation of several applications in its name to the Economic Development Agency of the Neighborhood Assistance Program. It also acted as "sponsor" of the Hermann Revitalization Project. It has a board of directors and a slate of elected officers.

On August 16, 1986, a contract for the sale of real estate was entered into by and between Hermann Revitalization Project, by Patrick H. Steele and Mildred C. Thuli. The sale contract was for the purchase of Ms. Thuli's property and mobile home located on First Street in Hermann. The sale price was $14,000.00. Five Hundred Dollars was deposited as earnest money. The contract was prepared by a real estate agent. A few days later, on October 21, 1986, a clause was added to the sale contract. The clause read: "Purchaser [seller?] accepts this contract subject to settlement with the Government on Flood on or before November 15, 1986." The clause was added at Ms. Thuli's request and initialed by Steele.

The Thuli property was part of the East-Wharf-East Front Street or the Kropp House Project--property adjacent to the Thuli property. The Kropp House was acquired in July, 1985 by Historic Hermann.

At an evidentiary hearing, Mr. Steele testified that the Hermann Revitalization Project was a part of Historic Hermann and that Historic Hermann is the local sponsor of the Project. He testified that the sale contract was never completed although Ms. Thuli had been requested to close the sale. He further testified that considerable work had been done on the adjacent property and money had been expended. As to the added clause, he stated that it was added in order to "see that Millie Thuli benefited from a settlement" with the government's flood relief insurance program.

Subsequent to the October 16, 1986 sale contract, two other sale contracts were prepared to accommodate Ms. Thuli and her mobile home, but these were rejected by her.

Although Steele testified that Hermann Revitalization Project is a "part" of Historic Hermann, and he frequently reported to Historic Hermann on various projects, including the Thuli project, and although Steele felt he was operating with the support and approval of the Board of Historic Hermann, the Board never approved or passed a resolution to purchase or acquire the Thuli property. Steele testified that he was "pretty sure that the Board knew that negotiations [for the purchase of the Thuli property] were under way."

Anne Steele, the wife of Patrick, is the secretary of Historic Hermann, Inc. She keeps the corporate minutes. At one Board meeting, the acquisition of the Thuli property was discussed. The minutes discuss the Thuli property, and the history of the Hermann Revitalization Project. The minutes indicate that one member of the Board explained that the Revitalization Project was "sponsored" by Historic Hermann, Inc. "to purchase properties for improvement and authorized the purchase of various properties including the Thuli property."

William E. Shrader, a member of the Board of Directors testified that he was aware of the projects and was aware of what Hermann Revitalization was doing, but was not aware, in any detail, of the purchase of the Thuli property. He was, however, aware that "purchasing maneuvers were going on."

Historic Hermann was given regular reports by the Project but did not formally approve or authorize the Thuli contract.

At the conclusion of the evidentiary hearing, the court took the matter under advisement.

After briefs were filed by the parties in July, 1989, the court entered its judgment on August 18, 1989. The judgment found in favor of Thuli, because at the time of the execution of the contract, Steele had "no specific authority" to act as agent for the plaintiff, Historic Hermann, Inc. The court said that Steele's principal, Hermann Revitalization Project is a "voluntary association of individuals working toward a common goal under the name of Hermann Revitalization Project but is not a legal entity and had no authority to bind its 'sponsor,' the plaintiff herein ..." Alternatively, the court concluded that even if there were a valid contract, the added clause relating to the settlement for flood damage to the Thuli property was a condition precedent to the seller's obligation to perform. This was not a condition the buyer could waive and all parties understood it was for Thuli's benefit. The use of the word "Purchaser" in the conditional clause was unexplainable, but it must have been a mistake on someone's part....