Marquand Development Corp. v. Maisak-Handler Shoe Co.

• Decision Date: 13 July 1953
• Docket Number: No. 1,No. 43185,MAISAK-HANDLER,43185,1
• Citation: 260 S.W.2d 242
• Parties: MARQUAND DEVELOPMENT CORP. v.SHOE CO. et al
• Court: Missouri Supreme Court

Page 242

260 S.W.2d 242

MARQUAND DEVELOPMENT CORP. v. MAISAK-HANDLER SHOE CO. et al.

No. 43185.

Supreme Court of Missouri, Division No. 1.

July 13, 1953.

Henri Sursa, Melvin Englehart, Fredericktown, for appellant.

Roberts & Roberts, Farmington, for respondents.

DALTON, Judge

Action for $8,000 damages for breach of a written contract and to recover $5,000 on a promissory note. The cause was instituted in Madison county and went on change of venue to the circuit court of Perry county. At the close of all the evidence the court directed a verdict for defendants, the verdict was returned and judgment was entered thereon. Plaintiff has appealed.

Plaintiff is a Missouri corporation organized for the purpose of developing industry in the Marquand Community in Madison county. On the 24th day of March 1948, it entered into a contract with the defendant Maisak-Handler Shoe Company, a corporation engaged in the manufacture of shoes (hereinafter referred to as Shoe Company). Plaintiff agreed to construct a concrete block building of a stated size and design, on specifically described premises, and to lease the building to Shoe Company at a rental of $1 per year so long as Shoe Company operated the building as a factory and complied with the conditions set out in the contract.

Shoe Company agreed "to occupy said building immediately after the same is completed and to begin business operations in a reasonable time after occupying said building." The contract contained no provision requiring Shoe Company to occupy and use the building as a factory for any specified period of time. Shoe Company agreed to pay all taxes on the building, to use care in the protection of said premises, to keep same in good order and repair, to keep the premises free from filth or any nuisance and to deliver to plaintiff two promissory notes for $5,000 each, each note to be signed by Shoe Company and by defendants Oliver E. Maisak and Robert Handler. The first note was to be due "on or before one year after date" and the second note "on or before four years after date." The $5,000 for which this second note was to be given to plaintiff was for cash to be loaned, such cash to be placed in the Bank of Marquand to Shoe Company's credit and to be expended for machinery, materials, labor and training labor for the Shoe Company's factory located at Marquand. The contract provided that "said building shall be used as a shoe factory and at no time shall said premises or any part thereof be used other than the (sic) herein specified without the written consent of the first party." The first $5,000 note was to be marked paid and returned to Shoe Company, if and when it occupied the building and began business operations within a reasonable time after the building was completed, otherwise to remain in effect. The second $5,000 note, dated March 24, 1948, was to be marked "paid in full" and returned to the Shoe Company, if within three years from the date Shoe Company occupied the building it paid out at Marquand $225,000 in wages, otherwise the note was to remain in full force and effect.

Plaintiff alleged in its petition that it had "duly performed all the conditions of the aforesaid contract *** on its part to be performed"; that the Shoe Company occupied the building on September 29, 1948; and that, without just cause or reason, Shoe Company had breached the contract in the following respects: (1) That on or about December 1, 1950, it had removed all of its machinery, material and personal property from plaintiff's factory building to a place or places unknown to plaintiff; (2) that it had ceased operation as a factory before paying out the sum of $225,000 in wages at Marquand; (3) that it had not paid the state and county taxes assessed against the factory building for 1950; (4) that it had failed to remove accumulated rubbish in and about the said factory building; (5) that it had removed from the factory building parts of the vacuum blower system, which had been installed and paid for by plaintiff; (6) that it had damaged and destroyed fixtures and portions of the building in removing machinery and material; and (7) that, in violation of the lease, it had subleased a part of the leased premises without plaintiff's consent.

Plaintiff further alleged that by reason of the Shoe Company's breach of the terms of the contract, the second note had become due and payable; that demand for payment had been made; and that the whole amount of the note was due and unpaid. Plaintiff prayed judgment for $5000 against Shoe Company, Maisak and Handler on the note and for $8000 damages against Shoe Company for breach of contract. Appellant now construes the action as one "for the recovery of money advanced by" plaintiff to Shoe Company on a secured note, "a contract and for damages to the building leased by appellant to respondents."

Shoe Company's answer admitted the execution of the contract, the construction of the building and the execution and delivery of the notes, but it denied the alleged breaches of the contract or that the second note became due and payable. Shoe Company alleged that it had performed all of the obligations incumbent upon it by virtue of its contract and further alleged that, while engaged in the operation of its shoe factory at Marquand, the plaintiff, without just cause or reason, entered into the premises, forcibly evicted defendant Shoe Company and locked it out of the premises, and thereby breached the contract on plaintiff's part and rendered it impossible for defendant Shoe Company to operate a shoe plant in accordance with the terms of the contract. The answer of the individual defendants also denied that the note was due and payable and alleged the forcible eviction of the Shoe Company from the building. They alleged that such eviction made it impossible for the company to perform its contract or meet its provisions as to payroll payments; that, except for plaintiff's acts, the Shoe Company would have met the payroll requirements of the contract and the note would have been paid in accordance with the terms of the contract; and that, by reason of the acts of the plaintiff, the note sued on was null and void.

In view of the issues presented upon this appeal and the condition of the record, it will not be necessary to make a detailed review of plaintiff's evidence.

Plaintiff built the building and the Shoe Company occupied it and began operations. The notes were duly executed and delivered. The first note was subsequently marked paid and returned to the Shoe Company, as agreed. Plaintiff's evidence shows a total of $164,439.30 was paid out at Marquand by the Shoe Company by December 11, 1950; and that under Shoe Company's "payroll record" for Marquand for the week ending March 27, 1950, a maximum of $4,524.14 was paid out; and that thereafter, the expense declined until for the week ending December 4, 1950 it was $1,000.82, for the week ending December 11, 1950 it was $382.34 and for the week ending December 18, 1950 it was $27.14.

Much evidence was directed to the breaches of the contract, as alleged, to wit, that the Shoe Company, in December 1950, began to remove machinery to Senath, Missouri, where Shoe Company opened and, later, operated a shoe factory. Plaintiff's officers were unable to get definite evidence from Handler, the president of Shoe Company, with reference to Shoe Company's plans, but they did know of the removal of much of the machinery from the factory building. On December 11, 1950, the board of directors of the plaintiff corporation received a report on the situation and ordered a designated agent of the plaintiff to repossess the building on the following day. This was done. At the time the building was repossessed there were only twelve sewing machines and two cutters in the building and some five employees of the Shoe Company. There was no direct evidence that the Shoe Company was not then operating "said building as a factory." There was evidence that the amount and kind of machinery in the building at the time was insufficient to manufacture shoes. Thereafter, Shoe Company's president obtained a key to the building from plaintiff's agent and the remaining machinery was removed from the factory building. On December 12th or on December 21st, it is not clear which, but after the building was repossessed, there was "a lot of shoe glue on the floor and walls" and a part of the vacuum blower system was gone, to wit, some of the downspouts or drops from the main trunk line to the machines. There was quite a bit of rubbish about the exterior of the building. "The roof needed repair and needed some paint." Plaintiff also offered in evidence a certified copy of what purports to be a field warehouse lease of the factory building and premises in question by Shoe Company to the St. Louis Terminal Warehouse Company. The instrument is dated the fourth day of November 1949, and it had been of record in Madison county since November 10, 1949. There was no evidence of any occupancy or use by the lessee of any part of the premises under this sublease.

The note and contract sued upon in this case contained no provision for the acceleration of the due date of the second note in the event of any breach of the term of the contract by Shoe Company. The present action was instituted on June 30, 1951, which was, of course, prior to the due date of the note. The contract did not contain any provision that the Shoe Company would continue to occupy and use the factory building until it had paid out a total of $225,000 in wages at Marquand, or for any specific time. The inducement provided by the contract for the continued occupation of the building as a factory, and for the payment of a total of $225,000 in wages within three years from the date Shoe Company occupied the building, was the return of the second note to the Shoe Company with the notation "paid...