Villmer v. Household Plastics Co.

• Decision Date: 14 July 1952
• Docket Number: No. 42969,No. 2,42969,2
• Citation: 250 S.W.2d 964
• Parties: VILLMER et ux. v. HOUSEHOLD PLASTICS CO. et al
• Court: Missouri Supreme Court

Page 964

250 S.W.2d 964

VILLMER et ux. v. HOUSEHOLD PLASTICS CO. et al.

No. 42969.

Supreme Court of Missouri, division No. 2.

July 14, 1952.

Motion for Rehearing or to Transfet to Court en Banc Denied

Sept. 8, 1952.

Tyree C. Derrick, Karl E. Holderle, Jr., St. Louis, for appellants.

Greensfelder, Hemker & Wiese, Forrest M. Hemker, Mark R. Gale, St. Louis, for respondents.

BARRETT, Commissioner.

In this suit by Benjamin R. and Gertrude Villmer against Household Plastics Company and W. L. M. Clark, Inc., on two nonnegotiable $5000 notes a jury returned a verdict for the defendants on the plaintiffs' principal cause of action and the plaintiffs have appealed. The nonnegotiable notes recited that they were 'subject to the terms and conditions of the Contract of even date herewith by and between the parties hereto.' In their petition the plaintiffs pleaded the notes, the fact that they arose out of the contract, dated June 30, 1949, and 'that plaintiffs have in all respects complied with said contract upon which payment was predicated.' The defendants, in separate answers, admitted the execution of the notes but denied that the plaintiffs had 'as alleged, in all respects complied with such contract.' In addition the defendants pleaded specific clauses of the contract and asserted that by the quoted clauses payment of the notes was 'expressly conditioned upon the performance by the plaintiffs of the terms and conditions thereof; that such performance constitutes a condition precedent to the payment' of the notes and, the defendants alleged that the plaintiffs had not performed or complied with the conditions. The defendants pleaded the clauses of the contract in which the plaintiffs agreed that they would not employ or solicit the employment of Household Plastics' employees, or engage in the 'Party Plan' of selling plastics in competition with Household in the territories in which it operated. They pleaded the clause of the contract in which the plaintiffs agreed, for a period of nine months, that they would not 'become interested or participate, directly or indirectly, as owner, agent, employee, stockholder, partner, sales agent or in any other manner in any business operating in any State of the United States in which Employer (Household) or any subsidiary may then be doing business, which is the same as or similar to the type of business now operated by Employer, which type of business features and is predicated upon the sale of plastic products of any and all sorts by means of the so-called 'Party Plan of Selling," except that plaintiffs were permitted to sell plastics wholesale. The answers alleged, as the contract provided, that 'It is the essence of this agreement that Employees (Plaintiffs) shall not' violate the quoted clauses and the answers again asserted that the plaintiffs had failed to 'perform the precedent conditions' by engaging in specified and prohibited activities and, therefore, the defendants were 'excused from payment of the instruments sued on' and were not liable to the plaintiffs. In separate counts the defendants Clark, Inc. pleaded a setoff and Household Plastics pleaded a counterclaim as well as a setoff of $972.04. The plaintiffs' replies to the separate answers were, in effect, general denials and the reply to the counterclaim was that they were under no obligation to pay the item. While the action was on the notes it is thus plain from the pleadings that the suit and the plaintiffs' right to recover depended upon whether they had substantially complied with the contract or whether they had breached the contract and these were in fact the vital and decisive issues tried and submitted.

The jury, although given several forms of verdicts covering all possible issues and possible verdicts, returned the single verdict, 'We, the Jury in the above cause find in favor of the Defendants on the issues herein joined.' The judgment, from which the plaintiffs appeal, recites 'that the plaintiffs take nothing by reason of their cause of action, and that the defendants be discharged and go hence without day as to said cause of action * * *.' Upon this appeal the plaintiffs assert that their motion for a directed verdict at the close of all the evidence should have been sustained and that the verdict for the defendants is not supported by evidence. They also claim that the jury's failure to return a verdict on Household's counterclaim was prejudicially erroneous and that the court erred in admitting certain evidence upon the counterclaim. In connection with their principal cause of action the plaintiffs also assert that the trial court prejudicially erred in the giving and refusal of specified instructions.

Benjamin and Gertrude Villmer and W. L. M. Clark became associated in a business venture in these circumstances, which are necessary to an understanding of this litigation and the basic issues involved: Ben is a young man, thirty-six, formerly a truck driver. Through his wife he became interested in selling plastic items on the 'Party Plan.' Briefly this method of selling consists in having a sales person, a 'dealer,' arrange with a housewife to invite a number of her friends to her home and the dealer displays, demonstrates and takes orders from the guests for the various plastic products for sale. The dealer then purchases the items at a discount from a company handling them and delivers them to the housewife and collects for the sales. Ben and his wife intermittently engaged in this type of merchandising for others and finally started out on their own on a rather limited scale. They lacked capital and in the course of their business met Mr. Clark, seventy-seven years of age, a manufacturer of small plastic products--the principal stockholder in W. L. M. Clark, Inc. At first Mr. Clark extended the Villmers some credit and finally formed a partnership with them and caused them to move their business operations into a vacant room in his establishment. The Villmers displayed an extraordinary talent for this type of merchandising and between February 1948 and November 1949 literally skyrocketed gross sales from $2000 a month to $200,000 a month and were doing business in eighteen states. In April 1948 the partnership was dissolved and a corporation, Household Plastics Company, was formed. The W. L. M. Clark company paid in $25,300 and received 250 shares of the authorized 500 shares of capital stock of Household Plastics Company. The Household Plastics Company entered into a contract with Ben Villmer under which he acted as general manager and received one half the net profits, before taxes, as compensation. By November 1948, on this basis he was entitled to $45,000 as his one half the net profits and he used $24,500 of that sum to acquire 245 shares of the capital stock of Household Plastics. The business grew from twenty-five dealers doing business in the St. Louis area of $1200 a month to 600 or more dealers doing $260,000 a month. Ben Villmer, by December 1948, was drawing a salary of $1000 a month, plus $500 a month for expenses, and his wife, Gertrude, was drawing $1000 a month as a sales manager. Finally disagreements arose between the Villmers and the Clarks as to policies, advertising, retrenchment and sound financing and they commenced negotiations with a view that either the Villmers buy out the Clarks' interest or the Clarks buy out the Villmers' interest. The Villmers were unable to finance the purchase of the Clarks' interest and the result was that the Clarks bought out the Villmers by the contract of June 30th, 1949. Villmers received the $24,500 they had paid for their stock and for their employment contract the two $5000 notes payable in nine months. From June 1949 forward Household Plastics Company lost dealers and area and unit managers and it is a fair inference from the record, whatever the cause, that sales and business declined and the boom for this particular enterprise ended.

In support of their argument that the verdict in favor of the defendants is not supported by substantial evidence and that their motion for a directed verdict should have been sustained the appellants argue that there is no evidence from which it could be found that they breached the contract. They approach the argument in this manner: They contend that they made a prima facie case and that the defendants pleaded and relied upon affirmative defenses, for which they had the burden of proof, and that there was no evidence to support the affirmative defenses. It is in this connection that they contend that the court erred in refusing two of their instructions, A and B, which placed the burden of proof upon the defendants to establish 'the affirmative defense that the plaintiffs breached the terms and conditions of said contract' and in giving one of the defendants' instructions which declared that 'the burden is on the plaintiffs to prove their case by a preponderance or greater weight of the credible evidence and that unless they have done so your verdict must be for the defendants.' On the other hand the respondents contend that the provisions of the contract impose precedent conditions, the performance of which must be pleaded and proved as a part of the plaintiffs' case, as the plaintiffs in fact pleaded and assumed the burden, and that the sufficiency of the evidence to support the verdict is not an open question in this court. The respondents contend, therefore, that the court did not err in instructing the jury.

The arguments concerning affirmative defenses and conditions precedent and burden of proof, so far as the essential merits of the case are concerned, are rather academic at this stage of the proceedings. We have set forth the pleadings and, whether they present affirmative defenses or conditions precedent, they fairly well define the issues of whether the plaintiffs had complied with the contract and were therefore entitled to recover on the notes, or whether they had...