Yerington v. Riss
| Decision Date | 13 January 1964 |
| Docket Number | No. 50059,No. 2,50059,2 |
| Citation | 374 S.W.2d 52 |
| Parties | Lee Dell YERINGTON, Appellant, v. Richard R. RISS, Sr., Respondent |
| Court | Missouri Supreme Court |
Clyde J. Linde, Linde, Thompson, VanDyke, Fairchild & Langworthy, Kansas City, for appellant.
Lathrop, Righter, Gordon & Parker, Richard S. Righter, William M. Stapleton, Joseph E. Stevens, Jr., Kansas City, for respondent.
STOCKARD, Commissioner.
In this suit for fraud plaintiff sought $150,000 actual and $500,000 punitive damages. At the end of the plaintiff's evidence the trial court directed a verdict for defendant and plaintiff has appealed. We shall set forth the evidence in considerable detail.
In 1946 plaintiff purchased an army surplus B-7 bulldozer and went into the construction business. In 1952 he entered into a partnership arrangement with Mr. Emmett J. Breen, president of the Farmers Exchange Bank at Parkville, Missouri, and plaintiff borrowed money from that bank and from Mr. Breen with which to operate. In the early part of 1953 the business was incorporated under the name of Yerington Construction Company. (We shall hereafter refer to this corporation as 'Yerington Company.') Of the 840 shares of common stock issued, 419 shares were issued to plaintiff, one share was issued to his wife, and 420 shares were issued to Mr. Breen.
Early in 1954 Mr. Breen indicated to plaintiff that he did not wish to continue to advance working capital to Yerington Company, and at Mr. Breen's suggestion plaintiff met defendant in Mr. Breen's office. As a result plaintiff entered into an arrangement with defendant to move some dirt on a project at Parkville. After the work was under way defendant stated that he would like to go into the construction business, that he had some dirt moving equipment of his own, that money was no object, that he had just bought thirteen million dollars of tractors and trailers (apparently for a trucking business), that he had five million dollars lying around, and that 'we wouldn't have to borrow money' but he had 'the money to operate on.' According to plaintiff he and defendant came to an oral agreement the early or middle part of April. The terms of this agreement are not clear, but plaintiff testified that he told defendant that 'we would have to have it on a fifty-fifty proposition,' and that defendant agreed. In addition, according to plaintiff, defendant was to advance operating capital and money to buy equipment which was to be returned to him out of the earnings of the company. Plaintiff testified that all the money that would have been necessary for defendant to advance was thirty or forty thousand dollars, and that he expected defendant to loan the money without taking a note from the company. Under this oral agreement, according to plaintiff, defendant was to 'match my equipment' with his equipment, and defendant's equipment was to be added to the assets of Yerington Company, but nothing was said about this equipment being sold to the company. Defendant also agreed to make the bid and performance bonds.
About two weeks after this oral agreement was reached, plaintiff figured a bid on a construction job at Olathe, Kansas, which amounted to more than $300,000.00, and which was much larger than plaintiff had been able to bid on before. Defendant furnished the bid bond and Yerington Company was awarded the contract which was executed as of April 27, 1954. Plaintiff testified that defendant also furnished the performance bond, but it appears from a copy of the contract that the performance bond was furnished by The Travelers Indemnity Company. On the day that plaintiff started to work for defendant he was told that he could use some of defendant's equipment, and after the oral agreement was entered into defendant told him 'it is all one big family, go ahead and use' his equipment, and plaintiff did so on various jobs, including the Olathe job.
Defendant 'was in on ordering all the equipment,' and on behalf of Yerington Company he ordered a Bucyrus B-170 scraper at the cost of $16,000, but plaintiff signed the order, and other equipment at the cost of $58,000. Prior to this, Yerington Company had 'turned in' some equipment to Victor L. Phillips Company and to Service Equipment Company and had credits of $13,000 and of $10,000. These two credits were used as part payment on this new equipment.
Plaintiff stated that pursuant to the agreement with defendant, Miss Kay McAuliffe was to be the bookkeeper of Yerington Company, and that he had no agreement to go into business with her or with any person other than defendant. However, on May 21, 1954 plaintiff and Miss McAuliffe executed an agreement (dated May 20, 1954) the terms of which we shall set out in considerable detail. 'In order to induce' Miss McAuliffe to enter into the agreement plaintiff warranted and represented certain matters and conditions pertaining to the corporate structure of Yerington Company and its financial condition. It was then provided that plaintiff 'agrees to sell to [Miss McAuliffe] and [she] agrees to purchase from [plaintiff] five hundred sixty (560) shares of common stock of the Yerington Company * * * for the sum of Fifty-four Thousand ($54,000) dollars * * *,' and that 'at the time of the closing' plaintiff should (1) endorse in blank the certificates representing the 560 shares, (2) deliver to Miss McAuliffe the 'minute book, stock certificate and transfer book, corporate seal, together with all books of account, agreements, documents and all other instruments of, or relating to the said Yerington Company,' (3) deliver to Miss McAuliffe the 'written resignation of each and every director and officer of said Yerington Company (other than [plaintiff]) which shall be expressed to be effective immediately,' and (4) deliver to Miss McAuliffe 'the call and waiver of notice of a special meeting of the Board of Directors to be held * * * at the time and place of the closing * * *.' It was also provided that at the meeting of the Board of Directors 'all of the directors shall be present in person, and at such meeting, shall, in due course, * * * accept the said resignations in rotation, and, upon the acceptance of each resignation of the Directors, other than [plaintiff], the remaining members of the Board of Directors of said Yerington Construction Company shall elect, in the place of the director whose resignation has been accepted, such person, as may be nominated by [Miss McAuliffe].' It was then provided that 'the closing hereunder shall take place at the office of the Yerington Construction Company, or at such other place as the parties hereto may agree, on May 21, 1954 at 10:00 A.M.,' and also that 'at the consummation of the transfer of the aforesaid stock' plaintiff should 'loan to the Yerington Construction Company, fifty four thousand ($54,000) Dollars to be evidenced by Corporate Note executed by the Yerington Construction Company for said amount payable in three annual installments, * * * said note to bear interest at the rate of five (5%) per cent per annum on the unpaid balance.'
A special meeting of the board of directors of Yerington Company was held at 10:00 o'clock a. m. on May 21, 1954, and plaintiff presided as chairman. All the directors were present which, in addition to plaintiff, consisted of plaintiff's wife and Mr. Breen. Five stock certificates representing 420 shares of common stock in Yerington Company then issued in the name of E. J. Breen, and one certificate representing one share in the name of plaintiff's wife, were endorsed transferring said stock to plaintiff. This resulted in all the outstanding stock being in the name of plaintiff or indorsed to him. The minutes of the special meeting above referred to, which plaintiff and his wife approved and signed as chairman and secretary respectively, recite that plaintiff advised the board 'that he sold 560 shares of the 840 shares * * * which he personally held and that it was his desire that Emmett J. Breen and Isabell Yerington [plaintiff's wife] resign as officers and Directors of this Corporation.' The minutes then show that Mr. Breen resigned as director, and that the remaining two members, plaintiff and his wife, elected Miss Kay McAuliffe as director to fill the unexpired term. Plaintiff's wife then resigned as director and the remaining two, plaintiff and Miss McAuliffe, elected David H. Bresler as director for the unexpired term. Following this Mr. Bresler was elected vice president and Miss McAuliffe was elected secretary and treasurer.
Plaintiff testified that when this meeting of the directors started defendant stated with no prior notice to plaintiff, that he would not go along on 'a fifty-fifty proposition' but that he was 'going to have two-thirds of the stock' because he had made the bond at Olathe, he was going to be responsible for the new equipment, he was going 'to put the money out' for operating expenses, and his 'risk is just too great.' Plaintiff testified that this demand occurred after the Olathe contract had been obtained and the new equipment had been purchased, and that if he had not acceded to defendant's demands 'it would have ruined' Yerington Company. Plaintiff admitted that at the meeting the various acts referred to in the minutes did in fact occur, but he said that the minutes had been prepared in advance and that while he read them he did not understand them or know exactly what was being done.
At this meeting 560 shares of common stock of Yerington Company were issued to Kay McAuliffe which left 280 shares issued to plaintiff. No stock was issued in the name of defendant.
A second special meeting of the board of directors of Yerington Company was held at 3:00 o'clock in the afternoon of the same day in the office of Mr. Bresler, and all the then directors were present. These minutes, also signed and approved by each member of the board, which included plaintiff, recite that plaintiff 'discussed in detail, plans...
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