Magruder Quarry & Co., L.L.C. v. Briscoe, ED 79869.
| Decision Date | 25 June 2002 |
| Docket Number | No. ED 79869.,ED 79869. |
| Citation | 83 S.W.3d 647 |
| Parties | MAGRUDER QUARRY & COMPANY, L.L.C., Plaintiff/Respondent, v. Joseph M. BRISCOE, Shirley M. Briscoe, Joseph M. Briscoe II, Peggy A. Briscoe, Debra A. Owens f/k/a Debra A. Briscoe and Ray & Briscoe, Inc., a/k/a R&B Quarry, Defendants/Appellants. |
| Court | Missouri Court of Appeals |
Jerry L. Suddarth, O'Fallon, Richard A. Wunderlich. St. Louis, for appellant.
Joseph A. Brannon, Hannibal, Robert J. Selsor, Valerie J. Pacer, St. Louis, for respondent.
On the court's own motion, the opinion in the above styled case handed down on May 28, 2002 is withdrawn. A new opinion is attached. Respondent's motion for rehearing is denied as moot.
Joseph M. Briscoe, Shirley M. Briscoe, Joseph M. Briscoe II, Peggy A. Briscoe, Michael E. Briscoe and Deborah A. Briscoe ("Briscoes"), lessees, appeal from a judgment of the Circuit Court of Lincoln County, Missouri, which declared that a quarry lease agreement with Magruder Quarry and Company, L.L.C. ("Magruder"), successor lessor and owner of the quarry, was null and void. Magruder claimed the lease lacked mutuality of obligation because Briscoes were not obligated to mine or sell any rock. Briscoes contend the trial court erred in holding the lease null and void due to a lack of mutuality, because the promise was not illusory in that lessees were obligated to exercise good faith and use reasonable efforts to mine and sell the rock. We reverse and remand.
On February 5, 1994, Briscoes drafted and executed a quarry lease agreement ("lease") with Noble I. Presley Jr., Lois Faye Presley, Claude T. Presley, Iris Presley, and Laura May Presley ("Presleys") as lessors. Briscoes leased the land from the Presleys for the purpose of mining, quarrying, removing, and marketing limestone rock. The lease provided, in pertinent part:
(1) The Lessors do hereby grant, demise, lease and let unto the Lessees, for the purpose of mining, quarrying, operating for, removing and marketing limestone rock, rock, sand, soil and dust, or any of said material either in the raw state or processed in ground, burned, clinkered or hydrated state or any other processing of the raw materials as may be found in, under and upon all that certain tract of land lying, being, being and situated in the County of Lincoln, State of Missouri, known and described as follows:
* * * *
(4) The Lessees shall have exclusive use of the aforementioned property without any restrictions upon their use of said property. They shall have the exclusive use of all land, minerals, resources, fixtures, buildings and any other item or items that may be found in or upon the property.
(5) The rental during the initial term of this Lease shall be eighteen cents ($0.18) per ton of any and all rock product sold during the preceding month, payable upon the fifteenth day of each month, with the first payment being due March 15, 1994, and subsequently [sic] monthly payments being due and payable on the same day thereafter for the term of the Lease.
(7) In the event of default by the Lessees in the performance of any of the promises or conditions set forth herein in this Lease, or the payment of any rent due Lessors, and in the event that said default continues for a period of thirty (30) days, Lessors shall notify Lessees by registered mail of such default, and if rent is not paid, or the other covenants and conditions not performed within thirty (30) days thereafter, Lessors shall be entitled, at their option, to the possession of the demised premises, subject to the provisions of the next numbered paragraph herein.
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(9) This Lease shall be assignable by Lessees upon written approval of Lessors. That approval shall not be unreasonably refused.
On November 7, 1997, Magruder Quarry and Equipment Company purchased the leased land from the Presleys, subject to the lease agreement with the Briscoes. Magruder accepted rent payments from the Briscoes pursuant to the lease. In early 1998, Fred Weber, Inc. ("Fred Weber") contacted the Briscoes and offered $800,000 to purchase their interest in the lease. Briscoes requested approval from Magruder for the assignment of the lease to Fred Weber. Magruder informed the Briscoes that it would not approve the assignment, citing Fred Weber was an arch-competitor and an assignment to Fred Weber would severely hinder Magruder's ability to compete in the geographic market because Fred Weber would then control 90% of the market share of high-quality limestone. In September 1998, Magruder stopped accepting rental payments because it believed that Fred Weber had purchased Briscoes' interest in the lease.
Magruder filed a petition against the Briscoes. Count I sought a declaratory judgment that the lease was null and void due to a lack of mutuality, Count II for breach of contract claimed the lease was assigned to Fred Weber without Magruder's approval, and Count III requested ejectment of the Briscoes from the leased land. The Briscoes filed a separate petition alleging that Magruder breached the terms of the contract by unreasonably withholding its consent to the assignment of the lease and tortiously interfering with Fred Weber's purchase of the assignment from the Briscoes. The suits were consolidated for trial.
After a bench trial, the trial court found the lease to be null and void and ordered Briscoes ejected from the premises. The trial court found Magruder's breach of contract claim in Count II to be moot. The trial court denied Briscoes' claims for breach of contract and tortious interference. Briscoes now appeal.
The trial court's judgment will be sustained unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
In Briscoes' first point on appeal, they contend that the trial court erred in holding the lease was null and void due to a lack of mutuality of obligation. Briscoes argue the lease agreement was not invalid because the promise to pay rent in the amount of eighteen cents per ton of rock sold from the quarry during the preceding month was not an illusory promise in that they, as lessees, were legally obligated to exercise good faith and use reasonable efforts to mine and sell the rock.
Magruder argues that the lease was null and void because it did not obligate the Briscoes to do anything, or in other words, that it was within their power not to mine any rock, thereby relieving them of any duty to pay rent to Magruder. Magruder contends the lease is invalid due to a lack of consideration rendering the promise illusory.
The phrase "illusory promise" means "words in promissory form that promise nothing." CORBIN ON CONTRACTS Section 5.28. An illusory promise is not a promise at all and cannot act as consideration; therefore no contract is formed. Id.
The tendency of the law, however, is to uphold the contract by finding the promise was not illusory when it appears that the parties intended a contract. Id. "Frequently a court will find an apparently illusory promise to be accompanied by an implied promise to use `best efforts' or `reasonable efforts.'" Id. Consequently, an implied obligation to use good faith is enough to avoid finding a contract null and void due to an illusory promise. Id. Such is the case here.
Justice Cardozo, in his famed opinion of Wood v. Lucy, Lady Duff-Gordon articulated the theory of implied covenants of good faith and reasonable efforts. 222 N.Y. 88, 118 N.E. 214, 215 (1917). Cardozo stated that even though the plaintiff did not promise in so many words to use reasonable efforts to market defendant's designs, Id. (citations omitted).
In Missouri, the covenants of good faith and fair dealing are implied in every contract. Home Shopping Club, Inc. v. Roberts Broadcasting Co., 989 S.W.2d 174, 179 (Mo.App.1998). In National Refining Co. v. Cox, 227 Mo.App. 778, 57 S.W.2d 778 (1933) defendant and his wife leased their gasoline station to the plaintiff oil company. Id. at 779, 57 S.W.2d 778. The lease provided that the premises were to be used as a filling and automobile service station and the rent was to be one cent per gallon of gasoline sold. Id. In addition to the lease, the defendant and the plaintiff entered into an agency contract, which provided for the employment of defendant by plaintiff as its agent to operate the station. It also stipulated defendant could only sell the plaintiff's petroleum products. Id. The defendant fell behind in remitting payments to plaintiff for product sold, and the plaintiff sued....
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...promise is not a promise at all and cannot act as consideration; therefore, no contract is formed." Magruder Quarry & Co. v. Briscoe, 83 S.W.3d 647, 650-51 (Mo. App. E.D. 2002). Under well-established contract law, an agreement in which one party retains the unilateral ability to avoid its ......
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Morrow v. Hallmark Cards, Inc., WD 67440.
...promise is not a promise at all and cannot act as consideration; therefore, no contract is formed." Magruder Quarry & Co. v. Briscoe, 83 S.W.3d 647, 650-51 (Mo.App. E.D.2002). Under well-established contract law, an agreement in which one party retains the unilateral ability to avoid its co......