Rue v. Helmkampf

• Decision Date: 23 August 1983
• Docket Number: No. 45620,45620
• Citation: 657 S.W.2d 76
• Parties: Roger C. RUE and Nellie M. Thomas, Plaintiffs-Appellants, v. Harold F. HELMKAMPF, et al., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 76

657 S.W.2d 76

Roger C. RUE and Nellie M. Thomas, Plaintiffs-Appellants, v. Harold F. HELMKAMPF, et al., Defendants-Respondents.

No. 45620.

Missouri Court of Appeals,

Eastern District,

Division Four.

Aug. 23, 1983.

J.B. Carter, John H. Lamming, Clayton, for plaintiffs-appellants.

Jane E. Leonard, Charles Alan Seigel, St. Louis, for defendants-respondents.

PUDLOWSKI, Presiding Judge.

Plaintiffs appeal from a judgment entered upon the trial court's sustention of defendant's motion for summary judgment. We affirm.

The case involves the issue of the requirement for, and sufficiency of, consideration returned or tendered as a condition for setting aside or cancelling a contract of settlement and release.

The pleadings and affidavits establish the uncontroverted facts of the case. In the spring of 1977, the two plaintiffs individually and as sole stockholders, directors and officers of Big Bend Square, Inc., a Missouri corporation, entered into a business relationship with defendant for development of a real estate tract in St. Louis County into a shopping, office and residential center to be known as Big Bend Square. As part of the land development project, the parties jointly incurred indebtedness including three loans, notes and deeds of trust from sundry lenders and an employment contract with a law firm for legal services.

Escalating cost overruns and other serious disputes and financial problems developed. The original target date for completion of the project was September 1, 1978, but was extended several times to, finally, July 31, 1980. By letter of March 16, 1980, plaintiffs expressed to defendant their disquietude about their increasing substantial financial liabilities occasioned by the delays and their desire to withdraw from the project.

Complying with their wish, the defendants and plaintiffs met on April 4, 1980 and executed the Big Bend Square Settlement Agreement disposing of their financial differences and terminating their original business agreement for the real estate development project. The settlement agreement contained mutual promises and releases concerning the parties' respective rights, duties and obligations. Plaintiffs, on the one part, and defendant, on the other part, released each other "from each and every claim, right, action, and/or cause of action, known or unknown," each of them "may have against" the other "arising out of the purchase, financing, accounting, construction, development and leasing of the land and the improvements thereon and appurtenances thereto and all actions of" each of them "relative thereto" except the rights of each party arising under the provisions of the Settlement Agreement and the documents delivered to each party pursuant thereto. Under the terms of the settlement agreement, defendant released plaintiffs from personal liability in an approximate sum of $3,336,000 under all of the loan agreements and the legal employment contract, and defendant agreed to perform and assumed all of the obligations of plaintiffs relating to the real estate development. In return, plaintiffs conveyed to defendant by special warranty deed all their right, title, and interest in the real estate development as well as the loan agreements and all other interests in the project.

Four months after executing the agreement, plaintiffs filed their four count petition in equity against defendant for damages, accounting, rescission and constructive trust. Count one alleged defendant delayed construction on the real estate project causing plaintiffs financial difficulties, and that defendant made false representations to them, thereby breaching their fiduciary business relationship. Count two alleged defendants' nondisclosure of financial records of the real estate project for which plaintiffs sought an accounting. Amended count three prayed for rescission of the deeds, assignment, and release executed by plaintiffs on April 4, 1980, on the grounds that the instruments were obtained fraudulently through coercion and undue influence by defendant. Count four requested imposition of a constructive trust to preclude defendants' unjust enrichment.

Plaintiffs raise several points on appeal. First, plaintiffs contend the trial court erred in rendering summary judgment for defendant because the pleadings and affidavits set forth a submissible case in presenting the following questions of material fact:

1) Whether defendant breached his duty to plaintiffs as a "partner" by withholding information concerning their "partnership's" financial status and by using superior knowledge and threats to coerce plaintiffs into divestiture of their business interests;

2) Whether the "partnership" attorney acted in concert with defendant in bringing about the divestiture by threatening them with financial ruin and not giving them an opportunity to consult another attorney;

3) Whether plaintiffs' wills were overborne by fear of financial loss;

4) Whether defendant intended, by representations concerning his role in the prospective development, concealment of material information to coerce plaintiffs' exit from the project.

Second, plaintiffs state that their offer to do equity and tender back to defendant certain written instruments sufficed for the court in equity to supervise reformation and rescission of the written instruments and to adjudicate the parties' respective rights. They assert that the general rule at law requiring plaintiffs to tender back benefits received under an agreement as a prerequisite to plaintiffs' maintaining a cause of action is inapplicable in a court of equity where no tangible corpus or fund returnable to defendant exists and where the requirement of restoration of "status quo" would have the effect of indemnifying defendant for a disputed amount.

Defendant, on the other hand, posits that the restoration or tender of restoration is an essential condition to effect a rescission of the settlement release to permit plaintiffs to maintain their claim or cause of action in equity. Defendant asserts that plaintiffs' failure to tender back all benefits received under the settlement contract was fatal to plaintiffs' action, so that the judgment of the trial court should be affirmed.

Plaintiffs reply that the settlement agreement of April 4, 1980, did not bar absolutely their right to maintain their lawsuit against defendant theorizing that their offer to do equity in amended count three of their petition substantively indicated their willingness to make whatever restoration the court, in the exercise of its equitable powers, deemed necessary and proper.

We need not address plaintiffs' initial issue of whether or not they had adequately pleaded a cause of action against defendant for damages, accounting, rescission and constructive trust based on the allegedly fraudulent conduct of defendant so as to withstand summary judgment. Our concern at this point focuses on the dispositive issue of whether the existence of the settlement agreement constitutes a bar to plaintiffs' action. The settlement agreement squarely encompasses the issues within plaintiffs' petition. Neither side contends any of plaintiffs' claims are outside the purview of the agreement. Thus, absent a proper tender back by plaintiffs to defendant of the consideration received, the settlement agreement remains intact and bars plaintiffs' claims. Therefore, the crux of this appeal is the sufficiency of plaintiffs' tender.

We do not believe that the amended count three where plaintiffs merely allege that they "are willing to do equity and hereby tender and offer to deliver up to defendant the releases for the notes and deeds of trust" satisfies the requisite...