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Fleming v. Parkview Colonial Manor Inv. Co.

AUGUST 5, 1975.

PATRICK J. FLEMING, PLAINTIFF-APPELLEE,

v.

PARKVIEW COLONIAL MANOR INVESTMENT COMPANY, INC., DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of St. Clair County; the Hon. D. KENT TRONE, Judge, presiding.

MR. JUSTICE EBERSPACHER DELIVERED THE OPINION OF THE COURT:

This is an appeal by the defendant, Parkview Colonial Manor Investment Company, Inc., from a judgment for $14,500 entered in favor of the plaintiff, Patrick J. Fleming, by the circuit court of St. Clair County on plaintiff's action for damages arising out of an alleged breach of contract.

The plaintiff is an attorney. In the latter part of 1967 or the early part of 1968, he became a member of the boards of directors of two corporations, the defendant corporation and Parkview Manor, Inc., which owned and operated a nursing home in O'Fallon. At this time the stock in each company was owned by Philip Schildknecht and Neil Gavin.

In early 1968, the board of defendant corporation discussed the possibility of enlarging the nursing home. A 114-bed addition was contemplated and the plaintiff was asked to explore the possibilities of financing the proposed addition. The plaintiff submitted a proposed written agreement to the board, which provided for the payment of a $14,500 fee in the event the plaintiff was able to obtain permanent and construction financing for the planned expansion. While the written agreement was neither signed, nor offered into evidence, both the plaintiff and Philip Schildknecht testified that the board had orally agreed to the plaintiff's proposal.

According to Philip Schildknecht, this proposal obligated the corporation to pay the plaintiff a fee of $14,500 in the event he obtained permanent and construction financing in the amount of $1,450,000, $840,000 to finance the construction and $600,000 to pay off an existing loan. The actual cost of construction was, at that time, estimated to be $700,000. The excess of $140,000 was included to pay for additional expenses, including a commitment (or finder's) fee and the $14,500 fee of the plaintiff. Fifty percent of the plaintiff's fee was to be paid when the board "knew that we had it [the loan] for sure and the balance [was to be paid] whenever the construction was done."

In a letter dated December 20, 1968, John H. Poelker, then comptroller of the city of St. Louis, advised Philip Schildknecht that,

"You may consider this letter as a commitment on behalf of the Firemens Retirement System of St. Louis and/or the Alternative Police Retirement System of St. Louis to make a First Mortgage Loan on the expanded Parkview Colonial Manor Nursing Home in the amount of $1,450,000 due in twenty years at interest rate of 7 1/4% to be taken down December 1, 1970; subject to the following conditions: — "

Included among the six enumerated conditions was the following condition:

"Further, this agreement shall provide that the operating company cannot be sold nor the agreement be subject to sub-contract without our approval."

The plaintiff identified this letter as the commitment he had obtained through one James Schmitt of "Mississippi Mortgage Company." A fee of $40,000 was paid by the defendant corporation to Schmitt's Company for his services in obtaining this commitment.

Subsequently, one Harvey Friedman, an officer of Bernard Nursing Homes, Inc., of St. Louis, became interested in the O'Fallon nursing home and, after preliminary discussions, made a written offer to purchase all of the stock in each of the nursing home corporations. This offer contained the following clause:

"It is understood and agreed that the permanent commitment for the 114-bed addition to the nursing home issued by the Comptroller of the City of St. Louis and the pending construction loan for $840,000.00 with the First National Bank of O'Fallon will be transferred to the purchasers subject to the approval of both lenders."

On February 15, 1969, Gavin and Schildknecht accepted Friedman's offer. This offer had contained a provision:

"That there are no contracts in effect with either of said corporations which cannot be terminated on thirty (30) days notice, ...


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