Jones v. DeWitt

• Decision Date: 10 September 1973
• Docket Number: No. 1,No. 56816,56816,1
• Parties: Harvey JONES and Elizabeth Jones, Respondents, v. Mary Mildred DeWITT, an individual, and Mary M. DeWitt, as Executrix of the Estate of Roger DeWitt, deceased, Appellants
• Court: Missouri Supreme Court

Page 524

499 S.W.2d 524

Harvey JONES and Elizabeth Jones, Respondents, v. Mary Mildred DeWITT, an individual, and Mary M. DeWitt, as Executrix of the Estate of Roger DeWitt, deceased, Appellants.

No. 56816.

Supreme Court of Missouri, Division No. 1.

Sept. 10, 1973.

Rehearing Denied Oct. 8, 1973.

Hogsett, Shaffer & Gibson, James W. Shaffer, Joseph R. Hogsett, Sherman L. Gibson, Kansas City, for respondents.

Rufus B. Burrus, Independence, W. Raleigh Gough, Kansas City, for appellants.

WELBORN, Commissioner.

Action for specific performance of option contract for the sale of real estate. Trial court granted specific performance and awarded plaintiffs judgment for $46,520.87 for overpayment under the contract. Defendants appealed.

The land which is the subject of this litigation is a tract of approximately 205 acres, presently within the boundaries of the city of Independence, Missouri. In 1957, the property was owned by Billy Flournoy, the widow of William Flournoy and the estate of Kenneth Flournoy, the beneficiary of which was Rose Flournoy Harrelson. Both Billy and Rose were non-residents. Martin B. Dickinson was executor of the estate of Kenneth Flournoy, with power of sale. Dickinson had received numerous offers to purchase the property, including one under date of September 18, 1958, by plaintiff-respondent Harvey A. Jones to pay $100,000 for the property. Jones made his offer through an Independence realtor with whom he deposited $1,000 as earnest money.

Jones and his wife were social friends of Roger DeWitt and his wife, Mary Mildred, who lived in Independence. According to Jones, DeWitt learned of Jones' offer and was anxious to join with Jones on the deal. He gave Jones $500 as one half of the earnest money. The offer was rejected and Jones returned the $500 to DeWitt by a check dated November 3, 1958.

In December 1958, DeWitt and his wife and Jones and his wife jointly made an offer of $140,000 for the property. This offer was accepted. The transaction was closed in late December. The purchase price was paid in cash furnished by DeWitt and two short term notes, paid by DeWitt. The deeds, to DeWitt as grantee, were filed for record on December 26, 1958.

In February 1959, the Joneses and DeWitts entered into the agreement which is the basis of this litigation. Omitting the description of the property involved, the agreement read as follows:

'THIS AGREEMENT Made this _ _ day of February, 1959, by and between Roger DeWitt and Mary Mildred DeWitt, his wife, hereinafter referred to as first parties, and Harvey Jones and Elizabeth Jones, his wife, hereinafter referred to as second parties.

'WHEREAS, first parties are the owners of the following described property in Jackson County, Missouri, to-wit:

* * *;

being approximately 205 acres, having purchased the same on December 24, 1958, for the sum of $140,000.00; and,

'WHEREAS, first parties have caused to be filed certain applications for rezoning said property with the proper zoning officers, it being requested in said applications that a portion of said premises be zoned for residential use and a portion thereof zoned for business purposes; all as more fully set out in said applications; and,

'WHEREAS, second parties have indicated their desire to purchase an undivided 40% interest in the aforedescribed real estate and to exercise their best efforts along with first parties in the development of said property for whatever uses the parties hereto may hereafter determine; and,

'WHEREAS, in connection with the use and development of the aforedescribed real estate, the parties have discussed the possibility of forming a corporation to carry title to said real estate and to develop said land in any manner determined by the board of directors of any such corporation; and

'WHEREAS, the parties desire to enter into this written agreement setting out the terms and conditions of their understanding in detail.

'NOW THEREFORE, for and in consideration of the sum of $32,000.00 to first parties in hand paid, the receipt of which is hereby acknowledged, and in further consideration of the mutual covenants and agreements herein contained, it is stipulated and agreed by and between the parties as follows:

'(a) First parties hereby grant to second parties an option to purchase an undivided 40% interest in all of the real estate described herein for the sum of $24,000.00. This option may be exercised at any time after July 1, 1959, but not before, and it shall expire and be null and void from and after August 31, 1959. In the event the real estate described herein sold to any corporation controlled by first parties, then first parties will protect second parties' interest and cause to be sold to second parties the number of shares in any such corporation which will accurately reflect the interest in the real estate for which an option is hereby given. In the event said real estate is sold to any person, firm, corporation or co-partnership of persons (other than a controlled corporation), then first parties will pay to second parties 40% of the net sum received from any such sale less the sum of $24,000.00.

'(b) All expenses incurred in the development, sale or promotion of said land shall be paid by first parties, but if second parties elect to exercise the option granted herein, then second parties shall, upon such election, refund to first parties 40% of all sums expended by first parties.

'(c) It is understood between the parties that Harvey Jones, one of second parties, is an engineer and surveyor by profession, and is experienced in the layout and engineering of sites for subdividing. He agrees herewith to perform such services in preparing the land herein described for such purpose in the event second parties elect to exercise the option herein granted and in the event the parties determine between themselves to subdivide said area. He further agrees that any such work will be done at actual time and expense and that no charge shall be made for his personal supervision or services. The parties agree that at such time as it is determined to subdivide said land, if such determination is made, the parties will enter into a contract for such work in which will be set out all of the services to be performed and the charges to be made.

'(d) In the event the land herein described is sold to a corporation which is controlled by either or all of the parties hereto prior to the date the option herein granted is exercised, if so, then second parties shall be entitled to purchase for the sum of $24,000.00 a sufficient number of shares of such corporation to assure them of an interest in said corporation equal to 40% of the value of the land herein described regardless of the fair market value thereof at said time or of the price paid for said land by such corporation. Upon the transfer of title to said land, the option contained in paragraph (a) hereof shall terminate and the provisions of this paragraph (paragraph d) shall prevail; it being the intention of the parties that at no time shall second parties be entitled to purchase more than a 40% interest in said venture. It is further agreed that should said land be sold to such a controlled corporation, that the parties will execute a stock purchase agreement limiting the sale of the stock of the corporation so as to prevent the introduction of outside stockholders without the consent of all parties.

'(e) First parties agree to lend to second parties the sum of $24,000.00 to be used by second parties to purchase the 40% interest herein provided for, in the event second parties elect to exercise the option herein granted. Second parties agree to secure said loan by executing their promissory note in the amount of $24,000.00 payable five years from the date of execution thereof, with interest at the rate of 6% per annum. Said note shall provide for prepayment privileges, and shall be secured by a first deed of trust on the 40% interest of second parties in the property herein described, together with the deposit with said first parties as collateral under a collateral pledge agreement of the following items:

'(1) $28,750.00 in face amount of notes executed by Kentucky Hills, Inc., and payable to second parties or their order.

'(2) 200 shares of capital stock of Kentucky Hills, Inc., issued to second parties.

'Time is of the essence of this contract.

'IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year first written.'

As recited in the agreement, Jones was an engineer. According to him, as soon as the property was sold, he began working on plans for developing and selling the property. He discussed the plans with the DeWitts on numerous occasions. Jones stated that he and DeWitt bought the property, intending to develop it for sale. According to Mrs. DeWitt, 'Well, we didn't buy to develop it. Roger DeWitt wasn't a builder. He was an automobile man back from 1921. He knew nothing about developing and we weren't putting any more money into it for anybody or for anything.'

Jones testified that his office staff prepared plans and zoning exhibits involving proceedings in which the zoning was changed to residential and business property.

In September 1959, DeWitt and Jones filed an application with the Jackson County Board of Zoning Adjustment for authorization to establish a sewage disposal unit consisting of five oxidation basins on the property. According to the order granting the permission, the board found that 'Mr. J. Roger DeWitt is the owner of 205 acres of ground on which he plans to construct approximately 500 homes.'

Jones prepared plans and profiles for the basins. His plans are dated July 10, 1959. A 'Plan of Proposed Rogers Park, Independence, Mo. for J. Roger DeWitt & Harvey A. Jones,' dated July 13, 1959, was prepared by Jones.

On September 1, 1959, the DeWitts entered into a contract with the Bishop of the Kansas City Diocese for the sale of 15 acres in Rogers Park for...