Walker v. Western Sur. Co., 17702

• Citation: 824 S.W.2d 456
• Decision Date: 27 January 1992
• Docket Number: No. 17702,17702
• Parties: Danny E. WALKER and Reva A. Walker, Plaintiffs-Appellants, v. WESTERN SURETY COMPANY, a South Dakota Corporation, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 456

824 S.W.2d 456

Danny E. WALKER and Reva A. Walker, Plaintiffs-Appellants, v. WESTERN SURETY COMPANY, a South Dakota Corporation,

Defendant-Respondent.

No. 17702.

Missouri Court of Appeals,

Southern District,

Division One.

Jan. 27, 1992.

Motion for Rehearing or Transfer to

Supreme Court Denied

Feb. 10 and 20, 1992.

Thomas W. Millington, Schroff, Glass & Newberry, P.C., Springfield, for plaintiffs-appellants.

Glenn A. Burkart, Mann, Walter, Burkart, Weathers & Walter, Springfield, for defendant-respondent.

PARRISH, Judge.

Danny E. Walker and Reva A. Walker (plaintiffs) filed an action in the Circuit Court of Greene County against Western Surety Company (defendant) seeking recovery on a certain surety bond issued by defendant. Plaintiffs filed a motion for summary judgment. Defendant filed a motion for judgment on the pleadings. The trial court granted the motion for judgment on the pleadings in favor of defendant and denied plaintiffs' motion for summary judgment. This court reverses and remands.

Plaintiffs entered into a contract with Clifford Mike Jones and Martha Delynn Jones for the purchase of a business owned by Mr. and Mrs. Jones. The contract was dated July 1, 1984. The business was identified in the contract as "the Mike Jones Auto Salvage Company, owned and operated by [Mr. and Mrs. Jones] at Simmons, Missouri, to include all of the salvage automobile [sic] and salvage automobile parts listed on the Bill of Sale attached [to] and made a part [of the contract]." The sale was closed by means of Mr. and Mrs. Jones delivering to plaintiffs a bill of sale that listed the items sold. Among the items identified on the bill of sale, as characterized in defendant's suggestions supporting its motion for judgment on the pleadings, were "172 pickup trucks and automobiles not described by identification numbers; the 'bodies' of 77 such vehicles; 2 'burned' vehicles." An addendum to the contract dated July 2, 1984, included a provision, "Sellers agree to furnish titles for all salvage automobiles for which they received a title, on or before January 1, 1985."

A judgment from the United States Bankruptcy Court for the Western District of Missouri in a case designated "Clifford Mike Jones and Martha Delynn Jones, Debtors," No. 89-60703-S-7-KMS, captioned "Danny E. Walker and Reva A. Walker, Plaintiffs, vs. Clifford Mike Jones and Martha Delynn Jones, Defendants," with a designation, "Adversary No. 89-6097-S," provides "that plaintiffs are entitled to have and recover judgment ... for the sum of $31,000.00, with interest from the date of this judgment at the rate of 9% per annum." The judgment recited that it arose by virtue of the failure of Clifford Mike Jones and Martha Delynn Jones "to properly transfer valid and effective title documents substantiating the plaintiffs' claimed ownership interest in and to salvage motor vehicles set forth and described within the general bill of sale executed by the parties." The judgment recited:

Plaintiffs are entitled to proceed with such efforts as they deem appropriate to collect their damage claim substantiated by this judgment from any applicable surety bond made by defendant Mike Jones, if any, and to the extent otherwise allowed by law. Nothing herein shall be construed as a determination by this court of the liability or not of a surety or sureties for payment of the claim pursuant to this judgment.

It was entered March 20, 1990.

Plaintiffs filed this case June 14, 1991. The petition alleged that respondent caused a certain Missouri Motor Vehicle Dealer Bond, No. 58116168, to be issued in the amount of $25,000, effective January 1, 1985. It alleged that plaintiffs had entered into a contract with the principal on the bond, Mike Jones, "for the purchase of a business including certain automobiles, which contract provided that seller, defendants' [sic] principal, Mike Jones, had until January 1, 1985 to furnish title to certain automobiles set forth within the contract on or before January 1, 1985." The petition stated that a copy of the contract was attached to it. It alleged that "[b]y reason of the failure of defendants' [sic] principal to properly deliver evidence of ownership and certificates of title, suit was instituted ... against Clifford Mike Jones, defendants' [sic] principal," in the bankruptcy court; that judgment had been entered in the bankruptcy court on March 20, 1990, awarding damages in the amount of $31,000 to plaintiffs with interest; that notice was given by letter to the "Executive Director of the Missouri Motor Vehicle Commission" of the judgment; that correspondence had been exchanged between the Missouri Motor Vehicle Commission demanding payment of the amount of the bond. Copies of correspondence that were addressed to defendant and that indicated they were from the Missouri Motor Vehicle Commission were attached to the petition. The correspondence asserted that, pursuant to "the provisions of § 301.560(4) R.S.Mo.," respondent was obligated to pay to plaintiffs "the full amount of the bond."

The petition in the trial court included a second count. The second count incorporated the allegations that were made in the first count. It sought, in addition to the relief requested in its "Count I," damages from respondent for "vexatious refusal to pay" as "authorized by § 375.402 R.S.Mo."

The statute upon which plaintiffs based their claim and pursuant to which the Motor Vehicle Commission advised defendant that it should pay plaintiffs' claim, " § 301.560," was enacted in 1988, after the date the surety bond was issued and effective and after the date of the contract between plaintiffs and Mr. and Mrs. Jones. Also, the subsection cited in the petition, " § 301.560(4)," is erroneous; however, it appears that plaintiffs intended to rely on § 301.560.1(4), RSMo Supp.1988. That statute became effective January 1, 1989. It required applicants "as a new motor vehicle franchise dealer, a used motor vehicle dealer, a wholesale motor vehicle dealer, or boat dealer" to furnish with their application for licenses a corporate surety bond or irrevocable letter of credit, conditioned upon compliance with applicable Missouri statutes, as "an indemnity for any loss ... by reason of the acts of the person bonded when such acts constitute grounds for the suspension or revocation of his license." Although the statute upon which plaintiffs apparently intended to rely was not in effect at the time they entered into their contract with Mr. and Mrs. Jones, § 301.251.2, RSMo Supp.1984, that became effective January 1, 1985, contained essentially the same provisions. Section 301.251.2, RSMo Supp.1984, required applicants for registration as automobile dealers to submit a surety bond with their application for registration. The bond was to be in the sum of $25,000. Section 301.251.2 further required:

The bond shall be in effect upon the applicant being registered and shall be conditioned upon his complying with the provisions of the statutes applicable to new motor vehicle franchise dealers, used vehicle dealers and to wholesale motor vehicle dealers, and the bond shall be an indemnity for any loss sustained by any person by reason of the acts of the person bonded when such acts constitute grounds for the suspension or revocation of his registration.

Plaintiffs' first two points on appeal will be discussed together in that they are related and afford the basis for disposition of this appeal. Plaintiffs assert that the trial court erred in denying their motion for summary judgment and in granting defendant's motion for judgment on the pleadings. By their first point, plaintiffs claim that there is no genuine issue as to material facts; that the record that was before the trial court disclosed that a prior judgment had been "rendered against defendant's principal for acts constituting grounds for suspension or revocation" of "defendant's principal's license." Plaintiffs assert that defendant was obligated to "pay the full amount of the bond under R.S.Mo. § 301.251." Plaintiffs contend by their second point on appeal that the trial court erred in concluding, as a matter of law, that the bond issued by defendant was not intended to cover the type of transaction that plaintiffs and Clifford Mike Jones and Martha Delynn Jones entered into.

Plaintiffs submitted a copy of correspondence from the Executive Director of the Missouri Motor Vehicle Commission that had been directed to defendant. ¹ That...