B & B Equipment Co. v. Bowen

Facts

Braymen, Jacques, and Hughes were three partners who owned B&B Equipment Co. (Plaintiff). Since Braymen wanted to retire, Jacques and Hughes tried to find a replacement partner. Jacques and Hughes entered into an agreement with Bowen (Defendant) to replace Braymen as partner. Since Bowen did not have the necessary $15,000 to buy Braymen’s 100 shares of stock, Plaintiff bought the stock from Braymen on Defendant’s behalf. In return, Defendant gave $2,500 and a promissory note for $12,500 to Plaintiff. Defendant and Plaintiff agreed that he would be entitled to the dividends on the shares, but that he would turn over the dividends until the promissory note was paid. Under the agreement, Defendant was in charge of corporate recordkeeping and bookkeeping. He was responsible to take care of anything else that needed to be accomplished for the company. After Defendant’s performance proved to be unsatisfactory to the partners, the partners informed Defendant that he was discharged from the company. Defendant agreed to surrender his interest in the corporation for a certain amount of money. Plaintiff’s attorney responded that the agreement had been rescinded. As such, Plaintiff was repaid the original $2,500 and any other amount he invested towards purchasing stock. The parties continued to dispute this matter. As a result, Plaintiff sought declaratory judgment and Defendant filed a counterclaim seeking declaratory judgment as well. After the trial court ruled that Plaintiff had the right to rescind the contract, Defendant appealed to the Missouri Court of Appeals.