IN THE MISSOURI COURT OF APPEALS WESTERN DISTRICT EQUITY FINANCIAL ) RESOURCES, INC., ) Respondent, ) ) v. ) WD83461 ) HOWARD OVERMAN, et al., ) FILED: March 16, 2021 Appellants. ) Appeal from the Circuit Court of Clay County The Honorable Janet L. Sutton, Judge Before Division One: Alok Ahuja, P.J., and Thomas H. Newton and Thomas N. Chapman, JJ. Equity Financial Resources, Inc., brought suit against Rose Ann, Howard,
Tracy, and Taylor Overman, to enforce an agreement in which the Overmans agreed
to pay Equity a commission for procuring financing for their agricultural business.
Following a jury trial, the Circuit Court of Clay County entered judgment for Equity. The Overmans appeal. They argue that the circuit court’s verdict-directing
instruction was erroneous, because it failed to require the jury to resolve a critical
disputed factual issue, and that the circuit court abused its discretion by refusing to
submit an instruction on the affirmative defense of failure of consideration.
Because we agree that the verdict-directing instruction was deficient, we reverse
and remand for a new trial. Factual Background Together with her husband Rodney (who passed away in July 2016), Rose
Ann Overman farmed land in Barton County beginning in 1960.1 Although they
began by purchasing an 80-acre tract, the farmland the Overmans owned grew to
1,579 acres by 2017. In 2017, all of the land was titled in the name of Overman and
Son Partnership, a partnership comprised of Rose Ann; her son, Howard; Howard’s
wife, Tracy; and Rose Ann’s grandson, Taylor.
The Overmans borrowed extensively to finance their property acquisitions
and farming operations. By the end of 2016, the Overmans owed Simmons Bank
$4.3 million on a promissory note, and an additional $500,000 on a line of credit, all
secured by their farmland. They also owed $500,000 to Deere & Company, secured
by some of their farm equipment.
The Overmans wished to refinance their debt, but were unsuccessful in
locating alternate financing on their own. In April 2017, they contacted Gail
Murphy, President of Equity, for assistance in locating replacement financing.
Equity and the Overmans entered into two agreements in April 2017. Under
the first agreement, the Overmans agreed to pay Equity an hourly rate to prepare a
business plan to present to potential lenders. Pursuant to this agreement, Equity developed a plan which proposed that the Overmans refinance their existing debt
with two new loans at a 5% interest rate: a twenty-year loan for $4,680,310; and a
seven-year loan for $700,000. The Overmans paid Equity $7,500 for development of
the business plan.
The second agreement required Equity to use its best efforts to assist
Overman and Son Partnership in obtaining financing. Equity was to be paid a 1%
1 Because she shares a surname with other parties to this proceeding, we refer to Rose Ann Overman by her first name for clarity’s sake. No familiarity or disrespect is intended.
2 commission upon closing of a new loan. The agreement contained a provision giving
Equity the exclusive right to seek financing for the Overmans for one year, and
specifying that the Overmans would owe Equity a commission if they independently
obtained financing. The exclusivity provision stated:
APPLICANT agrees that EQUITY shall have the EXCLUSIVE right for the period of 365 days from the date of this agreement to attempt to arrange financing for APPLICANT with a bank, lender, or other financial resource upon terms and conditions suitable to the APPLICANT. . . . During this EXCLUSIVE time period, APPLICANT agrees not to attempt to arrange financing on their own without the express written consent of EQUITY. If the APPLICANT, without the assistance of EQUITY, obtains financing from a suitable bank, lender, or other financial resource during this EXCLUSIVE time period, APPLICANT agrees to compensate EQUITY as set forth [elsewhere in the agreement]. Following execution of the commission agreement, Murphy began working to
secure financing for the Overmans. Murphy also communicated with the
Overmans’ existing lenders, Simmons Bank and Deere & Company, to forestall
foreclosure on their farmland and repossession of their equipment.
Murphy was unable to secure replacement financing during 2017. In late
November or early December 2017, Deere & Company repossessed some of the
Overmans’ equipment. Rose Ann testified at trial that Simmons Bank also advertised a foreclosure sale for the Overmans’ property for January 4, 2018.
Because Equity had not secured financing, Rose Ann contacted Conterra
Bank in Iowa. Conterra agreed to issue the Overmans a three-year “bridge loan” of
approximately $5.43 million, at an annual interest rate of 8.08%. Rose Ann
testified that the proceeds of the Conterra loan fell approximately $120,000 short of
what the Overmans needed to respond to the existing collection efforts, which
required them to sell a tractor to pay what was due to Deere & Company and regain
possession of their other farm equipment. The proceeds of the Conterra loan were
3 disbursed on January 3, 2018 – the day before Simmons Bank’s foreclosure sale was
scheduled to occur.
When Murphy heard that the Overmans had secured financing from
Conterra, he demanded that they pay Equity its 1% commission on the loan
amount. The Overmans refused. In February 2018, Equity filed this lawsuit in the
Circuit Court of Clay County (the forum specified in the loan commission
agreement), asserting claims for breach of contract and quantum meruit.
A jury trial was held in September 2019. Equity submitted only its claim of
breach of contract. The jury found in Equity’s favor, and awarded it $54,300, 1% of
the principal amount of the Conterra loan. The circuit court’s judgment also
awarded Equity $26,685.84 in attorney’s fees, and pre-judgment interest in the
amount of $8,220.87.
The Overmans appeal.2
Discussion I. The Overmans’ first Point argues that the verdict-directing instruction for
Equity’s breach of contract claim (Instruction No. 6) failed to require the jury to
decide a disputed factual issue. As submitted, Instruction No. 6 read: Your verdict must be for plaintiff if you believe First, plaintiff and defendants entered into an agreement whereby plaintiff agreed to use its best efforts to obtain financing for defendants and defendants agreed to pay plaintiff 1% of any financing obtained by defendants during the term of the contract, and Second, plaintiff performed its agreement, and Third, defendants failed to perform their agreement, and
2 Rose Ann Overman died in October 2020, after the filing of this appeal. Because no motion for substitution was filed within ninety days of her passing, we dismissed Rose Ann from this appeal without prejudice.
4 Fourth, plaintiff was thereby damaged. (Emphasis added.) The Overmans argue that the emphasized portion of paragraph
“First” was erroneous because it did not require the jury to decide an essential,
disputed issue: whether the financing Rose Ann obtained from Conterra was
“suitable.” We agree.
The Overmans preserved the issue raised in their first Point by making a
specific objection to the verdict director during the on-the-record instruction
conference, and by re-asserting that objection in their timely-filed new-trial motion.
“Whether a jury was properly instructed is a question of law that this Court
reviews de novo.” Edgerton v. Morrison, 280 S.W.3d 62, 65 (Mo. 2009) (citation
omitted). To reverse on grounds of instructional error, the party claiming
instructional error must establish (1) that the instruction at issue misdirected,
mislead, or confused the jury; and (2) prejudice resulted from the instructional
error. Sorrell v. Norfolk S. Ry. Co., 249 S.W.3d 207, 209 (Mo. 2008).
“Where a dispute exists as to one or more of the terms of the agreement relied
on by the claimant to support recovery, that issue must be hypothesized in the
verdict directing instruction. Failure to do so is prejudicial error.” Penberthy v.
Nancy Transp., Inc., 804 S.W.2d 404, 407 (Mo. App. E.D. 1991) (citations and internal quotation marks omitted). “Because ‘[t]he purpose of the verdict[ ]
directing instruction is to hypothesize propositions of fact to be found or rejected by
the jury,’ the verdict directing instruction ‘must hypothesize the facts essential to
the plaintiff's claim.’” Hervey v. Mo. Dep't of Corr., 379 S.W.3d 156, 160 (Mo. 2012)
(quoting Lasky v. Union Elec. Co., 936 S.W.2d 797, 800 (Mo. 1997); first alteration
added by Hervey).
Equity was only entitled to a commission if the Overmans independently
obtained “suitable” financing. The parties’ agreement provided that Equity would endeavor to secure financing for the Overmans “upon terms and conditions suitable
5 to” them; the agreement also provided that the Overmans would owe Equity a
commission only if they independently secured financing “from a suitable bank,
lender, or other financial resource.”3
The agreement does not further define what would be deemed “suitable” loan
terms, or a “suitable” lender. “To ascertain the original intent of the parties to a
contract, we will give the words of the contract their natural, ordinary, and common
sense meaning,” and may refer to a dictionary to supply that commonly understood
meaning. Behrick v. Konert Farms Homeowners’ Ass’n, 601 S.W.3d 567, 573 (Mo.
App. E.D. 2020) (citations and internal quotation marks omitted); see also, e.g., TCN
Invs., LLC v. Superior Detail, 588 S.W.3d 245, 251 (Mo. App. W.D. 2019). Common
dictionary definitions of the term “suitable” are: “adapted to a use or purpose,”4 or
“such as to suit; appropriate; fitting; becoming.”5
The Overmans’ briefing suggests that the term “suitable” in the contract
contains a latent ambiguity. We do not find the term to be ambiguous, since it has
a single, commonly understood meaning. Instead, the term is general, and required
the jury to make a case-specific factual determination whether the “suitability”
condition was satisfied by the Conterra loan. In a similar fashion, courts have
recognized that issues of “reasonableness” or “materiality” in contract disputes present factual issues for jury determination. See, e.g., Guengerich v. Barker, 423
S.W.3d 331, 339 (Mo. App. S.D. 2014) (“The materiality of a breach [of contract] is a
3 The commission agreement uses slightly different wording to define Equity’s obligation to locate financing for the Overmans, and the Overmans’ obligation to compensate Equity for financing they independently procured. Notwithstanding the variation in wording, Equity acknowledged in its briefing, and at argument, that it would only be entitled to a commission if the Overmans had secured “suitable” alternative financing. 4 Suitable, MERRIAM-WEBSTER, https://www.merriam- webster.com/dictionary/suitable?src=search-dict-box (visited March 9, 2021). 5 Suitable, DICTIONARY.COM, https://www.dictionary.com/browse/suitable?s=t (visited March 9, 2021).
6 question of fact.” (citations omitted)); G & J Holdings, LLC v. SM Props., LP, 391
S.W.3d 895, 903 (Mo. App. E.D. 2013) (same); Swartz v. Mann, 160 S.W.3d 411, 414
(Mo. App. W.D. 2005) (“Whether buyers exercise reasonable diligence in obtaining
financing pursuant to a contingent financing provision [in a real-estate purchase
contract] is a question of fact.” (citations omitted)); Venture Stores, Inc. v. Pac.
Beach Co., 980 S.W.2d 176, 183 (Mo. App. W.D. 1998) (“what is [a] ‘reasonable
[time] under the circumstances’ [for exercising a purchase option] is a question of
fact, rather than one of law”; collecting cases).
The Overmans disputed at trial whether the Conterra financing was
“suitable.” The business plan which Equity developed proposed that, for the long-
term viability of the Overmans’ farming operation, they should obtain twenty-year
financing with a 5% interest rate, and a smaller seven-year loan at the same
interest rate. This business plan provides some evidence of the meaning the parties
ascribed to “suitable” financing. During her testimony, Rose Ann testified that the
Conterra loan, for three years at 8.8% interest, was “not a long-term loan,” and that
the high interest rate was not economically viable:
We have until 2021 to get a bank. And right now, we're paying 8.08 percent interest on the big loan with Conterra. . . . So we need to get a bank with a lower interest. We could make our payments if we get a lower interest and get our payments strung out, we can make it. And my son and my grandson – my grandson is in to doing a no- till and into cover crops and to lower the input costs and spray, and he's – he can make it work, but we just got to have a bank. Rose Ann also testified that the Conterra loan was $120,000 short of what the
Overmans needed to fully pay off their debts to Simmons Bank and Deere &
Company, and that they had been forced to sell a tractor to make up the deficit.
Notably, Equity’s President, Gail Murphy, acknowledged on cross- examination that Rose Ann had merely been able to obtain “what they call a bridge
7 loan.” He agreed that a “suitable” loan for the Overmans “would be one that would
loan them 5 million-plus on a 20-year loan.” When asked whether the Overmans
had “obtain[ed] a loan from a suitable bank,” Murphy responded, “In my opinion,
no.” Murphy testified that even a loan with a ten-year amortization was “not worth
a darn” for purposes of financing farming operations like the Overmans’.
The Overmans’ counsel highlighted the suitability issue for the jury in his
closing argument:
[I]f you look at paragraph D which says: . . . If the applicant, without the assistance of Equity obtains financing . . . from a suitable bank, lender, or other financial resource during this inclusive time period, then the applicant still owes that one percent. Now, did Rose Ann Overman get a loan from a suitable bank lending institution? .... . . . He said: I can give you a loan close to $5 million, 20 years, five percent. Another one, half-a-million dollars, seven years, five percent. What did she get? She got a three-year loan. She got a bridge loan for three years. I can't remember, it's either eight or nine percent. And she's going to have to come along and try to get another loan before 2021, or she's going to be back in the same place she was. Despite the Overmans’ evidence and arguments that the Conterra loan was not “suitable,” Equity argues that “the suitability of the financing cannot really be
in dispute[,] . . . because the [Overmans] actually accepted the $5,430,000 financing.
. . . When [the Overmans] accepted the financing, they put all issues to bed as to
whether or not the financing suited their needs.” Equity essentially argues that, if
the Overmans obtained financing, that financing was – by definition – “suitable.”
We disagree. The commission agreement only required the Overmans to
compensate Equity if the Overmans independently “obtain[ed] financing from a
suitable bank, lender, or other financial resource.” Equity’s argument would require the Overmans to compensate it in any case in which they “obtain[ed]
8 financing” – eliminating the separate requirement that the financing be “suitable.”
“[C]ourts must construe a contract,” however, “so as not to render any terms
meaningless.” State ex rel. Greitens v. Am. Tobacco Co., 509 S.W.3d 726, 743 (Mo.
2017) (citing State ex rel. Riverside Pipeline Co. v. Pub. Serv. Comm’n, 215 S.W.3d
76, 84 (Mo. 2007)). We reject Equity’s contention that the Conterra loan was
necessarily “suitable” simply because the Overmans agreed to it as a stop-gap
measure to avoid imminent foreclosure.
Equity concedes that, to establish its right to a commission on the Conterra
loan, it was required to prove that the Conterra loan was “suitable.” Although this
issue was central to Equity’s cause of action, and was disputed by the Overmans at
trial, the verdict director did not require the jury to determine whether the
Overmans independently obtained “suitable” financing. The fact that the
Overmans’ counsel was able to argue the issue in closing is no substitute for
language in the verdict director which would have required the jury to find that the
Conterra loan was “suitable” before returning a verdict in Equity’s favor.
Argument by counsel is no substitute for proper direction from the trial court. Irrespective of any comments made during closing arguments (which are by definition argumentative), the jurors are required to follow only the directions and instructions given to them by the court. Reasonable jurors could obviously reject statements made by counsel when those statements were not supported by the verdict director given to them by the court. Therefore, . . . “[w]hile [counsel’s] closing argument . . . would have been helpful to the jury in understanding the applicable rule of law . . . it was not sufficient . . . to allow the jury to render an informed verdict.” Agri Process Innovations, Inc. v. Envirotrol, Inc., 338 S.W.3d 381, 389-90 (Mo. App.
W.D. 2011) (citing and quoting Rice v. Bol, 116 S.W.3d 599, 611 (Mo. App. W.D.
2003)); see also Miller v. Norfolk S. Ry. Co., 591 S.W.3d 29, 41 (Mo. App. W.D. 2019)
(admission of governing statute into evidence, and discussion of governing law in
9 counsel’s closing argument, were “[in]sufficient to cure the prejudice from” the
court's instructional error).
Because it failed to require the jury to find that the Conterra loan was
“suitable,” the verdict director on Equity’s breach of contract claim was prejudicially
erroneous, and requires reversal and remand for a new trial.
II. In their second Point, the Overmans argue that the circuit court abused its
discretion in refusing to submit an affirmative defense instruction which they
tendered. The Overmans’ proposed instruction asked the jury to find that there had
been a failure of consideration preventing enforcement of the commission
agreement. Although what we have said in § I above mandates reversal, we
address the Overmans’ second Point because the issue may recur on remand.
The Overmans’ proffered failure-of-consideration instruction (Instruction A)
read:
Your verdict must be for Defendants if you believe: First, Gail Murphy knew that Defendants were indebted to Simmons Bank and John Deere Company and that if the Defendants were unable to obtain a loan through the services of Plaintiff, that Simmons Bank would foreclose Defendants' property and John Deere Company would seize Defendant's farm equipment covered by its lien, and Second, Plaintiff was unable to obtain financing for Defendants which would have prevented the foreclosure of the Simmons Bank loan and the seizure of Defendant's farm equipment by John Deere Corporation, and Third, Defendants were forced to obtain a loan from other sources to prevent the foreclosure of the Simmons Bank loan and the seizure of Defendant's farm equipment by John Deere Corporation, and Fourth, Plaintiffs failure to obtain financing to prevent foreclosure of Defendant's property by Simmons Bank and failure to obtain financing to pay off John Deere Corporation resulted in a failure of consideration to pay any money to Plaintiff in the event that
10 Defendant's obtained financing from another source without the assistance of Plaintiff. The word "consideration" as used in this instruction means a benefit to the defendant, or a loss or detriment to the plaintiff. “When a party claims that the trial court erroneously refused to submit an
instruction to which she claims she was entitled, we review the trial court's refusal
to submit the instruction for abuse of discretion.” McCullough v. Commerce Bank,
349 S.W.3d 389, 396 (Mo. App. W.D. 2011) (citations and internal quotation marks
omitted). “The trial court abuses its discretion when its ruling is clearly against the
logic of the circumstances then before the trial court and is so unreasonable and
arbitrary that the ruling shocks the sense of justice and indicates a lack of careful
deliberate consideration.” Dodson v. Ferrara, 491 S.W.3d 542, 552 (Mo. 2016)
(citation omitted).
The circuit court did not abuse its discretion in refusing to submit Instruction
A to the jury. The facts hypothesized in the Overmans’ proposed instruction did not
establish a failure of consideration, but instead would have established only that
Equity had failed to perform its contractual obligations – an issue which was
already addressed in the verdict director on Equity’s breach of contract claim.
“‘Failure’ of consideration implies that consideration, once existing and
sufficient, had become worthless or ceased to exist, which distinguishes it from ‘lack’
of consideration.” Mobley v. Baker, 72 S.W.3d 251, 257 (Mo. App. W.D. 2002)
(citation omitted). Where, as here, the contracting parties exchange promises as
consideration for a contract, there is no “failure of consideration” simply because
one of the parties fails to provide the promised performance. In these
circumstances, the contracting party’s “promises, and not the performance thereof,
constituted the consideration for the [contract], and [the other party]’s remedy for
[the contracting party]’s alleged failure to perform its promises was an action for breach of the agreement” – not cancellation of the agreement on the basis of “failure
11 of consideration.” Shelton v. M & A Elec. Power Co-op., 451 S.W.2d 375, 379 (Mo.
App. 1970) (citations omitted).
Missouri courts have consistently rejected “failure of consideration”
arguments like the one made by the Overmans here. In Turner v. Sch. Dist. of
Clayton, 318 S.W.3d 660 (Mo. 2010), parents of children in the City of St. Louis
Transitional School District chose to send their children to school in the Clayton
School District. Id. at 663. Because they lived outside the boundaries of the
Clayton district, the parents executed contracts agreeing to pay tuition for their
children to attend Clayton schools. Id. After the parents executed these
agreements, the St. Louis school district lost its state accreditation, and under
§ 167.131.1, RSMo 2000, it thereby became liable to pay the tuition required to send
the children to the Clayton schools. Id. “The parents argue[d] that the tuition
agreements should be terminated for lack of consideration and contend[ed] that
they ha[d] a right to restitution because they [were] now paying tuition for an
education their children should have received for free under § 167.131.” Id. at 669.
The Supreme Court explained that the change in circumstances did not
result in a “failure of consideration”:
“[C]onsideration must be measured at the time the parties enter into their contract and [ ] the diminished value of the economic benefit conferred, or even a complete lack of value, does not result in a failure of consideration.” Here, the parents received the benefit of their bargain – the education of their children by the Clayton school district – and, therefore, cannot claim lack of consideration. Id. at 670 (quoting Weinstein v. KLT Telecom, Inc., 225 S.W.3d 413, 415-16 (Mo.
2007); alterations added by Turner; other citation omitted).
Weinstein involved a “put option” agreement, under which one of the
contracting parties agreed to sell, and the other agreed to buy, shares of corporate
stock on a future date at an agreed price. The Supreme Court held that there was no “failure of consideration” even though the stock became worthless prior to the
12 option date, and the stock purchaser had thereby “‘suffer[ed] a disappointment in
his bargain.’” 225 S.W.3d at 416 (citation omitted).
Similarly, in Hunt v. Dallmeyer, 517 S.W.2d 720 (Mo. App. 1974), the
purchaser of an insurance business agreed to pay the seller $7,500 per year for ten
years, so long as the purchaser remained an agent of a specified insurance company.
Id. at 721. The purchaser was later terminated as an agent for the relevant
company, and therefore had no obligation to continue making the $7,500 annual
payments. Id. at 722. Although the business seller would no longer receive the
$7,500 annual payments, the Court held that no failure of consideration had
occurred: “It is well settled that simply because one suffers a disappointment in his
bargain, a failure of consideration does not occur.” Id. at 723 (citation omitted).
The Overmans’ “failure of consideration” argument is, in reality, simply a
claim that Equity failed to perform its contractual obligations, and that the
Overmans did not receive all of the benefit they expected from the commission
agreement. Equity’s performance did not become impossible, and the subject
matter of the contract did not cease to exist, when Simmons Bank scheduled a
foreclosure sale and Deere & Company repossessed some of the Overmans’ farm
equipment. To the contrary, it was still possible for the Overmans to retain ownership of their land and equipment by securing alternate financing – as Rose
Ann did by securing the Conterra loan. Failure of consideration may have been an
available defense if the Overmans had lost all rights to their property through
foreclosure and repossession, and therefore had no ongoing need for financing (and
no ability to qualify for it). But that is not what happened.
Point II is denied.
13 Conclusion The circuit court’s judgment is reversed, and the case is remanded for further
proceedings consistent with this opinion. Given our reversal of the judgment, we
deny Equity’s motion for attorney’s fees on appeal, which was taken with the case.
Alok Ahuja, Judge All concur.