Malone v. Johnson

Decision Date16 December 1993
Docket NumberNo. 18774,18774
Citation866 S.W.2d 935
PartiesPatrick D. MALONE, Plaintiff-Appellant, and Innovative Real Estate Agency, Inc., Plaintiff, v. Grover L. JOHNSON and Pulaski Bancshares, Inc., Defendants-Respondents.
CourtMissouri Court of Appeals

J. Patrick Wheeler, Canton, for plaintiff-appellant.

James L. Thomas, Waynesville, for defendants-respondents.

CROW, Judge.

Two plaintiffs, Patrick D. Malone ("Malone") and Innovative Real Estate Agency, Inc. ("Innovative"), a Missouri corporation, sued Grover L. Johnson and Pulaski Bancshares, Inc. ("Bancshares"), a Missouri corporation, for a commission allegedly earned by the plaintiffs in finding a buyer for "The State Bank of Dixon." The trial court denied recovery. Malone, alone, appeals. Discussion of his two points relied on is possible only after introducing the drama's main participants.

Malone, a Tennessee resident at time of trial, 1 was a Missouri real estate broker when the saga began. We learn from his testimony that he and his wife, herself a broker, were in the "real estate business" in Camdenton. Malone's testimony:

Q What was the name of the corporation that you were operating under?

A Innovative Real Estate Agency, Incorporated.

Grover L. Johnson, president of State Bank of Dixon at all times pertinent here, was the husband of Bonnie L. Johnson when the relevant events began, but their 37-year marriage was dissolved January 8, 1993, by the Circuit Court of Pulaski County. 2

Bancshares owns approximately 96 percent of the shares of State Bank of Dixon. According to Grover Johnson, there are 1,143 "outstanding shares" of Bancshares.

The first germane occurrence was February 15, 1991, when a two-page document captioned "EXCLUSIVE AGENCY LISTING" was signed. At that time the document read:

TO: MR. PATRICK D. MALONE

TO: INNOVATIVE REAL ESTATE & INSURANCE AGENCY

....

In consideration of your agreements to list and to endeavor to sell the property described as follows, I, being the owner of such property, hereby give you an exclusive agency to sell such property and confer on you authority to receive and to transmit to me offers to purchase the property for the price and upon the terms described below.

The property to be listed is described as follows:

[Legal description of land by lot and block] together with the improvements located thereon, the furniture, furnishings, machines and equipment and all real and personal property utilized by and constituting the business known as The State Bank of Dixon.

The price and the terms for the property is [sic] as follows:

The price for the property/stock shall be based upon the bank's book value at the date of closing. The sales price shall be calculated at one and one-half times the book value. The Seller would agree to set up a reserve account on closing for the sum of $200,000.00 for specified loan losses for a period of three (3) years. Any prospective Buyer shall deposit $250,000.00 in escrow to establish that the Buyer is serious before the records of the bank are made available for examination.

I agree to pay you a commission of three percent (3%) of the sales price, if, either (1) you procure a Buyer, who is ready, willing, and able to perform, or (2) you procure a Buyer to whom I do in fact sell or trade the property.

....

Dated: 2-15-91

Pulaski Bancshares, Inc.

: s/Grover Johnson

Grover L. Johnson, owner

ACCEPTANCE OF EXCLUSIVE LISTING FOR SALE OF THE STATE BANK OF DIXON

I accept the listing for sale of the State Bank of Dixon for the price and upon the terms designated in the attached listing proposal and agree to exercise diligence to achieve its purpose.

Dated: 2-15-91

Innovative Real Estate

& Insurance Agency

By: s/Patrick D. Malone

Patrick D. Malone

The above document appears susceptible to two interpretations: (1) a contract by Bancshares to pay a commission if a buyer is found for the shares of State Bank of Dixon owned by Bancshares, or (2) a contract by Grover Johnson to pay a commission if a buyer is found for the shares of Bancshares owned by him.

At trial, the defendants' lawyer argued Grover Johnson, individually, was not a party to the agreement. On that subject, we find the following dialogue in the cross-examination of Malone:

Q ... The listing agreement--who is the listing agreement with? Let me just ask you that....

A With Pulaski Bank Shares, Incorporated [sic], and Grover L. Johnson as owner.

We cannot deduce from that testimony whether Malone embraced interpretation "1" or interpretation "2"--or both!

The agreement is also abstruse as to whom the commission would be due if a buyer were found. On that subject, we discover this in Malone's cross-examination:

Q ... on ... the second page, you have an acceptance of the exclusive listing, is that correct?

A Yes.

Q And that's Innovative Real Estate and Insurance Company [sic], by Patrick D. Malone, is that correct?

A Correct.

Q You did not sign that as an individual, is that correct?

A That's correct.

Q You signed it in your official capacity.

A Yes.

From this, we infer Malone believed the listing was with Innovative, not him personally.

Be that as it may, Malone launched a quest for a buyer. After several months he "come across Don Roth and Don Koch." Discussions ensued between Roth, Koch, Malone and Grover Johnson. Eventually, Roth and Koch "faxed" Malone a two-page document captioned "PROPOSAL OF INTENT TO PURCHASE." 3

Malone took the proposal to the bank one afternoon "after 3:00" and discussed it with Grover Johnson. Malone recalled the date as Friday, August 1, 1991. 4 Malone recounted that Grover Johnson "had a secretary that kept running in and out." On several occasions, said Malone, Grover asked the secretary "if Bonnie would agree."

On a date unrevealed by the record, but apparently before Malone delivered the Roth/Koch proposal to Grover Johnson, Malone learned Bonnie Johnson "did have an interest in [Bancshares] and that she ... was also an owner of the property and the bank shares." 5

Several provisions in the Roth/Koch proposal were unacceptable to Grover Johnson. Malone made notes of them, then returned to his office, had the proposal retyped, and "faxed" a copy of the revised version to Koch.

Malone subsequently received, by facsimile transmission, a new proposal bearing the signatures of Roth and Koch. We henceforth refer to this document as "Exhibit 4," its designation at trial. Three or four days later, Malone presented Exhibit 4 to Grover Johnson. Malone asked Grover to sign it and give it to Bonnie for her signature. Malone quoted Grover as saying he would sign, but he was going to give it to Bonnie first and get her signature. Malone added: "But [Grover] definitely would sign it. We definitely had a deal."

Exhibit 4 identified what was being purchased as: "The State Bank of Dixon, 100% Capital Stock of Pulaski Bancshares, Inc. a Bank Holding Company, which owns 96% Capital Stock of the State Bank of Dixon." Exhibit 4 contained sundry "terms," including:

Seller agrees to finance a part of the purchase price in the amount of 70% of the purchase price to be evidenced by a negotiable purchase money promissory note, over a period of 10 years, amortized over 10 years, bearing interest at Prime tied to Southwest Bank of St. Louis with 7% floor and 10% ceiling. First year, interest shall be paid only. Payable monthly.

....

Buyer agrees to addition to purchase price to give Grover L. Johnson a Consulting Contract for a period of 12 months in the amount of $100,000.00 annual, payable monthly, in exchange for 30 hours monthly. Consulting Contract to begin at date of closing and expire 12 months thereafter.

Contingent on satisfactory interview of reviewing loans and conversing with present bank employees on operational matters of the bank and to perform "due diligence".

....

Buyer request that financial audit by a third party accounting firm, be performed prior to closing and approved by Buyers, at Bank cost. Not to exceed $5,000.00.

Buyer request during transition period pending approval, any material changes in balance sheet of more than $10,000.00 shall be discussed and approved by Buyers.

....

Buyer agree to deposit escrow money in the amount of $35,000.00 with Innovative Real Estate Agency, Inc., fully refundable if transaction not consummated.

Seller shall agree to signing a no compete agreement with Buyers terms to be agreed on. 250 mile radius of Dixon, Missouri for a period of 5 years with exception by express written permission of Buyer. (Emphasis added.)

Closing date shall be October 5, 1991 or as soon as possible thereafter all Contingency are met and regulator approval obtained.

Contingent on approval, in writing, by the Missouri Division of Finance allowing the State Bank of Dixon to have a Branch in West St. Louis County.

....

Seller reserves right to Credit Checks on Buyers.

....

If terms of "Proposal of Intent" are accepted, Buyer will move to definitive purchase agree [sic] within 45 days.

Seller agrees to deal exclusively with Buyer during this period, and Buyer and Seller agree to keep all matters in confidence.

A day or two after Grover Johnson received Exhibit 4 from Malone, he (Grover) prepared a paper summarizing the financial implications of the proposed sale. This paper, received in evidence as Exhibit 6 at trial, was delivered to Bonnie, along with Exhibit 4. Exhibit 6 stated, among other things:

These are good people that are buying this. I need to talk to my attorney and accountant and suggest you do the same. Don't feel rushed, but a decision needs to be reached soon.... I've given my word that I would sell, provided you feel comfortable and would sell, therefore its [sic] in your hands to make the final decision.

On August 12, 1991, Grover Johnson consulted a certified public accountant, Larry Gray, about the transaction, including tax consequences. Gray's calculations led him to advise Grover that he "could...

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