International Plastics Development, Inc. v. Monsanto Co.

• Citation: 433 S.W.2d 291
• Decision Date: 13 May 1968
• Docket Number: No. 53148,53148
• Parties: INTERNATIONAL PLASTICS DEVELOPMENT, INC., et al., Appellants, v. MONSANTO COMPANY, Respondent.
• Court: United States State Supreme Court of Missouri

Page 291

433 S.W.2d 291

INTERNATIONAL PLASTICS DEVELOPMENT, INC., et al., Appellants, v. MONSANTO COMPANY, Respondent.

No. 53148.

Supreme Court of Missouri, En Banc.

May 13, 1968.

Dissenting Opinion Nov. 12, 1968.

Guilfoil, Caruthers, Symington, Montrey & Petzall, Gerald M. Smith, Gordon G. Hartweger, Darold E. Crotzer, Jr., St. Louis, for (plaintiffs) appellants.

E. J. Putzell, Jr., John M. Bray, Coburn, Croft, Kohn & Herzog, Richmond C. Coburn, Thomas L. Croft, Terrence L. Croft, St. Louis, for (defendant) respondent.

BARRETT, Commissioner.

International Plastics Development is a domestic corporation with eight stockholders. It was engaged, according to the allegations of its petition, in the business of 'promoting and selling' a building industry product called 'Sculpt-Crete,' a compound of various materials 'which molded a dimensional surface to backing material such as concrete, plywood, masonite and other building materials.' The principal stockholders, owners of over eighty per cent of the stock, and the moving spirits of the corporation were Close, Gittins and Morrill. Monsanto Company is the well-known chemical manufacturer based in St. Louis.

In June 1962, at the request of Monsanto, International submitted samples of its product for 'examination, testing and evaluation.' Subsequently International furnished Monsanto its 'patent applications for analysis and evaluation.' Thereafter Monsanto 'undertook negotiations' (emphasis supplied) with International and its officers, Close and Gittins, the 'objective of these negotiations' was the acquisition by Monsanto of all of International's stock and for a period of time the personal services of Close and Gittins. These negotiations culminated in this three-count action for damages in excess of a half-million dollars by International, Close and Gittens personally, and all International stockholders against Monsanto. The trial court, after sustaining motions to dismiss all three counts for failure to state claims upon which relief could be granted (Civil Rule 55.33, V.A.M.R.), entered final judgments against the plaintiffs and they have appealed, thus presenting the question of whether the allegations of either of the counts, upon any theory, states a cause of action.

In the first count of their petition the plaintiffs allege that on November 6, 1962, 'following the aforesaid negotiations,' the parties 'entered into an oral agreement' the terms of which in the main were fourfold: one, that International agreed to sell and Monsanto agreed to buy International's capital stock for $250,000.00 to be paid from sales of Sculpt-Crete; two, Monsanto assumed International's debts of $30,000.00; three, Monsanto agreed to employ Close at an annual salary of $15,000.00 and, four, employ Gittins as a consultant at $100.00 per day. The plaintiffs charge that despite their demands Monsanto failed and refused to perform its obligations under the agreement with the consequence that International lost the opportunity to promote and franchise Sculpt-Crete to its damage of $500,000.00, that the eight individual stockholders lost the agreed price of their stock, approximately $250,000.00, and Close and Gittins lost $60,000.00 and $45,000.00, respectively.

The parties are agreed that the court dismissed this count of plaintiffs' petition upon the theory that on its face it pleaded an oral contract falling within and therefore barred by the statute of frauds. The parties are not in agreement, however, as to which statute of frauds is specifically applicable. It probably makes no difference in the end result. Section 432.010 requires 'any contract' or 'any agreement that is not to be performed within one year But, as indicated, the specifically applicable statute of frauds is not the controlling factor, the appellants assert that they have alleged all the elements of a cause of action for breach of a contract (Missouri Military Academy v. McCollum, Mo.App., 344 S.W.2d 636, 637) to buy International's stock and their point is this: 'the oral contract may serve as a basis for recovery providing there is in existence sufficient proof to establish the factual existence of a contract.' In support of this statement the appellants cite Kludt v. Connett, supra, and Fredericks v. Red-E-Gas Co., Mo. App., 307 S.W.2d 709. But in the Kludt case there was in point of fact a memorandum in writing and in the Fredericks case there was a letter, a writing, which satisfied the statute of frauds. But again, this is not the appellants' point, they do not rely on a memorandum and they do not rely on part performance or any other factor that might serve to remove an oral contract from the operation of the statute of frauds. The appellants say, and this is their point: 'The Statute of Frauds does not require a written contract; it requires only, as one way of making an oral contract enforceable, that evidence be provided at trial in writing to establish the existence of such contract.' Under this statement, and under the express terms of the commercial code, the appellants assert that the statute of frauds 'contemplates trial of the issue.' In this connection it is said that the statute of frauds is an affirmative defense (Civil Rule 55.10) and that under Missouri law 'oral contracts may very well form the basis of recovery providing the proof at the trial is sufficient to establish that such a contract was in fact entered into.' The appellants' argument may be but another way of saying that in no event may a trial court sustain a demurrer or motion to dismiss a petition merely because on its face it alleges an oral contract falling within the statute of frauds.

from the making thereof' to be 'in writing and signed by the party to be charged therewith.' While the dates are not alleged with particularity it appears from the allegations with respect to Close and Gittins and from their prayers for relief that their employment contracts, if not at will, were not to be performed within a year and, therefore, unless removed for some reason from the ban of the statute were required to be in writing. Campbell v. Sheration Corp. of America, 363 Mo. 688, 253 S.W.2d 106; Godwin v. Dinkler St. Louis Management Corp., Mo., 419 S.W.2d 70, 72. Section 432.020 provides that 'no contract for the sale of goods, wares and merchandise for the price of thirty dollars or upward, shall be allowed to be good * * * unless some note or memorandum in writing be made of the bargain, and signed by the parties to be charged with such contract.' In Kludt v. Connett, 350 Mo. 793, 168 S.W.2d 1068, 145 A.L.R. 1014, a case relied on by the appellants, the court said, 'It is undisputed that this section (432.020, RSMo 1959) covers the sale of corporate stock.' See also Houston v. Mahoney, Mo.App., 219 S.W. 128. The appellants say that the contract is governed by the Uniform Commercial Code, RSMo 1959 Supp. Sec. 400.8--319, 'a contract for the sale of securities is not enforceable by way of action or defense unless (a) there is some writing signed by the party against whom enforcement is sought.' But the plaintiffs allege a contract of November 6, 1962, part of which was from that date 'until the date of closing, January 1, 1963' and by its own terms the Uniform Commercial Code 'shall become effective on the first day of July, 1965. It applies to transactions entered into and events occurring after that date.' Laws Mo.1963, p. 637.

The basic difficulty with the appellants' contention is best illustrated by a case upon which they rely, Major v. St. Louis Union Trust Co., Mo.App., 64 S.W.2d 296. There the court sustained a demurrer to plaintiff's petition which alleged an 'oral agreement' or option 'for the purchase of certain property.' On demurrer the defendant On the other hand the respondent Monsanto relies on the rule enunciated in 1845: 'Where the complainant in the bill shows a contract not in writing, and so expressly describes it, the defendant may demur; and unless the facts set forth in the bill are sufficient to withdraw the contract from the operation of the statute, the demurrer must prevail.' Chambers v. Lecompte, 9 Mo. 575, 577; State ex rel. Uthoff v. Russell, Mo.App., 21o S.W.2d 1017; 37 C.J.S. Statute of Frauds § 267, p. 789; 49 Am.Jur. (Statute of Frauds) Sec. 611, p. 919. The Missouri cases and the instances in which the statute of frauds may and may not be invoked by motion to dismiss are collected in the annotation 158 A.L.R. 89, 'Manner of pleading statute of frauds as a defense.' It is unnecessary to further demonstrate from the allegations, on its face and without exception the petition alleges an oral contract falling within the statute of frauds and the mere claim that under the statute the question is solely one of proof on trial after an affirmative plea is not sufficient to remove the cause from the force of a motion to dismiss for failure to state a claim upon which relief can be granted.

claimed that the contract was for the sale of land and therefore was unenforceable under the statute of frauds. The court observed that the statute of frauds did not 'render a contract void, but goes merely to the remedy, and as such is a rule of evidence. It is an affirmative defense, and may be waived.' But what the appellants overlook is this, l.c. 297, 'In the instant case plaintiff's petition alleges an oral agreement, but nothing appears in the petition to indicate that the contract and agreement upon which the suit is brought has any connection with, or pertains to, 'the sale of lands,' * * * and therefore, even though plaintiff has pleaded an oral contract, the law presumes its validity, and plaintiff is not called upon to affirmatively show in his petition that the contract is without the statute of frauds. That it is within the statute of frauds is a matter of defense, but that defense cannot be invoked by demurrer.' (Emphasis supplied.) See also Sherwood v. Saxton, 63 Mo. 78, 79; Phillips v....