author: HOUSER, Commissioner.

text:
    CARRIER CORPORATION, a Corporation, Respondent, v. ROYALE INVESTMENT COMPANY, a Corporation, Appellant.
    No. 49230.
    Supreme Court of Missouri, Division No. 1.
    March 11, 1963.
    Rehearing Denied April 8, 1963.

      Shifrin, Treiman, Agatstein & Schermer, St. Louis, for appellant.
    Harry S. Gleick, Lawrence Sanders, St. Louis, for respondent, Carrier Corp., Gleick, Strauss & Friedman, St. Louis, of counsel.
    Wilbur B. Jones, amicus curiae — referee, St. Louis, attorney pro se.
   HOUSER, Commissioner.

Equitable action to recover $40,870 claimed due on a contract for the sale of air conditioning equipment; to establish and enforce a mechanic’s lien, and for a decree of priority over a subsisting deed of trust. The trial chancellor found the issues for plaintiff on the contract, adjudged the lien and its priority, and the owner of the realty has appealed. We have jurisdiction because the record affirmatively shows that the amount in dispute exceeds the sum of $15,-000.

The petition was in the usual form of an equitable mechanic’s lien suit, joining as defendants another lien claimant and the trustee and beneficiary of the deed of trust.

In its original answer Royale pleaded breach of warranty. In its first amended answer it sought rescission of the contract. In its second amended answer and in its counterclaim Royale alleged that the contract “is of no further force or effect and Plaintiff is not entitled to recover,” and sought damages on the theory that Carrier’s representatives made fraudulent representations inducing Royale to purchase the equipment in question; reliance upon and falsity of the representations; consequent damage in that the equipment was worthless for its purposes and was abandoned, and Royale was forced to spend large sums for substitute equipment. Royale offered to return the equipment to Carrier. The prayer was for dismissal of the petition and judgment for the amount Royale paid on account and for expenses incurred for electric wiring, steam fitting, and duct work ($53,547.45 actual) and for $100,000 punitive damages, an aggregate total of $153,-547.45.

The court appointed a referee who conducted hearings, made and entered findings of fact and conclusions of law, and recommended judgment in favor of Carrier and against Royale. The court approved the report of the referee and entered judgment for Carrier for $30,870 on its petition and against Royale on its counterclaim, adjudged a mechanic’s lien and its priority, and awarded the referee an $8,000 fee.

The vital question raised by appellant is whether the contract is vitiated by fraud. On this review our duty is to determine whether Carrier, through its agents, knowingly made material representations of fact with intent that Royale act thereon; whether Royale was entitled to and did rely thereon; whether the representations were true or false, and if false, whether Royale was thereby damaged. We review the case upon both the law and the evidence as in suits of an equitable nature, § 510.310(4), RSMo 1959, V.A.M.S., de novo on the whole record, making our own findings of fact, drawing our own conclusions of law, and rendering or directing the rendition of such judgment as equity and justice may require. Maas v. Dreckshage, Mo.App., 244 S.W.2d 397, and cases cited, l.c. 400. The findings of the referee, who heard the witnesses and had an opportunity to judge of their credibility, are a factor to be considered, although his report does not have the standing of a special verdict. Schwartz v. Shelby Construction Co., Mo.Sup., 338 S.W.2d 781.

From the transcript of 1,408 pages, answers to interrogatories, and the exhibits, we find these to be the facts:

In 1957 Royale Investment Company,, owner of Ambassador-Kingsway Hotel in St. Louis, contracted for and started construction of a two-story addition adjacent to the seven-story hotel. The corporation, through Bernard Tureen, its president and chief executive officer, an experienced hotel man, retained and consulted with the firm of Rathert and Roth, architects; employed R. K. & A. Jones as general contractors, and consulted with Lester Hundelt of Consolidated Engineering & Sheetmetal Company, designers and installers of air conditioning equipment. The new two-story addition was to be air-conditioned, and Hundelt, who had previously done air conditioning work for the hotel and since 1954 had done all of Tureen’s air conditioning on several other buildings under his control, was to install the duct work. Tureen discussed with Hundelt the amount of tonnage that would be required for the new addition. Tureen had on hand four 50-ton electrically driven Chrysler centrifugal air conditioning machines, complete with compressors and water chillers, ready for installation in the new two-story addition.

Early in February, 1958 Harold West-phal, an employee of Laclede Gas Company, visited Charles Weiseman, chief engineer and maintenance man for Royale, and aroused his interest in absorption air conditioning, which uses gas instead of electricity to generate the necessary energy to operate. Both Tureen and Weiseman professed to know nothing about gas absorption air conditioning at that time. Westphal sent Charles E. Hartwein, of the sales department of Laclede Gas Company, to see Weiseman. Tureen was brought into the discussions and Hartwein, Weiseman and Tureen had several meetings. Hartwein stressed the advantages of utilizing a gas absorption machine. He pointed out that the hotel was on a summertime rate for gas which required them to pay a minimum amount whether that amount was used or not and that they were not consuming as much gas as they were paying for; that this gas, being paid for hut not used, could be utilized in the operation of a gas absorption air conditioning system, instead of spending money for nothing. Tureen called in his air conditioning consultant, Hundelt, on at least one of these meetings. Although not then familiar with Carrier absorption cooling systems, Hundelt had some experience with gas refrigeration equipment, having installed four, five or six Servel units for a building and realty firm at a shopping center. Hundelt conferred with Tureen on the possibility of savings through the use of gas, and made notations with respect to the cost of electricity. The economy of fuel cost appealed to Tureen. Hartwein presented to Tureen two analyses, Exhibits B and B-l. Exhibit B showed the number of therms of gas used and the amount billed to the hotel during each month of the year 1957. Exhibit B-l was a per season estimate of the cost of operating a gas absorption machine, steam-driven, as compared with that of an electrically driven machine. The estimate was based upon the assumption that 236 tons of air conditioning were installed, and that the load would be equivalent to 1400 hours of full load operation. It was estimated that 82,600 therms would be used during the months May to September. The analysis estimated that under these assumptions the cost of a gas absorption machine would be $1,152 per season and that of an electrically operated machine would he $3,430, further assuming an electric rate of 1.25^ per K.W., or $4,116 at 1.5$ per K.W.

Hartwein also handed Tureen Exhibit K, a 35-page, glossy-backed, magazine-type brochure entitled “Carrier Automatic Absorption Refrigeration.” It contains many photographs and illustrations. It tells “The story of the most remarkable refrigeration machine in the world,” a “success story * * * of a major advance in cooling techniques. * * * [T]he story of a machine so simple, so compact, so quiet and so completely automatic that it has been called the most remarkable in the world.” Operation of the refrigeration machine is termed “completely automatic. There are no valves to turn, no switches to throw. Just a tiny push button for ‘Stop or Go/ Or it can be thermostatically or time-clock controlled.” It contains a section on cutting operating expenses, and gives reasons why under given circumstances steam power costs and installation costs may be relatively lower on gas absorption systems than electricity costs on electrically powered systems. It points out that there are no major moving parts, and that this type is the smallest and lightest per ton capacity of all types. In the discussion on automatic adjustment to zero capacity the statement is made that “Because of the perfectly smooth load characteristic, the Absorption Machine requires a minimum of attention since the load can fluctuate and chilled water temperatures remain constant without the necessity for an operator to change controls or start and stop the machine.” Nine advantages are summarized, among others, the automatic Stop- and-Go feature, as to which it was said: “Starting and stopping thg Carrier Absorption Machine is as easy as ringing a doorbell. There are no valves to turn, no switches to throw. Just a single push button for ‘Stop-and-Go.’ If desired, the human element can be eliminated entirely. A time-clock, for example will start the unit in the morning and turn it off at night.” It indicates that “this simplest of all refrigerating machines is as easy to operate as it is to install. Its automatic control features, combined with its completely automatic refrigeration cycle, make the Carrier Automatic Absorption unit almost completely self-operating and maintenance-free.” “The Absorption Machine is simple and economical to install. It requires no massive foundation, heavy structural support or alignment of compressor or other components.” “The simplicity of the system and its automatic controls are such that highly trained specialized operating personnel are not required. There are no operating hazards or chance for damage if the machine is left unattended.” “The only moving parts on the entire machine are very small solution, evaporator and purge unit pumps and motors, that require merely simple maintenance procedure. No large drivers or switch-gear to require attention.” The brochure contains an explanation of how the refrigeration cycle operates; capacity ratings, steam ratings, heat rejection factors, with examples; physical, engineering and application data, with photographs of the factory, indicating that the finest tools and methods insure economical production. It gives a tribute to the craftsmanship, and the modern and efficient characteristics of the factory, the skills and experience of the workers, and ends with this statement: “This great combination of meticulous attention to detail, deep-seated pride in craftsmanship and modern manufacturing methods results in products unmatched in the industry for quality, performance and dependability.”

Appellant claims that the statements in Exhibit K constitute representations and that they are false. We regard the brochure as a whole as dealer’s talk, trade talk, puffing of a manufacturer’s wares, and sales propaganda. Exhibit K is in the nature of a mailing piece used in advertising to enlist interest in a product. Many of the statements made in it are mere statements of opinion, promises, expectations and estimates, which are not actionable. Many statements of fact are made, which are supported by evidence. We will subsequently analyze with particularity the statements in the brochure bearing on the five charges of fraud, although we note in passing that nowhere in Tureen’s testimony did he state that in purchasing this equipment he relied upon the statements contained in Exhibit K.

Hartwein “did a good job” of telling Tureen of the merits of gas absorption air conditioning. Tureen knew Hartwein as an employee of Laclede Gas Company, working in an effort to increase the sales of his employer’s product (gas). Hartwein did not represent himself to Tureen as an agent of Carrier. No Carrier representative held Hartwein out as Carrier’s agent, or acknowledged him as such. Hartwein had no connection, directly or indirectly, with Carrier, and no authority from Carrier to sell its products. Carrier did not pay him or contract to pay him for his services, or control or have the right to control his activities. Carrier had furnished Laclede, at the latter’s request, a supply of its brochures describing its products, and was aware of the fact that Laclede was promoting the sale of absorption refrigeration, including Carrier’s products, and that Laclede’s salesman Hartwein was distributing Carrier’s brochures to prospective gas users in an effort to sell them equipment of the type Carrier made and sold, but there was no arrangement with respect thereto between Carrier and Laclede. Carrier also knew that Hartwein was trying to promote the use of gas by the sale of the products of Carrier’s competitors in the industry, York Corporation, The Trane Company, and Arkla-Servel.

Tureen asked his air conditioning consultant Hundelt to call the Carrier Corporation and get prices on several different sizes of machines they were considering. Up to this time Carrier’s representatives had no knowledge of Tureen’s interest in their products. On March 7, 1958 Hundelt drove Tureen to Carrier’s office, where they talked to Leonard Miller of the engineering department. Tureen indicated interest in prices of two or three different sizes of absorption machines. He asked for contractor’s prices, which are lower than the prices quoted to property owners, and inquired about a special 40% discount below contractor’s price. Tureen asked how soon delivery could be made. Tureen was a “hot prospect.” Carrier’s district manager, A. G. Hillen, and sales manager, Elmer Juneau, were out of town. When they returned they and other representatives of Carrier were instrumental in and participated in sales efforts, conversations and inducements that led up to the execution of the contract of April 16,1958.

While costs of installation, comparative fuel costs and maintenance were discussed generally by Tureen and the Carrier representatives, the latter did not have before them the Hartwein analyses, Exhibits B and B-l, and did not confirm the correctness of Hartwein’s analyses on comparative costs. Hartwein was not present at these discussions. The Carrier people made no representations of fact or specific estimates in terms of dollars and cents with respect either to the cost of installation, cost of gas fuel for the operation of the machine, or cost of maintenance. No economic analyses were made by Carrier. Carrier’s salesmen did make representations with reference to the simplicity of operation and ease of maintenance. Hillen and Juneau said that one of the merits of the machine was its simplicity; that it was “push button” and did not require constant vigilance but was virtually maintenance-free; that it did not use expensive freon gas, but inexpensive lithium bromide; that there were few moving parts and therefore little to wear out. In response to Tureen’s question about noise they told him there would be some noise resulting from the operation of the fan on the cooling tower, but nothing was said as to the volume of the noise.

Although Tureen Was “sold” on this equipment as a result of the sales efforts of Hartwein, Exhibits B and B-l, his conversations with the Carrier representatives and the brochure, he did not contract in credulous reliance upon their statements, arising out of a disparity between his knowledge of gas absorption refrigeration and the expertise and superior knowledge of his informants. Tureen conducted his own investigation, satisfied himself, and entered into the contract of April 16, 1958 in reliance upon his own judgment.

The contract required Carrier to furnish arid install a Carrier absorption refrigeration machine, a cooling tower, and a Bryant gas-fired steam boiler, for $40,870, payable as follows: on or before the 10th of each month, 90% of the value of labor and equipment delivered to the point of erection during preceding month, and when equipment is ready for operation, a sum to increase the total payments to 100% of purchase price. Carrier also contracted to furnish the services of a competent absorption specialist to instruct Royale’s operating personnel in the proper operation and maintenance of the machine. Royale was to furnish all electrical work; control air piping; chilled water, condenser water, steam and condensate piping; gas piping, and all overtime work.

Carrier delivered the equipment to the site promptly. Royale employed Mossing-hoff Plumbing & Heating Company to install the piping, and Naslund Electric Company to do the electrical wiring. Mossinghoff’s bill was settled for $17,500 and Naslund’s bill was $4,000. The machine was placed in operation September 16, 1958. Carrier called on Royale for payment, none having been made pursuant to the terms of the contract, and was advised by Tureen to write Jefferson Bank and Trust Company for payment, that bank being the escrow agent in connection with a deed of trust on the hotel property. Carrier wrote the bank September 22, 1958, and on the same day Carrier extended the warranty period to one year from June 1, 1959, in view of the fact that the system had gone into operation so late in the cooling season of 1958. No payment was received in 1958 from the bank or from Royale.

Shortly after the machine went into operation in September, 1958 it developed trouble in the gas jets in the boiler. It took three or four days to correct this. It took “a bit longer” to get the proper balance going in the system. It was operated only for a short time — the balance of the month ■of September — during the fall of 1958. During this time there was excessive noise from the cooling tower, resulting in a complaint by the police department and by an anonymous telephone caller. The noise was uncomfortable in several of the hotel rooms. Carrier’s service department provided a sound engineer at whose recommendation several changes were made in the tower, resulting in a reduction of the noise to a level of 10% above ambient (background) ■noise. In the winter of 1958-59 Tureen, ■contemplating the air conditioning of certain guest rooms, delivered to Carrier a floor plan and asked for an estimate on the installation of a fan coil under the window air conditioning units in these rooms. Carrier, not having received payment under the contract of April, 1958, did not figure this estimate.

On May 1, 1959 Royale paid $10,000 on account. On or about the same day Weise-man, unable to make the machine start, ■called on Carrier to get the machine in operation for the coming season. The machine was “cold” and there was diffi■culty working up steam because the boiler was sized for normal operations, not for a cold machine. The machine was put in ■operation by two of Carrier’s engineers, after about eight hours of work. Later Weiseman was unable to start the machine because something went wrong with the controls. This was corrected by Carrier. Early in June it lost its vacuum and ceased •operating. This was corrected by Carrier. During the 1959 season Carrier made approximately ten service calls. According to Royale the machine lost its vacuum five or six times in the next 40 days. Carrier’s John McCabe denied knowledge of more than one such occasion. In July, 1959 Royale put 10 tons of self-contained air conditioning equipment in the area to be cooled, and used the Carrier equipment only intermittently between July and September. At the end of the season Royale employed Carrier to shut the machine down and “winterize” it, a $58 all-day job. Carrier accounts for the poor performance on the ground that Mossinghoff omitted certain valves from the installation, the purpose of which was to check the flow of water (one of the chief difficulties was that there was too much water flow) ; that a gummy substance or dirt found its way into the mechanism causing it not to operate for the time being, this apparently having been introduced into the pumps because of failure of Mossinghoff to install a strainer; that there was dirt in the “T” restrictor which controls the length of the dilution cycle; that in the absence of Carrier service personnel someone would tinker with and manipulate the adjustments on the machine and change the controls, thereby causing trouble.

Royale’s defense is based upon fraudulent misrepresentations, not on breach of warranty or failure of consideration. Five separate charges of representation were made.

First, it is charged in the second amended petition that Carrier, its agents and servants, represented that the equipment was an efficient and economical installation and that the amount of gas to be consumed in the operation would be substantially less than the cost of electricity to operate an electrically powered unit of the same capacity. The evidence Royale introduced in an effort to prove that this representation was made and that it was false is insufficient to sustain this charge. Royale relies heavily on Exhibits B and B-l, but they do not constitute false representations of material facts. There was no proof tha.t any of the assumptions upon which B-l was based existed as facts in the actual operation in the year 1958. Tureen recognized and accepted B-l as an estimate, and nothing more than an estimate. As an estimate B-l constituted an opinion or judgment, but not a representation of an existing fact upon which a right to recover for fraud might be based. “Thus there can be no redress for error in representations which are expressed and understood as mere estimates or judgments, * * 37 C. J.S. Fraud § 10a, p. 227, fn. 23. In Burlison v. Weis, Mo.App., 152 S.W.2d 201, the agent of the defendant told the prospective purchaser of a heating plant that the cost of heating the house and doing the cooking would not exceed $75 or $80 a year. This was held to constitute promises or expectations, not representations of existing facts, and as such insufficient as a basis for an action for fraudulent representations. In Boston Consol. Gas Co. v. Folsom, 237 Mass. 565, 130 N.E. 197, statements that a gas-fired boiler for heating a house would not cost much more, if any, than the purchaser had been paying to heat his house; that it could be done “for about the same,” if untrue, were not representations of material fact, but merely matters of opinion, judgment or estimate, insufficient to sustain an action of tort. Appellant seeks to avoid this rule by invoking the exception where the promissor has or professes to have superior knowledge based upon past experience, citing Nichols v. Hendrix, Mo.App., 312 S.W.2d 163, but there is no showing that Hartwein had or professed to have superior knowledge of the fuel consumption or cost of operating gas absorption machines of the size and capacity involved, based upon past experience. This cannot be inferred from the mere fact that Hartwein had been “employed in the sales department” of the gas company for twelve years.

Royale’s evidence that Exhibit B-l was false is not convincing. In an attempt to prove its falsity Royale had Mr. Behrens, an employee of the billing division of the gas company, prepare Exhibits Q and Q-l a compilation of gas company figures as to gas consumption at the hotel from January, 1957 through November, 1960. They show the number of therms used monthly; the rates under which the therms were billed (General, Interruptable and Optional), and the amount of the monthly bills. The interruptable rate is a cheaper rate allowed a customer who has stand-by alternate equipment which the gas company can require the customer to use in periods of great demand on the gas company, thus relieving the consumption of gas. In previous years the hotel was equipped with a Kewanee oil-burning boiler for stand-by use, enabling the hotel to enjoy the more favorable interruptable rate. Tureen, knowing that the Bryant boiler purchased from Carrier could not be used for oil, and that the interruptable rate would no longer be available, determined to buy the Bryant boiler and removed the Kewanee boiler. In 1957, 1958 and 1960 there were two accounts, a general rate for cooking, and an interruptable rate for water heating and steam. In 1959 there was only one account, billed at the optional rate. Using figures from previous years on consumption of gas for cooking, water heating, and making the computation on the interruptable (rather than the optional) rate, he attempted to figure the bill for gas consumed in the air conditioning system during the months the air conditioning was on in 1959. Royale contends that according to Mr. Behrens’ computations the rates were more than double the cost estimated on Exhibit B-l. Behrens conceded that these figures were inexact and not absolutely correct, because the allowances for cooking and water heating were based on the previous year’s figures rather than 1959 figures. Mr. MacClurg, manager of project development in the sales department of the gas company, testified that in determining whether there had been an increase in gas consumption after installing the air conditioning system, and the extent of any such increase, the following factors during the seasons under comparison would have to be considered: the amount of gas used for cooking', water heating, space heating and air conditioning; the number of public and private parties; whether the swimming pool was heated; weather conditions, and room occupancy. The difference between interruptable and optional rates would also affect the situation. Such an analysis is a problem for the sales engineering division; not for the billing division. There having been no testimony as to these factors, we find Beh-rens’ testimony unreliable proof of the falsity of Exhibit B-l, and no testimony directly impeaching Exhibit B-l having been introduced, we are not prepared to declare it false.

Carrier’s brochure, Exhibit K, contains no actionable misrepresentation of fact with reference to economy of operation. It says that hundreds of installations around the world attest to its economy; that it converts seasonably idle or excess boiler capacity into substantial savings of dollars; that it uses the cheapest of all refrigerants — common tap water; that it offers economies worthy of “your most serious investigation” ; that where steam costs are relatively low it cuts operating expense; gives factors which enter into operating cost analyses under given conditions in various localities and under favorable gas rates frequently encountered; quotes from a buyer in Dallas, Texas whose choice of this equipment was influenced by a comparative cost analysis of operating expense and who stated that his firm’s substantial yearly savings enable them to amortize the equipment over a shorter period, and a buyer in Cincinnati who said his firm selected this equipment because of the economies involved in operating costs. Each such statement may be classified either as sales talk or as a qualified statement of fact the falsity of which was not shown.

Tureen testified that Hillen, Juneau and Hartwein said “there would be a great saving in cost because the centrifugal machine * *. * is bound to lose its freon gas, which is éxpensive. Gas was so much cheaper that it would pay for itself in the long run to have this machine. * * * [A] cost saving factor * * * ” and Weiseman testified that Hillen and Juneau both stated many times that the gas absorption system “could operate far cheaper than electric, and the installation cost was minimum” and that they showed "by comparison between electric and gas where this was cheaper,” but we have found that Carrier’s representatives made no representations of fact with reference to the cost of operation.

The first charge fails for lack of proof.

The estimate given by the alleged agent Hartwein not having been actionable, and not having been proved false, the question whether Carrier is responsible for the actions of Hartwein on the ground of actual or implied agency or agency by estoppel, becomes immaterial.

Second, it is charged that Carrier, through its representatives Juneau and Hillen, and by its brochure, Exhibit K, represented that the operation and maintenance of the equipment after its installation involved simple routine attention and care without requiring specialized expert maintenance and repair work. Royale did not carry the burden of proving this charge. The overwhelming weight of the testimony is that, considering the size and capacity of this equipment in comparison with electrically operated air conditioning systems of equal size and capacity, it is in fact comparatively simple in operation and maintenance. Independent and impartial witnesses from Washington University, which operates a 700-ton Carrier gas absorption plant, testified that it is a fairly simple operation; that such a plant is operable by stationary engineers, oilers and ordinary maintenance men without special qualifications. Harold Brehm, an independent mechanical engineer, testified that of the three types of units, centrifugal, reciprocating and absorption, the latter is the simplest to install; that its operation is very simple —a “push button” operation; that all a maintenance crew should need is operating instructions. Gas absorption has fewer moving parts than electrically operated equipment. The only moving parts are small pumps and motors. We find from all the evidence that it is a “push button” operation when in working condition; that it does not take an engineer to operate it; that ordinary maintenance men without special qualifications customarily operate and maintain these machines; that all a maintenance man would need would be the ability to read and understand operating instructions.

Appellant stresses certain “assurances” contained in Carrier’s brochure, Exhibit K, intended to convince the prospective buyer “that the equipment is almost completely self-operating and maintenance-free; that no highly trained specialized operating personnel are required, and that there need be merely simple maintenance procedure.” The first statement refers only to the automatic control features and automatic refrigeration cycle, and is true. The second statement refers only to certain small electric motors and pumps, the moving parts, and is true. The third statement refers only to the simplicity of the system and its automatic controls, and is true. Appellant questions the brochure statement that “If desired, the human element can be eliminated entirely.” In its context this statement is true. It is used in connection with the data on stopping and starting, which is accomplished by a push button, with' the explanation that if it is desired to completely eliminate human intervention this may be accomplished by the use of a time-clock.

Appellant considers that Exhibit L, the engineering operational manual, conclusively disproves the representations as to the simplicity of the machine, and argues vigorously that the “Planned Service” offered by the Carrier organization and the suggestion of Carrier-conducted training courses for the owner’s help belie the statements that only a minimum of supervision and simple maintenance procedure is involved. The statements about simplicity of operation and maintenance must be taken in their frame of reference, and it must be remembered that “simplicity” is a relative term. This is a large, powerful, commercial installation, simple in comparison to electrically driven machinery of the same capacity, and simple in operation and maintenance to one accustomed to handle such a system, but it is at once obvious, even to a neophyte, that it involves a technical application of electricity, gas, steam, chemistry and mechanics and requires a knowledge and understanding of the theory, principle and construction of gas absorption air refrigeration, and practical experience in this field. While it was shown to be “the simplest of all refrigerating machines,” no prospective purchaser, after the most casual examination of the nature of the equipment involved, could reasonably conclude that once installed this extensive system would be self-operating and maintenance-free. Tureen himself revealed that, after investigating gas absorption equipment prior to purchase, he regarded this as a “highly technical piece of equipment.” Under the evidence he must be held to have accepted the suggestion of simplicity with a full understanding of the comparative nature of such a description, and a comprehension of the area of reference involved.

The fact that Carrier supplied a technical manual, compiled in engineering terms, thoroughly explaining its construction, operation, and maintenance does not militate against the fact that this is a “simple” system, speaking relatively and in the dimension and context in which obviously the parties were dealing. And the fact that Carrier offered an optional service program does not detract from the fact that dozens of such plants are operated by mere maintenance men without engineering degrees, and in some cases by janitors.

Third, it is charged that Carrier represented that Royale’s cost of installing the equipment would not exceed the sum of $6,500. Tureen testified that Hillen gave him an estimate that the cost of installing the unit, including steam fitting, labor and materials, “on the basis of other installations,” would be $6,500, but this was specifically denied, and we find that no such statement or estimate was made. While Carrier’s representatives engaged in general conversation with Tureen respecting the cost of installation they did not fix any definite amount or suggest any dollar and cents maximum.

Parenthetically, if this testimony of Tureen had been true, Carrier’s statements would not have formed the basis of a charge of fraud, for they would have amounted to estimates only and not representations of material fact. Tureen so considered them, for he answered questions as to the “estimates of the cost of installation”; said he did not check with anybody on “those estimates”; compared the “estimate” of the cost of steam fitting with his estimates of the cost of putting in new panels (an expense necessary in an electrically driven installation) ; referred to “their estimate,” and in answer to the direct question “You knew those were estimates?” answered “Yes.” He “felt they were safe estimates.”

This charge was not established by the statements in Carrier’s brochure, Exhibit K, that “Absorption Refrigeration lowers installation costs”; that “the initial installation costs for connecting to the Absorption Machine are usually much less than for providing power services to equivalent motor driven refrigeration equipment”; that “this simplest of all refrigerating machines is as easy to operate as it is to install”; and “[t]he absorption machine is simple and economical to install.” These are not actionable misrepresentations of material facts. The first two statements are connected to qualifying statements that apply “Where steam service is already available.” A statement that it is “easy” to install is not actionable. Such a term has a comparative or relative connotation. Carlay Co. v. Federal Trade Commission, (C.C.A. 7th Cir.), 153 F.2d 493, 496. The statement that it is economical to install is coupled with the further statement that it requires no massive foundation, heavy structural support or alignment of compressor or other components (expenses necessary in installing electrically driven equipment). In this context, there is no question that this statement is true.

Not only was there a failure to establish that this “representation” was made, but also a failure to show that it was false. While the contractors testified that the charges made for their work, totaling more than $20,000, were reasonable, we are left in doubt by the evidence whether the work for which these bills were rendered was work exclusively connected with the installation of the air conditioning equipment. Mossinghoff also did work on the swimming pool, in the kitchen, and on the plumbing system generally. Naslund also wired the Caesar Room, put in receptacles, wired the addition over the boiler room, the roof, and worked in the area adjacent to the Caesar Room, in the stair well, stairway and remodeled and electrified the kitchen. It is not clear that the invoices charged to air conditioning did not include amounts properly chargeable to these other works. Roy-ale did not advertise for competitive bids. Tureen asked these contractors what the cost would be, but they were unable to tell him because they were uncertain as to what there was to do. Royale provided no over-all supervision. Mossinghoff was inexperienced in this type of work. It was the first time he had installed a large, commerical absorption machine. Although Carrier’s suggested plans were in Tureen’s hands as early as May 7, Mossinghoff claimed he did not get the plans for the piping until the last week in June. No one ever gave him any complete instructions as to what was to be done. There was never a complete set of specifications until “the last stage on the job.” Mossinghoff did not know where the chilled water coil was to be installed when the job started. On the stand he was unable to give an intelligent answer as to the number of feet of pipe used in the job. There was duplication of effort, and general inefficiency in the prosecution of the work, unnecessarily adding to the time and expense. There was independent testimony that the wiring of an absorption machine like this should not take more than a week and a half, but the invoices show that 40 days were spent on this job. We conclude that the work was not accomplished economically and with ordinary speed, dispatch and efficiency; that Royale failed to show that an economically efficient installation could not have been accomplished for $6,500.

Fourth, it is charged that Carrier represented that the operation of the refrigeration system would be “virtually noiseless and unoffensive to the residents of the Ambassador Hotel and to persons residing in the immediate vicinity.” We have found as a fact that in answer to Tureen’s. inquiry about noise Carrier’s representatives informed him there would be some noise but made no representations with respect to the volume of the noise. Juneau told Tureen that occupants of the hotel rooms next to the cooling tower would hear noise, and told him of having occupied a room in another St. Louis hotel on a level with the cooling tower and having been kept awake by the noise, and conceded that his guests would probably have the same experience. Mr. Tureen was not alarmed by this information, and indicated that he would rent those rooms last.

Appellant relies on pages 8 and 9 of Carrier’s brochure, Exhibit K, as representations relating to the noise “of the operation of the system,” and recites the evidence that the rotating fans in the cooling tower on the top of the roof of the new addition made excessive noise. The statements on pages 8 and 9 made with reference to quiet operation and noise level, however, relate only to the absorption refrigeration machine itself, which was located in the basement. Appellant makes no complaint and introduced no evidence that the machine itself was noisy. Exhibit K makes no reference to quiet operation or low noise level of the cooling tower. Statements as to quiet operation of the machine cannot form the basis of a charge of misrepresentation with respect to quiet operation of the cooling tower.

Fifth, it is charged that Carrier represented that the refrigeration equipment was capable of producing 174 tons of refrigeration when cooling 418 gallons of water per minute from 55 degrees F. to 45 degrees F. and that the cooling tower as part of the said equipment would cool 700 GPM of water 101.4 degrees F. to 85 degrees F., and it is contended that the equipment failed to so perform. These representations were made and they were representations of material facts. In an effort to demonstrate their falsity Royale’s witness Weiseman testified that the water was never cooled under 50 degrees F., and Royale’s electrician Arthur Hampton testified that the temperature would run from 50 to 54 degrees F., “progressing down”; that he never recalled the water getting below 48 degrees F., where it would stay maybe ten minutes, maybe an hour, then rise again. For Carrier Henry Klingle, a Carrier serviceman, testified that on the day the machine went into operation, and the next day, September 16-17, 1958, the gauge showed that the water was chilled to 45 degrees F. and that the operation was normal. Mechanical engineer John Aanes of Carrier testified that around May 1, 1959 he observed McCabe do the spring start up procedure and that after the machine was in operation he observed the temperature of the chilled water was between 40 and 45 degrees F. John McCabe, a sales engineer for Carrier, testified that he helped start the machine for the 1959 season (around May 1) and that after the machine was started they got the chilled water temperature; that on several occasions when he serviced the machine that summer the water temperature would be 45, 46 or 47 degrees F. and going down, as he would leave the job. There were occasions when the equipment failed to draw the water temperature below 50 degrees F. but most of these were times when due to various causes not attributable to Carrier, the system was not properly operating. Insofar as the essential capacity of the equipment is concerned, the testimony of Carrier’s witnesses satisfactorily establishes that the system in ordinary operation, properly adjusted and balanced, was fully capable of producing, and did produce, the water temperature represented, and that Royale failed to prove the falsity of this representation.

Appellant stresses its right to recover under an exception to the rule that fraud cannot be predicated on promissory statements, or unfulfilled estimates, promises or expectations; that where such statements, etc. were made by one having or professing to have superior knowledge based on past experience, such statements will support an action for fraud, citing Wendell v. Ozark Orchard Co., Mo.App., 200 S.W. 747, 749; State ex rel. St. Louis & San Francisco Ry. Co. v. Daues, 316 Mo. 474, 482, 290 S.W. 425; Doll v. Purple Shoppe, 230 Mo.App. 256, 90 S.W.2d 181, 185; 26 C.J. 1090; 37 C.J.S. Fraud § 11, p. 235. Appellant argues that Tureen and Weiseman were without knowledge of gas absorption systems prior to the solicitation by Carrier, a fact known to Carrier, a well-known and ostensibly reputable company; that in contrast all of Carrier’s representatives were graduate engineers and experts in the field, and therefore Tureen had the right to rely on their statements “without an independent investigation of his own.” The exception has no application because Tureen did not rely upon their so-called representations without making an independent investigation of his own. On the contrary, he made a thorough investigation, personally and through his chief engineer or maintenance man. Although Tureen testified that Carrier’s supporting data was printed in its brochure, Exhibit K, and his chief engineer testified that he and Tureen “went over it” and discussed it, nowhere in his testimony did Tureen state that he relied upon the statements contained in the brochure, and we find that he did not rely thereon. Tureen stated that he was a business man, and that he was interested in operating costs; that when Hartwein told him about the efficiency and economy of this system he asked Hartwein to give him an “estimate” of gas costs, and that Hartwein gave him some supporting figures, data (never produced at the trial), and a breakdown on comparative costs of operation (Exhibits B and B-l). He checked the data in Hartwein’s estimate (the gas bills) with his bookkeeper, and took up the matter with his chief engineer, and his air conditioning consultant and contractor Hundelt. Tureen told Hartwein the facts were highly interesting and that he “would like to learn more about this equipment.” He “wanted to know more about the facts,” and wanted “to do some checking on his own.” He talked to his architects about the estimates. He was “seeing his architects right along.” He talked with Hundelt. He compared the cost of installing this system with the cost of installing panel boards. Tureen did not credulously accept the word of the experts without making any investigation to satisfy himself. He wanted to be shown. Carrier told Tureen of three Carrier gas absorption installations in the area. Carrier’s Hillen took Tureen’s chief engineer to see the Carrier gas absorption plant at Merchant’s Exchange Building, where Weiseman talked to the engineer in charge. Weiseman also inspected the Carrier installation at Mallinckrodt Chemical Works. Tureen had the benefit of the advice of his chief engineer, Weiseman, who reported on these inspections, and otherwise informed himself to the point where he was satisfied and willing to recommend to Tureen his purchase of this equipment. Tureen was not hurried into an acceptance. Tureen was first approached in February. Carrier’s written proposals were delivered to Tureen on March 25, and by Tureen kept under advisement and investigation until accepted some three weeks later, on April 16.

We conclude that Tureen, a man of wide business experience, entered into the contract with his eyes open; that he did not purchase in reliance upon any false representations by Carrier but upon the basis of estimates, predictions and expectations that were found acceptable by and satisfactory to him, after conducting a thorough, careful, arms-length investigation of his own. With expert advisers and the means of acquiring the necessary information at hand, and after receiving advice and counsel from many quarters, Tureen acted on his own judgment, and not on the basis of any fraudulent representations by Carrier.

The difficulty with Royale’s fraud case is that Royale failed to sustain the burden of proving that in the several conferences, or in its brochure, Carrier made any false representations of material fact with reference to its product, upon which Royale relied.

Finally, appellant claims that the $8,000 fee awarded the referee is excessive and unreasonable. When the referee was appointed there were seven parties in this litigation, represented by six different firms of attorneys. All of the parties agreed in writing that in making an allowance to the referee the court would not be restricted by the limitation imposed by statute, § 515.220, and Supreme Court Rule 68.22. The referee conducted a preliminary hearing to discuss procedure and expedite the hearing of oral testimony and the presentation of exhibits. Notices of the first hearing on November 14, 1960 were served on all parties or their attorneys, and the taking of testimony began. The hearing was continued from time to time until concluded on February 21, 1961. Briefs were filed, the last one on May 9, 1961, and the case was argued orally on May 5. On May 26, 1961 the referee filed a full and complete report, which occupies 46 pages in this transcript. The transcript of the record, which includes the pleadings, interrogatories, answers to interrogatories, motions, rulings, referee’s report, application of the referee for allowance, exceptions, memorandum, findings, conclusions, judgment and decree and after-trial procedure is 179 pages in length. The transcript of the testimony before the referee occupies 1,408 pages. There were 108 exhibits in the case. The referee spent part of 99 different days on this case. He submitted an itemized schedule of the services rendered on each of the 99 days, and the total number of hours invested. Substantial amounts of money were involved, totaling $40,870 on the petition and $153,547.45 on the counterclaim. One question was that of the priority of a $1,000,000 deed of trust on the property. Considerable research in the law was involved in the consideration and disposition of the many and complicated issues. The trial court approved and adopted the report of the referee. Considering the complexity of the issues, the pecuniary amount involved, the amount of work, the time consumed, the careful consideration given the matter from beginning to end, the diligent, prompt and efficient manner in which the referee handled the matter, the quality of his work product and all of the other elements properly to be taken into consideration, we approve the allowance of a fee of $8,000. See Phelps v. Watson-Stillman Co., 365 Mo. 1124, 293 S.W.2d 429, 435.

The judgment was correct and proper and is affirmed.

COIL, C., not participating.

HOLMAN, C., concurs.

PER CURIAM.

The foregoing opinion by HOUSER, C., is adopted as the opinion of the court.

All of the Judges concur.


source: Caselaw Access Project

author: HYDE, Judge.

license: Public Domain

text:
    STATE of Missouri, Respondent, v. James Leroy COCHRAN, Appellant.
    No. 49583.
    Supreme Court of Missouri, Division No. 1.
    Feb. 11, 1963.
    Motion for Rehearing or to Transfer to Court En Banc Denied March 11, 1963.
    Emanuel Shapiro, Clayton, for appellant.
    Thomas F. Eagleton, Atty. Gen., George W. Draper, II, Asst. Atty. Gen., Jefferson City, for respondent.
   HYDE, Judge.

Defendant found guilty of first degree robbery (Secs. S60.120 and 560.135) and sentenced under the habitual criminal statute (Sec. 556.280) to ten years’ imprisonment. (Statutory references are to RSMo and V.A.M.S.) Defendant has appealed and makes the following three contentions: (1) Refusal to require production of the police report concerning the robbery; (2) Refusal to dismiss indictment and direct judgment of acquittal on the ground of delay in bringing him to trial, claimed to have deprived him of his constitutional right to speedy trial; and (3) Admission of evidence, over objection that it was obtained by illegal search.

On June 3, 1960, about 11:00 A.M., two well-dressed young men came into the liquor store of Joseph J. Lawler and ordered a case of cold beer. Lawler started to fill an empty case when the man, identified by Lawler as defendant, pointed an automatic pistol at him and ordered him to go into the back room. This man stayed in the room with Lawler for ten or fifteen minutes while the other man with him remained in the front of the store and took money ($306.00) from the cash register. The man with Lawler took a roll of bills ($51.00) from him and then locked him in the back room with a padlock. These two men were seen going to and leaving the liquor store by Mrs. Albert M. Cruse whose husband operated a washing service next door to Lawler’s store. She was waiting in the doorway for her husband to bring some detergent, when they went by and came back. They were also seen by Mr. Cruse, returning with the detergent, who met them as they left Law-ler’s store. Defendant was identified by Mr. and Mrs. Cruse at the police station on the afternoon of June 6, 1960, and by Lawler on the next afternoon. Since it is not claimed that the State failed to make a jury case against defendant, other facts will be stated in ruling the three contentions made.

As to the police report, defendant’s counsel says he wanted to use it for impeachment of witnesses but frankly admits that “it could be that the report would not impeach the credibility of the witnesses.” He filed a motion to produce which was overruled and then had issued a subpoena duces tecum which was quashed. He also asked the court to look at the report to determine if there was any impeachable matter in it, which the court refused to do. Defendant cites State v. Crayton, Mo.Sup., 354 S.W.2d 834, 838, in which a police report was used by a police officer to refresh his memory shortly before testifying. The cases cited therein, on which defendant also relies, concerned use of papers to refresh the memory of a witness at the trial. There was nothing in this case to show any such use and no witness was even asked if he had ever seen the police report. Defendant also cites Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103, but it was concerned with reports made by witnesses, which was not the case here. See also State v. Gilliam, Mo.Sup., 351 S.W.2d 723, 727, and cases cited. Therefore, no error in the court’s rulings appears.

On the issue of delay (claiming denial of speedy trial and laches) it appears that defendant was arrested on information concerning his participation in the robbery of the Roosevelt Federal Savings and Loan Association of St. Louis. See Cochran v. United States, 8 Cir., 291 F.2d 633, rehearing denied August 7, 1961, in which defendant’s conviction for that crime was reversed and remanded for new trial. Defendant was indicted for the robbery of Lawler’s Store on February 13, 1962, and his trial began on April 2, 1962, at the next term of court. See Secs. 478.263 and 545.-890. Defendant filed a motion to dismiss, on March 13, 1962, on the ground of delay in informing him of the charges against him and bringing him to trial. At the hearing on this motion, the testimony was that a federal warrant was issued against defendant on June 6, I960; that on June 8, 1960, he was relinquished to the federal authorities; and that he remained in federal custody until after his second trial and conviction in the federal court. While awaiting his second appeal, defendant elected to stay in the city jail and the State then instituted these proceedings. The State had testimony that “it has been our experience that the Feds do not give up a prisoner that is under sentence”; but they did so in this case after defendant had asked to be brought to trial on this present charge. It was not shown where defendant was kept in federal custody prior to his second federal trial or the date of that trial.

Defendant cites Taylor v. United States, 99 U.S.App.D.C. 183, 238 F.2d 259, where the defendant therein was not indicted within the three-year statute of limitations period. Although the statute was tolled by his absence from the jurisdiction in prison in New York, the court held there was an unreasonable delay which could have seriously prejudiced the defendant. There the offense was committed July 19, 1950, the indictment was returned February 28, 1954, and the defendant was not tried until March 28, 1956. The court pointed out that there was no showing the defendant even knew he was indicted; that the case against him was weak; and that the long lapse between the time of the offense and the trial “must seriously have handicapped the preparation of a defense.” The court said: “Had the evidence been overwhelming, so that no infirmity might be made to appear, a different result might be reached.” Here the evidence was strong because defendant had been very positively identified by three people, which he must have known at the time he was turned over to the federal authorities. Defendant’s counsel argued that the testimony as to identification was weak because the witnesses testified the man they identified as defendant was wearing sun glasses when they saw him. However, these witnesses said they did see his face and Lawler was in the room close to him for more than ten minutes. This room was lighted by a 75-watt electric light and the time was between 11:00 A.M. and noon. Defendant cites State v. Milner, Ohio Com.Pl., 149 N.E.2d 189, and State v. Waites, Ohio Mun., 163 N.E.2d 195, which he says are based on Taylor v. United States, supra. However, in these cases, not only was the time longer than in this case but the defendants were in custody of the authorities of the same state. Likewise, in Ex parte Trull, 133 Kan. 165, 298 P. 775, cited by him, the defendant remained in the state free on bond, after a preliminary hearing on a complaint, and although bound over to district court no information was filed until more than two years later. For cases in which the defendant was in federal custody and contentions like this one were denied see Lee v. State, 185 Ark. 253, 47 S.W.2d 11; Ex parte Schechtel, 103 Colo. 77, 82 P.2d 762, 118 A.L.R. 1032; Kirby v. State, 222 Md. 421, 160 A.2d 786; State v. Larkin, 256 Minn. 314, 98 N.W.2d 70; Application of Melton, Okl.Cr., 342 P.2d 571. We hold that the court did not err in overruling defendant’s motions to dismiss the indictment and for judgment of acquittal on •grounds of delay and laches.

The claimed inadmissible evidence was the testimony of two police officers, who went to arrest defendant, that he was found in a clothes closet in the apartment which they entered to find him. Defendant’s objection was that he was found as the result of an unlawful search. Defendant’s conviction in the federal court was reversed on a holding of unlawful search because of admitting in evidence (after overruling a motion to suppress) a gun found in the apartment similar to the one used by the robber in the Savings and Loan Association robbery and car keys found there which fit an automobile parked in front of the type used in that robbery. (291 F.2d 1. c. 634.) Because of this federal court ruling, the state prosecutor stipulated with defendant’s counsel that the articles would not be used in this trial. However, evidence of flight or concealment is generally admissible. 20 Am.Jur. 273, Evidence, Sec. 293 ; 22A C.J.S. Criminal Law §§ 625, 626, 628, pp. 460-472. Citing State v. Harris, Mo.App., 325 S.W.2d 352, 358, and Giddings v. State, 130 Tex.Cr.R. 406, 94 S.W.2d 1168, it is said in 22A C.J.S. Criminal Law § 628: “It is generally proper for the prosecution to show an attempt on the part of accused to evade, escape, or avoid arrest, whether or not the arrest was legal.” See also Wharton’s Criminal Evidence, Secs. 139, 140, in which it is shown that inferences may be drawn from such conduct of the defendant. Testimony about conduct is an entirely different matter from the use of illegally seized articles. We hold there was no error in admitting this evidence of defendant’s conduct.

We have examined the record as required by our Rules 28.02 and 28.08, V.A.M.R. and find it sufficient as to those matters therein specified.

The judgment is affirmed.

All of the Judges of the Division concur and Hunter, Special Judge, concurs.


author: HOLMAN, Commissioner.

text:
    Ambrose F. YAX, Plaintiff-Appellant, Fred H. Helling, Intervenor-Appellant, v. DIT-MCO, INCORPORATED, F. L. Thompson, Frank S. Morgan, Jack Lipsitz, Rose Morgan, Lucian Piane, Sherman W. Dreiseszun, Florence O. Heller, Baltimore Bank, and George W. Higginbotham and Traders National Bank, Executors of the Estate of George P. Heller, Deceased, Defendants-Respondents.
    No. 49587.
    Supreme Court of Missouri, Division No. 1.
    March 11, 1963.
    Motion for Rehearing or to Transfer to Court En Banc Denied April 8, 1963.

      Albert Thomson, Mark J. Klein, Kansas City, Linde, Thomson, Vandyke, Fairchild & Langworthy, Kansas City, of counsel, for plaintiff-appellant.
    John B. Ewing, Jr., Phillip C. Houx, of Brenner, Wimmell, Ewing & Lockwood, Kansas City, for intervening appellant.
    E. E. Thompson, Ivan E. Moody, Kansas City, Popham, Thompson, Popham, Trusty & Conway, Kansas City, of counsel, for respondents Dit-Mco, Incorporated, F. L. Thompson, Frank S. Morgan, Jack Lipsitz, Rose Morgan, Lucian Piane and Sherman W. Dreiseszun.
    Joseph J. Kelly, Jr., Howard F. Sachs, Kansas City, Spencer, Fane, Britt & Browne, Kansas City, of counsel, for respondents Heller and Higginbotham and Traders National Bank, Executors of Estate of George P. Heller, Deceased.
   HOLMAN, Commissioner.

This equitable action was instituted by plaintiff, Ambrose F. Yax, as a stockholder of defendant Dit-Mco, Inc., for himself and all others similarly situated, seeking a decree compelling certain defendants to hold in trust for the benefit of said corporation and all of its shareholders the benefits from a contract with defendants George P. and Florence O. Heller, whereby said defendants purchased from the Hellers 52,-643 shares of the stock of Dit-Mco. Another stockholder, Fred H. Helling, was permitted to file an intervening petition. Plaintiff and intervenor filed a motion for a temporary injunction in an effort to restrain defendants from voting that stock at the annual stockholders meeting in June 1961. After a hearing, that motion was overruled on June 1, 1961. Upon the final hearing the court found all of the issues in favor of defendants and accordingly entered a judgment for them. Plaintiff and intervenor have appealed.

The defendants in this case are Dit-Mco, Inc., hereinafter sometimes called the “Company”; F. L. Thompson, Frank S. Morgan, Jack Lipsitz, Rose Morgan, Lucian Piane, Sherman W. Dreiseszun, hereinafter sometimes referred to as “buyers” or as “purchasing defendants”; George P. Heller (until his death) and Florence O. Heller, his wife, hereinafter sometimes referred to as the “sellers”; Baltimore Bank, the escrow agent under agreements hereinafter described; and George W. Higginbotham and Traders National Bank who were substituted as defendants for George P. Heller who died prior to the final hearing and are now parties as executors of said decedent’s estate.

Mr. Heller is described in the record as the parent of the Company. On the dates hereinafter mentioned there were approximately 223,000 shares of stock outstanding, of which Mr. Heller and his wife owned 67,500. For some time prior to March 1961, Mr. Heller had been chairman of the board and F. L. Thompson had been president of the Company. Both were also members of the board of directors, as was Frank Morgan. In June 1960, Mr. Heller told Thompson that he wanted to sell all of the stock he and his wife owned in the Company. He desired to do so primarily because of the state of his health. For a time efforts were made to sell the entire Company but such a sale did not materialize. Mr. Heller also made an effort to sell the stock through a securities company but no sale in that manner was consummated. Finally, an effort was made by a group of stockholders to purchase the stock, and in February 1961 Mr. Heller suggested that he might sell his stock for $11 a share. Mr. Heller also expressed a desire that the Company acquire a portion of his stock because he knew that in March of that year there would be a dilution of the stock by the exercise of certain options whereby the Company had agreed to sell a large number of shares to certain officers and ' employees at a price considerably below the market price of the stock. After extended negotiations the sellers, on March 2, 1961, made a written offer to the board of directors to sell 14,857 shares of the stock to the Company at a price of $10.50 per share or a total of $156,000. On the same date, the sellers entered into a written agreement with the purchasing defendants whereby they agreed to sell to said purchasers 52,643 shares of their stock at a price of $11 per share or a total of $579,073. The purchasers agreed to buy said stock in accordance with the following percentages thereof: Frank Morgan, Rose Morgan and Sherman Drieseszun 16⅝% each, F. L. Thompson 25%, Lucian Piane and Jack Lipsitz 12½% each. It was agreed that stock certificates would be delivered to said purchasers for said stock, and that they would pay for same by executing a promissory note for the amount of the purchase price, dated April 1, 1961, which should bear interest at 5%, payable annually, and that the principal would become due and payable in five annual installments of $115,814.60, beginning on April 1, 1965, and ending on April 1, 1969. The stock was to be placed in escrow to secure the payment of the purchase price. The purchase agreement provided that the sale of the shares to the purchasing defendants, as above outlined, was conditioned upon the acceptance by the Company of the offer of the sellers to sell 14,857 shares to it, as above mentioned, to be paid for in cash upon delivery of the stock certificate.

A meeting of the board of directors was held on March 4, 1961, with all five of the directors present, and a resolution was adopted authorizing the purchase of said shares of stock and the payment of the purchase price therefor. All of the directors voted in favor of that resolution except Mr. Heller who abstained from voting. Thereafter, the purchase of the shares by the individual defendants was consummated and the certificates for said shares were issued to said purchasers and delivered to the Baltimore Bank as escrow agent to secure the payment of the note given by said defendants for the purchase price of said stock. In addition to the 52,643 shares, said purchasers, in accordance with the sales agreement, also delivered to the escrow agent certificates of stock in the Company for a total of almost 15,000 shares as additional collateral security for the payment of said promissory note.

F. L. Thompson testified that as far as the purchasing defendants were concerned the two transactions whereby they and the Company each purchased stock were entirely separate; that he and Mr. Morgan had handled the negotiations for the sale and that the shares purchased were prorated among the purchasers in proportion to the number of shares they already owned; that he had objected to the two deals being combined into one contract but that such was done at the insistence of Mr. Heller’s tax attorney because it was considered a necessary and advantageous procedure for Mr. Heller’s tax purposes; that as far as the individual purchasers were concerned the purchase of their stock was not contingent upon the purchase of stock by the Company; that if the Company had not bought that stock “we would have bought it, and wanted to”; that at that time the Company had $542,000 in cash, or its equivalent; that the Company had undertaken an extensive research program which required heavy expenditures, but the directors determined that an expenditure of $156,000 for the purchase of stock could prudently be made; that Mr. Heller had indicated that he wanted to sell the stock to them on a deferred payment basis so that he could have the interest income and also a tax advantage, but that he would not sell stock to the Company on a time payment basis.

The evidence indicated that the market price of the Company’s stock on March 2, 1961, was approximately $11 per share, on May 18, 1961, was $17 a share, and on the date of the final hearing, February 28, 1962, was $16.50 per share. It was admitted by the parties, however, at the time of oral argument here (January 1963) that the market price of the stock at that time was approximately $6 per share.

In a deposition taken on April 14, 1961, plaintiff testified that he was employed as a salesman for Midland Securities Company of Kansas City. He stated that he owned 800 shares of stock in the Company and a corporation in which he was a stockholder owned another 800 shares; that he thought it was sound judgment for the Company to buy the 14,857 shares and he had no complaint concerning that transaction; that he filed the suit because he wanted the court to make an order that the Company “be the purchaser of all the stock” sold by the Hellers, or that all the stockholders be given the opportunity to buy the stock on a prorata basis.

We will first consider the question of our appellate jurisdiction. The shares of stock in question were purchased for $11 per share. At the date of the final hearing the market price was $16.50. That represented an increase in value of $289,-536.50. Appellants contend that the Company, or all of the stockholders, should have the benefit of that appreciation in value. It would therefore appear that on the record as it existed at the time the appeal was taken (June 1962) the amount in dispute exceeded $15,000. We are mindful of the fact that the market value in January 1963 was $6 per share and therefore, at that time, the purchasers had sustained a substantial loss and there was no profit from which the Company or the stockholders generally could benefit. We have recently said: “Certainly, none will question that the amount in actual dispute for jurisdictional purposes is determined at the time an appeal is taken, and that nothing that subsequently occurs should be invoked to confer jurisdiction which did not exist at the time of the appeal, and that the possibility or contingency that a subsequent event will reduce the amount that was acHtally in dispute at the time an appeal was taken should not deprive the court of the jurisdiction which it had at the time of the appeal.” Snowbarger v. M. F. A. Central Cooperative, Mo.Sup., 317 S.W.2d 390, 393. We have concluded that we must determine the jurisdictional question from the facts appearing in the transcript as of the time the appeal was taken, and that we accordingly have jurisdiction by reason of the amount in dispute. Art. V, Sec. 3, Const, of Missouri 1945, V.A.M.S.; § 477.040, RSMo 1959, V.A.M.S.

Appellants contend that the trial court erred in finding the issues in favor of de- ' fendants because the purchase of the stock by the Company and by the purchasing defendants was one unified transaction in which the defendants Thompson and Morgan breached their fiduciary duty to the Company. For that reason it is said that the court should have decreed that the purchasing defendants hold the stock as constructive trustees for the benefit of the Company and its shareholders. In the final analysis appellants contend that the wrong committed by the purchasing directors was to cause the Company to buy 14,857 shares and pay $156,000 in cash therefor, which they say was a “down payment” on the total purchase of all of the Heller stock, and in that manner the purchasing defendants were able to buy 52,643 shares upon a deferred payment basis without paying anything at the time of purchase.

At the outset of our consideration of the questions presented certain well-established principles should be recognized. “The general rule is that officers and directors in control of a corporation occupy toward the corporation and its stockholders, in respect to the business or property of the corporation, a fiduciary relation somewhat in the nature of a trusteeship and cannot deal with the property of the corporation for their own personal benefit or advantage. But this duty does not extend to the outstanding stock of the corporation for the reason that such stock is the individual property of the respective stockholders and not in any sense the corporation’s property. The corporation, as such, has no interest in the outstanding stock or in dealings among the stockholders with respect thereto unless restricted by charter or by-laws of the corporation.” Adams v. Mid-West Chevrolet Corp., 198 Okl. 461, 179 P.2d 147, 156, 175 A.L.R. 554. We approve the statements in 13 Am.Jur., Corporations, §§ 1010, 1012, 1013, pp. 962, 965, 966, that “ordinarily, a corporate officer or director has a right to purchase the stock of a shareholder therein the same as any other person has a right to purchase such stock, and there is nothing in the mere fact that the purchaser is an officer or director of the corporation, the shares of which he purchases, from which fraud or unfair dealing may be inferred. * * * The general rule that an officer or director may purchase stock of his company from stockholders is especially applicable in the case of a purchase from a stockholder who is also a director and who has an intimate knowledge of the operations of the corporation. * * * [T]he directors are not by reason of their relation to the corporation prohibited from selling their stock to whomsoever they desire * *

We have said that the “evidence to establish a constructive trust must be so clear, cogent, unequivocal and positive as to banish doubt from the chancellor’s mind.” Thomason v. Beery, Mo.Sup., 235 S.W.2d 308, 312. On the other hand, if it is established that directors have obtained a profit from dealing with the corporation “and the transaction is drawn in question as between them and the stockholders of the corporation, the burden is upon the directors to show that such transaction has been fair, open, and in the utmost good faith.” Bromschwig v. Carthage Marble & White Lime Co., 334 Mo. 319, 66 S.W. 2d 889, 892.

There are certain conclusions herein about which there can be no question. The Hellers had a right to sell their stock to anyone they desired upon any terms mutually agreed upon between the sellers and buyers. The purchasing defendants had a right to buy all or any part of the Heller stock upon any terms that might be mutually agreed upon, and the director-defendants were under no obligation to give notice of the transaction to the stockholders generally. The board of directors could properly authorize the Company to purchase the shares it did purchase for a fair and reasonable price (conceded in this case) where it appears that the transaction was entered into in good faith and considered to be in the best interest of the Company. Appellants make no complaint (in fact, approve) of the purchase of the stock, in this instance, by the Company. But, as indicated, they contend that the director-purchasers have used their positions to cause the Company to purchase that stock, and, while it was not detrimental to the Company, said directors were enabled thereby to buy the remainder of the Heller stock on a deferred payment plan and thus make a personal profit which they should not be permitted to retain.

The difficulty with appellants’ contention is that it is not supported by the facts as we find them. It should be borne in mind that only two of the six purchasing defendants were officers or directors of the Company. They were a minority of the board of directors and did not constitute a majority of those who actually voted on the resolution to purchase the stock. Mr. Heller was interested in the welfare of the Company and knew that by reason of the terms of the contract with the purchasing defendants he and his wife (and their assignees or personal representatives) would continue to have a direct financial interest in the Company for at least nine years. Mr. Heller, as well as all of the other officers and directors of the Company, are bound to have known that it would have been extremely unwise for the Company to have purchased all of the stock, as appellants now contend should have been done. Such would have obligated the Company to pay more than $700,000. Of its $542,000 in current assets, $250,000 had been earmarked for the Company’s research and development program which was already in progress. Obviously, a substantial part of the remaining $292,000 was required for operating capital. It was a consideration of those factors which caused the officers and directors to conclude that no more than $160,000 could prudently be used for the purchase of the stock deemed necessary to replace that which would be required to meet the option commitments of the Company, which would be exercised in March 1961.

Because of the effect upon his tax status, Mr. Heller desired that some, but not all, of the purchase price for his stock be paid at that time. He would not sell the 14,857 shares to the Company upon a deferred payment basis. While he may have had a number of reasons for that decision, one likely reason was that it would have been very poor business for the Company to have paid 5% interest upon the amount of the purchase price of that stock when it had the funds available with which to pay cash for same. It therefore was reasonable for Mr. Heller to require that the Company pay cash for its stock, and permit the stock sold to the purchasing defendants to be paid for by their personal installment note secured in the manner heretofore detailed. It should also be noted that he would not have sold any of the stock to the Company unless he was able to first consummate the sale to the purchasing defendants because, unless it was done in that manner, the gain received from the shares sold to the Company might have been ruled to be a dividend instead of a capital gain.

In connection with our decision, we find the following additional facts: (1) The payment of $156,000 by the Company to the Hellers for the 14,857 shares was not a “down payment” made for the purpose of enabling the purchasing defendants to buy the remainder of the Heller stock; (2) the Hellers would not have sold any more stock to the Company than they did sell and would not have sold any stock to it on terms other than for cash; (3) the purchasing defendants would have bought all of the Heller stock if said sellers had agreed to sell it to them; (4) the sale of the stock to the Company was a transaction which was fair, open, and entered into in good faith by the directors; (5) the sale of the stock to the Company was made a condition precedent to the sale of the remainder of the stock at the insistence of the Hellers for reasons personal to them and not for the purpose of enabling the purchasing defendants to buy stock in a manner advantageous to them; and (6) there has been no unjust enrichment on the part of said buyers and no discrimination against the rights of the Company or its stockholders by the officers and directors thereof.

As indicated by the foregoing, our conclusion is that appellants were not entitled to any relief and that the court properly entered a judgment for the defendants.

In support of their contentions appellants have relied primarily upon the following cases: Bromschwig v. Carthage Marble & White Lime Co., supra, 334 Mo. 319. 66 S.W.2d 889; Johnson v. Duensing, Mo. Sup., 351 S.W.2d 27; Proctor v. Farrar, Mo.Sup., 213 S.W. 469; Irving Trust Co. v. Deutsch, 2d Cir., 73 F.2d 121; Elliott v. Baker, 194 Mass. 518, 80 N.E. 450; Schwab v. Schwab-Wilson Mach. Corp., Ltd., 13 Cal.App.2d 1, 55 P.2d 1268; and Commonwealth Title Ins. & Trust Co. v. Seltzer, 227 Pa. 410, 76 A. 77. Those cases all involve factual situations so different from the situation in the case before us that they may not be regarded as supporting the contentions of appellants. In the Bromschwig case a minority stockholder obtained relief upon a showing that a director, also manager, had used corporate funds in order to buy stock in the company for himself. In Johnson v. Duensing, a stockholder obtained relief because the directors had caused the company to sell some of its stock to one of the directors for less than its true value. In Proctor, relief was properly granted because the facts showed a wrongful appropriation of corporate funds by several directors who were authorized to sell certain corporate assets. In Irving, certain directors were shown to have taken over a contract (for their personal benefit) the corporation had entered into to purchase certain stock of another corporation. Elliott v. Baker involved the issuance of additional stock of the corporation by a majority of the directors and the sale thereof to an associate so that said directors could obtain control of the company. Likewise, in Schwab new stock was issued by the corporation and sold to one of the directors so that he could obtain control of the company, and, in Commonwealth the situation involved the fraudulent conduct of the president of the corporation in the purchase of the company’s stock so as to indirectly accomplish the sale of certain real estate owned by the corporation for his personal profit when it was his duty to attempt to sell the real estate for the corporation.

The motion of respondents to dismiss plaintiffs’ appeal because of alleged violation of Civil Rule 82.05, V.A.M.R. is overruled.

The judgment is affirmed.

COIL, C., not participating.

HOUSER, C., concurs.

PER CURIAM.

The foregoing opinion by HOLMAN, C., is adopted as the opinion of the court.

All concur.


author: WESTHUES, Judge.

text:
    STATE of Missouri, Respondent, v. Clarence Richard BOSLER, Appellant.
    No. 49129.
    Supreme Court of Missouri, Division No. 1.
    April 8, 1963.

      Clarence Richard Bosler pro se.
    Thomas F. Eagleton, Atty. Gen., James K. Pendleton, Sp. Asst. Atty. Gen., Jefferson City, for respondent.
   WESTHUES, Judge.

The defendant was charged by an indictment of having committed robbery in the first degree by means of a dangerous and deadly weapon. The offense was alleged to have been committed on December 30, 1960, in the City of St. Louis, Missouri. The indictment alleged further that Bosler had previously been convicted on five separate felony charges. Upon a trial, a jury found defendant guilty of robbery in the ■first degree. The trial court, in accordance with Section 556.280, RSMo 1959, V.A.M.S., held a hearing on the question of whether Bosler had previously been convicted and had served sentences therefor. The trial court so found and assessed defendant’s punishment at imprisonment in the State Penitentiary for a term of twenty-five years. From the sentence, defendant appealed to this court.

We shall first dispose of a number of preliminary matters raised by a brief filed by the defendant pro se. Defendant was represented by court-appointed counsel at the trial of his case. This attorney filed a motion for a new trial and after it was overruled and judgment entered, he filed a notice of appeal. This attorney further applied for and obtained an extension of time to file a transcript of the evidence in the trial court. Thereafter, and before the transcript was filed, defendant asked the trial court to terminate the assignment of defense counsel. The trial court granted this request on March 30, 1962. Defendant was granted leave to appeal as a poor person. The transcript of the record was approved by the assistant circuit attorney on July 25, 1962. The record shows that on December 3, 1962, the trial court approved the transcript. The entry on the record reads:

“TRANSCRIPT ON APPEAL APPROVED BY THE COURT
“The Defendant pro se not having agreed, this Transcript on Appeal is hereby approved this 3rd day of December, 1962.
/s/ “Ivan Lee Holt, Jr.
“Judge”

The record further shows that Herbert A. Mack, the court-appointed attorney who represented defendant throughout the trial, approved the transcript. Whether such approval by Mr. Mack is binding on the defendant is not material in view of the record as made by the trial court wherein it was stated that defendant had not agreed to the transcript. In a brief filed in this court, defendant suggested that he had not had the opportunity to examine the transcript and therefore he had been denied his rights under the law. In this brief, defendant asserts that the transcript before us “fraudulently purports to be Appellant’s transcript.” This seems to be defendant’s claim as further indicated by a letter from the Warden of the State Penitentiary, addressed to George W. Draper II, an Assistant Attorney General, wherein the Warden stated: “When the indicated subject (Bosler) was presented the copy of his transcript of appeal he would not sign the acknowledgment, as he indicated this document was a fraudulent copy.”

In the circumstances, this court is justified in accepting the action of the trial court in approving the transcript. S.Ct. Rule 82.12(c), V.A.M.R., provides in part that “If the parties agree that the transcript correctly includes all of the record, proceedings and evidence, it need not be approved by the trial court. * * * If there is any dispute concerning the correctness of any transcript, or any part thereof, or if the parties fail to agree within a reasonable time as to its correctness, the transcript shall be settled and approved by the trial court.” The defendant disputes the correctness of the transcript and claims that it is fraudulent. Hence, under Rule 82.12(c), supra, the trial court was authorized to pass on its correctness. As aforementioned, the court approved the transcript on December 3, 1962.

Defendant complains that this court, on October 8, 1962, denied his request to have access to the transcript. This court is under no obligation to surrender the transcript filed here on appeal. Ordinarily, a defendant or his attorney makes use of the transcript filed in the circuit court or trial court. Under the rules of procedure, this court, in a criminal case where no brief is filed by a defendant, is required to review all assignments of error properly preserved in a motion for new trial and this court may consider plain errors not raised in the motion for new trial. S. Ct. Rules 28.02 and 27.20, V.A.M.R.; State v. Reece, Mo., 324 S.W.2d 656. A defendant’s rights are thereby fully protected.

Defendant, in a brief in reply to respondent’s brief, complains that the brief of respondent was not served on him until January 10, 1963. He stated that the brief should have been filed and served on or before January 7, 1963, that being 10 days before the case was set for trial. Defendant requested this court to disallow the brief. Under the rules, an appellant is required to file the first brief. Defendant-appellant filed no such brief. He did file a reply to respondent’s brief. He is in no position to ask that respondent’s brief be disallowed.

Defendant next contends that this court is disqualified for the reason that each of the judges is a defendant in a civil case for damages filed in the Federal Court by the defendant. That case has finally been disposed of and no such case is now pending. The point is without merit.

In the trial of the case, the State introduced evidence which justifies the following statement: On the evening of December 30, 1960, two men entered a drugstore at 3101 Arsenal Street, St. Louis, Missouri, owned and operated by Mr. and Mrs. James Rigsbey. Mrs. Rigsbey was in the store at the time. She testified that the defendant with a gun in his hand asked her, “Where is the safe?”; that he commanded her to get down on the floor in “the back aisle” and remain there while defendant’s accomplice searched through a change drawer, cigar boxes, and a small cash box; further, that defendant took her billfold containing about $5; that all together the two men obtained about $190. A Mrs. Cox entered the store while the robbery was in progress and she was forced to join Mrs. Rigsbey on the floor in the back aisle.

At the trial, Mrs. Rigsbey and Mrs. Cox identified the defendant as the man that had committed the robbery. The defendant did not testify. His plea was an alibi. Two witnesses gave evidence in support of that plea. It is apparent that the State’s evidence was sufficient to sustain a verdict of guilty.

In the motion for new trial, defendant complained that the court erred in refusing to allow Detective King to testify concerning his knowledge of defendant’s incarceration on January 3, 4, 5, 6, and 7, 1961. Defendant’s theory was that such evidence would discredit the State’s witnesses as to the identification of the defendant. There was some confusion about the time and day Mrs. Rigsbey and Mrs. Cox were called to the police station and the day these witnesses were asked to view certain pictures. The trial court ruled that this evidence was irrelevant. We are in agreement with that ruling. Mrs. Rigsbey and also Mrs. Cox identified the defendant at the trial and each of these witnesses was cross-examined at length on the subject of identification. It was immaterial as to what day the first identification was made and whether made from a picture or from “the lineup” at police headquarters. These witnesses identified the defendant on each occasion. Defendant’s point is without merit. State v. Parker, Mo., 324 S.W.2d 717, 1. c. 723(10).

In the motion for new trial, defendant says that the punishment of twenty-five years’ imprisonment is excessive. Section 560.135, V.A.M.S., authorizes a punishment for robbery in the first degree by means of a deadly and dangerous weapon at death or by imprisonment for not less than five years. The defendant, in the circumstances of having five previous convictions, is in no position to complain that the punishment of twenty-five years’ imprisonment is excessive.

We have disposed of all questions presented for review and find no prejudicial error.

The judgment of conviction is affirmed.

The defendant, on March 20, 1962, which was prior to the time the transcript of the record was prepared in the .above case, filed a motion to vacate the judgment of conviction under S.Ct. Rule .27.26, V.A.M.R. The trial court, on March 26, 1962, after considering certain letters .and statements of the defendant, overruled the motion to vacate. The defendant appealed and asked the court to order a tran.•script of the proceeding had on his motion to be included in the transcript of the record on his appeal from his conviction. The trial court so ordered. This is a rather unique proceeding. We shall consider the ruling on the motion as though it were properly before us for review. The only ground stated in the motion that may be considered under Rule 27.26, supra, is that the defendant’s constitutional rights were violated because the trial court “refused to make an adequate and effective assignment of counsel for the defense after Movant repeatedly wrote letters to the Court informing the Court of Mr. Mack’s ineffectiveness.” Defendant cited Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158. That case is not in point here for the reason that the trial court timely appointed -counsel for the defense. The record shows that on February 3, 1961, the court appointed Roland M. Lending as defense counsel. On that day, a plea of not guilty was entered for Bosler. On February 23, 1961, the appointment was set aside and 'Herbert A. Mack was appointed. The trial was commenced on May 22, 1961. Under the ruling of the Powell case, supra, the appointment was made in due time.

The trial court heard Bosler’s complaint with reference to the competency of Mr. Mack. That court was in a better position to determine the merits of the complaint than this court. The court’s ruling was adverse to Bosler’s claim. The record of the proceeding and the trial does not support defendant’s claim. The record indicates that Bosler and Mr. Mack did not always agree on the action to be taken. Bosler, as the record showed, had had no small amount of experience in criminal procedure. We cannot say that Mr. Mack’s conduct of the trial was detrimental to the rights of Bosler. Furthermore, the record shows that Bosler was not easily pleased with attorneys. Mr. Mack was the second attorney to be appointed and he, too, was relieved of his obligations at defendant’s request after an appeal had been taken from Bosler’s conviction. We rule that Bosler’s complaint about Mack’s ineffectiveness is not supported by the record. State v. Whitaker, Mo., 312 S.W.2d 34, l. c. 41(16, 17).

Defendant presented a number of collateral matters which we may not review in this proceeding under S.Ct. Rule 27.26, supra. State v. Warren, Mo., 321 S.W.2d 705, l. c. 708(2). The collateral matters were disposed of in the opinion on the appeal from the conviction, supra.

Defendant says in his motion to vacate that his constitutional rights were violated because his request for the assignment of counsel to prepare and prosecute the appeal from his conviction was denied. Under the procedure in appeals in criminal cases, this court, as noted supra, reviews all questions preserved in a motion for a new trial in cases where no brief is filed by appellant. See S.Ct. Rules 28.02 and 27.20, and State v. Reece, Mo., 324 S.W.2d 656, supra. Such procedure adequately protects a defendant’s rights.

As heretofore stated, the judgment of conviction is affirmed. The order of the trial court refusing to vacate the judgment is also affirmed.

All of the Judges of the Division and STONE, Special Judge, concur.