Schmidt v. Morival Farms

• Decision Date: 11 June 1951
• Docket Number: No. 42231,No. 1,42231,1
• Citation: 240 S.W.2d 952
• Parties: SCHMIDT v. MORIVAL FARMS, Inc
• Court: Missouri Supreme Court

Page 952

240 S.W.2d 952

SCHMIDT v. MORIVAL FARMS, Inc.

No. 42231.

Supreme Court of Missouri, Division No. 1.

June 11, 1951.

As Modified on Denial of Rehearing July 9, 1951.

Frank W. Jenny, Union, Leo A. Politte, Raymond S. Davis and Jos. T. Davis, all of Washington, for appellant.

R. G. Church, Jr., St. Louis, Joseph T. Tate, Owensville, for respondent.

LOZIER, Commissioner.

The action is one for breach of a contract of employment in which plaintiff-respondent Schmidt had judgment for $6643.34 on his petition and against defendant-appellant corporation upon its counterclaims. We erred in transferring the appeal to the St. Louis Court of Appeals and that court properly retransferred the cause to this court. Schmidt v. Morival Farms, Inc., Mo.App., 232 S.W.2d 215. Although Schmidt's judgment against defendant was only for $6643.34, Schmidt also had judgment against defendant on defendant's 4 counterclaims, upon 3 of which it claimed a total of $10,900.67. The amount in dispute, exclusive of costs, exceeds $7500. Compare Jackson v. Merz, 358 Mo. 1212, 219 S.W.2d 320.

The principal issues are: the terms of the contract; whether it was void for indefiniteness or lack of mutuality; whether the corporation adopted a contract previously made by its organizer; and the propriety of the disallowance, as expenses, of certain repairs upon farm buildings and roads.

Schmidt initially sued the corporation and Joseph T. Davis, its president and majority stockholder, but later dismissed as to Davis. Count 1 of the petition alleged that: prior to defendant's incorporation Davis entered into negotiations with Schmidt for the purpose of employing Schmidt as manager of a Franklin County farm which later became the corporation's principal property; Davis offered to have the corporation employ Schmidt upon these terms: $100 monthly salary, a residence, use of a milk cow, a hog for butchering, reimbursement for reasonable expense of use of automobile and 25% of net profits realized from the operation of the farm; on or about March 1, 1946, after defendant's incorporation, defendant employed him in accordance with the proposal previously made by Davis; he began performance of his duties as manager and continued as such until February 28, 1947, when defendant terminated his services; defendant failed and refused to perform its obligations under the contract; and claimed these damages: $1200, salary, $450, failure to furnish the residence and cow, $100, car expense reimbursement, and $5017.85, net profits of operation between March 1, 1946, and February 28, 1947, a total of $6767.85.

In Count 2, Schmidt alleged that during that farm year he sold and delivered to defendant certain personal property of the reasonable value of $1102.95, and asked judgment for this sum.

In its answer, the corporation denied the alleged Schmidt-Davis negotiations, denied Davis offered to have the corporation employ Schmidt upon the terms alleged in the petition, denied 'that it 'agreed to compensate' plaintiff as its manager or agreed 'to carry out the offer made to him by the said Joseph T. Davis''; denied it 'agreed' to pay Schmidt $100 monthly salary, to provide a residence, to furnish a cow, or to pay him 25% of the net profits; and denied that Schmidt used his car in connection with defendant's business. The answer then asserted that the defendant was organized in November, 1945, and that Schmidt was its vice-president until February 28, 1947; that Davis had no authority to negotiate with plaintiff and that no Schmidt-Davis agreement was ever authorized, approved or ratified by the corporation.

The answer then alleged that for some time prior to November, 1945, Davis negotiated with Schmidt and Schmidt's father, Otto Schmidt, for the purchase of the farm owned by the Schmidts; that the sale was consummated in January, 1946, at which time 'plaintiff was in charge of said land and farms and was operating same and was the owner of all the livestock on said farm, and farm machinery and equipment and by agreement between defendant and plaintiff, said plaintiff was to continue his said operations for the defendant as its manager, and to devote his entire time, attention to management of all the farm land and property of the defendant, and, as such manager, plaintiff was to take possession and take over the operations of defendant's farms as of March 1, 1946; * * * that no express agreement was made or entered into between defendant and plaintiff as to compensation to be paid plaintiff, but he was to be paid a reasonable compensation.'

The answer admitted that Schmidt 'took over' on March 1, 1946, and operated the farm that farm year; but alleged that plaintiff 'breached his contract of employment as manager.' In substance, defendant said, Schmidt did not properly perform his duties, did not reside on the farm, but lived on his father-in-law's farm, and there engaged in his own farm activities, and used defendant's trucks in connection therewith.

The answer then asserted 'the facts to be as follows: that defendant was to pay plaintiff a reasonable compensation for his services as manager'; that it offered Schmidt a residence which Schmidt refused, that Schmidt refused the use of several of defendant's cows and that Schmidt had selected and butchered a hog; and denied that Schmidt used his car in the operation of the farm. The answer denied that the net profit was $20,069.35, admitted the correctness of several items in the income-expense statement in the petition, but denied others and asserted the existence of other items 'going to the determination of net profits.' Defendant asserted that an accounting would be necessary on this issue.

Answering Count 2 of the petition, defendant denied that $1102.95 was the reasonable value of the property it purchased from Schmidt.

In Count 1 of its counterclaim, defendant alleged that 'when the defendant corporation was organized in November, 1945, it employed the plaintiff as its manager * * * and under said employment plaintiff agreed to devote his entire time, efforts and attention to the farming operations and the raising of livestock on defendant's property'; that as a result of Schmidt's failure to do so, and because of the use of defendant's trucks, equipment and mules in his own farm operations, defendant suffered a loss which could only be determined by an accounting. Defendant asked no specific money amount under this count.

In Count 2, defendant claimed $10,000--$2500 as actual damages for farm equipment sold by Schmidt in excess of its value, in excess of its cost to Schmidt and in excess of OPA ceiling prices; and $7500 (3 times the $2500) as punative damages. In Count 3, defendant claimed $380 as alleged excess of cost to Schmidt of planting crops in 1945, and $105.67, excess above OPA prices on corn sold to defendant by Schmidt and his father. In Count 4, defendant claimed $415, alleged excess above OPA prices for hogs purchased from Schmidt by defendant ($350) and hogs purchased by Schmidt for defendant ($65).

Upon defendant's motion for a reference, the Honorable G. C. Beckham was appointed referee. The hearings lasted 7 days. The referee's report recommended that Schmidt have judgment for $5872.07 on his petition, with interest from March 1, 1947, and against defendant upon its counterclaims. After considering and overruling defendant's exceptions, the trial court entered the judgment recommended, viz.: for Schmidt, $5872.07 ($4869.12 upon Count 1, and $1002.95 on Count 2 of the petition), plus $771.27 interest, a total of $6643.34, and for Schmidt on defendant's counterclaims.

The referee found that defendant employed Schmidt upon the terms alleged in the petition. Schmidt's case as to the terms of his employment was a letter dated August 29, 1945, from Davis to Schmidt. Davis made a lengthy analysis, based upon data furnished by Schmidt, of the farm's income and expenses in prior years and estimated that the average annual net profit during the next ten years would be $4050. Davis wrote:

'In view of this situation the best that I can agree to in so far as your compensation per year would be: 1/4 of the farm's net profit plus $1200 per year, besides a house to live in free of rent, one cow or the equivalent of the milk of one cow, less some quantity due to being milked and cared for at my expense, one hog and such vegetables and chickens as you care to vaise. Where your car is used for farm business reasonable expenses for its use to be paid to you. I will advance you at the rate of $125.00 per month or $1500.00 per year, and then settle with you at the end of the year or other convenient times. If I do not make these payments as advances, but pay you so much per month as salary the withholding tax would have to be deducted each month.

'On the basis, then, of an average net profit per year of $4050.00, we would have 1/4 of the $4050, $1012.50; additional compensation, $1200.00; total compensation for average year, $2212.50; less advances of $125.00 per month, $1500.00--balance due you at end of year, $712.50.

'In determining the net profits the same would be confined to the grain farm operations and hogs--and would be based as follows: Market value, on the farm, of all grain and hay, whether used on the farm for livestock or not, less the ordinary farm operating costs and expenses, including labor, taxes, seed, maintenance, gas, oil, repairs, machinery and equipment depreciation. * * *

'My only incentive, I have to proceed, if we can come to understanding and terms, is that weather and river conditions in the future years, as well as the economic and farm commodity price conditions may enable us to increase this average net income a few thousand dollars per year. That's a gamble we have to take.'

Schmidt testified that upon one occasion, he asked Davis 'about the contract I had, this letter, whether he shouldn't make up a more formal contract, and he said that contract...