McFarland v. Winnebago South, Inc.
| Decision Date | 13 September 1994 |
| Docket Number | No. 19967-CV-W-9.,19967-CV-W-9. |
| Citation | 863 F. Supp. 1025 |
| Parties | Michael S. McFARLAND, et al., Plaintiffs, v. WINNEBAGO SOUTH, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Missouri |
Brian Williams, Watson, Ess, Marshall & Enggas, Kansas City, MO, Thomas Ruzicka, Watson, Ess, Olathe, KS, for plaintiffs.
Thomas H. Stahl, Jennifer P. Kyner, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for defendant Truman Bank & Trust Co.
Elvin S. Douglas, Crouch, Crouch, Spangler & Douglas, Harrisonville, MO, for defendants Winnebago South, Inc., Robert V. Steinhilber, Johnita F. Steinhilber, Jack O. Hart, Bonnie Hart, The Pleasant Hill Bank, Cass County Title Co., Lake Winnebago Real Estate Sales & Mgmt. Co., Lake Winnebago South Home Owners Assn.
Fred Northcraft, Frank Brancato, Smith, Gill, Fisher & Butts, Kansas City, MO, for defendants AMCA, Ltd. and Arnold M. Cook Associates, Inc., Arnold M. Cook, Barry Cook, Iris Cook.
Edward E. Schmitt, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for defendant Vernon T. Wiglesworth.
Tom Rippell, Grandview, MO, for Bannister Bank.
Robert L. Jackson Jr., Kansas City, MO, for the Estate of Robert L. Jackson Sr.
Don Jackson, John Lilla, Kansas City, MO, for defendants Halsey Rains, Shirley Williams, Orien Fehrman.
Defendant Johnita F. Steinhilber and her husband, defendant Robert V. Steinhilber, have potential claims against the receivership in the amount of $820,000, plus interest, less payments received, based on a Promissory Note from Winnebago South, Inc. to Johnita Steinhilber dated February 6, 1969, and a Deed of Trust from Winnebago South, Inc. dated January 28, 1970. On February 20, 1992, plaintiffs filed a "Memorandum" in which they requested that the claims under the note and Deed of Trust be disallowed and the instruments cancelled based on plaintiffs' assertion that the instruments are not supported by adequate consideration. The receiver joined in the request. Accordingly, on June 8, 1992, an Order to Show Cause was issued requiring the Steinhilbers to explain why their claims should not be disallowed and the note and Deed of Trust should not be cancelled for the reasons advanced by plaintiffs. The Steinhilbers responded on June 26, 1992.
Week-long evidentiary hearings were held in March and July 1994. Based on the evidence presented at these hearings and on the stipulations of fact entered into between plaintiffs and defendants Robert V. Steinhilber and Johnita F. Steinhilber, I make the following findings of fact.
Robert and Johnita Steinhilber are and were at all relevant times husband and wife. Both are well educated. Robert Steinhilber received his law degree from the University of Missouri-Kansas City in 1958 or 1959 and was admitted to the Missouri Bar shortly thereafter. He is currently licensed to practice law in Missouri. Johnita Steinhilber received a B.A. from Louisiana State University, a masters degree in government from Yale University in 1946 and a J.D. from Nova University in 1980 and is licensed to practice law in Florida.
In late 1967, Robert Steinhilber was chairman of the board of directors and president of Lake Winnebago Development Company, Inc. (Winnebago North), the development arm for the Lake Winnebago North subdivision. He remained in that position through 1969. Johnita Steinhilber, Jack Hart, Bonnie Hart, Alex Flemington (Johnita Steinhilber's brother), Grace Flemington and W.J. Madden were directors of Winnebago North throughout this period. Georgina Steinhilber (Robert Steinhilber's mother), was a director in 1967. Jack Hart and Alex Flemington were also officers in Winnebago North.
Either in late October 1967 or early November 1967, Winnebago North, authorized Joseph McCambridge, one of its salesmen, to cooperate with realtor Merle Decker in attempting to procure a buyer for the Williams Farm which was owned by the Williams family.
Because the Williams Farm was located immediately south of the Lake Winnebago North subdivision, Robert Steinhilber believed it was very important to Winnebago North for the Williams Farm to be acquired by Winnebago North or by a party friendly to Winnebago North.
On December 28, 1967, Robert Steinhilber executed a real estate sales contract with the Williams family to purchase the Williams Farm for $123,000. Robert Steinhilber claims that he subsequently offered Winnebago North the opportunity to purchase the Williams Farm, but that the corporation was unable to do so. The minutes of the annual meeting of shareholders and the annual meeting of the board of directors of Winnebago North dated February 27, 1968, do not reflect that the opportunity to purchase the Williams Farm was rejected by Winnebago North or even discussed at these meetings. Nor do the minutes of a special meeting of the board of directors of Winnebago North on January 2, 1968, show that purchase of the Williams Farm was discussed.
On January 16, 1968, Robert Steinhilber, as president of Winnebago North, wrote a check drawn on the account of Winnebago North payable to Merle Decker, a realtor involved in the sale of the Williams Farm, in the amount of $1,000 for part of the down payment for the purchase of the Williams Farm. On February 12, 1968, Robert Steinhilber endorsed over to Hight and Associates a check drawn on the account of Winnebago North in the amount of $8,000 payable to R.V. Steinhilber, signed by Robert Steinhilber, as president of Winnebago North. Hight and Associates was the closing agent for the Williams Farm sale.
Merle Decker and Joseph McCambridge each received a $3,690 Promissory Note in payment for their services in connection with the sale of the Williams Farm to Robert Steinhilber. The Promissory Notes were from Winnebago North, signed by Robert Steinhilber as president and were secured by lots in the Lake Winnebago North project. Demonstrating the failure of Robert Steinhilber to separate his personal interests from those of Winnebago North was a letter dated February 9, 1968, from Robert Steinhilber, attorney at law, to Merle Decker, realtor, in which he states that "I will execute a note to you for the amount of your half of the commission and execute a note to Joe McCambridge for his half of the commission...." As stated above, the word "I" turns out to be Winnebago North and not Robert Steinhilber, personally.
Pursuant to the real estate contract signed by Robert Steinhilber, a $16,000 down payment was required for the purchase of the Williams Farm. As set forth above, this down payment was paid by the January 16, 1968, check for $1,000 from Winnebago North, the February 12, 1968, check for $8,000 from Winnebago North to Robert Steinhilber and the two Winnebago North Promissory Notes totaling $7,380, less $380 returned by Merle Decker to Robert Steinhilber. Johnita Steinhilber did not contribute any money to the down payment.
After subtracting the $16,000 down payment from the $123,000 purchase price, $107,000 remained to be paid pursuant to the December 28, 1968, real estate contract. To finance the remaining $107,000, Robert Steinhilber and Johnita Steinhilber signed a Promissory Note to the Williams family in the amount of $57,000 and borrowed $50,000 from Businessmen's Assurance Company (BMA), executing a First Mortgage Real Estate Note and Deed of Trust.
Despite the fact that the real estate contract showed the purchaser of the Williams Farm to be Robert Steinhilber, a Missouri warranty deed dated February 14, 1968, was recorded on February 21, 1968, showing the purchaser to be only Johnita F. Steinhilber.
On February 5, 1968, a Certificate of Incorporation for Winnebago South, Inc. (Winnebago South) was issued by the Missouri Secretary of State. The Articles of Incorporation were signed by Robert V. Steinhilber on February 1, 1968. At all times prior to May 25, 1969, Robert Steinhilber was the president, chairman of the board of directors, chief executive officer and only shareholder of Winnebago South. Winnebago South was created to develop the Williams Farm.
On March 29, 1968, Robert Steinhilber paid the first quarterly interest payment on the Promissory Note to the Williams family by a check in the amount of $431.02 drawn on the account of Winnebago North. The check stub states "Charged to R.V. Steinhilber personal account...."
Around July 1, 1968, the second quarterly interest payment on the Williams' Promissory Note was paid by a check in the amount of $855, signed by Robert Steinhilber and drawn on the account of Winnebago North.
Also around July 1, 1968, the first semiannual interest payment on the BMA Promissory Note ($1,244.44) was paid by a check signed by Robert Steinhilber and drawn on the account of Winnebago North.
The third quarter interest payment on the Williams' Promissory Note was paid by a check dated around October 1, 1968, in the amount of $855. Again, the check was signed by Robert Steinhilber and drawn on the account of Winnebago North.
By a check dated December 20, 1968, signed by Johnita Steinhilber and drawn on the account of Robert V. or Johnita Steinhilber, $29,355 in principal and interest was paid to the Williams family.
By a check dated December 26, 1968, signed by Robert Steinhilber and drawn on the account of Robert V. or Johnita Steinhilber, BMA was paid $3,750 in principal and interest.
The source of the money to make the December 1968 payments to the Williams family and to BMA was a December 20, 1968, check in the amount of $34,000 drawn on Winnebago North's...
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