Simpson v. Simpson

• Citation: 295 S.W.3d 199
• Decision Date: 06 October 2009
• Docket Number: No. WD 69831.,No. WD 69810.,WD 69810.,WD 69831.
• Parties: Loyd R. SIMPSON, Appellant-Respondent, v. Stephan C. SIMPSON, Respondent-Appellant.
• Court: Missouri Court of Appeals

295 S.W.3d 199

Loyd R. SIMPSON, Appellant-Respondent, v. Stephan C. SIMPSON, Respondent-Appellant.

No. WD 69810.

No. WD 69831.

Missouri Court of Appeals, Western District.

October 6, 2009.

Todd H. Bartels, Esq., and Sharon Kennedy, Esq., St. Joseph, MO, for appellant.

Frederick H. Riesmeyer, II, Esq., and Matthew P. Clune, Esq., Kansas City, MO, for respondent.

Before JAMES E. WELSH, P.J., and VICTOR C. HOWARD and ALOK AHUJA, JJ.

ALOK AHUJA, Judge.

Loyd Simpson filed suit against his son Stephan Simpson to collect on a delinquent promissory note. After a bench trial the circuit court awarded Loyd Simpson judgment for $97,242.58 in damages, and $12,500.00 in attorneys fees and expenses. Stephan Simpson appeals, and Loyd Simpson cross-appeals.

For the reasons which follow, we deny relief on Stephan Simpson's appeal, but reverse on Loyd Simpson's cross-appeal, and remand for recalculation of his recoverable damages.

Factual Background

In 1999, Loyd Simpson and his wife Patricia Simpson agreed to sell their lumber business, Simpson and Sons Sawmill, Inc., for $1,771,000.00 to their son Stephan Simpson and his then-wife, Cindy Simpson.¹ In connection with the transaction the parties signed two promissory notes on July 15, 1999. The first note was for $500,000.00, and required monthly payments of $12,500.00 beginning September 1, 1999. The second note was for the remaining balance of $1,271,000.00, and also required $12,500.00 monthly payments; payments on the second note were not to begin, however, until the "30th day following the final and last installment" was paid on the first note.

The first note was paid in full in May 2000, and Stephan and Cindy Simpson thereafter began making payments on the second note.

In 2002, Stephan and Cindy Simpson divorced. In connection with the dissolution of their marriage, Stephan agreed to remove Cindy from the second note. On March 4, 2002, Stephan Simpson (hereafter "Son") and Loyd Simpson (hereafter "Father") signed a third promissory note (the "Note") in the amount of $847,711.69, which the parties believed at that time to be the current unpaid balance on the second note. The second note was canceled on or about April 4, 2002.

Under the Note, Son agreed to pay Father "the sum of $847,711.69, together with interest at a rate of 6%, compounded annually." The Note specified that "[Son] shall pay to [Father] on the 1st day of April 2002, and every month thereafter until the indebtedness hereunder is fully paid, the sum of $12,500.00." The Note contained no provision authorizing Son to prepay his indebtedness. To the contrary, the Note provided:

In the event that [Son] fails to transmit to [Father], any of the installments which accrue and become payable throughout the amortization period, within fifteen (15) days of the date said payment is due, [Father] may without further notice declare this Promissory Note in default and, demand payment of the entire amount of the unpaid balance at that time....

In the event of default as set forth herein, [Son] agrees to pay any costs incurred by [Father] which are associated with the collection of this Promissory Note, including, but not limited to, reasonable attorney's fees and expenses.

After the Note's inception, Son made timely $12,500.00 monthly payments to Father for an extended period. From July 2005 through August 2007, however, Son missed twenty-five installment payments (although Son made a one-time lump-sum payment of $124,483.12 in March 2006). In September 2006, Father's counsel sent Son's counsel a letter declaring the Note to be in default due to Son's failure to make any payment since March 2006, and demanding immediate payment of the Note's entire remaining balance.

On January 31, 2007, Father filed suit against Son in Buchanan County Circuit Court. Father alleged two counts, for breach of the Note and for anticipatory repudiation. Son answered and alleged two counterclaims, for unjust enrichment and for reformation of the Note. The gist of Son's counterclaims was his contention that, in light of Son's payments on the first and second notes, the $847,711.69 balance stated in the Note did not correctly reflect the amount which remained owing from Son to Father for purchase of the lumber business, but was instead the product of mutual mistake.

The case was tried to the court on April 28, 2008. On May 14, 2008, the court issued its judgment. The court found in Father's favor on his breach of promissory note claim, thus "render[ing] moot" his claim for anticipatory repudiation. In entering judgment for Father, the court rejected Son's argument that, despite his admitted failure to make the specified monthly payments of $12,500.00 for extended periods, he was not in default because of certain lump-sum payments he had made at irregular intervals: "There is no prepayment clause in the Note nor was [Son] excused from making a $12,500 payment `every month.' It is not disputed that [Son] ceased making payments under the Note and he is accordingly, in default under the express language of the Note." The court also rejected Son's counterclaims, based on its conclusion that Son "failed to establish by clear, cogent and convincing evidence that the sum calculated due under the Note was erroneous and the product of mutual mistake." The court awarded Father damages of $97,242.58, and attorneys fees and expenses of $12,500.00.

Both Father and Son appeal.

Standard of Review

"Because this is a court-tried case, our review is under the standard set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (1976)." Urban Renewal of K.C. v. Bank of New York, 289 S.W.3d 631, 634 (Mo. App. W.D.2009)(citing Mo. Land Dev. Specialties LLC v. Concord Excavating Co., 269 S.W.3d 489, 496 (Mo.App. E.D.2008)). "We will affirm unless the decision is not supported by substantial evidence, is against the weight of the evidence, or erroneously declares or applies the law." Id.

With respect to Son's challenges to the court's rejection of his mutual mistake claim, we note that

We must exercise our power to set aside a decree or judgment on the ground that it is against the weight of the evidence with caution and only with a firm belief that the decree or judgment is wrong.... As the trier of fact, it is the trial court's function and duty to assess the weight and value of the testimony of each witness. Thus, in determining whether a judgment is against the weight of the evidence, we must give due regard to the trial court's opportunity to judge the credibility of the witnesses. [W]e view the evidence, along with all reasonable inferences, in the light most favorable to the trial court's judgment, and disregard all contrary evidence and inferences.

O'Dell v. Mefford, 211 S.W.3d 136, 141 (Mo.App. W.D.2007) (citations and internal quotation marks omitted). In conducting our review, "[a]ll fact issues upon which no specific findings are made shall be considered as having been found in accordance with the result reached." Rule 73.01(c).

Given the nature of Son's arguments, we also emphasize that "it is well settled that the trial court is free to believe or disbelieve all, part or none of the evidence, including disbelieving evidence that is uncontroverted." Beery v. Shinkle, 193 S.W.3d 435, 443 (Mo.App. W.D.2006) (rejecting claim "that because ... testimony was uncontroverted, it had to be believed by the trial court": "That is a proposition that is not recognized in the law." (citing Nautilus Ins. Co. v. I-70 Used Cars, Inc., 154 S.W.3d 521, 528 (Mo.App. W.D.2005))). Because the trial court was free to reject even uncontroverted evidence, and because Son had the burden of proving the mutual mistake underlying his counterclaims, we also stress that "[i]t takes no evidence to support the trial court's ruling against [Son] because [he] had the burden of proof and persuasion." CB Commercial Real Estate Group, Inc. v. Equity P'ships Corp., 917 S.W.2d 641, 649 (Mo.App. W.D. 1996); see also, e.g., O'Dell, 211 S.W.3d at 141 ("`Since the burden of proof was on [Mefford], if the trial court chose to disbelieve [her] evidence, it was not necessary that there be affirmative evidence to support the finding' that Mefford did not take possession of the property and that there was no parol gift." (citation omitted)).

Analysis

I.

Son's first and second Points Relied On are founded on his claim that the Note mistakenly states the remaining balance owed by Son to Father as of the time the Note was made, March 4, 2002. Although the face amount of the Note is $847,711.69, Son contends that, "when all payments made by [Son] to [Father] [on the first two notes] were properly applied, the correct principal amount for the ... Note ... was $812,719.17 and not the stated amount of $847,711.69." As a result of this alleged overstatement of his outstanding indebtedness at the time of the Note's inception, Son contends that the remaining unpaid balance as of the time of trial was $31,038.91, not the $97,242.58 found by the trial court.

"`[I]t is presumed that a written contract embodies the entire agreement of the parties, and this is particularly so where it is a promissory note which is in dispute.'" Pac. Carlton Dev. Corp. v. Barber, 95 S.W.3d 159, 165 (Mo.App. W.D. 2003) (citation omitted). "`The parole evidence rule prohibits use of oral evidence to contradict or change the terms of a written, unambiguous and complete contract absent fraud, common mistake, accident or erroneous omission.'" Id. (citation omitted).

Son urges that the trial court should have deviated from the unambiguous written terms of the Note here, because "the great weight of the evidence ... was that the original balance of the Note should have been $812,719.17, and not $847,711.69," and the principal balance of the Note should have been reformed to correct this mutual mistake. In its judgment the circuit court expressly rejected Son's arguments, finding that Son "failed to establish by clear,...