From the Circuit Court of Ozark County Civil Appeal Judge James Clifford Crouch.
Before Flanigan, P.j., Greene, C.j., Titus, Crow, JJ.
The opinion of the court was delivered by: Greene
This appeal involves a contract for the sale of real estate and a subsequent rescission and release agreement. Plaintiffs, Homer and Janice Dilts, received a jury verdict against defendant, Forrest Lynch, in the sum of $20,000 and judgment was rendered in that amount. The trial court set aside the judgment and entered judgment for Lynch notwithstanding the jury verdict. The case was presented to the jury on a breach of contract theory. The trial court, in setting aside the judgment, observed that plaintiffs failed to make a submissible case of breach of contract, since the contract had been mutually rescinded, and the parties had agreed to hold each other harmless from further liability. Plaintiffs appealed.
On appeal from a judgment notwithstanding the verdict, we consider the evidence in a light most favorable to the parties receiving the verdict, giving them the benefit of all reasonable inferences that might be drawn from the evidence, and disregard any contrary evidence. Wilson v. Missouri-Kansas-Texas R. Co., 595 S.W.2d 41, 44 (Mo.App. 1980). Cast in that light, the facts are that Homer and Janice Dilts, residents of the state of Iowa, during a vacation visit to the Missouri Ozarks, negotiated with Forrest Lynch for the purchase of a resort owned by Lynch in Theodosia, Missouri. The complex consisted of approximately 40 rental units, a lounge, restaurant, and swimming pool. Prior to execution of the sales contract, an employee at the resort showed plaintiffs 8 or 10 of the rental units, all in reasonably good condition, and told them the remaining units were in the same condition, and that no major repairs were needed. Lynch also told them that the insurance premium on the premises was "reasonable", and that a large illuminated roadside sign advertising the premises was his.
On July 18, 1978, the parties executed a contract for sale of the property for the sum of $250,000. Mr. and Mrs. Dilts paid $25,000 as a down payment and were to sign a note, secured by a deed of trust, for the $225,000 balance, at which time a warranty deed was to be delivered to them by Lynch. The note and deed of trust were never delivered to them for execution, neither did they receive a warranty deed. The attorney for Lynch prepared the contract of sale which was executed in the attorney's office.
Plaintiffs took possession of the property on August 16, 1978, and ran into immediate problems. Only 18 of the units were rentable, as the others had rotted floors, no electricity, or badly leading water pipes. Plaintiffs expended considerable money making repairs. Operation of the resort produced income about 50% of what Lynch had represented, the "reasonable" insurance costs approximated $8,000 a year, and Lynch's sign turned out to be rented, with plaintiffs owing monthly rental of $220.
On September 20, 1978, plaintiffs contacted Lynch's attorney and told him they wanted out of the deal. The attorney suggested a rescission and release agreement, which he prepared. The agreement reads:
"WHEREAS, on the 18th day of July, 1978, the undersigned parties entered into a contract for the sale of real estate, same being the premises known as Lynch's Motel, Lounge and Restaurant located at Theodosia, Missouri, and
WHEREAS, the parties desire to rescind said contract and hold each other harmless from any further liability.
WITNESSETH: For value received the parties mutually agree as follows:
(A) The parties mutually rescind that certain contract, a copy of which is attached hereto and marked Exhibit "A", and the same hereafter shall be considered null and void.
(B) The parties further agree and do hereby release each other from any further liability to each other by reason of said contract.
IN WITNESS WHEREOF, the parties have executed this release on the 20 day ...