Reed Stenhouse, Inc. of Missouri v. Portnoy

• Decision Date: 16 November 1982
• Docket Number: 43975,Nos. 43951,s. 43951
• Citation: 642 S.W.2d 947
• Parties: REED STENHOUSE, INC. OF MISSOURI, Plaintiff-Respondent, v. Paul PORTNOY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 947

642 S.W.2d 947

REED STENHOUSE, INC. OF MISSOURI, Plaintiff-Respondent, v. Paul PORTNOY, Defendant-Appellant.

Nos. 43951, 43975.

Missouri Court of Appeals,

Eastern District,

Division Five.

Nov. 16, 1982.

Jim J. Shoemake, G. Lane Roberts, Jr., Guilfoil, Symington, Petzall & Shoemake, St. Louis, for plaintiff-respondent.

G. Carroll Stribling, Jr., Fordyce & Mayne, Gary L. Vincent, John S. Steiner, G. Carroll Stribling, Jr., Clayton, for defendant-appellant.

DOWD, Judge.

This is an appeal from an order of the Circuit Court of St. Louis County sustaining Reed Stenhouse, Inc.'s (hereinafter plaintiff) motion for new trial following a verdict by a jury for Paul Portnoy (hereinafter defendant) on his counterclaim for $84,000.00 plus interest in a breach of contract suit initiated by plaintiff. ¹ The jury found against plaintiff on its cause of action against the defendant. ²

We affirm the action of the trial court in granting plaintiff a new trial.

The following facts were adduced at trial. Plaintiff brought an action against defendant to recover monies paid pursuant to a contract for the purchase of defendant's insurance business. Defendant counterclaimed alleging plaintiff owed him the balance due on the contract. The jury returned a verdict for defendant and assessed damages at $84,000 plus 6% interest as stated in the contract. ³

Plaintiff contracted with defendant to purchase defendant's book of insurance business which consisted mainly of an account with the Permaneer Corporation. Under the terms of the agreement defendant was to receive a total of $320,000.00 for the business and a covenant not to compete. ⁴ Plaintiff by drafting paragraph 2B of the agreement attempted to provide a mechanism for adjusting the purchase price in the event the Permaneer account was lost or reduced. This provided for funding the payment amortization out of commissions actually earned from the Permaneer account and for the reduction in payments. Defendant and plaintiff also agreed that defendant would act as a consultant for plaintiff. In addition, plaintiff entered into a separate letter agreement with the Permaneer Corp., whereby Permaneer would give plaintiff a right of first refusal to match competitive offers from other brokerage firms. Defendant was not a party to this agreement.

The agreement between plaintiff and defendant was executed in June 1974, effective as of January 1, 1974. Payment under the agreement was apportioned as follows: $220,000 to the book of business and $100,000 payable at $20,000 annually to the covenant not to compete. Defendant received $84,000 immediately upon the execution of the contract and another $84,000 in January 1975 plus $9000 in accumulated interest. Prior to July 1975 plaintiff's branch manager had discussed the agreement for a right of first refusal with the new Chief Executive officer of Permaneer Corporation and understood that Permaneer would recognize in principle the basics of the letter agreement between plaintiff and Permaneer. In July 1975 Fireman's Fund, the chief carrier for the Permaneer insurance business indicated it would no longer underwrite Permaneer and cancelled the coverage on July 8, 1975 effective August 8, 1975. Plaintiff then arranged coverage for Permaneer with the Leatherby Company. However, in August of 1975 plaintiff received notice from Leatherby that Johnson & Higgins, a competing insurance brokerage firm, would replace plaintiff as agent of record on the Permaneer account.

Plaintiff then filed suit claiming it had lost the account and that defendant should return all of the consideration paid it. By the trial date plaintiff only claimed the $84,000 consideration paid defendant in advance on January 1, 1975 because the insurance account was lost during that year.

Both plaintiff's and defendant's causes of action are based upon the provisions of paragraph 2B of the contract for the sale of defendant's insurance business wherein it is provided that:

"In the event the Permaneer Corp. insurance account listed on Exhibit 'A' here to is lost or in the event the insurance commissions received by ICI with respect to that account decline by 30% or more, 'the payments' to be made by ICI to Portnoy as provided in the preceding subparagraph (A) hereof, shall be reduced in the same proportions as the amount of commissions lost bears to the annualized commissions income of Portnoy (and Town and Country) as of the date hereof."

The decisive issue in this case as to the plaintiff was whether the word "payments" as found in paragraph 2B indicated the defendant must return monies already paid for the year 1975 or that only future payments would cease upon the loss of the Permaneer account.

Defendant's description of his own counterclaim is that ICI did not lose the Permaneer account in 1975, because it made no effort to keep the account or to enforce the right of first refusal agreement, but rather willingly allowed the account to be transferred because Permaneer was no longer a long term business prospect.

The order of the trial court granting the plaintiff a new trial was based upon ground # 2 of plaintiff's motion for new trial and stated "Plaintiff's Motion for New Trial sustained on ground that error was committed in submitting Inst. 6." Instruction 6 is defendant's verdict directing instruction for his counterclaim. As the trial court failed to set forth any detailed reasons for its finding we look to plaintiff's motion for new trial where the following grounds appear as follows:

"A) The Permaneer account was, as a matter of law, lost to plaintiff in 1975 and it was therefore error to submit such issue to the jury.

B) Said instruction failed to hypothesize and to submit to the jury as an issue of fact defendant's proposed construction of the language previously held ambiguous by the court.

C) Said instruction was based on MAI 26.02 and is to be used in a contract action only where breach is the sole issue to be determined by the jury and the issue of breach was not the sole issue to be decided by the jury in this case, and

D) Said instruction failed to submit to the jury as an issue of fact the disputed and essential element of substantial performance."

Instruction No. 6 as requested by defendant reads as follows:

"INSTRUCTION NO. 6

Your verdict must be for defendant on defendant's counterclaim if you believe:

First, the Permaneer business was not lost to ICI and the commissions received by ICI from the Permaneer account did not decline 30% or more within the meaning of the agreement during 1975; thus leaving a balance due on the contract for Permaneer and other business and,

Second, plaintiff failed to pay to defendant the balance due, and

Third, defendant was thereby damaged.

Source, MAI 26.02 modified by defendant."

In reviewing a trial court's order for a new trial, the appellate court must indulge every reasonable inference favorable to the trial court's ruling and may not reverse unless there has been a clear abuse of discretion in granting the motion. Pihsou Hsu v. Mound City Yellow Cab Co., 624 S.W.2d 61 (Mo.App.1981); Laclede Inv. Corp. v. Kaiser, 541 S.W.2d 330 (Mo.App.1976). Also see Douglass v. Missouri Cafeteria, Inc., 532 S.W.2d 811 (Mo.App.1975).

While defendant relies on three points in support of his claim that the trial court erred in granting plaintiff's motion for new trial our review of the first is dispositive of this case.

Defendant contends on appeal that the trial court erred in sustaining plaintiff's motion for new trial in that instruction No. 6 submitted the ultimate fact issue of loss of the Permaneer account to the jury. Again as the trial court failed to specify any grounds for its decision we must look to each ground set forth in plaintiff's motion for a new trial.

Plaintiff first alleged in its motion for a new trial the Permaneer account was, as a matter of law, lost to the plaintiff in 1975 and that therefore it was error to submit such issue to the jury. We disagree. Without detailing the evidence any further we believe there were conflicts in testimony and evidence as to whether the account was lost or abandoned to warrant submitting said issue to the jury. Defendant offered proof and argued that the word "lost" has a special meaning in the insurance industry. Defendant further argued plaintiff made no effort to keep the account or to enforce the right of first refusal agreement but rather willingly allowed it to be transferred thereby abandoning it. Plaintiff argued that as the Permaneer Corp. had transferred its account to a new agent of record the account was simply lost. It is settled that where an agency is not coupled with an interest the principle has the power if not the right to revoke the agency at any time. See Chamberlain v. Grisham, 360 Mo. 655, 230 S.W.2d 721, 722-24 (1950). We believe the evidence supports the conclusion that the letter agreement between plaintiff and the Permaneer Corporation was not coupled with an interest and therefore constituted at most a revocable agency agreement.

However, defendant's contention that plaintiff lost the account because it made no effort to keep it is still at issue and the evidence supports its submission to the jury.

Where fair minded men would draw different conclusions from the facts, the question is not one of law but of fact for the jury to settle. Burke v. Moyer, 621 S.W.2d 75 (Mo.App.1981). Also see Roberts v. Wayne, 624 S.W.2d 523 (Mo.App.1981).

Secondly, plaintiff contended the defendant's instruction failed to hypothesize and submit to the jury defendant's proposed construction of the language previously held ambiguous by the court. Here, we agree. It is true that where the terms of an agreement are in dispute the verdict-directing instruction must hypothesize the proponent's version of the agreement actually made. Varn Co. v. Hamilton Federal Savings & Loan Ass'n., 488 S.W.2d 649, 651 (Mo.1973); Braun v. Lorenz, 585...