Wallach v. Joseph

• Decision Date: 08 May 1967
• Docket Number: No. 2,No. 51513,51513,2
• Citation: 420 S.W.2d 289
• Parties: Louis WALLACH, Mollie Wallach, his wife, Shirley Kash and Richard Wallach, Respondents, v. Jack JOSEPH and Harold Friedman, Appellants
• Court: Missouri Supreme Court

Page 289

420 S.W.2d 289

Louis WALLACH, Mollie Wallach, his wife, Shirley Kash and Richard Wallach, Respondents, v. Jack JOSEPH and Harold Friedman, Appellants.

No. 51513.

Supreme Court of Missouri, Division No. 2.

May 8, 1967.

Motion for Rehearing or to Transfer to Court En Banc Denied

June 12, 1967.

Certiorari Denied Nov. 13, 1967. See 88 S.Ct. 335.

Stephen A. Boggiano, Boggiano & Hessel, St. Louis, for respondents.

David K. Breed, St. Louis, for appellants.

DONNELLY, Judge.

This is a suit in equity involving title to real estate located on Lucas and Hunt Road in St. Louis County, Missouri.

On January 16, 1961, plaintiffs Louis Wallach and Mollie Wallach signed a Receipt for Earnest Money, which acknowledged receipt of the sum of $7,100 from defendant Harold Friedman as earnest money and part payment on purchase of the real estate, 'which property is this day sold to Harold Friedman, his successors or assigns for the total sum of Sixty-nine Thousand and no/100 ($69,000.00) Dollars.' On March 9, 1961, plaintiffs Louis Wallach and Mollie Wallach signed a Warranty Deed naming defendant Jack Joseph as grantee. At the time these documents were executed, the real estate was incumbered by a first deed of trust and a second deed of trust. On November 20, 1962, Louis Wallach and Mollie Wallach conveyed by quitclaim deed to plaintiff Shirley Kash as straw party for plaintiff Richard Wallach. Shirley Kash is a sister of Louis and Richard Wallach.

Plaintiffs brought this suit against defendants to determine title, to reform or set aside the instruments dated January 16, 1961, and March 9, 1961, and to cancel defendants' asserted interests in the real estate. The trial court decreed Richard Wallach to be the owner in fee simple of the real estate and found defendants have no title or interest therein. The trial court in its decree gave defendant Harold Friedman credit for payments and improvements made by him, restoring the parties to their original positions. Defendants appealed to this Court.

The facts are complicated and we shall recite only those which bear on the issues raised on appeal. Prior to the transaction in question, title to the real estate was in Louis Wallach and Mollie Wallach. In January, 1961, Louis Wallach, who operated a salvage yard on the premises, found himself in financial trouble. He was in default on the first deed of trust. Friedman came to see Louis Wallach and they discussed a disposition of the real estate.

According to Louis Wallach, they entered into an oral agreement whereby Friedman was to pay $2,737.14 to avoid foreclosure on the first deed of trust, pay in full an indebtedness of $10,000 secured by the second deed of trust, and advance $10,000 for working capital. He testified that a corporation was to be formed to take title to the real estate, with each owning one-half of the capital stock.

According to Friedman, no such oral agreement existed. He testified that there was no agreement for the formation of a corporation to be equally owned by the parties, and that the transaction was an outright sale as evidenced by the Receipt for Earnest Money and Warranty Deed.

There is an irreconcilable conflict in the evidence as between Louis Wallach and Harold Friedman. Therefore, the testimony of William J. Becker, a practicing attorney in Clayton, Missouri, is important. His testimony on direct examination, in part, is as follows: 'Q Did you ever have occasion to meet with Mr. Louis Wallach and Mr. Harold Friedman in connection with this transaction? A Yes, sir. * * * Q Will you tell us what matters were discussed in your office at that time? * * * A Wallach I believe was there first waiting and then Mr. Friedman came in and may recollection is that he had with him an earnest money agreement dated that day, no, I take that back, that was prepared at least in part in my office and they stated that because Mr. Wallach was unable to raise the necessary payment to meet the first mortgage payment at the time and the taxes were delinquent and there was a, one judgment that was a lien on the property outstanding and Wallach run out of cash, operating capital, that he had entered into an agreement with Mr. Friedman whereby they would become partners in this used car parts business or salvage business as it is so-called and that they would transfer the property to a corporation to be formed by them, that Mr. Friedman would furnish the necessary money to pay off or pay up the current taxes and he would make the payment that was now due to the heirs of the estate that held the first mortgage and various other payments which were later reflected in writing which I have here and Lou who put in his equity in the property. Now, they estimated that what Mr. Wallach--Mr. Friedman would have to pay up would be about $7100.00 or thereabouts and there was $48,000.00 on the first and $10,000.00 on the second. Now, this was an estimated amount on the second and the first was estimated at $48,000 at that time pretty close. Mr. Friedman insisted that he had to have an earnest money contract in order to make the bank, that the State Bank of Wellston or better, people associated with the State Bank of Wellston who owned the second, the bank didn't own it, I believe called Bond Investment Company controlled by some of the officers of the State Bank of Wellston owned this second and he had to make them believe that he was buying the property in order to, for him to be in a position to settle that second for $10,000.00. Q Where did you get that information, from whom? A From Mr. Friedman, he told me this in very plain unmistakable language. * * * Q Did they discuss just how much money, if any, that Mr. Friedman was to put up in connection with this business enterprise? A Well, that day, Mr. Friedman put up $2737.14 which was delivered to Mr. Obrock for the benefit of the holder of the deed of trust and for the payment of the taxes. A That was to stop foreclosure to be held that day? A Yes, sir, to be held that day and $2281.90 was to cover the foreclosure and $425.00 to cover the back taxes. Q When they were in your office before you went over to the Title Insurance Corporation office to deliver the money to stop the foreclosure, did they tell you that there had been any definite agreement as to just exactly how much money Mr. Friedman was to put up into the business? A Not in addition to these payments that were necessary to clear up the property so that it would be clear of everything but the first and the first would be current, taxes would be currently paid in addition to that one of them said and the other, whichever one said it, the other didn't deny it, that Mr. Friedman was to put in $10,000.00 operating cash into this corporation. I am sure now that I am thinking of it, I am sure it was Mr. Friedman that, he insisted that is what he was going to have to do make this work. * * * Q Was there anything said about it on January 16 while Friedman and Mr. Lou Wallach were in your office about what was to be done with respected to the second deed of trust on the property? A Mr. Friedman was to pay that off. Q And the property, did they discuss the property to be put in a corporation? A I stated before that that was what they planned to do and each would get half of the stock of the corporation and I was to form the corporation for them. * * * Q I show you Plaintiffs' Exhibit 32 which is your copy, office copy of the earnest money and receipt, there is a consideration inserted there, $69,000.00, you know whether that was inserted by you in the office or was that already in there? A That $69,000.00 is obviously on the typewriter of my office and it was, if I recall, figured up this way; first deed of trust, $48,000.00, second deed of trust, let us say for the time being, $10,000.00, that would give you $58,000.00. The Stockhammer judgment.$1000.00, that would give you $59,000 and the $10,000.00 cash to be put in for the corporation of the business, that is roughly it. They arrived at that quick in my office that morning. Q And that is how they arrived at the figure to your knowledge of $69,000.00? A Only purpose of showing the bank. * * * Q Now, do you have any independent recollection of what occurred on the 9th of March, 1961? A Yes, sir. We met again. My recollection is that it was in the title company office and it was not until we got over there that--you see, there were other details of this agreement to be carried out before the corporation could be formed or the property deeded to the corporation to be formed. There were other moneys to be paid. Now, at that time we prepared another closing statement and my recollection is that it was signed and approved by both Mr. Wallach and Mr. Friedman and each took his signed copy. * * * Q was there anything said at that meeting on March 9, 1961 about this corporation that was to be formed? A Yes, sir. Q Do you recall what was said then? A That as soon as they could work out the details they would form the corporation. Q Now, was there a deed prepared a that time to this property? A Yes, Sir. * * * Q Do you recall when it was signed in your office; on that date was Mrs. Mollie Wallach present? A She came in to sign it I believe the day before. Q Was the deed complete in all respects? A Yes, sir. Q Was the name of Jack Joseph in the deed, do you recall? A No, not when she signed it, because we didn't know his name at that time. Q Do you know when the name of Jack Joseph was inserted in the deed? A It was inserted in the deed. Q Was that done in your office? A In my office on the same typewriter later in the day after Mr. Lou Wallach and Mr. Harold Friedman agreed on Jack Joseph as a straw party. Q Did they discuss that in your presence? A Yes, sir. Q What did they say about Mr. Joseph being a straw party, if anything. A I suggested that we should leave the deed either with Mr....