Koedding v. Slaughter, 79-50C(2).

• Decision Date: 26 December 1979
• Docket Number: No. 79-50C(2).,79-50C(2).
• Citation: 481 F. Supp. 1233
• Parties: William F. KOEDDING, August F. Koedding, III, Plaintiffs, v. George T. SLAUGHTER, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

481 F. Supp. 1233

William F. KOEDDING, August F. Koedding, III, Plaintiffs, v. George T. SLAUGHTER, Defendant.

No. 79-50C(2).

United States District Court, E. D. Missouri, E. D.

December 26, 1979.

William E. Buckley, Kenneth C. Brostron and Amy Rehm Hinderer, Lashly, Caruthers, Thies, Rava & Hamel, St. Louis, Mo., for plaintiffs.

Robert F. Ritter (Local), Gray & Ritter, St. Louis, Mo., E. Ben Franks, Arnold, Arnold, Lavender & Rochelle, Ltd., Texarkana, Ark., for defendant.

MEMORANDUM

NANGLE, District Judge.

Plaintiffs brought this suit pursuant to 28 U.S.C. § 1332 seeking to recover damages for defendant's alleged breach of a contract to purchase plaintiffs' real estate. Defendant has denied the existence of an enforceable contract and, in the alternative, counterclaimed alleging that plaintiffs breached the contract.

This case was tried before the Court without a jury. The Court having considered the pleadings, the testimony of the witnesses, the documents in evidence, the stipulations of the parties, and being fully advised in the premises hereby makes the following findings of fact and conclusions of law as required by Rule 52, Federal Rules of Civil Procedure.

FINDINGS OF FACT

1. Plaintiffs William F. Koedding and August F. Koedding, III are residents of the State of Missouri.

2. Defendant George T. Slaughter is a resident of the State of Arkansas.

3. During the course of the transactions relevant to this litigation, plaintiffs were, together with other members of their family, the owners of a Holiday Inn in Rolla, Missouri. Plaintiffs were orally granted authority by all members of their family having an interest in this Holiday Inn to negotiate its sale.

4. Some time prior to April of 1978, John Jones of the realty firm of McRoberts and Company of Columbia, Missouri heard that plaintiffs were interested in selling the Rolla Holiday Inn. Jones contacted plaintiffs to ascertain the terms on which plaintiffs were willing to sell.

5. Jones then contacted defendant as a possible purchaser. Defendant was interested in the property and, through McRoberts and Company forwarded a proposal dated April 17, 1978 and signed by himself to plaintiffs.

6. Substantially all contact between the parties was made through McRoberts and Company. Though both John Jones and A. J. McRoberts testified that they were acting as plaintiffs' agents in the transaction, a more realistic appraisal of their positions is that they were middlemen, acting on behalf of all parties.

7. This proposal was rejected by plaintiffs mainly because the sixty day contingency period in which to obtain financing was considered too lengthy. Several changes were made in defendant's proposed contract, and the parties executed a document entitled "Real Estate Contract" on May 10, 1978.

8. This contract provided for the sale of the Rolla Holiday Inn by plaintiffs to defendant for a price of one million two hundred thousand dollars ($1,200,000.00). At the time of the execution of this contract, defendant deposited ten thousand dollars ($10,000.00) with McRoberts and Company as earnest money.

9. This earnest money was to be credited to the purchase price, but in the event of a breach by defendant,

. . . then the money deposited as aforesaid shall be paid over to the seller as liquidated damages, actual damages being impossible to ascertain, and this agreement may or may not be thereafter operative, at the option of the seller. If the aforesaid money deposited is paid over by the buyer, then it shall be divided equally between the seller and the said named agent for the seller, provided, however that the said agent shall in no event receive any sum of money for his services greater than the amount hereinafter mentioned for commission.

10. The contract was signed by plaintiffs as sellers and defendant as buyer. Defendant initially planned to purchase the hotel with another investor, but that investor backed out of the deal when he considered the hotel's occupancy rate to be far too low. That partner's existence was apparently unknown and unimportant to plaintiffs.

11. The contract described the real estate involved as follows:

HOLIDAY INN OF ROLLA, land and buildings located on Martin Spring Drive in the the City of Rolla, County of Phelps, Missouri, . . .

12. The contract left for future negotiations such incidental matters as food and liquor supplies, accounts receivables, etc., with the following language:

This contract, in addition to the contingencies later stated, is subject to an agreement to be worked out by buyer and seller which will contain the details of the ultimate sale.

Plaintiffs subsequently prepared a detailed contract which included provisions for all these items. This document was never executed by the parties.

13. The contract was contingent upon defendant's obtaining a loan or loan commitment and a commitment for a new Holiday Inn franchise within thirty days. Closing was to occur within sixty days, or by July 9, 1978.

14. Plaintiffs were to deliver an abstract of title to the office of McRoberts and Company within ten days, and were to furnish defendant an inspection report from Holiday Inns no older than sixty days.

15. Within the ten days of the signing of the contract, plaintiffs had obtained the title abstract, and contacted McRoberts and Company concerning its delivery. Plaintiffs were reluctant to send the abstract through the mail, and suggested sending it via Greyhound Bus. The realtors, however, were uncertain as to whether the abstract should have been delivered to them in Columbia, Missouri or to the title company in Rolla. A final decision was never reached as to where to send the abstract, and, consequently, plaintiffs never sent it anywhere.

16. Defendant never requested of either plaintiffs or McRoberts and Company that the abstract be delivered.

17. Plaintiffs furnished defendant an inspection report approximately ten months old, and never furnished a more recent report as required by the contract. This report is the result of a periodic inspection by a Holiday Inn representative, and does not go into great detail. A much more detailed deficiency report is required before Holiday Inn will issue a franchise.

18. Defendant had obtained a verbal loan commitment prior to the execution of the contract. However, neither a written loan commitment nor a commitment for a Holiday Inn franchise were obtained within thirty days of May 10, 1978.

19. Around the middle of June plaintiffs inquired of McRoberts and Company whether the contract was off due to these unfulfilled contingencies. McRoberts and Company relayed this concern to defendant, and defendant, in response, sent plaintiffs a telegram on June 16, 1978 stating that he waived all contingencies. Prior to this time, on or about June 13, 1978, defendant had obtained a written loan commitment from Community Federal Savings & Loan Association in St. Louis, Missouri. Defendant had not yet applied for a Holiday Inn franchise.

20. Sometime between June 16, 1978 and the expected closing date of July 9, 1978, defendant obtained a Holiday Inn franchse application. This application was quite detailed and it was apparent to defendant that the franchise application could not be completed by the closing date. Defendant asked plaintiffs for additional time in which to obtain the franchise.

21. Plaintiffs were concerned about the seriousness of defendant's offer. Sometime prior to July 26, 1978 they acted upon this concern by requesting fifty thousand dollars ($50,000.00) in additional earnest money. This request was relayed to defendant through McRoberts and Company.

22. Defendant was unwilling to furnish the additional funds, and stated that the substantial monies already expended by him in obtaining the loan commitment and working on the franchise application should have been sufficient guaranty to plaintiffs of his seriousness. John Jones and A. J. McRoberts of McRoberts and Company also vouched for defendant's reliability to plaintiffs.

23. Nevertheless, plaintiffs demanded on July 26, 1978 that the additional earnest money be put up immediately or the deal was off. Defendant refused, and stopped work on the franchise application, considering the deal to have fallen through.

24. On or about August 4, 1978, defendant received a letter from plaintiffs stating, in substance, that defendant still had until August 9, 1978 to close the deal. No action was taken by defendant prior to August 9, 1978.

25. Plaintiffs were at all times between July 9, 1978 and August 9, 1978 ready, willing and able to close the real estate purchase. Defendant at no time tendered the purchase price to plaintiffs, and was at no time ready, willing or able to close the deal.

26. Plaintiffs eventually sold the Holiday Inn to Triple T Inns, Inc. for the price of one million dollars ($1,000,000.00). There is no evidence that a sales commission was paid by plaintiffs on this sale. Had the deal with defendant gone through, plaintiffs would have had to pay McRoberts and Company a sales commission of sixty thousand dollars ($60,000.00).

27. The offer by Triple T Inns, Inc. was the only such offer received by plaintiffs after the agreement with defendant fell through. The sales price was reasonable under the circumstances.

28. Plaintiffs were never informed by defendant of his intent to resell the property at the price of one million five hundred fifty thousand dollars ($1,550,000.00), or, in fact, of his intent to resell the property at all. Defendant expended approximately seven thousand dollars ($7,000.00) in actions taken pursuant to the contract between the parties.

29. The ten thousand dollars ($10,000.00) earnest money was not turned over to plaintiffs after the deal fell through. McRoberts and Company still holds this money.

CONCLUSIONS OF LAW

This Court has jurisdiction of this case pursuant to 28 U.S.C. § 1332, the controversy being between residents of different states...