Opinion
No. 28559.
September 15, 1953. Motion for Rehearing or to Transfer to Supreme Court Denied and Opinion Modified October 16, 1953.
APPEAL FROM THE CIRCUIT COURT, CITY OF ST. LOUIS, WILLIAM S. CONNOR, J.
Oliver F. Erbs, Melva M. Stahlhut, St. Louis, for appellant.
John F. Hanlon, St. Louis, for respondent.
This is an action on a promissory note dated August 8, 1949, executed by defendant in favor of plaintiff in the sum of $750, and on a written agreement between the parties executed at the same time by the terms of which the amount due on the note should be increased on certain contingencies. Tried to the court without a jury, judgment was rendered in favor of plaintiff and against defendant for $1,475.53. From the judgment defendant has appealed to this court.
In his petition plaintiff set up the making and delivery of the note and that under the terms of the written agreement executed concurrently therewith the amount due on the note should be increased by the amount thereafter necessary to complete the building of a residence at 910 Curran Avenue over and above $1,250; alleged that in order to complete the building it was necessary for plaintiff to pay $399.77 in excess of $1,250, and prayed for judgment for the amount of the note, interest and attorney's fees, plus the $399.77.
The answer, conceding the execution of the note and written agreement by defendant, denied liability on the ground that there was no consideration passing from plaintiff to defendant for the note or for the written agreement.
The execution of these written instruments had its origin in the following state of facts: H. Clifford Brown, plaintiff, and his wife owned two lots in Kirkwood, Missouri, on which they desired to build a home. Brown entered into a "Purchase Order Agreement and Earnest Money Contract" with Economy Homes, Inc., a corporation, on July 21, 1948, by which he agreed to buy a home to be erected on the lots and Economy Homes, Inc., agreed to endeavor to secure a firm bid from a contractor covering the cost of the construction of the house for a sum not to exceed $12,000. Sixteen hundred dollars was deposited as a part of the down payment of $1,850 and Brown agreed therein to "enter into a construction contract with a builder to be designated by the seller."
Economy Homes, Inc., was a corporation organized as a sales agency for prefabricated homes manufactured in Detroit, Michigan. Defendant Norman A. George was president of and a stockholder in Economy Homes, Inc.
Builders, Inc., was a corporation engaged in the building business. It was organized by Economy Homes, Inc., and Edward Homes, Inc., a similar sales agency. The stock in Builders, Inc., was held by the two sales corporations. Defendant Norman A. George was vice-president of Builders, Inc.
On October 27, 1948 Builders, Inc., made a written proposal to plaintiff Brown and his wife to build a house at a total cost not to exceed $12,000 according to certain plans and specifications. This proposal was accepted by plaintiff and his wife. Construction was commenced in the fall of 1948 but in the late winter or early spring of 1949 construction came to a standstill because there was insufficient money on deposit with Farm and Home Savings and Loan Association (from which concern plaintiff had made a temporary loan for construction purposes) for the completion of the building. Plaintiff had arranged for a $10,400 loan from the association. At that time a number of other homes commenced by Builders, Inc., for various home owners remained uncompleted. In order to complete the construction of these homes an agreement was entered into on April 19, 1949 between Farm and Home Savings and Loan Association, the numerous property owners, and Builders, Inc., under the terms of which Builders, Inc., assigned to the association all of its contracts and payments due thereunder from the individual borrowers, including plaintiff, and Builders, Inc., authorized the association to proceed to complete the houses. The borrowers were authorized to pay the association all moneys due under the various contracts. This agreement specifically provided that it should not in any way prejudice any of the rights of the individual borrowers against Builders, Inc., or serve as a release by such borrowers of Builders, Inc. from its primary obligation under its building contracts with the borrowers. Construction proceeded on plaintiff's house pursuant to the agreement but in July or August, 1949 plaintiff was informed by the association that additional money above the contract price of $12,000 would be required for the completion of his residence in accordance with the specifications. Plaintiff went to the office of defendant and told him of the need for additional funds to complete the building. Defendant informed plaintiff that he had no money to lend and that he could not produce any more money for the reason that the lending agency had all of his available property "tied up" in other deals. Plaintiff indicated to defendant that he would take up the matter with the Better Business Bureau, whereupon defendant suggested that plaintiff arrange to borrow the money and that defendant would sign a note to plaintiff for the amount borrowed. Plaintiff told defendant that he would try to do so. Plaintiff found a person who would lend him $750, and on August 9, 1949 plaintiff and his wife signed a note payable to E. B. Henderson in that amount and turned the proceeds over to the association, which used the money in the completion of the construction of plaintiff's home. This was done by agreement between plaintiff and defendant. At that time defendant prepared and signed the promissory note and written agreement which form the basis of the instant action. The note was in conventional form. The agreement provided as follows:
"Agreement
"It is hereby agreed between H. Clifford Brown, party of the first part, and Norman A. George, Party of the second part, that it is assumed that the amount of this note, plus $500.00 credit due the party of the first from Economy Homes, Inc.; by reason of original down payment, less expenses already incurred, is sufficient to complete property located at 910 Curran Ave., based on figures established in a meeting held at the office of N. A. George R. E. Co. and attended by H. Clifford Brown, N. A. George, Wm. J. Lekar, and Mike Summa, on 8-6-49. It is expressly understood that in the event the above stated amounts are not sufficient or more than sufficient, in either case, this note can be changed accordingly, provided all invoices are in order and have been acknowledged as such by N. A. George and H. Clifford Brown and Wm. J. Lekar.
"(Signed) H. Clifford Brown "H. Clifford Brown
"(Signed) N. A. George "N. A. George
"(Signed) Wm. J. Lekar "Witness"
Thereafter additional funds in the total sum of $399.77 were advanced by plaintiff for the purpose of completing the project in accordance with the specifications. While invoices for the items thus purchased by plaintiff were not exhibited to and approved in writing by defendant, or William J. Lekar, plaintiff spoke to defendant about them and defendant expressed satisfaction that plaintiff, whose business was that of a purchasing agent, was able to buy these articles at less than retail prices, and expressed to plaintiff his approval of the purchase of the items necessary to complete the house in accordance with the plans. William J. Lekar left defendant's organization shortly thereafter and consequently was not available for the purpose of acting on such matters. The expenditures made were reasonably necessary to complete the residence in accordance with the plans and specifications, except the expenditure for venetian blinds. This involved a substitution which was specifically approved by defendant. At maturity plaintiff demanded payment of the obligation. Defendant refused to pay, whereupon plaintiff employed counsel to collect the sum due.
On this appeal defendant takes the position that if plaintiff has any claim it is against Builders, Inc., a corporation, and not against defendant personally and asserts that the applicable rule is that announced in Golden City Banking Co. v. Greisel, 161 Mo.App. 477, 144 S.W. 166, and Glassbrenner v. Morgan, Mo.App., 296 S.W. 201, namely, that a note executed by a stockholder in a corporation in payment of a pre-existing debt of the corporation is without consideration, nudum pactum and void in the absence of a discharge of the debt of the corporation to the plaintiff, forbearance, or other new consideration. We cannot agree with appellant. In neither of the cases cited did the plaintiff suffer any loss or detriment. If there were nothing but the pre-existing obligation of Builders, Inc. to support the note, the Glassbrenner and Golden City Banking cases would be in point. There are, however, additional facts in the instant case which provide "other new consideration" not present in those cases. Here there was a distinct detriment to the promisee.
When it appeared that the money provided by the loan company would be insufficient to complete the building plaintiff went to defendant and indicated that he needed more money. It was then that defendant Norman A. George made the suggestion that he try to make a loan from some of his friends and indicated that he would sign a note to plaintiff for the amount borrowed. Acting on this suggestion plaintiff negotiated a loan from E. B. Henderson and executed a promissory note to the latter in the sum of $750, the proceeds of which were turned over for use in the construction of the house.
Detriment to plaintiff, the promisee, is to be found in his efforts exerted to find a person from whom he could borrow $750, the incurring of liability by the execution of the note to Henderson in that amount, the out-of-pocket expenditure of $399.77 for fixtures, etc. necessary to complete the home, and the payment of the Henderson note when it became due. In Williams v. Jensen, 75 Mo. 681, the court said, loc. cit. 685:
"* * * Any trouble or labor however slight, undertaken by one person at the request of another, will support a promise by such other person, although the trouble or labor be of no benefit to the promisor. * * *"
See also Popovsky v. Griwach, 361 Mo. 1120, 238 S.W.2d 363.
In 10 C.J.S., Bills and Notes, § 151 e, page 617, the following appears:
"The incurrence or assumption of a loss or liability at the instance or request of the obligor is a sufficient consideration to support his undertaking on a bill or note."
There was, therefore, ample and adequate consideration to sustain and support the written promises of defendant.
Appellant argues, however, that the contract to build the house was that of Builders, Inc. and not that of appellant and that there was no obligation on appellant to raise the money to enable another builder to complete the house. If we concede the truth of both of these propositions we do not see how appellant is thereby relieved of liability on the note and written agreement, the payment of which he voluntarily assumed.
Appellant further asserts that there is no consideration for the note and written agreement because there was no assignment by plaintiff to defendant of his cause of action against Builders, Inc. for breach of its building contract. Although a discharge of Builders, Inc. in and of itself would have been a sufficient consideration for these promises, a discharge of Builders, Inc. was not an indispensable prerequisite to the existence of a valid consideration.
Finally, defendant raises the point that the terms and conditions of the written agreement sued upon were never met by plaintiff, in that there was no proof that the invoices for purchases made by plaintiff to complete the building were in order and acknowledged by Norman A. George, William J. Lekar and plaintiff. The evidence, however, indicates oral approval of these purchases by defendant Norman A. George and waiver by him of the requirement of written acknowledgement. Acknowledgement by William J. Lekar was no longer possible or necessary after he left the organization.
No error appearing, the Commissioner recommends that the judgment be affirmed.
The foregoing opinion of HOUSER, C., is adopted as the opinion of the court.
The judgment of the circuit court is, accordingly, affirmed.
BENNICK, P. J., and ANDERSON and RUDDY, JJ., concur.