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June 14, 1983


From the Circuit Court of Gasconade County; Civil Appeal; Associate Circuit Judge Randolph E. Puchta.

Before Pudlowski, P.j., Smith, Kelly, JJ.

The opinion of the court was delivered by: Smith

Defendant appeals from a judgment against it of $14,000 in a court-tried case' and a judgment against it on its counterclaim. Plaintiff sought return of $14,000 earnest money and rent paid pursuant to a lease-purchase agreement and defendant by counterclaim sought $21,000 for rent due and owing.

Plaintiff was a developer of commercial campgrounds. It became interested in some Franklin County property owned by defendant near Six Flags Over Mid-America. An oral agreement for a lease with option to buy was made on September 25, 1970. On October 8, 1970, this agreement was reduced to writing. The agreement provided for rental by plaintiff of the premises for five years at $7000 yearly rental with an option in the lessee to extend the tenancy on a yearly basis for up to 10 additional years at the same rental. During the ten-year period, lessee had an option to buy the land for $100,000. The agreement contained the following paragraph 11:

"This agreement is totally contingent upon Trailside's securing, as a condition of constructing and operating a commercial campground on the premises, all necessary federal, state, county, city, local and other requirements including satisfactory zoning, building permits, operating licenses, and sewage disposal facility approval. Should Trailside be unable to secure these approvals, permits or licenses prior to closing the $500 paid upon execution of this agreement shall be returned to Trailside without interest."

The agreement provided that rental would be paid as follows:

"Five Hundred Dollars ($500) shall be paid upon execution of this agreement and Thirteen Thousand Five Hundred Dollars ($13,500) constituting the balance of the first year's rental and rent for the fifth year shall be paid at closing subject to the provisions hereof. The rental for the second, third and fourth year in the amount of Seven Thousand Dollard ($7000) per year shall be due and payable upon the anniversary date of the closing of this transaction."

Rental for each year of the option term was due "on or before the anniversary date of the closing of this agreement." The agreement also provided for deposit of defendant's deed to the property in escrow "at the time of closing" to be returned to defendant if the agreement "is terminated for any reason other than the exercise by Trailside of its option to purchase . . .." The parties agreed that a memorandum of the agreement could be placed of record at lessee's option. Certain liens against the property totaling $12,000, held by third parties, were to be released "at the time of closing . . ." and the releases recorded "simultaneously with the closing of this agreement." Lessor agreed to subordinate its rights of ownership in the premises and improvements to mortgages on the property within certain percentage (70%) limits of the fair market value of the improvements and a $150,000 dollar limitation. The 70% loan funds advanced by lessee's bank and the 30% equity capital of lessee was to be placed in a bank and all checks in payment of construction were to be countersigned by an officer of lessor.

On January 25, 1970, an addendum to the agreement was executed by the parties making the term of the lease 25 years, making the rental for the last ten years $12,000, and expressly providing no option to buy during the last ten years.

On November 24, 1970 lessee received conditional approval of its preliminary plat from the Franklin County Planning and Zoning Commission.

On February 9 and 10, 1970, the parties engaged in a series of activities. (1) Plaintiff paid defendant $13,500; (2) the liens on the property were paid off and releases obtained; *fn1 (3) defendant placed its deed in escrow; (4) defendant executed a subordination agreement; (5) the parties executed a Memorandum of Lease. This latter document which was filed for record on February 17, 1971, stated:

"This Memorandum of Lease is entered into on this 10th day of February, 1971, by and between Trailside Campers' Inn, Inc., as lessee, and Pacific Mineral Spring Resort, Inc., as lessor, and constitutes an acknowledgment by the parties hereto that said parties did execute a lease on October 8, 1970, with respect to the premises legally described as follows: [legal description omitted] and further executed an addendum to such lease on the 25th day of January, 1971.

It is by the parties further acknowledged that the term of such lease is 25 years, with option to purchase during the 6th through the 15th year, during which term the lessee is required to pay rental to the lessor."

On March 23, 1971, Franklin County disapproved the final plat of lessee because of, among other reasons, excessive grades. In its rejection the County stated that the final plat differed markedly from the preliminary plat for which tentative approval had been issued. Following some investigation by lessee of the feasibility of grading to meet the County's requirements, plaintiff, on October 28, 1971, made demand for refund ...

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