BEFORE ROY NOBLE LEE, P.J., DAN M. LEE AND ROBERTSON, JJ.
ROBERTSON, JUSTICE, FOR THE COURT:
This case presents the substantive question whether, in the context of a third party beneficiary contract, a promisee/ shareholder in the beneficary corporation may on proper proof recover damages of and from his promisor consistent with our recent decision in Bruno v. Southeastern Services, Inc., 385
Assuming at least a partially affirmative answer to the substantive question, the case also presents the procedural question whether on this record such rights as the promisee/ shareholder may have may be adjudicated summarily consistent with Rule 56, Miss.R.Civ.P.
Substantively, we recognize as valid in this state a rule of law which affords a promisee/shareholder a right to recover foreseeable damages sustained by him or her individually flowing from the promisor's breach of duties imposed upon that promisor and owing to the promisee/shareholder in his or her individual capacity.
Procedurally, we hold that the Circuit Court erred when it granted summary judgment in favor of the promisor dismissing in their entirety the promisee/shareholder's claims. We reverse in part and remand for trial.
The cast of characters is as follows:
(1) James D. Vickers is an adult resident citizen of the Greenville, Mississippi/Lake Village, Arkansas area. He was the original Plaintiff below and is one of the Appellants here. He is the "promisee/shareholder" and is sometimes referred to below merely as "Vickers" .
(2) William Thomas, Jr., is an adult resident citizen of Greenville, Mississippi, who is the lawfully appointed, qualified and serving Trustee of the Estate of James D. Vickers, Bankrupt. Trustee Thomas was a Plaintiff below and is an Appellant here under authority of an order of the United States Bankruptcy Court for the Northern District of Mississippi filed February 9, 1981, in In Re James Dwight Vickers, No. GBK 78-00147.
(3) First Mississippi National Bank is a banking association organized, chartered and existing under the laws of the United States and having its principal place of business in Hattiesburg, Mississippi. The Bank was the sole Defendant below and is the Appellee here. In much of the discussion that follows, the Bank is the promisor.
(4) Toche Enterprises, Inc. and Jays & W, Inc. are two separate corporations each of which, at all times relevant
hereto, was chartered and existing under the laws of this state. Neither of these corporations is a formal party in this action. Collectively, they are referred to below as "Toche" . Toche is the beneficiary in the third party beneficiary setting discussed below.
The facts of this case - and the inferences therefrom and interpretations to be made thereof and ultimately the legal conclusions to be drawn therefrom - are hotly disputed. Because of the present posture of the matter, however, summary judgment having been granted in favor of the Bank and against Vickers, we here state the facts in a light reasonably favorable to Vickers. *fn1
In the year 1975, Toche operated a marine construction and repair facility in Ocean Springs, Mississippi. All stock in the Toche corporation was owned by four members of the Toche family. As 1975 drew to a close, the corporation was indebted to First Mississippi National Bank for over $800,000 and its payments were in arrears.
James D. Vickers is a member of a family with substantial experience in the marine construction business, operating primarily through Greenville Shipbuilding Corporation based in Greenville, Mississippi. In December of 1975 and early January of 1976, officers of the Bank engaged Vickers in negotiations regarding his possible acquisition of the Toche facility in Ocean Springs. These negotiations culminated on January 19, 1976, with the execution of a written agreement between (1) James D. Vickers, (2) First Mississippi National Bank and (3) the four members of the Toche family in their individual capacities as stockholders. Toche, the corporation, was not a party to the agreement, although it was obviously a third party beneficiary thereof.
The agreement of January 19, 1976, provided, inter alia:
(1) that the Toche family members should transfer ownership of all stock to Vickers;
(2) that the Bank would loan the Toche Corporation $1,435,000 at 7% per annum repayable over 24 months in four semi-annual payments;
(3) that certain indebtedness - including the over $800,000 owed by Toche to the Bank - would be extinguished ("refinanced") with the loan proceeds;
(4) that Vickers would personally guarantee that portion of the loan from Bank to Toche which constituted new money (approximately $500,000) and further guarantee any other sums advanced by the bank to Toche;
(5) that, in addition, the Bank would provide Toche a line of credit up to $3,000,000.00 for interim construction financing; and
(6) that in the event of the Bank's foreclosure upon Toche collateral, such proceeds would be applied first to that part of the indebtedness guaranteed by Vickers;
Immediately thereafter, Vickers went to Ocean Springs and took over the operation of the Toche marine construction facility. He caused Toche to begin purchases of steel, welding machines and other materials necessary for the construction of vessels. In March of 1976, through Vickers' efforts Toche had obtained contracts for the construction of marine hulls and began this work. It is in this connection that one of Vickers' primary complaints arises, to wit: the alleged failure of the Bank to provide Toche with interim ship construction financing. Again because of the summary judgment posture of the case, the rest of the story will be told in Vickers' own words as they appear in his affidavit of June 22, 1982.
Paragraphs 3 and 9 of the January 19, 1976, contract state that Defendant would provide Toche with up to $3,000,000.00 in interim financing. These funds are used in the shipbuilding industry to finance vessels while they are under construction. A shipyard cannot operate if no interim financing is available. Thus, without this portion of the January 19, 1976, contract, the remainder would have been worthless to Toche and to me. I would not have entered into the January 19, 1976, Agreement if Paragraph 9 had not been included in the Agrement.
From the time the contract was executed until April, I repeatedly requested First Mississippi National Bank to provide Toche and me with the promised $3,000,000.00 in interim construction funding. First Mississippi National Bank, speaking through Gray Slay, told me that the Bank was engaged in completing the paperwork and in contacting and negotiating with correspondent banks. He promised me that it would be only a short time before Toche and I could obtain the interim financing.
In the meantime, I operated Toche with my own personal funds and out of capital funds, as distinguished from interim financing which was to be furnished by the Defendant. Although I do not at this time have an exact accounting of how much money I ultimately put into Toche, to my best information and belief, the sum is approximately $1,000,000.00.
Also during this time, I attempted to obtain interim financing on my own so that Toche could commence construction of vessels. I was unable to obtain interim construction money because the Defendant had all of the assets of Toche, including my stock, encumbered.
In March, 1976, I entered into two construction contracts, for Hulls 101 and 102, on the strength of Defendant's comittment to provide Toche and me with interim financing. I was to receive approximately $3,000,000.00 for this construction. I commenced work on these vessels, using my personal money, inasmuch as First Mississippi National Bank had not provided me with any interim financing.
In April or May of 1976, I once again called First Mississippi National Bank to inquire about the interim financing. Gray Slay told me that the bank could not lend Toche or me any interim financing funds because to do so would cause the bank to exceed its legal lending limit to a single borrower.
The following day, I traveled to Greenville to consult with my attorney, Philip Terney. Mr. Terney telephoned Defendant, speaking with William A. Pittman and Gray Slay, to inquire about the interim financing. With me listening to both sides of the conversation, Pittman and Slay told us that the Bank was not obligated to provide Toche or me with interim financing because of an agreement we had signed. Defendant ultimately produced an agreement which is a copy of the January 19, agreement except that Paragraph 9, which required Defendant to provide $3,000,000.00 in interim financing, had been crossed out and initialed by only by [sic] Pittman.
In May, I shut down the Toche boat yard. Toche was unable to continue operations for lack of interim financing. At about this same time, I had negotiated construction deals for several supply boats which I could not complete without
construction financing. Ultimately, Greenville Shipbuilding Corporation built these boats because Toche was unable to obtain interim financing elsewhere.
From the time that I entered into this contract until October, 1976, and lasting thereafter, I approached numerous banks to attempt to obtain interim financing to construct boats. These banks included First National Bank of Greenville, Mississippi; of New Orleans, Louisiana; Colonial Bank of New Orleans, Louisiana; Greyhound Leasing Corporation of Chicago; Commercial Bank and Trust of Metarie, [sic] Louisiana; CitiCorp of New York; a large bank in Mobile; The Mississippi Bank; First National Bank of America of California; The Crocker Bank of California; The Bank of England; a Japanese bank; The Ranier Bank of Seattle, Washington; and a bank in Little Rock, Arkansas. I was unable to obtain interim construction funding from any of these banks because the Defendant Bank had a lien on all the assets of Toche, including my stock in the corporation.
Thus, in October, 1976, Toche had been shut down for months, no interim financing was available despite my best efforts to obtain it, and my personal fortune was exhausted. At that time, my economic situation and that of Toche left me with no alternative but yield to the economic threats and coercion of the Defendant Bank and sign the Agreement dated October 6, 1976. *fn2 This Agreement was forced upon me and Toche by Defendant, and represented the only hope I had of operating the shipyard long enough to get my personal money back.
Defendant then undertook to lend interim construction funds directly to those who contracted with Toche for ship construction, rather than to Toche, a mechanism Defendant believed would alleviate legal lending limit restrictions.
Despite the interim financing which then became available, the financial situation of the shipyard was no longer viable. In 1978, Toche was forced into involuntary bankruptcy. As a result of my guarantees of the debts of Toche, I was also forced to take bankruptcy.
On April 12, 1982, Vickers and his Trustee in Bankruptcy commenced this action by filing their complaint in the Circuit Court of Forrest County, Mississippi, naming the Bank as a Defendant. In his complaint Vickers demanded damages of and from the Bank for what amounts to all losses he sustained as a result of the Bank's alleged breach of certain contractual obligations alleged to exist by virtue of the January 19, 1976, agreement, a copy of which was attached to the complaint.
The Bank did not answer but rather on May 18, 1982, filed a motion to dismiss, Rule 12 (b) (6), Miss.R.Civ.P., or, in the alternative, for summary judgment, Rule 56, Miss.R.Civ.P., asserting, essentially, three gounds, to wit: Vickers' alleged lack of standing, the failure of the complaint to state a claim upon which relief can be granted, and judicial estoppel. The motion was heard on affidavits submitted by the respective parties and memorandum briefs filed by their counsel. On July 16, 1982, the Circuit Court adjudged that there were no genuine issues of material fact and that First Mississippi National Bank was entitled to judgment as a matter of law and, accordingly, entered final judgment in favor of the Bank and against Vickers and his trustee. En route, the Circuit Court stated:
The decisive issue is plaintiff Vickers' status to bring this action for breach of contract.
These facts are not in issue: There are two written agreements which control the obligations of the defendant in the premises. (The one dated January 19, 1976, Vickers claims is controlling. Defendant claims the subsequent agreement dated October 6, 1976, supersedes and controls. However, defendant claims Vickers is not a principal party to either agreement, and therefore, without status to bring this action.) No demand or claim has been made by defendant against plaintiffs under either agreement, and defendant has affirmatively waived any such claim. Defendant and Joseph A. Toche, Sr., John Anthony Toche, William R. Toche, Sr., and John Adaulph Toche, sole owners of all capital stock of Toche Enterprises, Inc., and Jay's & W., Inc., are principal parties to the January 1976 agreement. Toche Enterprises, Inc., and Jay's & W., Inc., (both Mississippi corporations) and defendant are principal parties to the October 1976 agreement.
It is determined that Vickers is a guarantor or secondary party in both agreements. The
corporation, not Vickers, has the cause of action.
The law of this state controlling in these facts is clearly stated in Bruno v. Southeastern Services, Inc., Miss., 385 So. 2d 620 (1980). In Bruno the Court denied to plaintiff, the sole stockholder, a cause of action for damages for alleged ...