Parker v. Stern Bros. & Co.

Decision Date10 September 1973
Docket NumberNo. 57059,No. 1,57059,1
Citation499 S.W.2d 397
PartiesSidney PARKER, Administrator of Estate of Mildred L. Parker, Deceased, et al., Plaintiffs, v. STERN BROTHERS & COMPANY, a corporation, Defendant-Third Party Plaintiff-Respondent, v. William C. LUCAS, Jr., et al., Third Party Defendants-Appellants
CourtMissouri Supreme Court

Lawrence M. Berkowitz, Dick H. Woods, Kansas City, for respondent Stern Brothers & Company, a Corporation; Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, of counsel.

H. George Lafferty, Jr., Kansas City, for appellant William C. Lucas, Jr.

James H. Ottman, William G. Zimmerman, Kansas City, for appellant Empire District Investment Co., Inc., a Corporation.

WELBORN, Commissioner.

Stern Brothers & Company was sued in six separate actions on the theory that Stern Brothers had refused to purchase stock in six Missouri banks, contrary to its offer to do so as an agent for an undisclosed principal. Four of the suits were in the United States District Court and two in the Jackson County Circuit Court. Stern Brothers filed third party actions in all six cases against William C. Lucas, Jr., Beulah Lucas, the mother of William, Jr., and Empire District Investment Company, Inc., for indemnity against any loss by Stern Brothers to the plaintiffs on the theory that Stern Brothers acted, in the transactions involved, as agent of the named third party defendants.

In December, 1970, Stern Brothers settled the six suits for $170,000. Trial was then had of the third party claims in the two circuit court actions, which were consolidated. One of the actions involved the claim originally filed by Sidney Parker, Administrator, which sought judgment against Stern Brothers for $441,599.83. The jury in the third party action returned a verdict in favor of Stern Brothers and against William C. Lucas, Jr., and Empire for $91,822. The second action involved the claim of Sidney Parker, individually, which sought judgment of $39,464.66 against Stern Brothers. The verdict in the third party action was in favor of Stern Brothers and against William Lucas, Jr., and Empire for $8,178. After their after-trial motions had been overruled, Lucas and Empire appealed to this court by notice of appeal filed June 29, 1971.

This litigation centers around the holdings of various members of the Lucas family in six Missouri banks: The Osceola Bank, Humansville Bank, Lowry City Bank, Tri-County State Bank, El Dorado Springs, Citizens State Bank, Fair Play, and Citizens Bank, Appleton City. William C. Lucas, Jr., inherited stock in each of the banks from his father, William C. Lucas. The stock which William Lucas, Jr., inherited average about 8% of the outstanding stock in the banks. Judge John Lucas, a half-brother of William C., Jr., and his son owned some 20% of the stock in each of the five banks, other than the Appleton City bank, where his holdings amounted to 5 or 10%. The Linney branch of the family, which stemmed from Lula Lucas Linney, the sister of W. C. Lucas, Sr., owned about 30% of the stock except for Appleton City, where their holdings were approximately 15%. Similar holdings were in the hands of the Terwilligers, who stemmed from Sophia Lucas Terwilliger, also a sister of W. C. Lucas, Sr.

Stern Brothers & Company is a Kansas City investment banking corporation. Raymond F. Davis has been an assistant vice-president of the company since 1953 or 1954. He became acquainted with William C. Lucas, Jr., in 1961. In 1963, Lucas purchased 100 shares of National Fidelity Life Insurance Company stock through Davis and Stern Brothers. In December, 1964, Lucas asked Davis to call some persons owning stock in the Appleton City Citizens State Bank to see whether they would sell their stock. Lucas instructed Davis not to reveal who was interested in buying. Davis was unable to find any sellers.

In August, 1967, Lucas came to Davis's office with a letter which he had prepared and which he asked Davis to send out on Stern Brothers stationery. According to Davis, Lucas told him that 'a group or a syndicate of people' wanted to buy stock of the banks referred to in the letter. Davis stated that Lucas assured him 'there would be no problem' about money. Lucas asked that the letter be sent to Mrs. Sophia L. Terwilliger of Colorado Springs, Colorado, Elston Merryfield, Appleton City, Lottie and Doris Scroggs, Clinton, and Frank and Edith Suchomel of Center Point, Iowa. Following substantially the draft submitted by Lucas, Davis, under date of August 17, 1967, sent, on Stern Brothers stationery, the following letter to the persons whom Lucas had designated:

'We hold offers to buy stock in the banks at Eldorado Springs, Fairplay, Humansville, Appleton City, Lowry City, and Osceola, Missouri. The offering prices vary from twice the book value at the smaller of these institutions to a high of two and one-half times the book value at Appleton City.

I have not quoted exact dollar prices to you since these are tied to book value which, from time to time, may fluctuate. The orders to buy are open for five years, expiring on this date in 1972. The actual dollar price would be set as of the exact date of receipt of acceptance at this office and then by certified statement as to the book value given to us by the cashier of the bank.

I would appreciate your interest in this matter to the extent of conveying this offer to other members of your family. The offer itself is general and open thus not subject to rejection as circumstances may change for you during the next five years.

Very truly yours,

Ray F. Davis

Assistant Vice President'

Lucas instructed Davis that he could not reveal who was buying the stock. Davis was not then aware that as agent for an undisclosed principal Stern Brothers might be liable to accept any stock tendered in response to the offer.

David heard nothing from the offer. He received occasional inquiries from Lucas as to whether anything had come in.

In late April or early May, 1968, a Mrs. Hahn of the Internal Revenue Service came to Davis's office with a copy of the August 17 letter addressed to Mrs. Terwilliger. Mrs. Hahn informed Davis that Mrs. Terwilliger had died and the Internal Revenue Service was interested in finding out, for estate tax valuation purposes, whether or not the August 17 letter represented a bona fide offer. Davis informed her: '* * * to the best of my knowledge this offer was open, that there was no money in escrow, that a group of people were trying to buy stock, that I thought that stock would be picked up, if tendered, and to call Mr. William C. Lucas for any further information.'

Immediately following Mrs. Hahn's visit, Davis called Lucas and told him about the visit and Mrs. Hahn's inquiry and that he had told her that the August 17 letter represented a bona fide offer. Lucas thanked Davis for calling.

On June 10, 1968, Davis received a call from Mr. Fred Murdock, a Kansas City attorney, asking for an appointment about the August 17 letter. Murdock came to Davis's office that afternoon. Prior to his arrival, Davis had called Lucas and told him that Murdock was coming over in the interest of clients whom he did not identify. Lucas told Davis, 'Don't let them know who is buying stock.' He also said, 'Let's see what they've got.' Murdock was accompanied by Mr. Sidney Parker and his daughter, Margaret Parker Platter. (The Parkers are of the Linney branch of the Lucas family.) They asked Davis whom Stern Brothers was representing and he told them 'it was a group or syndicate of people' and did not divulge Lucas's name. Murdock produced an authorization from Judge John Lucas and his son, John Lucas, Jr., to reveal whether or not they were the principals involved and Davis stated they were not. According to Davis:

'* * * The primary thing that I thought that they were concerned with was the estate valuation that was being placed on the stock in two estates by the Internal Revenue Service which was brought about by the letter of August 17, which the Internal Revenue Service had. And these people thought that this was a price far in excess of fair market value. In the discussion, Mr. Murdock asked me about the conditions of this letter; I told him that insofar as I knew, that this group of people would pick up any stock that was tendered, that there was no money in escrow, but that I believed the parties to be responsible. There was further discussion in this regarding the probability of who the people might be that were trying to buy stock, and it was my impression, by comments that were made by Mr. Parker and Mr. Murdock, that they were going to call on Bill Lucas. When they left, I immediately called Bill Lucas and related what I have told you.'

Davis stated that he told Lucas 'they would probably call on him.' Lucas replied, 'This was fine.' He told Davis 'just to sit back and see what they had to offer.'

The next day Lucas appeared at Davis's office, with a handwritten letter from his mother, addressed to Davis, which referred to her wish, previously transmitted to Davis, to purchase 'any or all stock owned by members of the Lucas family in the various country banks.' The letter stated that she would buy or William Lucas would sell on the terms given Davis. A copy of the letter was made and delivered by Lucas to Murdock.

Around June 13, 1968, Lucas got in touch with Mr. Delton Houtchens, an attorney at Clinton. Between June 13 and July 3, 1968, correspondence took place between Houtchens and Murdock relating to Lucas's willingness to negotiate with Murdock's clients on a different basis, and expressing an intent on the part of Lucas to exchange stock in return for a controlling interest in the Appleton City bank.

On July 1, 1968, Sidney Parker wrote to Stern Brothers 'Attention: Mr. Richard J. Stern, President,' as follows:

'I am the Administrator of the estate of Mildred L. Parker, deceased, which estate is the owner of...

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