author: HUNTER, Judge.

text:
    Earl P. BOLTEN, Plaintiff-Respondent, v. Floyd W. COLBURN et al., Defendants, Jerry L. James et al., Garnishees, William N. Colburn, Interpleader-Appellant.
    No. 24136.
    Kansas City Court of Appeals. Missouri.
    Feb. 1, 1965.
    Motion for Rehearing or Transfer to Supreme Court Denied April 5, 1965.

      Vernon N. Rneib, St. Joseph, for appellant.
    William Rosenthal, St. Joseph, for respondent.
   HUNTER, Judge.

This is an appeal by William N. Colburn, interpleader, from a final judgment of the Circuit Court of Buchanan County in favor of respondent, Earl P. Bolten, and against appellant to the effect that Colburn is not a holder in due course of a certain note dated August 22, 1961, in the sum of $7,250 nor the innocent purchaser for value of it and has no right to interplead.

The persons involved in this suit are related. The defendants are Floyd W. Col-burn and Alma M. Colburn and W. B. Col-burn and Emma B. Colburn who are nonresidents. W. B. Colburn is the father of Floyd W. Colburn and the grandfather of interpleader William N. Colburn. Earl P. Bolten is the brother of Alma M. Colburn, and the uncle of interpleader.

The Floyd W. Colburns owned a house and some lots in St. Joseph, Mo. In the latter part of 1960 and the early part of 1961, Bolten performed some carpentry and other work on the house and some cleanup work on the lots. At the request of Floyd W. Colburn, he turned the sale of the house and lots over to the Whitson Realty Company of St. Joseph. That company effected a sale of the property to Mr. and Mrs. Jerome E. Somerville for $8,000. As part payment the Somervilles on September 21,1961, gave their note in the sum of $7,250 secured by a first deed of trust. On March 12, 1962, the Somervilles sold the real estate to John S. and Dorothy L. Smith who sold to Jerry L. James and Jean Ann James who assumed and agreed to pay the note, which called for payments of $65 per month.

Bolten alleges he made demand for the value of his services and materials on defendants Floyd W. Colburn and Alma Col-burn but was refused.

On June 28, 1962, Bolten filed in the Circuit Court of Buchanan County a suit for $1,535 for money due on work and materials furnished defendants Floyd W. Colburn, Alma M. Colburn, W. B. Colburn and Emma B. Colburn and for his services in helping sell the house. On that same day an affidavit in attachment suit was filed and an attachment and summons issued. Bolten proceeded on the theory of garnishment in aid of attachment before judgment in a suit against nonresident defendants and named as garnishees Jerry L. James and Jean Ann James, Howard Sisson and Company, a corporation, and John Whitson and Ralph Whitson.

The Smiths had paid Whitson Realty Company $65 on July 7, 1962, and August 9, 1962, and the Jameses had paid Howard Sis-son and Company, Inc., $65 on October 2, 1962, November 5, 1962, and December 3, 1962, on the mentioned note, and this money as a result of the garnishment was paid to the Sheriff of Buchanan County to be held pending court decision as to who was entitled to receive it.

On September 18, 1963, William N. Col-burn appeared as interpleader, alleging that he had in good faith purchased the note from his father for fair value and that it had been duly endorsed and assigned to him; that he was the true owner of the note in question and was entitled to the note as its owner and to the mentioned payments. Colburn also claimed reimbursement for his travel expenses, time and counsel expense incurred as a result of the garnishment action.

On March 11, 1964, Bolten in his filed answer to the interplea of William N. Colburn, admitted the note and mentioned payments had been attached through his action, alleged that interpleader Colburn is not the innocent purchaser for value of the note; that it had not been endorsed to interpleader Colburn in good faith; that no consideration had been paid by interpleader Colburn for it; and that if it was endorsed to inter-pleader Colburn it was so done with notice of the attachment and garnishment mentioned above “and with the further intention of defrauding said plaintiff (Bolten).”

Thus the issue was presented at the trial on March 13, 1964, as to whether intervener William N. Colburn had in good faith and for value purchased the note and as its owner and holder in due course was entitled to it and the payments made thereon or whether Bolten as the alleged creditor of the Floyd W. Colburns was entitled thereto.

Turning to the evidence on this issue, in-tervener William N. Colburn (hereinafter referred to as Colburn) testified he was twenty-five years old, had a tenth grade education, was married, had six children and had lived in Longview, Washington for the past eight years. He married in St. Joesph in 1956. Prior to that he had lived in St. Joseph, Missouri, as did his parents Mr. and Mrs. Floyd W. Colburn. His parents had moved to Bellingham, Washington about nine years ago and after a short stay had moved to Longview, Washington. He had gone from St. Joseph to California for nine months and then moved to Longview.

About the middle of July, 1962, Colburn’s father mentioned the $7,250 note to him, said he was ill and needed some money, and said he would like to sell it. It then had an unpaid balance of $6,900. “We started negotiations.” They came to an agreement as to purchase terms. Colburn agreed to pay $5,000 for the note.

On August 1, 1962, Colburn gave his father his $3,000 check (which cleared the bank on September 13, 1962) as a “binder on the note” and on August 22, 1962, gave his personal note to his father and mother in the sum of $1,000 bearing 6% interest, payable at the rate of $50 per month (which he has kept currently paid). He also gave six head of white-faced stock averaging 900 to 1,000 pounds apiece and valued at $1,000 at least. On August 22, 1962, Colburn’s parents assigned and delivered to him the note, duly notarized. On the reverse side of the note above the assignment to Colburn was typewritten the crossed out words “pay to the order of William B. Colburn and Emma B. Colburn without recourse.”

Colburn testified he had no knowledge at the time he bought the note of any lawsuit or pending claim between his parents and Bolten. “I bought this note because my father said he needed money, and I have no knowledge of Mr. Bolten’s actions against my father. I knew the property and for the considerable amount of money he offered it for I considered it worthy value, and I purchased the note as a business transaction only.”

Colburn did not receive any payments on the note he had purchased from his parents. About September 15, 1962, he wrote to a St. Joseph, Missouri, attorney whom he had formerly known, and asked him to look into the matter. After a short time, the attorney wrote back sending a copy of the petition in the instant case, and that was the first time, according to Colburn, that he knew of any claim or suit between his parents and his uncle, Mr. Bolten. Colburn stated he had no interest in the lawsuit between Bolten and Floyd Colburn, that his only interest “is what money I have invested in this note.” He had discussed the mechanics of the deal with his personal lawyer in Long-view, Herb Springer, the last part of July when his father and he were bargaining as to sales terms on the note.

On cross-examination Colburn was asked, “Q. The note was for $7,250, unpaid balance about $6,900, it was a valid first lien on real estate, and you say you bought it for $5,000. That is about a twenty-five per cent discount. What was wrong with it? A. Other than the fact that my father needed money and had been sick and off work, he was willing to sell it at that price. Q. When your father was sick and needed the note you were going to scalp the note at a twenty-five per cent discount? A. I don’t know if — I considered it a shrewd business deal.” Colburn testified he had ño question about the honesty of his father. “He didn’t discuss any of his personal business with me. He just said he needed money and he knew that I had this money and he knew what I felt about St. Jo and about our home and asked me if I would buy the note from him, and I agreed to after due consideration.” * * * “Q. You don’t know anything about this business of your father deciding to endorse this note to-your grandfather, do you? A. Definitely not, sir. Q. And you never ever at any time knew of your uncle tending the property back here by way of selling it or ever doing any repairs on it, never heard of that? A. No, sir; I did not. A. And you and your father live right there in the same place? A. Within the same town, yes, sir. Q. How far apart do you live now? A. Probably a mile and a half, two miles.”

Colburn was asked if he had seen his father in the last couple years. He answered, “Yes, sir. Q. How often do you visit him? A. I try to hold a minimum of not more than three times a month in most cases. Q. Why have you put a minimum on that? A. Because of the fact that my wife’s relatives is back here and I don’t want to push my family upon my wife, and we prefer living that way. Q. Do you ever allow your father to come and see you ? A. He is welcome in my home anytime he wants. He never does come.” * * * “Q. Did you have a discussion with your father about this situation in this lawsuit? A. I had a discussion with my father after my attorney had told me what the condition was, and he said he didn’t know anything about any lawsuit. Q. Did you ask him about whether or not his brother-in-law had done all this work? A. I inquired about him, and he said he paid Mr. Bolten for any work he had done and he had no knowledge of any lawsuit.” My father said, “That is all silliness. I don’t owe him any money. It is stupid.”

Colburn was cross-examined in great detail as to where he got the money he used to purchase the note from his father. He explained that when he first went to Long-view he bought a home on contract, paying $175 down from savings from his wages. He soon sold it making about a $400 profit. He then rented a house and pasturage for $45 a month and with his $400 profit bought five head of beef cattle. He with the help of his wife bought, fed and sold cattle on a small basis. He borrowed $300 from the National Bank of Commerce “to expand” and .that plus more salary savings enabled him to finally build up to seventeen head of cattle. Eventually he had enough to pay off the $300 note and upon liquidation of his cattle had about $1,800 remaining from the cattle sale. He moved to town for awhile, and again moved to the country and. rented a house. He reinvested in livestock buying about seventeen head and continued to buy, feed and sell cattle.

Colburn decided to again liquidate his cattle and put an ad in the newspaper offering them for sale. In June, 1962, when his father first told him he would like to sell the $7,250 note Colburn had between $3,600 and $3,700 in the National Bank of Commerce in Longview, plus six head of cattle he had not sold.

As to Colburn’s employments, with the exception of a few weeks he was steadily employed all the time he lived in Longview. He had four different jobs over those eight years. His first employment at Longview was with Warehouser Lumber Company. He earned $1.85 per hour and worked 6 or seven days a week. His weekly take home pay was $100 to $125. After nine months of that employment he became a salesman for Schneider Brothers Hardware where he earned approximately $90.00 a week. After four years of that employment (and 90 days in Baltimore, Maryland) he was reemployed by Schneider Brothers Hardware where he remained 11 months, earning $100.00 a week. He then obtained his present job with Longview Plumbing and Appliance Company as an appliance salesman earning about $500 a month, plus commissions. In 1962 his total earnings were between $6,500 to $7,000.

Colburn testified it was his and his wife’s practice to save something, usually about $50 or more every two weeks out of his salary and invest it in his cattle business. This is partly why he was able to build up his cattle to some seventeen head just before he sold out all but six of them in June 1962. He originally banked in the National Bank of Commerce in Longview and kept his account there until 1963 when he transferred to Cowlitz County Bank because it was a new bank located closer to him. He was asked how much it took for him, his wife and children to live on. He answered, “A. I honestly don’t know. I would say that an average — I honestly don’t know. I would say that an average — I average the present time, I am living a little bit better, maybe I spent $250 a month. Q. And you are certain you don’t spend over $250 a month? A. I am not certain of it; no, sir. Q. To keep the eight of you?” * * * “A. $250, like I said I estimated that as an estimate. Q. You ought to be a pretty good estimator, you are the one that is keeping them, aren’t you? A. Yes, I don’t know what you are trying to infer. When a person gets sick and has an extra doctor bill he doesn’t evaluate an extra expense when you get sick and miss a day’s work. I am talking about what possibly I could have lived on. I honestly cannot say the dollar value, how much it was.” After explaining how he had accumulated the purchase money, and upon being asked if he had anything else to say, Colburn stated, “There is only one comment I would like to make in the eyes of the Court as far as how I acquired this money, and people can believe it or not. But my wife and I were born poor and we intend to make something of our lives and we have done personal sacrificing in clothing and every other way and devoted ourselves in a feeling of saving money and been able to have a home so we can eventually buy a farm and buy beef livestock, and this money is earned with our own sweat and we have paid for it out of our pocket, and this note is my note. That’s all I have to say about it.”

In an effort to show Colburn knew of some past conduct of his father to evade bills Colburn was asked, “Q. Isn’t it true that your father first bought this property, then he got sued in an attachment and he immediately transferred it to your grandfather, William B. Colburn? A. I don’t know. Q. Then the minute they got rid of the attachment they transferred it back to Floyd ? A. I don’t know their business. Q. Then your father got sued and he immediately transferred it again to your grandfather, William C. Colburn? A. If this has happened it is without my knowledge.”

There was testimony by witness Whitson that he mailed Floyd W. Colburn a copy of the papers in the attachment suit “in July of 1962”. Colburn testified he received the abstract of title to the premises on August 22, 1962, but did not have it brought up to date until several weeks later. Until brought up to date the abstract did not show anything concerning the present dispute.

Earl Bolten testified Colburn left St. Joseph for Longview, Washington “in ’58, ’57, along in there,” and returned he felt “pretty sure” in 1960, around August or September for a few days. He conceded it could possibly have been in 1959. Bolten was asked if Colburn was present at any time he was working on the Eureka property and answered, “he knew I was working on them. Q. Was he there when you were working on them at various times ? A. Yes.” Bolten also stated Colburn had unsuccessfully tried to borrow some money from him and from W. B. Colburn. In rebuttal Colburn testified it was in September, 1959, when he was in St. Joseph, that his wife and three children were with him; that he was there on a vacation and had purchased and used a round trip railroad ticket. He stated he didn’t try to borrow money from anyone and did not see Bolten doing any work on the Eureka Street property.

In a case of this kind tried to the court we review the record de novo and determine the credibility, weight and value to be accorded the testimony and other evidence, and arrive at our own conclusions based upon the entire record. In so doing we give due deference to the opportunity of the trial judge to see and hear the witnesses and to judge their credibility. Also, we should not set aside the judgment unless clearly erroneous. Civil Rules 73.01(d), V.A.M.R.; Chailland v. M. F. A. Mutual Insurance Company, En Banc, Mo., 375 S.W.2d 78(1); Kelso v. Kelso, Mo.Sup., 306 S.W.2d 534, 71 A.L.R.2d 258.

It is undisputed that at the time Colburn sought to intervene he not only had the note in question in his possession but also that the note on its face disclosed that it had been assigned to him. It is relatively undisputed, and certainly there is no contrary evidence, that Colburn paid his father for it $3,000 (by check which is in evidence as an exhibit), gave his $1,000 note (which is in evidence as an exhibit) and six cattle worth at least $1,000, and that his father and mother did transfer and deliver the note (which is in evidence as an exhibit) to him on August 22, 1962.

We proceed to state some of the rules of law involved in ruling this case. The basic rule on burden of proof on the issue of fraud as stated in 7 C.J.S. Attachment § 359, page 568, is that “If a transfer of the property to the intervener is admitted, but fraud is alleged and relied on to avoid such conveyance, the burden of proof rests upon the party who sets up fraud.” See, also, Section 401.059 RSMo.1959, V.A.M.S.; Local Finance Co. v. Charlton, Mo.App., 289 S.W.2d 157. It is likewise the rule that a sale made with intent to defraud a creditor will not be held invalid against the purchaser, if he buys it without notice of such intent, and for a valuable consideration paid before notice of the vendor’s fraud. Dougherty v. Cooper, 77 Mo. 528; Section 401.052 RSMo.1959, V.A.M.S.

To be a transferee without notice, the transferee must be such at the time of the payment of the purchase money. Citizens’ Bank of Hayti v. McElvain, 280 Mo. 505, 219 S.W. 75, 79. If the transferee have knowledge of the debtor’s purpose to hinder, delay or defraud his creditors, the transfer is nonetheless void no matter how valuable the consideration. Emlet v. Gillis, Mo.Sup., 63 S.W.2d 12.

Fraud is not to be presumed but must be proved. To satisfy this burden of proof the evidence produced must be clear and convincing. Mitchell v. McClelland, Mo.App., 306 S.W.2d 75; Herrold v. Hart, Mo.Sup., 290 S.W.2d 49. In so saying it is recognized that fraud can rarely be proved by direct evidence. It is most frequently to be deduced from the circumstances surrounding the transaction, and from the acts of the parties. Mere suspicion is not, however, sufficient. The fraud must be proved as an affirmative fact, and the proof must be of such a positive and definite character as to convince the mind of the chancellor, for it is never presumed and, if the facts shown are consistent as well with honesty as with fraud, the transaction should be held honest. Moberly v. Watson, Mo.Sup., 340 Mo. 820, 102 S.W.2d 886, 889.

The payment of the full value of a note is not necessary to make a holder for value, although the consideration paid must be more than nominal. Kincaid v. Estes, 218 Mo.App. 109, 262 S.W. 399. While inadequacy of consideration in the conveyance of property by an insolvent debtor is held to be a badge of fraud, yet it is not generally regarded as sufficient alone to raise a legal inference of fraud unless so gross as to create the assumption the conveyance could not have been made in good faith. Weigel v. Wood, 355 Mo. 11, 194 S.W.2d 40; Munford v. Sheldon, 320 Mo. 1077, 9 S.W.2d 907.

It is the rule a conveyance from father to child will be closely scrutinized, but the existence of the relationship does not of itself establish fraud in the transfer. Moberly v. Watson, 340 Mo. 820, 102 S.W.2d 886; Allison v. Mildred, Mo.Sup., 307 S.W.2d 447. It is not until a creditor has established badges of fraud sufficient to raise a presumption of fraud that the burden of explaining the transaction and showing its good faith shifts to the parties to such conveyance. Oetting v. Green, 350 Mo. 457, 166 S.W.2d 548; Local Finance Co. v. Charlton, supra.

Turning to the question of whether Colburn in good faith purchased a negotiable note for valuable consideration without notice of any defect, we have very carefully examined the entire record and have come to the conclusion that he did purchase the note in good faith for a valuable consideration without notice of any defect and is the holder in due course of it. Bolten, who has the burden of proof on the fraud issue, has not produced any evidence showing bad faith or fraud on the part of Colburn and has failed to carry his burden of proof on the fraud issue. Additionally, it is a part of our duty on review to consider credibility and we are convinced Col-burn’s testimony concerning the amount he paid for the $7,250 note and that he bought it in good faith without knowledge of the pending suit between Bolten and his father is credible.

Since our conclusion is different from that reached by the trial court we will refer to the reasons given by that court and will endeavor to explain briefly why they have not been persuasive in our judgment.

The trial court thought Colburn’s testimony to be so inconsistent as to be ridiculous, naming three “inconsistencies”. The first is that although Colburn’s father must have been aware of Bolten’s claim against him when he sold the note (and we agree the evidence persuades that Colburn’s father did know this) that it is incredible to conclude the father did not tell Colburn and that Colburn did not know it. However, there is no evidence or reasonable inference from evidence that Colburn knew it and he denies he knew it. The mere fact that the transaction is between a father and son is not evidence of fraud on the part of the son, or that he knew what the father knew. The personal relationship between Colburn and his father does not appear to have been a close one. For many years they had separate homes. Each seemed to go his own independent way with just limited and routine visiting. Colburn explained in detail how the entire transaction occurred, and while the father-son relationship might at the outset create a suspicion and call for a very careful examination of the entire transaction, our review of the evidence has dispelled that suspicion.

The second “inconsistency” named by the trial court is that it is incredible that Col-burn could have saved the money to pay the $3,000 for the note and to give his father $1,000 worth of cattle. However, not only did Colburn explain how he had over the years saved approximately $3,600 by July, 1962, and had it in the bank but also he produced and placed in evidence his can-celled check to his father and mother for $3,000 on the National Bank of Commerce, Longview, Washington showing it had cleared that bank near the time in question.

The trial court stated, “He claims he is now rearing six children, himself and his wife on $250 a month and saving the balance of his salary. The court simply doesn’t believe it. It is beyond comprehension that a man could do these things.” As we read Colburn’s testimony, and we have quoted it liberally in this opinion, he does not claim his entire family expenses never exceeded $250 a month. Even so, the evidence discloses he lived very frugally in inexpensive housing in a rural area and we do not believe it can be safely or reasonably said that Colburn could not have lived economically enough to have “tried to take $50 out of every two weeks pay check” to invest in his cattle as he testified.

The trial court also thought Colburn evasive and upset at simple questions. It is notable, and possibly overlooked, that he testified he was “nervous and * * * not familiar with court law”, and that on one occasion when he asked that a question be repeated he explained, “I have one damaged ear and I cannot understand.” In spite of this he did bear up well on the witness stand, including a long cross-examination. We have carefully examined the record and conclude that for a twenty-five year old man with a tenth grade education, unaccustomed to being in court as he said he was, he did a credible job of frankly answering searching questions calling for a firm memory and considerable detail. While we do not have the advantage of having seen Colburn testify, the transcript does not cause us to conclude he was evasive or upset.

Some point is also made of the fact that Colburn paid only $5,000 for a note having an unpaid balance of approximately $6,900. There is no evidence as to the commutated value of the note as of the day of its purchase. However, the note was payable at the rate of only $65 monthly and Colburn’s purchase price for it included $3,000 in a lump sum plus six head of cattle, as well as a $1,000 note payable at the rate of $50 monthly. The father’s statement he had been ill and needed immediate cash, if true, and Colburn states he did believe it, would explain to Colburn why the father was willing to sell at the stated price.

Attention is directed to Bolten’s statement Colburn visited in St. Joseph, Missouri, for a few days in 1960 (Colburn says 1959) when Bolten was doing “some work” around the house and lots in question and that Colburn saw him doing it. Bolten’s statement as to whether the year was 1960, 1961, or 1959 is somewhat uncertain whereas Colburn’s statement of 1959 was both certain and related to events including the presence of his wife and three children, all on vacation, that would assist him in remembering the correct date. Additionally, Bolten’s claim in his petition for work performed at the house includes such things as cleaning up and hauling away trash, repairing a back door, mowing the lawn, cleaning up brush on the vacant lots, and replacing a window pane. Even if Colburn is mistaken about the date of his St. Joseph visit (we accept his testimony as more likely to be accurate) and did see Bolten mowing the lawn, or cleaning up some brush (and has forgotten it), seeing these things would not in and of themselves put him on notice that Bolten, if entitled to be paid for them, had not been paid or that Colburn's father was selling the mentioned note to hinder or avoid payment of such debts.

It is the law that if a plaintiff in attachment shall cause a person to be summoned as garnishee and shall fail to recover judgment against such garnishee, the garnishee is entitled to a judgment for a sum sufficient to indemnify him for his time and expenses, and a reasonable attorney’s fee in attending and answering and defending in subsequent proceedings as garnishee. Civil Rule 90.23. The evidence is that Colburn’s round trip cost of transportation and travel expense from Long-view, Washington to St. Joseph, Missouri was $225, that he lost $100 in wages because of his attendance at the trial, and that he was charged $300 by his attorney for answering and defending in these proceedings. Colburn is entitled to a judgment in the sum of $625.00 as indemnity for them.

The judgment is reversed and the cause is remanded with directions that a judgment for William N. Colburn, interpleader, and against Earl P. Bolten, respondent, be entered in accordance with this opinion, including the holding that William N. Colburn is the bona fide purchaser for value of the negotiable $7,250.00 note and as such is entitled to it and to the payments made thereon that have been paid to the Sheriff, and including an award of $625.00 to William N. Colburn as indemnity for his time, his attorneys’ fee and travel expense in defending against the garnishment.

All concur.

BROADDUS, J., not participating.


source: Caselaw Access Project

author: SPERRY, Commissioner.

license: Public Domain

text:
    Florence I. BENTON, Plaintiff-Appellant, v. Paul SMITH, Defendant-Respondent.
    No. 24081.
    Kansas City Court of Appeals. Missouri.
    April 5, 1965.

      Robert G. Oberlander, Kuraner, Ober-lander, Lamkin, Dingman & O’Laughlin, Kansas City, for appellant.
    Harry Weed, Kansas City, for respondent.
   SPERRY, Commissioner.

Plaintiff sued defendant for damages because of personal injuries incurred by her when the automobile which she was driving collided with an automobile operated by defendant. At the close of plaintiff’s evidence the court directed a verdict for defendant. Plaintiff appeals.

The collision occurred at the intersection of Nichols Parkway and 47th, public streets in Kansas City, Missouri, on August 22nd, 1960. Plaintiff offered evidence sufficient to establish that she suffered serious personal injuries because of the negligence of defendant. While defendant actually offered no testimony, his insurer’s attorney was called as a witness by plaintiff and testified to claimed evidentiary facts which would have constituted a legal defense for defendant, and grounds to support a counter-claim, had there been actual evidence thereof offered.

Immediately following the collision, and as a result of it, plaintiff’s arm was bruised and blue, and her arm, shoulder and neck were sore and painful. She consulted a U. S. Navy doctor at Olathe, Kansas, where her husband, a naval enlistee, was stationed. The doctor examined her injuries and X-rayed her arm. He informed her that she had no serious injuries, and that she would soon fully recover.

Later, Mr. Ferguson, an attorney employed in the office of Mr. Harry Weed, attorney for defendant’s insurer, called plaintiff and, eventually, sent a young man to see her. This young man took her statement of how the accident occurred. On August 27th, 1960, plaintiff and her husband visited Mr. Weed’s office to settle her claim. She told Mr. Ferguson that she had consulted the Naval doctor who had told her that she had received no serious injuries. She told Mr. Ferguson that she thought that she was not severely injured, and that there were no charges for medical services. Her husband was present, with her, at this conference. Eventually, the following written instrument was signed and executed by plaintiff and her husband, in Mr. Weed’s office, to-wit:

"SETTLEMENT AND RELEASE
“WE, Ronald Benton and Icedore F. Benton, husband and wife, hereby acknowledge payment to us in hand this day by Paul H. and Shirley Smith of the sum of Three Hundred Twenty-five and 32/100 Dollars ($325.32), in full settlement and satisfaction of a disputed claim arising out of personal injuries, known or unknown, and damage to property sustained by us at Kansas City, Mo., on or about the 22nd day of August, 1960, by reason of Automobile Collision, for which personal injuries and property damage we have claimed the said Paul H. and Shirley Smith to be legally liable, which liability is expressly denied by Paul H. and Shirley Smith, and in consideration of said sum so paid, we have released and discharged and do hereby for ourselves, our heirs, representatives and assigns, release and discharge the said Paul H. and Shirley Smith of and from any and all claims, demands, and causes of action which we may now or hereafter have or claim to have on account or arising out of said accident * * ” (Emphasis ours).

Pursuant to the terms of the above agreement plaintiff and her husband received a draft in the sum of Three Hundred Twenty-five and 32/100 Dollars ($325.32), which they cashed. Defendant’s contention is that this claim is barred by reason of the above agreement and the payment of the sum mentioned. The trial court so ruled and directed the verdict, as stated.

Thereafter, plaintiff continued to have pain in her shoulder and, eventually, in the neck. She also suffered some pain in her fingers and in the palm of her hand. These pains grew progressively worse. During the latter part of November, 1960, she stated that she telephoned Mr. Ferguson and asked if the insurance company would pay medical and hospital bills which, she felt, would be necessarily incurred in the treatment of her condition. She stated that her request was refused. Her condition worsened and, in April of 1961, she entered Research Hospital and was operated on for a herniated disc. Later still, she was further hospitalized for treatment. There was evidence to the effect that the total cost for medical treatment, hospitalization, and loss of time, was near Four Thousand Dollars ($4,000.00) ; that the condition for which she was treated was caused by injuries suffered in the automobile collision; and that, at the time the release was executed, she honestly believed that her injuries consisted solely of a bruised arm and some muscle strain.

Plaintiff seeks to avoid the force and effect of the release on the theory that it was executed by parties by reason of a mutual mistake of fact. Defendant, in his brief, concedes that mutual mistake of fact is, generally, a good ground for avoidance of a release of this kind, under proper facts and conditions. He denies that the facts here will justify avoidance of the contract.

Mr. Weed, who directed the settlement on behalf of defendant, and who testified when called by plaintiff, contends that he did not recommend that defendant enter into the agreement because of a mistake of fact; that he knew that plaintiff claimed that she suffered some personal injuries and property damages; that both she and defendant claimed to have entered the intersection on a green light; and that defendant consulted him about claiming damages because of an aggravation to a preexisting heart complaint, because of plaintiff’s negligence in causing her automobile to collide with him.

In Vondera v. Chapman, 352 Mo. 1034, 180 S.W.2d 704, plaintiff sued for damages for personal injuries, in the sum of Twenty-five Thousand Dollars ($25,000.00). Defendant pleaded a release, executed by plaintiff nine days after the casualty occurred, as a bar to the action. That release recited that plaintiff accepted One Hundred Seventy-five Dollars ($175.00) in full settlement for all injuries “not only now known injuries, losses and damages, but any future injuries, losses and damages not known or anticipated but which may later develop or be discovered, including all the effects and consequences thereof.” Plaintiff’s reply admitted the execution of the release and alleged: “that it was executed at a time when the only injuries of which appellant had knowledge or could have known by the exercise of ordinary care were superficial and slight; that such injuries were all that were known by respondents at the time the release was executed; that if respondents had knowledge or information of any additional injuries they did not communicate the same to appellant, but fraudulently withheld it from her; that appellant made the settlement in the honest belief that such injuries were all that she had sustained; that the amount of the settlement was considered by her, and according to her best information and belief by the respondents, to be fair and reasonable compensation for the injuries then known by the parties. The reply then alleges that shortly thereafter she discovered additional injuries, described in detail, of such nature that the amount of settlement would be grossly and shockingly inadequate to compensate her; that if she had known of such injuries she would not have settled for so small a sum, and that the settlement was made as a result of a mutual mistake on the part of appellant and respondents as to the existence of such serious and permanent injuries.” (Emphasis ours).

The trial court sustained defendant’s demurrer to plaintiff’s reply and the Supreme Court affirmed the judgment. The court said that ”[n]o doubt a slight taint of fraud or unfairness, coupled with a grossly inadequate consideration, will authorize the setting aside of a contract.” In that case, as in this, no fraud was claimed, no overreaching, no concealment, no persuasion practiced by anyone. This case, on the facts, is on all fours with the Ven-derá case. We are required to follow the Missouri Supreme Court’s latest ruling on the subject. We must affirm the judgment in this case.

It will serve no useful purpose to discuss other cases on the subject where a different result may have been reached. In most, the facts were materially different from those in the case at bar; but, in any event, we are governed by the decision in the Vondera case, no matter what decision may have been reached in other jurisdictions.

Those interested in a general discussion of the subject are referred to Clancy v. Pacenti, 15 Ill.App.2d 171, 145 N.E.2d 802, 71 A.L.R.2d 77; and to A.L.R. annotation there found.

The judgment is affirmed.

MAUGHMER, C., concurs.

PER CURIAM.

The foregoing opinion of SPERRY, C., is adopted as the opinion of the Court.

HOWARD, J., not participating.


author: CROSS, Presiding Judge.

text:
    ASSOCIATED GROCERS’ COMPANY OF ST. LOUIS, MISSOURI, a corporation, Appellant, v. S. N. CROWE, George W. Wise and Chas. E. Cates, as Members of the Industrial Commission of Missouri, and the Division of Employment Security, Respondents.
    No. 24132.
    Kansas City Court of Appeals. Missouri.
    April 5, 1965.

      Harold A. Thomas, Jr., Fordyce, Mayne, Hartman, Renard & Stribling, St. Louis, for appellant.
    Lloyd G. Poole, Jefferson City, for respondent, Industrial Commission.
   CROSS, Presiding Judge.

On January 8, 1964, the Industrial Commission of Missouri, sometimes hereinafter referred to as the commission, entered its decision in a proceeding pending before it, numbered CR-417, involving the question whether one Jack Linz rendered services for appellant corporation in “employment” as defined in the Missouri Employment Security Law by Section 288.034 V.A. M.S., or as an independent contractor. This decision consisted of an order denying Associated’s application for review of the decision of the Appeals Tribunal of The Division of Employment Security to the effect that the subject individual was engaged in employment within the meaning of Section 288.030. As a result the decision of the Appeals Tribunal is deemed to be the decision of the commission for the purpose of judicial review. Section 288.200(1) V.A. M.S.

On January 28, 1964, Associated filed its petition for judicial review of the subject decision in the Circuit Court of Cole County and process was duly issued and served upon the commission. Responding thereto, the commission on February 14, 1964 filed its “Return” under its official seal, attested by its secretary, together with the entire record of proceedings involved, duly certified by the return. On the same day the respondent Division of Employment Security filed its separate answer.

On February 17, 1964, subsequent to filing its return and certifying the record of proceedings to the circuit court, the commission filed its “Special Appearance and Motion to Dismiss” praying dismissal of Associated’s petition on the sole ground that the court lacked jurisdiction because “this action for review was not commenced against The Industrial Commission of Missouri on or before January 28, 1964, as is required by Section 288.210 V.A.M.S.” This motion was sustained by the court and judgment entered accordingly. Associated appeals.

The sole question presented by this appeal is whether the action was commenced “against the commission” in compliance with Section 288.210 V.A.M.S. of the Employment Security Law which provides for judicial review of decisions of the Industrial Commission as follows (in pertinent part): “Within ten days after a decision of the commission has become final, the director or any other party aggrieved thereby may secure judicial review thereof by commencing an action in the circuit court * * against the commission for the review of such decision * * *." With respect to the form and substance of the petition, Section 288.210 requires only that it “shall state the grounds upon which a review is sought”. There is no issue before us involving the merits of the subject matter of the commission’s decision.

The caption of the petition names respondents as “S. N. Crowe, George W. Wise and Chas. E. Cates, as members of the Industrial Commission”. The pleading is titled “PETITION FOR JUDICIAL REVIEW OF A DECISION OF THE INDUSTRIAL COMMISSION OF MISSOURI UNDER THE EMPLOYMENT SECURITY LAW”. In the introductory paragraph the pleader “petitions the court to review a decision of the Industrial Commission of Missouri”. In paragraph 2 it is alleged that respondents S. N. Crowe (chairman), George W. Wise and Chas. E. Cates were the members of the Industrial Commission of Missouri and that “as such at all times herein mentioned did exercise the power provided for in * * * the Missouri Employment Security Law * * * Paragraph 3 identifies the decision complained of as a “two-to-one decision” of the Industrial Commission, which affirmed and thereby denied review of the Appeals Tribunal’s decision. Paragraph 4 alleges that the findings and decision of the Industrial Commission are erroneous for reasons therein set out — five in number. The prayer of the petition is “that the said Industrial Commission of Missouri, composed of S. N. Crowe, George W. Wise and Chas. E. Cates, certify to this Court all the proceedings, * * * that this Court review the same * * * and that said action of said Commission be reversed and set aside with instructions to enter findings and decision in accordance with the dissenting opinion * * *

As appellant, Associated assigns that the circuit court erred in sustaining the motion to dismiss because the petition for review satisfied both the letter and spirit of the statute requiring that review proceedings be commenced “against the commission”, and effectively invoked the jurisdiction of the circuit court.

It is contended by the commission that this action was not commenced against “The Industrial Commission of Missouri” as required by Section 288.210. Therefore, says the commission, the circuit court acquired no jurisdiction to review its decision by the filing of Associated’s petition, and consequently committed no error by sustaining the motion to dismiss. Argument intended to support this contention is to the effect that the petition failed to allege that the commission was legally empowered “to sue and be sued in its official name”, and that the action was against that agency; that the Industrial Commission of Missouri is not named in the caption or body of the petition as a respondent; and, that Paragraph 2 of the petition describes the individual commission members as respondents but does not refer to the legally suable entity, the Industrial Commission of Missouri. Thus it is apparent that the thrust of this contention (and of the motion to dismiss as presented to the circuit court) involves only the name of the administrative agency which rendered the decision. It is conceded that the petition for review satisfied the requirement of the statute as to time of filing. No complaint is directed against the sufficiency of the grounds for review as set out in the petition.

The legal effect of Associated’s petition for review will be determined under rules of construction applicable to pleadings in civil actions generally. Civil Rule 42.01, V.A.M.R., appertaining to civil procedure in circuit courts provides there shall be one form of action to be known as “civil action”. Consequently, the action authorized by Section 288.210 to be filed in a circuit court can be of no other species than the “civil action” defined by the cited rule. “The Civil Code, while not supplanting special procedure statutes, applies to such statutes where it is not repugnant to their provisions”. Herrman v. Dixon, Mo.App., 285 S.W.2d 716.

The rules of civil procedure are purposed to provide for just determination of every civil proceeding. “These rules shall be construed to secure simplicity and uniformity in civil procedure, fairness in the administration of justice, and the elimination of unjustifiable expense and delay”. Civil Rule 41.03. No technical forms of pleading are required. Civil Rule 55.06. And, the only mandatory requirement of a pleading which sets forth a claim for relief is that (1) it contain a short and plain statement of the facts showing the pleader is entitled to relief, and (2) a demand for the relief to which he deems himself entitled. Civil Rule 55.06. “All pleadings shall be so construed as to do substantial justice”. Civil Rule 55.26. The principles inherent in these rules are reflected in numerous Missouri decisions, some of which are here noted.

“In determining if a petition states a claim or cause of action, the aver-ments of the petition are to be given a liberal construction, according the averments their reasonable and fair intendment — fair implication should be indulged from the facts stated. So considered, a petition should be held sufficient if its averments invoke substantive principles of law which entitle plaintiff to relief. A petition is not to be held insufficient merely because of a lack of definiteness or certainty in allegation or because of informality in the statement of an essential fact”. Zuber v. Clarkson Construction Co., 363 Mo. 352, 251 S.W.2d 52, quoted with approval in Mathews, Exr. v. Pratt et al., Mo.Sup., 367 S.W.2d 632. In determining the effect of the petition it must be read from its four corners and in its entirety, and considered in its plain and ordinary meaning. King v. Guy, Mo.App., 297 S.W.2d 617. The court may consider not only the facts pleaded but also the relief sought, Kemp v. Woods, 363 Mo. 427, 251 S.W.2d 684, and may also consider what the opposite party had reason to understand was the issue tendered. Quigley v. King, 182 Mo.App. 196, 168 S.W. 285.

The rule of liberal construction is specifically applicable in the instant case, in view of the following quoted ruling of the Supreme Court: “The pleadings in an action for the review of a decision of the Commission should be liberally construed with a view of determining the real questions for review; especially is this true in view of the remedial social character of the Unemployment Compensation Law”. Northeast Osteopathic Hospital v. Keitel, 355 Mo. 740, 197 S.W.2d 970.

After analyzing the petition under the foregoing principles we are left with no doubt that it states a cause of action “against the commission” for judicial review of the decision in question and, that by filing the petition in the circuit court within the time allowed by law, Associated commenced an action “against the commission”, in substantial compliance with the requirements of Section 288.210. To reach a contrary conclusion it would be necessary for us “to rob, by construction, language of its plain and obvious meaning, or of the fair, reasonable and obvious conclusion to be deduced therefrom”, (Hood v. Nicholson, 137 Mo. 400, 38 S.W. 1095) and to ignore those substantial portions of Associated’s petition which we have heretofore set out and which clearly invoke, in unequivocal terms, the right of judicial review guaranteed by the Missouri constitution and provided by statute.

There is no merit in the commission’s complaint that Associated has sued the wrong parties by naming the individual members of the commission as “respondents” in the caption of the petition and by again referring to them as such in the body of the petition. As shown above, the individuals referred to are named in the caption as “S. N. Crowe, George W. Wise and Chas. E. Cates, as Members of the Industrial Commission of Missouri”. The reference made in the body of the petition is “That the respondents S. N. Crowe (Chairman), George W. Wise and Chas. E. Cates are—the—members of the Industrial Commission of Missouri, and as such— did exercise the power provided for in— the Missouri Employment Security Law”.

We do not believe that the fair and reasonable intendment of Associated in phrasing either the quoted caption portion or the quoted allegation was to designate or refer to Messrs. Crowe, Wise and Cates as respondents in their individual, personal capacities. The very language used by the pleader imports otherwise. We interpret the words “as members of the Industrial Commission of Missouri” to mean “in the capacity of” or “constituting” that legal entity by the effect of the combined trium-viral membership. Our interpretation of the allegations in paragraph 2 is to like effect.

However, the meaning of the language in question must be considered in connection with all other portions of the petition, the relief sought, and the issues tendered thereby. Taken as a whole, there is no conceivable issue raised by the petition which could affect Messrs. Crowe, Wise and Cates as individuals. There is no allegation of any act on the part of those named persons, as individuals, that has any relevance to this controversy. No possible relief could be granted on Associated’s behalf against them, as individual persons. Furthermore, in our opinion Messrs. Crowe, Wise and Cates as individuals had good reason to understand that the issue tendered by Associated’s petition was its right to secure judicial review of the decision rendered by the Industrial Commission as a legal entity—and that the commission itself also had good reason to entertain the same belief. Consequently we are convinced that neither the individuals nor the commission were misled in any degree by the petition. This is confirmed by the fact that when process was served on the commission it was that body which responded in its official name, and certified its record of proceedings to the circuit court— not Messrs. Crowe, Wise and Cates, who have filed no pleading in the cause.

Conceding that the body of the petition does not designate the Industrial Commission of Missouri as a respondent in haec verba, yet, under the rule that aver-ments will be accorded their fair and reasonable intendment and that fair implication should be indulged from the facts stated, it is our view that the petition in legal substance effects such designation. And as for the caption—the names of the individual commission members therein stated, together with the qualifying words “as members of” may be considered as mere surplusage and disregarded. See Iroquois Mfg. Co. v. Annan-Burg Milling Co., 179 Mo.App. 87, 161 S.W. 320, and cases digested in Vol. 23, Mo.Digest, Pleading, *®::=535. With such surplusage eliminated, even the caption would designate the Industrial Commission of Missouri as respondent in its technically correct legal name, leaving respondent commission without cause for complaint.

Associated directs our attention to a circumstance of considerable interest relating to the preparation of its petition. It appears that for such purpose Associated consulted and relied upon the Wheaton-Blackmar treatise entitled “Missouri Practice”, Volume 11 of which is devoted to various procedural forms suggested for use in Missouri civil practice. Prefaces found in Volumes 1 and 8 indicate that the forms were prepared with thorough care including discussions “with various federal, state and county officials”.

Page 181 of Volume 11 contains a form for petition entitled “V.A.M.S., Sec. 288.-210—Form 1. Petition for Judicial Review of a Decision of Industrial Commission of Missouri under Employment Security Law”. This form is recognized and apparently approved by the editorial staff of Vernon’s Annotated Missouri Statutes. At the foot of Section 288.210 as set out in V.A.M.S., 1964 Pocket Part, an appendix entitled “Forms” contains the following reference: “Petition for judicial review of decision of industrial commission of Missouri under employment security law, see Missouri Practice, Vol. 11, Wheaton-Black-mar, § 288.210 — Form 1”.

Comparison of Associated’s petition with the Wheaton-Blackmar form indicates that the former was faithfully patterned after the latter. Of particular interest is the identity of Associated’s paragraph 2 with paragraph 2 of the Wheaton-Blackmar form which reads as follows: “That the respondents, -, - and -, are, and were at all times herein mentioned the duly appointed, qualified, and acting members of the Industrial Commission of Missouri, and as such at all times herein mentioned did exercise the power provided for in the Missouri Revised Statutes, 19 — , chapter 288 known as the Missouri Employment Security Law”.

Associated’s use of the Wheaton-Black-mar form, which purports to be appropriate for use in drafting a petition for judicial review of a decision of the Industrial Commission of Missouri, and which is so recognized by the editors of our official annotated statutes, gives further reason to believe that it was Associated’s intention to commence its action against the commission and not against the individual members.

Although by judicial construction we have found that the language employed by Associated in its petition is legally sufficient for its intended purpose, this opinion is not to be understood as approving the continued or future practice, in drafting petitions for review authorized by Section 288.210, of designating “the commission” by the terminology Associated has seen fit to use here. To the contrary, m the interest of clarity and simplicity of pleading, and to avoid confusion such as arose in this case, we strongly recommend that the petitions in those actions name the respondent commission as “The Industrial Commission of Missouri” without reference to its individual membership.

Our final conclusion is that in order to do substantial justice in this cause, Associated must be accorded the right to judicial review which the law has afforded.

Accordingly, the judgment is reversed and the cause is remanded for further proceedings consistent with this opinion.

HUNTER, J., concurring.

HOWARD, J., not participating.


text:
    William TRIPLETT and Thomas Loughead, Appellants, v. GRUNDY ELECTRIC COOPERATIVE, INC., a corporation, Paul Hiatt, Cliff Stanton, Dale Porter, Albert Reeves, Clem Cleeton, Roger Williams, Charles Mack, and Wayne Rhoades, as memhers or former members of the Board of Directors of Grundy Electric Cooperative, Inc., a corporation, Respondents.
    No. 24135.
    Kansas City Court of Appeals. Missouri.
    April 5, 1965.

      L. E. Atherton, Milan, for appellants.
    Phil Hauck, Pickett, Andereck & Hauck, Trenton, for respondents.
   HUNTER, Judge.

Appellants William Triplett and Thomas Loughead, on August 4, 1962, brought a declaratory judgment action against Grundy Electric Cooperative, Inc., and certain members and former members of its Board of Directors asking in Count I that the court determine that certain payments made to the directors are illegal under Section 394.-140 RSMo. 1959, V.A.M.S., and the ByLaws of the Cooperative, and that the Cooperative is without power to continue making such payments. In the second count appellants sought an accounting of these payments to the end that any sums received by respondents be restored.

Respondents filed a motion to dismiss on the ground there was no genuine issue as to any material fact, that the matter was moot and that they were entitled to judgment as a matter of law. As a result of a hearing on that motion the trial court ruled the controversy had become moot, and entered judgment for defendants. This appeal followed.

The pertinent facts as developed by the pleadings and at the hearing on the motion to dismiss are undisputed. Grundy Electric Cooperative, Inc., of Trenton, Missouri, is a rural electric cooperative, deriving its existence from and being subject to the statutory provisions known as “The Rural Electric Co-operative Law”, chapter 394, RSMo. 1959, V.A.M.S. Appellants are two of the many hundred members of the cooperative. ’

According to the petition for declaratory judgment, “In 1956 the board of directors * * * voted a $20.00 per diem and expenses when attending meetings of the board of directors or when representing the cooperative at meetings, (of) the Missouri State Rural Electrification Association, the National Rural Electrification Association, or meetings called by the Rural Electrification Administration. * * * The board of directors caused to be paid the expenses and per diem of various directors who attended various meetings other than meetings of the board of directors in Trenton, Missouri, some of which meetings which a portion of the board attended were in Missouri, Arkansas, Oklahoma and Louisiana and expenses of certain of the directors were paid to attend the national meeting of the National Rural Electric Cooperative Association in St. Louis, at Washington, D. C., and in Dallas, Texas * * *."

Four days after appellants filed their present suit, and in direct response to it, at a regular meeting of respondent Cooperative with a quorum present, the present suit was explained to those attending. We quote from the minutes of that meeting: “The President continued with the business session of the meeting and advised that recently, a lawsuit in the nature of a Declaratory Judgment action had been commenced by William Triplett and Thomas Loughead in the Circuit Court of Grundy County, Missouri, against the Cooperative and all of the present directors of the Cooperative except Archie Hampton and Byron Grisamore, and including a past director, Clem Clee-ton. He explained that the general nature of the litigation was to question the amount of expenses and per diem received by the Directors, since 1956, for the attendance by said Directors, while representing the Cooperative, at meetings called by the Missouri State Rural Electrification Association, the National Rural Electrification Association, regional meetings of the Rural Electrification Association and other related meetings, which require travel to places other than Grundy County, Missouri. He advised that it had been the policy of the Board of Directors since 1956 to receive the sum of $20 per diem and expenses when attending the aforesaid meetings on behalf of the Cooperative.

“At this point, Mr. Glen Daily, a member of the Cooperative who was present at the meeting, obtained the floor and made the following motion:

“RESOLVED: That those persons who are the Directors and employees of the Cooperative are encouraged to attend meetings conducted by the Rural Electrification Administration, and the State, Regional and National Associations with which the Cooperative is associated for the purpose of representing the Cooperative, and to better enable them to carry out their respective duties on behalf of the Cooperative; and

“RESOLVED: That compensation heretofore or hereinafter approved by the Board of Directors for attendance by such persons at such meetings is hereby ratified and authorized by the membership of this Cooperative. Said motion as made was then seconded by Elmer Johnston, a member of the Cooperative who was in attendance at the meeting.

“Mr. Eugene E. Andereck, one of the counsel for the Cooperative, being in attendance at the meeting, was then called upon to explain the significance of the resolution offered by Mr. Glen Daily. He advised that cooperatives throughout the United States were expected to make it possible for Directors and others who were employees of the Cooperative to attend various meetings such as workshops, institutes and Rural Electrification Association meetings, whether on the national, regional or state level; that it was desirable to have representatives of the Cooperative attend said meetings to better enlighten them on the problems pertaining to the affairs of the Cooperative and to be in a better position to serve in their respective positions in dealing with said problems.

* * * * * *

“The inspectors of election * * * certified that proposition number three, the resolution ratifying and authorizing compensation to Directors and employees of the Cooperative for attendance of meetings conducted by the Rural Electrification Administration, the State, Regional and National Associations with which the Cooperative is associated for the purpose of representing the Cooperative, as heretofore or hereinafter approved by the Board of Directors, was approved and adopted by a majority vote of the members of the Cooperative; the vote being 674 for the resolution and 56 opposed to the resolution.” * *

“The President further declared that the resolution for compensation of Directors was accepted by a majority of the members of the Cooperative voting at this meeting.”

At the August 2, 1963 Annual Meeting the minutes of the 1962 Meeting were read in full and were approved by the Membership of the Cooperative.

The trial judge in entering judgment for defendants by memorandum stated, “The purpose of the suit was to have a judicial declaration that the outlay had been made without the approval of the members, and, if so, to require the directors to refund it. Plaintiffs’ only legitimate interest in the affair, in other words, was to protect the Co-op’s treasury from the drain of unauthorized disbursements. The suit was proper for that purpose. But it did not afford the only means by which that result could be achieved. The members of the Co-op could protect themselves against unauthorized disbursements, and one method of doing so was to supply the necessary authority. That was the method the statute contemplated. No payment complained of here was either violative of public policy or inherently evil; it was simply ‘defective from a failure to observe in its execution a requirement of law enacted for the benefit or protection of a certain class,’ viz., the members themselves, and ‘the parties for whose benefit the requirement was enacted may ratify it.’ 19 C.J.S., Corporations, Section 968, p. 424. This they did. Whatever defect may have stemmed from the failure to authorize the outlays in advance was removed by the subsequent approval of them — by the formal ratification of them.

“In effect, therefore — indeed, in fact— there has been what amounts to a full compliance with plaintiffs’ demands, or at any rate a complete satisfaction of any proper interest they may have had in the matter, and hence ‘no justiciable controversy remains in the case.’ ”

Appellants state the trial court erred in its ruling and that the issues on appeal are (1) in view of Section 394.140 RSMo. 1959, V.A.M.S., and the By-Laws of the Cooperative, does the Board of Directors of the Cooperative have power to compensate the directors for attending meetings other than meetings of the Board held in Trenton, Mo.; and (2) if the Board has such power could the By-Laws be amended to ratify past expenditures for attending such meetings as well as future ones. We address ourselves to these two contentions of appellants.

Section 394.080 sets forth the broad powers of a rural electric cooperative whose function may be generalized as the providing for and the supplying of electric energy and promoting and extending the use thereof in rural areas. Subsections 12, 13, and 14 thereof provide the cooperative is authorized: “(12) To conduct its business and exercise any or all of its powers within or without this state; “(13) To adopt, amend and repeal by-laws; and “(14) To do and perform any and all other acts and things, and to have and exercise any and all other powers which may be necessary, convenient or appropriate to accomplish the purpose for which the co-operative is organized.” Section 394.110 provides, “The original bylaws of a co-operative may be adopted by its board of directors or stockholders. Thereafter bylaws shall be adopted, amended or repealed by its members. * * * ”

Mentioned Section 394.140 provides that “1 The business and affairs of a co-operative shall be managed by a board of not less than five directors. * * * Without approval of the members, directors shall not receive any salaries for their services as directors. The bylaws may, however, provide that a fixed fee and expenses of attendance, if any, may be allowed to each director for attendance at each meeting of the board of directors. * * * 6 The board of directors may exercise all of the powers of a co-operative except such as are conferred upon the members by this chapter, or its articles of incorporation or bylaws.”

Of particular note is Section 394.310 which provides, “This chapter shall be construed liberally. The enumeration of any object, purpose, power, manner, method or thing shall not be deemed to exclude like or similar objects, purposes, powers, manners, methods or things.”

The only by-law provision deemed pertinent by appellants is contained in Section 5 which provides: “Compensation. Directors as such shall not receive any salary for their services, but by resolution of the board of directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each meeting of the board of directors.”

It is appellants’ specific contention that Section 394.140 and the Cooperative’s bylaw so limit compensation to directors that the action of the Board of Directors allowing themselves per diem and expenses for attending anything other than the meetings of the Board of Directors in Trenton, Missouri, was illegal and void.

It is the generaí rule that the Directors of a corporation are not entitled to any compensation or salary for performing the usual and ordinary duties pertaining to their office unless compensation for such services is provided for in the charter (statute) or authorized by a by-law or resolution of the board of directors before the services are rendered. 5 Fletcher, Corporations, Section 2109, page 474; O’Brien v. John O’Brien Boiler Works Co., 154 Mo.App. 183, 133 S.W. 347; Ferrenbach v. Edward Fehlig & Co., Mo.App., 80 S.W.2d 705.

We first look to the mentioned statutes to determine if among the corporate powers is the power to pay directors compensation, including a fixed fee for attending on behalf of the corporation meetings, other than the board of directors meetings, and for reimbursements of the expenses incurred as a result of such attendance. Our duty is to ascertain the legislative intent as expressed in the statutes.

By applying the usual and recognized rules for ascertaining legislative intent we find that Section 394.140 provides the members of the Cooperative the power and authority to pay directors compensation for attending such meetings and for reimbursing their resultant expenses. That section states, “Without approval of the members, directors shall not receive any salaries for their services as directors.” (Emphasis ours.) Giving this provision the liberal construction legislatively required by Section 394.310, the reasonable intendment of the provision is that with approval of the members the directors may receive salaries for their services as members. This is a common sense construction designed to permit the Cooperative to carry out its functions and responsibilities in a modern, fast moving society where knowledge and improved skills may be obtained through attendance at such meetings as are here in question. We think this construction expresses the legislative intent.

Appellants contend the above quoted sentence must be read in the light of the following sentence, and that it is limited thereby. We agree that all of the statutory provisions of Chapter 394 concerning rural electric cooperatives must be read together in ascertaining the legislative intent, but we do not agree that such a reading results in the limitation appellant suggests. The following sentence, “The bylaws may, however, provide that a fixed fee and expense of attendance, if any, may be allowed to each director for attendance at each meeting of the board of directors” has no application to fixed fees and expenses for directors attending national, regional or state meetings or conventions which are not meetings of the board of directors of this cooperative. (Italics ours.) Nor does this sentence limit or prohibit the otherwise existing power or authority of the corporation, properly exercised, to pay a fixed fee and expenses to directors attending meetings that are in the interest of the cooperative and which are not board of director meetings of the cooperative.

Nor does Section 5 of respondents’ by-laws prohibit the cooperative from making the questioned fee and expense payments. A corporation’s by-law if repugnant to statute must give away to the statute’s superior authority. The Section 5 by-law provision that “Directors as such shall not receive any salary for their services” must be read in the light of the statute permitting directors’ salary for services with the approval of the members of the cooperative. So read, the by-law provision means that without the approval of the members of the cooperative the directors shall not receive any salary for their services as directors (except by resolution of the board a-fixed sum and expenses may be allowed for attendance at each meeting of the board.) Thus, the clear implication of the by-law provision is that with the approval of the members of the cooperative the directors may receive such salary.

We come to appellants final question, could the resolution of the members of the Cooperative “be made retroactive to any payments prior to the adoption of the resolution in 1963?” Here, the directors did not have the power or right to vote themselves compensation and expenses for their attendance at the mentioned meetings or conventions for such action was beyond the scope of their powers. However, under the presented circumstances where there is no fraud or overreaching involved and the services being expensed and compensated were plainly in the interest of the Cooperative, the action of the directors was at most only voidable, and not void.

It is the general rule that any act of the board of directors beyond the scope of their authority fixing or increasing compensation and providing for reimbursement of actual and reasonable expenses incurred in carrying out the affairs of the company may be ratified by the stockholders when the stockholders could have originally authorized such act, and this may be done even after suit, is filed. 5 Fletcher, Cyc Corporations, Section 2139, page 572; Williams v. Williams Insulation Materials, Inc., 91 Ariz. 89, 370 P.2d 59; Edmonson v. First Nat. Bank of Birmingham, 256 Ala. 449, 55 So.2d 338; Kerbs v. California Eastern Airways, Inc., 33 Del. Ch. 69, 90 A.2d 652, 34 A.L.R.2d 839; Flight Equipment and Engineering Corp. v. Shelton (Fla.), 103 So.2d 615. Ratification of the act under such circumstances is considered tantamount to original authority and is as binding as if prior authority had been given. In 19 C.J.S., Corporations, § 1016 c, page 492, it is stated, “As a general rule, in the absence of actual fraud, the stockholders may ratify any act or contract of any other body or agency of the corporation which they might have authorized in the first instance. Accordingly, if they have knowledge of the facts at the time of ratification, they may ratify constituent acts done by the directors outside the scope of their powers, and which do not pertain to the ordinary corporate business, or they may ratify informal or irregular action of the board of directors * * * which is within the corporate powers. * * * A ratification by stockholders at a stockholders’ meeting may be by * * * a vote of the majority where the act might have been authorized by a majority in the first instance. * * * ” Loe. cit., § 1023, page 505, “As in other agencies, as a general rule the ratification of an act or contract which has been entered into on behalf of a corporation, without proper authority therefor, relates back to the time when the act or contract was entered into. * * * ”

In 13 Am.Jur., Corporations, Section 979, page 931, it is expressed: “Generally speaking, those who could originally have authorized, on behalf of the corporation, a certain act or contract can ratify it after it has been done or made without authority. For instance, any act of a board of directors which the stockholders could originally have authorized may be ratified by the stockholders. Moreover, unanimous consent of all the stockholders is not necessary to the ratification of a voidable contract which a majority of them could have authorized in the first instance. Acts done in the interest of the corporation which are voidable only — that is, not fraudulent or ultra vires— may be ratified by a majority of the shareholders.” To the same effect see, Beazell v. Farmers’ Mut. Ins. Co., 214 Mo.App. 430, 253 S.W. 125. In 1 Hornstein, Corporation Law and Practice, Section 386, page 497, it is expressed, “Finally, it should be remembered that ratification by the shareholders can always authorize payment to a director.”

In Putnam v. Juvenile Shoe Corporation, 307 Mo. 74, 269 S.W. 593, 598, 40 A.L.R. 1412, in discussing the stockholders ratification of directors’ action in paying a bonus to officers and directors of the corporation, our Supreme Court en Banc said: “Primarily, the action brought by the plaintiff is for the benefit of the corporation. The stockholders must be held to have power to dispose of the subject-matter of the suit by such ratification, even after suit is filed, unless plaintiff had the right, because of illegal or fraudulent action of the directors and majority stockholders, to maintain an action in her own name for recovery of her proportion of the money paid out as bonus or deferred salaries. But the payment was not fraudulent. We think it was prudently and honestly made for the benefit of the corporation. The action of the directors was voidable, at most, and could be ratified by the stockholders. Plaintiff has cited no authority to the proposition that ratification, after suit filed, is ineffective to dispose of a suit filed for the benefit of the corporation. It is entirely reasonable and just that the stockholders should have such power to ratify action of the directors, taken for the benefit of the corporation, even after suit has been filed. In filing a suit of that character, the plaintiff took the chances of subsequent ratification and cannot complain thereof.”

The trial court declared and ruled that the action of the stockholders in ratifying the action of the directors made the matter before the court moot, dismissed plaintiffs’ petition and enter judgment for defendants. It is the general rule that courts will not decide a moot question or render a purely advisory opinion unless it is one of great public importance under conditions that may in substance be repeated at any time. Further, a case orig-mally presenting an existing controversy may become moot by causes occurring after the commencement of the action. Lawyers’ Association of St. Louis v. City of St. Louis, Mo.App., 294 S.W.2d 676. However, we do not consider the instant matter moot because after the stockholders’ meeting ratifying the mentioned payments it was still appellants’ claim that the stockholders’ action did not cure the irregularity of the payments of the fixed fee and expenses to the board of directors. That controversy has continued to exist between the parties. We have taken up, considered and ruled upon the merits of appellants’ contentions in their declaratory judgment action as prayed in their petition, and in so doing have reached the same ultimate result as the trial court; namely, that appellants’ suit is without merit. The judgment for defendants is affirmed.

All concur.

      . All statutory citations are to V.A.M.S.


author: MAUGHMER, Commissioner.

text:
    Edna Viola McCUE, As Dependent and Surviving Widow of Edward Vincent McCue (Employee), Respondent, v. STUDEBAKER AUTOMOTIVE SALES, INC., d/b/a Frontier Motors (Employer), and Zurich Insurance Company (Insurer), Appellants.
    No. 24166.
    Kansas City Court of Appeals. Missouri.
    April 5, 1965.

      Ralph G. Trogdon, John R. Caslavka, Kansas City, Shughart, Thomson & Kilroy, Kansas City, of counsel, for appellants.
    Bott, Sharp & Carey, Larry Worrall, Kansas City, for respondent.
   MAUGHMER, Commissioner.

Claimant, Edna Viola McCue, the surviving widow and dependent of Edward Vincent McCue, automobile salesman who was killed in an automobile accident, was awarded a judgment for death benefits under the Workmen’s Compensation Act of Missouri against his employer and its insurer. The award of the commission was affirmed by the circuit court. Both the employer and the insurer have appealed. The sole alleged error presented on appeal is that the employee’s death did not arise out of and in the course of his employment.

It was stipulated and agreed that the employee was killed in an automobile accident on January 31, 1963, and at the time was an employee of defendant Studebaker Automotive Sales, Inc. d/b/a Frontier Motors, was working under the provisions of the Missouri Workmen’s Compensation Law and that the employer’s liability was fully insured by defendant Zurich Insurance Company. There was no dispute as to the amount of the weekly wage or that a proper claim had been timely filed. Actually appellants’ sole contention is that at the time of the accident the employee was so completely under the influence of liquor or alcohol as to render it impossible for him physically and mentally to have been engaged in the course of his employment.

The fatal accident occurred at about 7:00 p. m. on the Intercity Viaduct between Kansas City, Kansas and Kansas City, Missouri, and while employee was traveling east. Mr. McCue was at all times furnished a Demonstrator for use in his work as a salesman and was operating such an automobile when he was killed.

On the day of the accident the employee went to work about 7:30 a. m. According to the witness Fred V. Whitaker, used car manager for employer, McCue was “on the floor” from 8:30 a. m. until 2:00 p. m., when he left the show room at 2735 Main Street, Kansas City, Missouri. Whitaker said Mc-Cue told him when he left shortly after 2:00 p. m. that he had a 7:30 appointment that evening with a prospective customer at the company show room; that at about 4:00 or 4:30 p. m. McCue called by telephone, again mentioned the 7:30 appointment and inquired if Whitaker would he present that evening. Whitaker said Mc-Cue was “one of the top salesmen”, that a man who “sells as many cars as McCue does, works thirteen, fourteen hours a day as a general diet”. He said McCue’s voice was normal during the telephone conversation, but that he had on at least two occasions sent him home “for drinking”. On cross-examination Whitaker stated that the employee told him that “he was going to Kansas City, Kansas to see a man about a deal on a new car and he had made an appointment that evening”.

Evert Appleberry, who identified himself as owner and operator, as of January 31, 1963, of the Appleberry Hardware, 1809 Minnesota Avenue, said McCue came to his place of business about 5:45 p. m. on that date to pay a bill; that they conversed; that McCue was in the store from 30 to 40 minutes; that he made a payment on his bill and they discussed the purchase of a Studebaker Lark for Appleberry’s daughter. Mr. Appleberry stated that the direct route from his hardware store to Kansas City, Missouri would be “down Minnesota Avenue to the Intercity Viaduct” (where the accident occurred). He said McCue’s conversation in the store was clear and coherent; that he did not stagger and that he drove his car out of the parking place with no trouble, although he detected “that he had been drinking”.

The witness Sherman Thompson operated a restaurant at 153114 Prospect, where beer is sold. He had known McCue for about six years. He said McCue called him on the telephone about 4:00 or 5:00 p. m. on the day in question and made an appointment for “around 6:00 o’clock”. The purpose of the appointment was to discuss the possible purchase of an automobile. He, too, said the direct route from Minnesota Avenue in Kansas City, Kansas to Kansas City, Missouri and his restaurant would be over the Intercity Viaduct. The appointment was not kept by McCue and Thompson learned of his death later that night.

Mrs. McCue, claimant, said that she and deceased were married on December 20, 1930, and that he was at home on the day of his death from about 5:30 p. m. and until 6:30 p. m. She said he told her he was going out to show a car and invited her to go along.

Three doctors were produced by appellants and testified. Dr. Richard C. Ibarra, M.D., deputy coroner, Wyandotte County, Kansas, was on duty at St. Margaret’s Hospital, Kansas City, Kansas, and in the emergency room when the ambulance bearing Mr. McCue arrived after the accident. Dr. Ibarra pronounced him dead on arrival. He drew two blood samples, gave one to the Kansas City, Missouri police and one to Dr. Lauren Moriarty of Medical Laboratories Associated. An autopsy was performed by Dr. Ralph J. Rettenmaier, coroner.

Dr. John E. Johnson, M.D. of Medical Laboratories, with pathologists under his supervision, tested the sample of McCue’s blood. The result in part was “Alcohol .175 milligrams percent, or .175 percent.”

Dr. Ralph Emerson Duncan, M.D. has, since 1933, operated the Ralph Clinic, which specializes in treating alcoholism. He testified that McCue had been a patient at the Ralph Clinic from January 18, 1960 until January 28, 1960 on a continuous abstinence program. Dr. Duncan commented on the probable effect of various contents of alcohol in the blood, but pointed out that some persons, especially regular drinkers, develop a greater tolerance for it. A hypothetical question was put to Dr. Duncan, the chief assumed fact in which was that McCue’s blood test showed .175 percent alcohol. Dr. Duncan, in response, said this amount of alcohol would result in intoxication, inability to operate a motor vehicle safely and engage in a business sale or transaction only “in a very vague way”. On cross-examination Dr. Duncan admitted that people carrying this amount of alcohol do drive automobiles without accidents, but he said nevertheless “that is not driving safely and efficiently”.

The police report of the accident showed a head-on collision — left front of each vehicle — and with the McCue car about one-third over to the left of the center line. The report described the weather as “cloudy”.

The finding of the referee was that the deceased “did not sustain an accident arising out of and in the course of his employment”. On review the commission reversed the referee and found “the accident arose out of and in the course of the employment”. The award of the commission was on appeal affirmed by the circuit court.

Appellants assert that claimant has the burden of proving that there was (1) an accident; (2-3) that the accident arose out of and in the course of the deceased’s employment with the employer. We agree. Kerby v. Mo. State Highway Commission et al., Mo.App., 238 S.W.2d 464, 469; Love v. Land, Mo.App., 356 S.W.2d 105. An accident did occur. There is no controversy as to that occurrence. Whether or not it arose out of and in the course of the employment requires further study and discussion.

It is also the rule that an appellate court must view the evidence upon which the commission made its award in the light most favorable to the party which prevailed before the commission. Harper v. Home Imp. Co. et al., Mo., 235 S.W.2d 558; Howard v. Ford Motor Co., Mo.App., 363 S.W.2d 61, 64. Neither the circuit court nor this court may substitute its judgment for that of the commission. Each of these courts may determine only if the award is supported by substantial, competent evidence. The reviewing court is restricted to deciding if the commission could have reasonably concluded as it did conclude. Howard v. Ford Motor Co., supra; Long v. Mississippi Lime Co. of Mo. et al., Mo.App., 257 S.W.2d 167, 170, and cases there cited.

Appellants rely heavily upon the opinion in O’Neil v. Fred Eveus Motor Sales Co., Mo.App., 160 S.W.2d 775. It was there finally decided that the claim for workmen’s compensation benefits should be denied for the reason that claimant, because of his drinking, could not have been physically and mentally engaged in his occupation. Claimant in that case, too, was an automobile salesman.

In the O’Neil case claimant was first involved in a minor automobile accident. He rested for a time and was then involved in a second accident — the one upon which his claim was based. Before and between these two accidents he had visited a tavern and imbibed intoxicating liquor. He told physicians that his mind was a blank from the time of the first accident until he awoke in the hospital following the second one. Thus there was more effective evidence and more satisfactory proof offered, we think, showing (1) intoxication and (2) deleterious effect upon the employee’s physical and mental faculties, than was produced in our case. Second, the trier and finder of the facts — that is, the commission — found against O’Neil and the circuit court reversed. The appellate court ruled the evidence presented an issue of fact and applying the hard and fast rule that the commission’s conclusion on a factual controversy must be sustained if there is support for it in the evidence, reversed the circuit court, reinstated the award and refused, quite properly, to determine the factual dispute de novo. It appears to us that the evidence in the O’Neil case is substantially different from the evidence in the matter before us. The legal conclusion there reached is also, we think, authority for affirming rather than for reversing the commission, since the opinion holds squarely that it is the prerogative of the commission to determine the weight of the evidence and the credibility of the witnesses and that its ultimate finding in that field must not he overturned on review or appeal, if it was supported by substantial evidence, even though the circuit or appellate court might come to a different conclusion.

In the instant case claimant produced substantial, credible evidence that McCue was a top automobile salesman who regularly met prospective customers after normal working hours; that he visited likely purchasers on the day of the accident and had a definite appointment with one on that very evening. It was shown that he had discussed a sale with Mr. Appleberry at his hardware store about 6:00 o’clock. Mr. McCue actually operated his automobile over city streets and in and out of parking lots immediately prior to the fatal event.

We believe sufficient credible evidence was presented to authorize the commission to find, as it did find, that the accident and resultant injury arose out of and in the course of deceased’s employment. Certainly we cannot rule as a matter of law that the award is without sufficient evi-dentiary support and basis. Moreover, under the facts here presented we concur with the conclusion of the commission.

The judgment affirming the award of the commission should be and it is affirmed.

SPERRY, C., concurs.

PER CURIAM:

The foregoing opinion of MAUGHMER, C., is adopted as the opinion of the Court.

All concur.


text:
    Alfred THOMAS, Appellant, v. DURHAM MOTORS, INC., et al., Respondents.
    No. 24168.
    Kansas City Court of Appeals. Missouri.
    April 5, 1965.

      Benard Eveloff, Kansas City, for appellant.
    Richard K. Phelps, Lee’s Summit, for respondents.
   HUNTER, Judge.

This is a suit for actual and punitive damages resulting from the alleged fraud of respondent, Durham Motors, Inc., through its employee, respondent Robert Vallencourt, in the sale of an automobile to Alfred Thomas, appellant. The jury’s verdict was for appellant and against both respondents in the sum of $849.70 actual damages and $2,000 punitive damages. Respondents filed a motion for new trial alleging prejudicial error in the giving of Instruction No. S. The trial court, after giving appellant the opportunity of remitting the punitive damages which appellant refused to do, sustained the motion and granted a new trial. This appeal followed.

Since the only issue concerns Instruction No. 5 the pertinent facts may be briefly stated. Durham Motors, Inc., a corporation, was engaged in the used car business in Kansas City. Robert Vallen-court was its employee-salesman. About March 2, 1961, Thomas discussed the purchase of a 1959 Lincoln automobile with Vallencourt, and after reaching an agreement as to price and terms Thomas signed a purchase money chattel mortgage and note setting forth the terms of sale. Commercial Credit Corporation purchased “this note” and sent Thomas a “credit book” which according to Thomas showed different terms than those agreed upon. Thomas stated the mortgage and note sold to Commercial Credit was a forgery in that it contained someone else’s and not his signature on it and contained different terms from the one he had signed. He attributed this to respondents. He testified he had to pay a difference of $849.70 more by the terms of the forgery and this is what he asserts is his actual damage.

During the trial Thomas’s attorney, without objection being made, read to the jury a statement giving the net worth of Durham Motors, Inc., as between $150,000 and $175,000. There was no evidence as to the financial worth of Vallencourt.

Instruction No. 4 told the jury if they found the named acts of defendants were maliciously and willfully done that in addition to actual damages “you may assess against the defendants by way of punishment * * * such sum as you think proper and fair.”

Objected to Instruction No. 5 read: “The Court instructs the jury that if you find for the plaintiff and if you assess punitive damages against defendants, then you may take into consideration in arriving at the amount of such punitive damages defendants’ financial condition.”

It is the general rule that in a suit involving exemplary damages against one person or one corporation the defendant’s worth or financial condition is competent and relevant.

However, many jurisdictions, including Missouri, follow the rule that where a number of defendants are sued jointly, their wealth, either individually or collectively can not be shown for the purpose of punitive damages, for one defendant cannot be punished for the wealth of another. Dawes v. Starrett, Mo.Sup., 82 S.W.2d 43; Gray v. Phillips Bldg. Co., Mo.App., 51 S.W.2d 181; Wolfersberger v. Miller, 327 Mo. 150, 39 S.W.2d 758; Stansberry v. McDowell, Mo.App., 186 S.W. 757; Schafer v. Ostmann, 148 Mo.App. 644, 129 S.W.2d 63; Leavell v. Leavell, 114 Mo.App. 24, 89 S.W. 55; Annotation, 63 A.L.R. 1405.

In the Dawes case, supra, 82 S.W.2d loc. cit. 60, our Supreme Court stated, “The general rule is that where exemplary or punitive damages are recoverable, as in this case, it is proper for the jury to consider defendant’s wealth and pecuniary ability in fixing the amount of such damages. But where the action is against two or more defendants jointly, our courts have approved and followed the rule announced by the Supreme Court of the United States in Washington Gas Light Co. v. Lansden, 172 U.S. 534, 19 S.Ct. 296, 303, 43 L.Ed. 543. It is there said: ‘As the verdict must be for one sum against all defendants who are guilty, it seems to be plain that, when a plaintiff voluntarily joins several parties as defendants, he must be held to thereby waive any right to recover punitive damages against all, founded upon evidence of the ability of one of the several defendants to pay them.’ ” In the Stansberry case, supra, 186 S.W. loc. cit. 762, it was expressed, “The suit is against two defendants, and a joint judgment is sought which must be identical in amount as to each defendant. In such cases, evidence as to the financial worth of either or both defendants is not admissible.” (Italics ours.) In the Wolfersberger case, supra, 39 S.W.2d loc. cit. 765, the Supreme Court stated, “We are unable to see * * * (that) evidence relating to the wealth of any defendant, was justified. Where a number of defendants are sued jointly, their wealth, either individually or collectively, cannot be shown for the purpose of punitive damages, for one defendant cannot be punished because of the wealth of another.”

In the light of the above authority, Instruction No. 5 is clearly erroneous. The instruction improperly instructs the jury that in assessing the amount of punitive damages against the defendants it may consider “defendants’ financial condition”. This is not a correct statement of the law for one defendant is not to be punished according to or as a result of considering the financial condition of both defendants.

Appellant suggests the error is cured by respondents’ failure to object to the offer in evidence of the testimony concerning the corporation’s net assets. If such an objection had been made it should have been sustained. Even so, if through failure to object irrelevant or improper evidence is adduced a party is not entitled thereby to successfully contend it may use the admission of the improper evidence as justification for the giving of an erroneous instruction. The situation is somewhat comparable to the rule that one cannot make prejudicial arguments on immaterial facts which happen to get into the record without objection and justify the argument on the ground that facts about which he argued were in the record. See, Wallace v. Whitzel, Mo.App., 324 S.W.2d 157(b); Beer v. Martel, 332 Mo. 53, 55 S.W.2d 482, 484.

Appellant also contends no prejudice resulted to Durham Motors, Inc., from the instruction. It is the rule that if there was no prejudice resulting from the erroneous instruction then the error would be harmless and would not be the basis for granting a new trial. If there was evidence of Vallencourt’s financial condition then clearly it would be prejudicial to Durham Motors, Inc., to direct the jury it should consider that evidence in assessing punitive damages against Durham Motors, Inc. If there was no evidence of Vallen-court’s financial condition then there was no evidence upon which to base an instruction directing that Vallencourt’s financial condition should be considered in determining the amount of punitive damages to be assessed against the two defendants jointly. At one place in his brief appellant argues there is evidence in the record concerning Vallencourt’s financial condition (inferentially from Vallencourt’s type of job and his fear of discharge for his actions) and in other places in his brief argues there is no evidence of Vallencourt’s financial condition and therefore Durham Motors, Inc., could not have been prejudiced by the instruction permitting the jury to consider both defendants’ financial condition in determining the amount of the punitive damages. Appellant’s conclusion is that the trial court should not have granted a new trial to Durham Motors, Inc., even if it was proper to grant one to Val-lencourt.

We do not agree with appellant’s contention and for the reason we are convinced the erroneous instruction was prejudicial to Durham Motors, Inc. The instruction authorized the jury to look to the financial condition of both defendants in determining the amount to be assessed against Durham Motors, Inc. This invited the jury to try to determine (speculate as to) the financial condition of Vallencourt and to add it to that of the corporation. The instruction in any event must have confused the jury as to how the jury should determine the amount of punitive damages. It is fair to assume the trial court had this view of the effect of the instruction for the trial judge granted a new trial because of the complained of error in the instruction.

As its final contention appellant says that if there must be a new trial it should have been granted only on the issue of punitive damages. Civil Rule 78.01, V.A.M.R., authorizes a trial court to grant a new trial “on all or part of the issues”. This authorizes the trial court to exercise a sound discretion in determining whether a new trial should be granted on the issue of damages only or as to all issues. The trial court may be reversed in such determination only for an abuse of that discretion. In exercising its discretion the trial court is presumed to have weighed and considered the evidence and the possibility of prejudice to the various parties. See, Annotation, 29 A.L.R.2d 1213; Taylor v. St. Louis Public Service Co., Mo.Sup., 303 S.W.2d 608.

Where the facts pertaining to damages and liability are so interwoven that a retrial on the issue of damages only would prejudice a party the trial court should not limit the retrial to the damage issue. The issue must be clearly severable from the other issues in the case and not so blended or interwoven as to make it unfair or prejudicial to try them separately. In 66 C.J.S. New Trial, § lie, (1), page 96, it is stated, “Where the damages claimed and submitted to the jury by the court are both compensatory and punitive, the element of punitive damage has been held to make it impossible for the jury at a second trial to give an adequate appraisal of the merits of plaintiff’s claim without the proofs to establish liability being again presented.”

Thus, where punitive damages are an issue the trial court must consider and decide whether that damage issue can be tried alone without injustice to the defendant. With these considerations in mind we rule the trial court did not abuse its discretion in granting a new trial on all issues and in refusing to grant a new trial on the issue of punitive damages alone. See, Wessels v. Smith, Mo.Sup., 341 S.W.2d 104; Greco v. Hendricks, Mo.Sup., 327 S.W.2d 241, 247.

The judgment ordering a new trial is affirmed and the cause is remanded.

All concur.