Investors Title Co., Inc. v. Hammonds

• Decision Date: 13 March 2007
• Docket Number: No. SC 87669.,SC 87669.
• Citation: 217 S.W.3d 288
• Parties: INVESTORS TITLE COMPANY, INC., Respondent/Cross-Appellant, v. Janice HAMMONDS, et al., Appellants/Cross-Respondents.
• Court: Missouri Supreme Court

217 S.W.3d 288

INVESTORS TITLE COMPANY, INC., Respondent/Cross-Appellant, v. Janice HAMMONDS, et al., Appellants/Cross-Respondents.

No. SC 87669.

Supreme Court of Missouri, En Banc.

March 13, 2007.

Rehearing Denied April 17, 2007.

Nelson L. Mitten, Jennifer L. Geschke, Clayton, for Respondent/Cross-Appellant.

Patricia A. Redington, Cynthia L. Hoemann, Office of the St. Louis County Counselor, Clayton, for Appellants/Cross-Respondents.

WILLIAM RAY PRICE, JR., Judge.

INTRODUCTION

St. Louis County ("County") and Janice Hammonds, the recorder of deeds ("Recorder") for County, appeal from the judgment of the trial court following a jury verdict in favor of Investors Title Company ("Investors"). Investors cross-appeals from the judgment. The judgment of the trial court is affirmed.

FACTS AND PROCEDURE

Investors is a title company that routinely records documents related to real property transactions with the Recorder. Prior to 1995, title companies would pay filing fees each time they filed documents with recorder. For example, Investors typically would send an employee to the Recorder's office several times per day to file documents. Each time, the employee would wait while a staff member of the Recorder's office filed the documents and calculated filing fees. The employee would then write a check from Investors for the amount of the filing fees.

The procedures for title companies filing documents in the County changed in 1995. Investors was told by Dan O'Leary, the Recorder at that time, that it should deliver the documents to the Recorder, along with a signed check made payable to Recorder, but with the amount of the check left blank so that the Recorder's office could fill in the total amount at the end of the day. At the close of business, Investors would receive a computer listing of the documents recorded along with a tape from an adding machine in the Recorder's office that purported to list the recording charges and the total amount filled in on the blank check.

Margaret King was employed by the County in the Recorder's office as a cashier and later as the head cashier. From 1995 to September 2001, King would routinely fill out Investor's blank checks with amounts that exceeded the actual sum due to the Recorder from Investors. She then removed cash from the cash drawer of the Recorder's office matching the amount overcharged. King concealed her theft by attaching an adding machine tape to the front of the files given to Investors that added up to the amount that she filled in the blank check each day.

The Recorder's office had a policy designed to ensure that the County received the proper amount of fees whereby the cashier and lead cashier were to check each other's work, but this policy was not followed. Instead the cashier and lead cashier divided the work by title companies. Although an examination of the computer printouts provided to Investors would have revealed the discrepancies, King's subterfuge went undiscovered for six years, until September 2001, when Investors finally did check the financial figures and immediately reported a problem to the Recorder.

The illegal activity by King ceased thereafter. During the period from 1995 to September 2001, however, King misappropriated hundreds of thousands of dollars through filling in inflated amounts on the blank checks provided by Investors to the Recorder.

King subsequently pleaded guilty to multiple counts of theft. Investors requested a refund of the amounts that it paid to the Recorder in excess of what it actually owed for recording documents during the period of King's illegal activities. The County refused to pay such a refund, and Investors initiated litigation against the Recorder in her official capacity and against the County.

The County cooperated with Investors to investigate the thefts and determine how much Investors had been overcharged. The parties disputed the applicable statute of limitations, but stipulated to the entry of exhibits that calculated the overcharges. If a three-year statute of limitations were to apply, the overcharges totaled $499,391. Alternatively, if the limitations period were five years, the overcharges totaled $727,215.

The County and Recorder filed a motion for summary judgment, which the trial court sustained in part and overruled in part, limiting the recovery of damages under Count I (money had and received) to a period of three years and granting summary judgment their favor on Count II (breach of contract), Count III (establishment of prepaid accounts), Count IV (neglect of duty), Count VIII (negligence), and Count IX (conversion). Investors voluntarily dismissed Count VI (RESPA claim). The cause was thus tried to a jury on Count I (money had and received), Count V (due process), and Count VII (Equal Protection).

At the close of all evidence the trial court granted County's motions for directed verdict on Count V (due process claim) and Count VII (equal protection claim). The case was submitted to the jury on the remaining count, money had and received. The jury awarded Investors $499,391.00 in damages, and the trial court added an additional sum of $143,701.46 in prejudgment interest for a total of $ 643,092.46.

A. THE COUNTY'S POINTS ON APPEAL

The County and the Recorder (hereinafter referred to collectively as "the County") assert the following points of error:

(1) Investors failed to make a submissible case because there was no evidence of any written contract as required by section 432.070¹.

(2) The evidence did not establish the essential elements for money had and received because there was no evidence that the County gained anything from Investors' overpayments and, thus, no evidence of a benefit conferred or appreciation by the County of the fact of such benefit.

(3) The evidence did not establish the essential elements for money had and received because Margaret King stole from Investors by falsifying the checks and the totals, which enabled her to steal cash from County in the exact amount of the overpayments before County became aware of the overpayments.

(4) The trial court erred in withdrawing from the jury's consideration evidence that Investors failed to check the receipts provided by the County because the evidence concerned an issue still before the jury.

(5) The County was entitled to submit a "change in circumstances" affirmative defense instruction because there was sufficient evidence for the jury to decide that Margaret King stole cash in the exact amount of Investors' overpayments and that the County was no more at fault than Investors in failing to discover that King was inflating Investors' checks and totals.

DISCUSSION

I.

In its first point, the County argues that Investors failed to make a submissible case because there was no evidence of a written contract as required by section 432.070 and the County cannot be liable based upon an implied contract. Although the County has framed this as an evidentiary issue, the question is purely one of law: Does section 432.070 preclude Investors from recovering the overcharges from the County in an action for money had and received? This Court reviews the trial court's judgment de novo. Dudley v. Agniel, 207 S.W.3d 617, 618 (Mo. banc 2006).

a.

"The appropriate action when one party has been unjustly enriched through the mistaken payment of money by the other party is an action at law for money had and received." Blue Cross Health Services, Inc. v. Sauer, 800 S.W.2d 72, 75-76 (Mo.App.1990). "Although the action is purely one at law, it partakes of the nature of equity, and whenever it is shown that one has money in his possession which rightfully belongs to another, the law establishes privity between the parties, and implies the promise and obligation upon which the action rests." Eichenberg v. Magidson's Estate, 170 S.W.2d 105, 108 (Mo.App.1943). "The action for money had and received has always been one favored in the law and the tendency is to widen its scope—it being a flexible form of action, levying tribute on equitable, as well as strictly legal doctrines; so that, it has become axiomatic that the action lies where the defendant has received or obtained possession of the money of the plaintiff, which, in equity and good conscience he ought to pay over to the plaintiff." Webster v. Sterling Finance Co., 351 Mo. 754, 173 S.W.2d 928, 931 (1943).

b.

Section 432.070 states, in relevant part:

No county . . . shall make any contract, unless the same be within the scope of its powers or be expressly authorized by law, nor unless such contract be made upon a consideration wholly to be performed or executed subsequent to the making of the contract; and such contract, including the consideration, shall be in writing and dated when made, and shall be subscribed by the parties thereto[.]²

Section 432.070 was enacted to preclude parties who have performed services for a municipality or county or other governmental entity without entering into a contract from subsequently recovering the value of those services based upon an implied contract. Crutchfield v. Warrensburg, 30 Mo.App. 456, 462 (Mo.App.1888). "To subject the city to liability for such services, the statute declares affirmatively that the contract must be made and executed in writing prior to the service performed, for it must express the consideration on its face, to be performed or executed subsequent to the making of the contract." Id. (emphasis in original). "The manifest purpose of the requirement is that the terms of the contract shall, in no essential particular, be left in doubt, or to be determined at some future time, but shall be fixed when the contract is entered into. This was one of the precautions taken to prevent extravagant demands, and to restrain officials from heedless and ill-considered engagements." Id. (quoting Woolfolk v. Randolph County, 83 Mo. 501, 506 (Mo. banc 1884)). The County argues that section 432.070 precludes Investors...