Joplin CMI, Inc. v. Spike's Tool and Die, Inc.

• Decision Date: 14 October 1986
• Docket Number: No. 14360,14360
• Parties: JOPLIN CMI, INC., Plaintiff-Appellant, v. SPIKE'S TOOL AND DIE, INC., and Oscie-Ora Acres, Inc., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 930

719 S.W.2d 930

JOPLIN CMI, INC., Plaintiff-Appellant, v. SPIKE'S TOOL AND DIE, INC., and Oscie-Ora Acres, Inc. Defendants-Respondents.

No. 14360.

Missouri Court of Appeals,

Southern District,

Division Two.

Oct. 14, 1986.

Motion for Rehearing and/or Transfer

to Supreme Court Denied

Nov. 3, 1986.

Application to Transfer Denied Dec. 16, 1986.

Charles Buchanan, Joplin, for plaintiff-appellant.

Albert D. Johnston, Johnston & Carlton, Carthage, for defendants-respondents.

NORWIN D. HOUSER, Senior Judge.

Action on a written contract captioned "Option to Purchase Real Estate" dated May 4, 1973, in which for a consideration of $100 Optionor Spike's Tool and Die, Inc., a corporation, (hereinafter "Spike's") gave Optionee Ronald Walker the option to purchase Oscie Acres, a parcel of real estate in Jasper County containing approximately 608 acres, and to pay $800 an acre as follows: $25,000 on the date the option was exercised, $50,000 on October 1, 1973, and thereafter the minimum sum of $20,000 annually, "the first installment due on the 10th day of October, 1974, and a like sum due on the same date of each succeeding year, the remaining balance, if any, payable in full on October 10, 1983."

Paragraph 3 provided that Optionor "on receiving payments of cash * * * mentioned herein shall execute and deliver to Optionee a Warranty Deed for that portion of real estate paid for in cash, the Optionee having the right to select the particular acres to be conveyed which lie above 880 feet above sea level, the Optionor having the right to select the particular acres to be conveyed which lie below that level; "that Optionor will convey to Optionee at various times portions of the above described real estate, by General Warranty Deed, on the occasion of each cash payment * * * the number of acres to be conveyed on each such occasion to be determined by dividing" 800 into the said cash payment. Optionee was required to purchase one acre of the lower land for each acre chosen by Optionee from the upper land, until Optionee purchased 200 acres of lower land, after which Optionee might, at his election, select and purchase any remaining acres from either the upper or the lower acreage. (The lower land was less desirable. It contained ravines and overflowed three or four times each year. This provision was included to protect vendor from the possibility that vendee might choose only prime land, thus leaving vendor with the undesirable land in case of vendee's default).

Possession was to be delivered to Optionee upon exercise of the option. Taxes for 1973 were to be pro-rated and after 1973 to be paid by Optionee. Optionee was given the right to assign the contract.

Paragraph 6, the focus of the controversy, provided:

"In the event Optionee exercises this option and thereafter fails to make any payment when due or fails to comply with the conditions, covenants and agreements set forth herein, the Optionor shall be released from all obligations in law or equity to convey additional property."

Paragraph 9 provided:

"It is understood and agreed by and between the parties hereto that this contract is the entire agreement between the parties, and that no alterations, changes or additions thereto shall be made, except in writing approved by the parties * * *."

The contract does not contain an express forfeiture clause; does not contain a liquidated damages clause; and does not contain a provision that time is of the essence.

Ronald Walker assigned the option contract to Joplin CMI, Inc., a corporation in which Walker had a 90% interest, and on May 11, 1973, Joplin CMI, Inc. exercised the option by the payment of $25,000 to Optionor, which was money loaned to Walker by Ted and Sara Bormaster. The Bormasters also advanced the $50,000 payment made on October 1, 1973. In 1973 the Bormasters acquired 50% of the capital stock of Joplin CMI, Inc. and in 1975 acquired the remaining 50% of the stock. Soon after May 11, 1973, Walker took possession of Oscie Acres and began developing the real estate project. Contractors were contacted; a land use study was commissioned; land was cleared; road work was done; a secretary was employed; draftsmen were hired to prepare plans for model homes and an office was built on a site designated by Walker and conveyed to Joplin CMI, Inc. Between July 9, 1973, and June 6, 1974, nineteen separate parcels ranging in size from .43 acres to 1.71 acres and totalling 12.18 acres, all located in the upper tract, were selected by Walker and conveyed by Spike's to Joplin CMI, Inc. Walker testified that he delayed selecting any more real estate pending completion of the engineering work, in order to get the most effective use of the land, and pending sale of lots to prospective purchasers. F.R. Melugin, President of Spike's, testified that he delayed selection of land in the lower tract at Walker's suggestion that it would be improper or perhaps unbusinesslike to select and deed "just a half acre at a time"--that Walker wanted him to wait and select forty acres at a time. Neither Melugin nor Walker objected to, and both consented to, the delay of the other in selecting real estate to be conveyed.

Walker made no sales to new purchasers from May 11, 1973, to October 10, 1974; all sales during that period were to buyers whose names were provided to Walker by Spike's.

Joplin CMI, Inc. failed to make the $20,000 payment due October 10, 1974. On October 21, 1974, and February 25, 1975, the principals met to discuss their differences.

Plaintiff-vendee's Evidence

Walker and Melugin scheduled a meeting to take place a few days before October 10, 1974, when the $20,000 payment was to come due, for the purpose of making the payment and designating the properties to be conveyed to vendee. At Melugin's request that meeting was postponed until the Monday following October 10. When they met Melugin informed Walker that the contract was in default. Melugin expressed dissatisfaction with Ted Bormaster, claiming that the latter had made derogatory remarks around town about Melugin.

On October 21, 1974, a meeting was held at Melugin's house at the instigation of the Bormasters to make the $20,000 payment and reconcile their differences; to see if the parties were in agreement as to the acreage already conveyed and the acreage due to be conveyed. The meeting was attended by Ronald Walker, Ted and Sara Bormaster, Ted's father Morris Bormaster, and F.R. Melugin. Melugin, Bormaster and Walker conferred over a map and agreed "in harmony and accord" on how many lots vendee had coming and on how these lots were to be selected. Melugin said there was no hurry in selecting the lots. Walker testified that Ted Bormaster presented Melugin with a $20,000 check naming Spike's as payee. The Bormasters could not remember whether a check was "physically written" but they "came prepared to pay" and had checks with them. Melugin refused to accept payment, stating that the payment was late and holding to his position that the contract "had been defaulted." He said he had been deceived and taken advantage of; that the Bormasters were not the kind of people he thought he was dealing with and notwithstanding he had legal counsel before signing, he had not clearly understood the agreement, which was unfair to begin with. Melugin stated he would not accept any more payments "unless with conditions"--unless Ted agreed to guarantee to go forward, develop the entire tract and complete payments throughout the life of the contract. Ted answered that he could not do that. The conditions were unacceptable; he "did not know what tomorrow brings." Ted refused to make a guarantee or post a performance bond. Ted acknowledged that he may have then said, "There will be no money forthcoming." Sara in explanation testified that there was no reason to make further payment or to go forward with the contract "when we hadn't been given the land for which we had already paid and to which we were entitled under the terms of the contract." The meeting concluded with a statement by Melugin that he was going to see his attorney before conveying any more land.

Thereafter a plat of Oscie Acres, supplied by Melugin's surveyors, disappeared from the office of Joplin CMI, Inc. and Melugin's surveyors refused to provide the Bormasters with a copy of the plat, as a result of which the Bormasters were unable to select additional lots for conveyance.

On November 13, 1974, Sara Bormaster asked Melugin by telephone when they could select the rest of the land coming to them. Melugin answered that he had talked to his attorney, was advised that he did not have to give Ted any more land, and what he had conveyed was all Ted was going to get.

On February 25, 1975, the parties assembled in the office of Bormaster's attorney for the purpose of seeing whether Melugin would deliver the land due the Bormasters and whether Melugin intended to "nullify" the contract. Ron Walker was absent, in the meantime having become inactive in the project. The attorney asked Melugin, "Are you going to take the $20,000?" Saying "They have defaulted," Melugin read aloud paragraph 6 of the contract and said he was not obligated to convey any more land and was not going to do so, but he would reinstate the contract if Bormaster would give him some assurance that they intended to go through with the entire contract. Melugin offered to accept a 25% discount if all payments were made in advance. Then Melugin said Ted could get what was due him, but not at the contract price of $800 an acre; that it would have to be at market value. Bormaster said, "No way."

Defendants' Evidence

Melugin's office manager called his attention to the fact that the $20,000 installment had not been paid. Melugin called Walker, who said he would call the Bormasters and see about it. Later Walker told Melugin by telephone, "No, they don't intend to make the payment." At the October 21, 1974 meeting (which Melugin testified ...