Wooster Republican Printing Co. v. Channel 17, Inc.

MEMORANDUM AND ORDER GRANTING JUDGMENT IN FAVOR OF THE WOOSTER REPUBLICAN PRINTING COMPANY AND AGAINST CHANNEL SEVENTEEN, INC. AND TAPESWITCH CORPORATION OF AMERICA AND DENYING THE COUNTERCLAIMS OF CHANNEL SEVENTEEN AND TAPESWITCH CORPORATION, THE CROSS-CLAIM OF TAPESWITCH, AND THE THIRD PARTY CLAIM AGAINST RICHARD KOENIG

Plaintiff, the Wooster Republican Printing Company (Wooster), is a closely-held family corporation which owns and operates daily and weekly newspapers, radio stations, and a commercial printing business. Defendant, Channel Seventeen, Inc., (Channel Seventeen), is a closely-held Missouri corporation which owns and operates a UHF television station in Columbia, Missouri, as an ABC network affiliate under the call letters, “KCBJ-TV.” This diversity action was initiated by Wooster, an Ohio corporation, to enforce an alleged contract “to sell the assets, property and business of defendant, excluding bank accounts, cash-on-hand and accounts receivable.” Alleging the uniqueness of the business of Channel Seventeen and an anticipatory breach of the contract by repudiation, Wooster primarily seeks specific performance of the alleged agreement. Alternatively, should specific performance be determined inappropriate, Wooster seeks damages in the amount of $912,053.02. Plaintiff also seeks attorneys fees, costs and expenses in conjunction with its claim for specific performance.

Channel Seventeen denies the existence of the alleged contract for the sale of its assets, property and business. It contends that a requisite number of its shareholders did not approve a sale of its corporate assets, as required by Section 351.400 RSMo.; that, in fact, its shareholders specifically *603 voted to disapprove 'the contract; that Wooster has not fulfilled its obligation under the contract to place $50,000 in an escrow account; that the clause of the alleged contract providing for the remedy of specific performance is unenforceable; that Wooster is precluded from obtaining specific performance of the alleged contract or damages for its breach because of a course of conduct on the part of the officers and agents of Wooster which misled Richard Koenig, president and majority shareholder of Channel Seventeen, and Robert Koenig, his brother and a shareholder in Tapeswitch Corporation of America, a corporation which purportedly owns 45% of the corporate stock of Channel Seventeen; that Wooster is foreclosed from either specific performance or damages because it has failed to fulfill the contractual conditions precedent to litigation; and that the alleged contract purports to convey property, specifically a transmitter site and tower, the title to which Channel Seventeen does not possess. In the event that the alleged contract is determined to be in existence, Channel Seventeen seeks the recision of that contract.

Upon the motion of Channel Seventeen, made pursuant to Rule 19, F.R.Civ.P., Tape-switch Corporation of America (Tape-switch), a New York corporation, has been joined herein as a party defendant. 1 Tape-switch asserts rights as an owner of 45% of the corporate stock of Channel Seventeen and essentially raises defenses to enforcement of the contract which are similar to those raised by Channel Seventeen; specifically, that no contract exists; that, as an owner of more than one-third of the corporate shares of Channel Seventeen, it has never approved the sale of the corporate assets; that execution of the contract was obtained by Wooster through the fraud and deception of its agents and officers; and that the contract purports to convey certain property which is not owned by Channel Seventeen. 2 By counterclaim and cross-claim, Tapeswitch also seeks a declaratory judgment that the contract is null and void, and to enjoin the sale of the assets of Channel Seventeen. It has also joined Richard Koenig, as majority shareholder and chief executive officer of Channel Seventeen, to obtain indemnification for “any monetary losses as a result of the purported agreement.”

After a substantial period of pretrial discovery and upon the agreement of the parties, the cause was tried to the Court without a jury. The pleadings of the parties, the testimony of the witnesses adduced at trial, the documentary material in evidence, and the stipulations of the parties reveal the following.

Findings of Fact

Background and Events Preceding Contract Negotiations

Channel Seventeen has operated as a UHF television station in Columbia, Missouri since 1971 when it began broadcasting. At all relevant times, Richard Koenig was the president and majority shareholder of the corporation, owning 55% of the outstanding stock. His brother, Robert Koenig, controlled the remaining 45% of the stock of Channel Seventeen, either as an *604 individual owner or through his control of Tapeswitch Corporation of America. 3 From April 1, 1978 to the time of trial, Richard Koenig was the president of Channel Seventeen and Robert Koenig was its vice-president, treasurer and secretary. Both were the exclusive members of the board of directors of the corporation.

In May of 1978, John Tupper, a member of a brokerage firm specializing in acquisitions of television and cable television stations, wrote Richard Koenig to identify himself and to indicate that he represented a client “who would be very interested in acquiring KCBJ-TV Columbia, Missouri.” In the letter, Tupper stated that Koenig should consider “a 1978 transaction” if he had “any thoughts of trading within the next few years” because the “market for television stations [was] at or near its cyclical peak.” Tupper advised Koenig that he would call upon him to arrange a meeting in Columbia to “discuss these matters in detail.”

Shortly thereafter, in early June of 1978, Tupper called Richard Koenig and met with him at the station facility. They inspected the station facilities and discussed at length the possibility of a sale of Channel Seventeen, including the manner by which the payment of a brokerage fee could be handled. 4 In addition, Koenig provided Tupper with exhaustive information of a confidential nature relating to the financial structure of the corporation. The information included a projection of the cash flow of the corporation through the year 1982; financial statements for the years 1975, 1976 and 1977; balance sheets for the years 1975, 1976 and 1977; statements of income and expenses through December 31,1977; and a profit and loss statement for the years 1975, 1976, and 1977. Tupper advised Koenig that the financial information would be used to analyze the financial position of Channel Seventeen and “would be incorporated in a file .. . for distribution to a prospective buyer of a television station.” Koenig expressed concern that the information he provided, intended primarily for the internal use of Channel Seventeen, would not be as appealing to a prospective buyer as it might be. But Tupper assured him that the information would be disseminated accurately to potential buyers and the value *605 of the station would not be minimized. The two also discussed a price for the station, with Koenig estimating its value at $2,500,-000 and Tupper increasing that price to $2,600,000 to include a brokerage fee. Regarding the physical facilities of the station, Richard Koenig represented to Tupper that the transmitter site upon which the station was located was leased from the only other shareholder of the corporation and that it would be included in a sale of the corporate assets.

Following their meeting, Tupper again wrote Richard Koenig on June 21, 1978, to discuss methods by which the brokerage fee could be handled and to state that “the Wooster Republican Printing Co. [was] the ideal buyer for [Koenig’s] property.” Then again, on June 30, 1978, Tupper wrote a letter to Koenig, this time outlining a schedule of payments for a sale of the station for $2,500,000, discussing the tax consequences of such a sale, and making preliminary arrangements for a visit by “principals of the Wooster Republican Printing Co.” and himself.

Based upon the general and financial information provided by Richard Koenig during their initial meeting, Tupper prepared a thirty-three page “file',” or brochure concerning Channel Seventeen, including its markets, its corporate structure, its finances, its audience ratings, its daily programming, and its physical facilities. Tupper contacted Timothy Dix, secretary and general counsel of Wooster, both by telephone and by correspondence, to convey this information. By letter of July 6,1978, Tupper forwarded the “Kepper file” to Dix, along with a capsule summary of the television station and its growth potential.

On July 10, 1978, Timothy Dix, acting as secretary for Wooster, wrote Richard Koenig directly'to indicate that Tupper’s material had impressed him, that the board of Wooster would be considering the potential acquisition of Channel Seventeen, and that he and Tupper would meet with Koenig during the month of August, 1978. 5 At the time, the directors and shareholders of Wooster 6 had expressed an interest in moving into the television business in order to diversify the corporate media holdings. Timothy Dix was directed to visit the station, to review the situation, and to report to the directors of Wooster with a recommendation as to whether or not the corporation should proceed toward the acquisition of Channel Seventeen.

Timothy Dix, John Tupper, and Richard Koenig met during the last week of August, 1978, in Columbia, Missouri. Dix was introduced as a potential buyer and the purpose of his visit was clearly to survey and discuss the corporate assets of Channel Seventeen for potential acquisition by Wooster. 7 The three men discussed the operations of the station and its potential. Koenig led Dix upon a tour of the station facilities which were then located in the Tiger Hotel in Columbia. Dix also visited the transmitter site, located approximately 18 miles from downtown Columbia in rural Moniteau County, Missouri. Through their discussions, “Koenig indicated [to Dix] that he was definitely interested in seeing that the *606 station was sold and placed in the hands of new operators.” They discussed the price of the station and Koenig indicated it would be available for $2,600,000. He also represented to Dix that he was 55% shareholder of Channel Seventeen, that his brother Robert Koenig held the remaining 45% of the corporate stock, and that each “wanted different types of pay out” for their respective interests. No offer was made by Dix at that time to purchase the stock or assets of Channel Seventeen.

No negotiations occurred between representatives of Wooster and Channel Seventeen immediately after the August meeting. However, during this period of time, John Tupper and Richard Koenig discussed the acquisition of a new building for the station. On September 1, 1978, approximately one week after the August meeting, Tupper wrote Koenig to state that the purchase of a new building “appear[ed] to be an advisable move” and to urge Koenig to sign a written and exclusive authorization to sell the stock of Channel Seventeen. Koenig did not sign such an authorization.

In September of 1978, John Tupper met with Richard Koenig in Columbia. Koenig related that his brother, Robert, had visited the station on the prior weekend, and that they both agreed that their acquisition of a new building had materially enhanced the purchase price of the station. Koenig indicated that the station should bring $3,300,-000 instead of the $2,600,000 which had been quoted a month earlier. Koenig suggested that Tupper discuss the matter with his brother over the telephone. Tupper did so. During the course of the telephone conversation, Tupper indicated to Robert Koenig that it would “be difficult to obtain a buyer to pay that price at that time.” Robert, in turn, “related . . . that he felt that the value of the building enhanced the value of the company above and beyond the price that they had paid — paid for the building, and he felt that the company was then worth $3,300,000 ...” Robert also told Tupper “that he would take, and he said yes, said he would be willing to sell the company for $3.3 million.” After the telephone conversation concluded, 8 Richard Koenig “related [to Tupper] . . . that Bob would go along with his wishes insomuch as he was in the driver’s seat, so to speak, in running the company.” Shortly after his visit, Tupper prepared an updated sales brochure based, in part, upon confidential information provided by Richard Koenig. This new brochure indicated that the sales price of the station would be $2,990,000 and that a purchaser would be responsible for payment of the brokerage fees.

Following his meeting with Richard Koenig and his telephone conversation with Robert Koenig, Tupper relayed the change in purchase price to Timothy Dix. At the September board meeting of Wooster, Timothy Dix recommended that the corporation should give serious consideration to the purchase of Channel Seventeen. However, because of the increase in the price of the station and Wooster’s negotiations in other areas, no immediate authorization was given to proceed toward the acquisition of Channel Seventeen. After the board meeting, Timothy Dix communicated with Tupper who told him that, because of the impending transfer of the station facilities to a new building, he had advised Richard Koenig “to take the station off the market, and then consider a sale at a later time.” 9

*607 In October of 1978, Albert Dix, vice president of Wooster, asked Fred Osier, his friend and then general manager of a Louisville, Kentucky television station, to visit the station facilities of Channel Seventeen to make an expert assessment of the station. On October 10, 1978, Osier traveled to Columbia and spent approximately five hours with Richard Koenig touring the station and discussing the program, promotion and production aspects of the station. Upon his return, Osier submitted á written report to Albert Dix, indicating that the station was “woefully weak in marketing, programming, promotion and production expertise” and that its “basic structure [was] weak.” He further reported low advertising charges, weakness in sales promotion and packaging, unsophisticated programming, and inadequacy in equipment. He did advise, however, that the operation of Channel Seventeen could be improved to achieve significant financial success. This report was circulated to members of the board of Wooster.

Wooster remained interested in the acquisition of Channel Seventeen. But during the fall of 1978, it was engaged in negotiations concerning an acquisition contract which it had earlier executed for the purchase of a UHF television station in Layfayette, Indiana. 10 Apparently, difficulty had arisen in the acquisition of that station due to the inability of the seller to transfer clear title. Eventually, Wooster withdrew from the contract and took back an earnest money deposit which it had made.

The Contract Negotiations

No further steps were taken by Wooster toward the acquisition of Channel Seventeen until the spring of 1979, when the board of directors, during its meeting of May 31, 1979, authorized Timothy Dix “to attempt to acquire substantially all the assets of Channel 17 . . . for up to 3.5 million dollars, including commitments for working capital brokerage fees, and actual costs and assets ...” This resolution by the Wooster board came as a result of earlier board discussions and conversations between Timothy Dix and John Tupper regarding the Koenigs’ willingness to enter into an “asset transaction” for “3.3 million dollars.” 11

John Tupper arranged for representatives of Wooster to visit Richard Koenig at the station on June 8, 1979. He suggested to Timothy Dix that he prepare a letter of intent prior to the meeting, which Dix prepared. Albert Dix, Raymond Dix, Timothy Dix, John Tupper, Richard Koenig and Thomas Koenig 12 met in Columbia in the new office building of Channel Seventeen to discuss the terms of the sale of the company. 13

Following an initial tour of the new building by the Wooster representatives, the parties fully discussed the sale of the assets of Channel Seventeen to Wooster. During those discussions, Richard Koenig appeared anxious and willing to consum *608 mate the sale. He did not indicate to the Wooster people, or for that matter any one else, that his brother was reluctant to sell the station. Nor did he ever indicate to those Wooster representatives that the minority interest in Channel Seventeen was owned by Tapeswitch rather than his brother.

The parties utilized the draft letter of intent, prepared prior to the visit by Timothy Dix at the suggestion of John Tupper, as a platform for their negotiations. As originally drafted, that letter left the purchase price of the station as an open item for negotiation. It did, however, set out several provisions with concreteness and clarity. One of those provisions established that the “allocation of the purchase price to assets” would reflect a full assumption of tax liability by Channel Seventeen “for all taxes related to recapture of depreciation and investment tax credits.” In addition, the letter indicated, among other things, that adjustment would be made for increases or decreases in the assets of Channel Seventeen; that certain prorations would be made for rent, real and personal property taxes and other items, that liens and other encumbrances would be cleared, and that a $50,000 escrow deposit would be made as earnest money with an immediate $10,000 deposit with Kepper, Tupper & Company. A final sales agreement was to be prepared “within ten days to two weeks.”

In the course of the discussions, Albert Dix expressed concern that a continuity of management be established at the station following the sale. Thus, despite Richard Koenig’s initial representations that he was “going to take part of his money and travel,” he was asked by the Wooster representatives to remain available for consultation. To achieve that purpose, a clause was added to the letter of intent to pay Richard Koenig the sum of $75,000 over a three-year period of time as a part of the purchase price. Most importantly, a purchase price of $3,225,000 was established, with a requirement that Wooster deposit the sum of $50,000 with an escrow agent, $10,000 of which was to be deposited immediately with Kepper, Tupper & Company. Although Richard Koenig stated that this agreement “was not quite what they were looking for” in terms of price, the “offer was very marginal in difference and thus the offer was acceptable ...” 14 Richard Koenig signed the letter of intent as president of Channel Seventeen. Raymond Dix signed it as president of Wooster. On June 12,1979, Wooster deposited $10,000 with the escrow agent as an initial payment of earnest money.

On June 12, 1979, John Tupper wrote Richard Koenig to outline the tax consequences of the agreement which had been set forth in the letter of intent. That letter came as the result of a telephone conversation between Koenig and Tupper concerning the matter. The next day, on June 13, 1979, Tupper wrote Timothy Dix to suggest an allocation of the proposed purchase price to assets and to explain the tax consequences of that allocation. Tupper proposed an allocation of 60% to 65% of the total purchase price to the assets, an allocation which was reasonable by industry standards.

By letter of June 22, 1979, Timothy Dix forwarded copies of a proposed contract to Richard Koenig. He indicated that the proposal was “a vehicle to engage in a full discussion of the status of the station and its assets,” that “everything in the contract [was] negotiable,” and that any problems in the contract could be resolved by working with Koenig’s attorney.

On the same day, however, Robert Koenig visited his brother at the station. Robert Koenig was aware that Richard Koenig *609 had been negotiating for the sale of the station to Wooster and that Richard was determined to consummate the sale. 15 During their meeting, Richard advised Robert that the consulting fee arrangement which he had struck with Wooster in the June 8th letter of intent “was of no consequence.” Apparently, the Koenigs also discussed the price of the station for, shortly thereafter, Richard Koenig telephoned John Tupper to tell him that Robert would not accept the figure agreed upon of June 8th, but “that they would accept $3.3 million.”

Immediately after learning of the Koenigs’ new demand, Tupper called Timothy Dix to communicate it to him. Dix, in response, indicated that he would have to discuss the matter with the Wooster board.

Timothy Dix subsequently advised John Tupper that Wooster would agree to the increase in price and that it would offer $3,300,000 for the assets of Channel Seventeen. However, as a condition to any further negotiations by Wooster, Dix insisted that he be provided with written documentation which demonstrated that all the shareholders of Channel Seventeen had agreed to the sale of the corporation at that price. As Timothy Dix stated it, the purpose of this document was to insure “that 100 percent of the shareholders, the two brothers, had accepted the transaction as well as the corporation” and to provide evidence of that unanimous acceptance before he “spent the time and effort to go back to Columbia or spent any time redrafting contracts.”

To that end, Timothy Dix drafted a formal letter of commitment which presented the offer of $3,300,000 by Wooster for the assets of Channel Seventeen and generally outlined the basic conditions of the agreement including provisions for an earnest money deposit, an allocation of the purchase price to the corporate assets to reflect an assumption of Channel Seventeen of tax liability for depreciation recapture, an adjustment of increases or decreases in existing assets, warranties, and other miscellaneous matters. That letter clearly indicated that Wooster’s counsel would prepare a proposed sales agreement to be submitted to Channel Seventeen “within a few days.” That letter, dated July 2, 1979, was mailed to Richard and Robert Koenig on the same day. 16 It required the acceptance, by signature, of both men, as shareholders of Channel Seventeen, and of Richard Koenig, as president of the corporation. The letter had been signed by Timothy Dix as representative of Wooster.

About this time, on approximately June 22, 1979, Robert Koenig employed a media broker, James Blackburn, to visit the station facilities of Channel Seventeen to appraise the fair market value of its assets. 17 *610 Blackburn met with Richard and Robert Koenig at the station on July 2,1979. Richard Koenig had not been informed of the prospective meeting until Blackburn arrived. During the meeting, Blackburn toured the facilities, discussed the station operations with the Koenigs, and gathered financial information. He also visited the tower site. Robert Koenig advised Blackburn that he owned the land upon which the tower stood and that, upon a future sale of the station, he would deed the land over to a purchaser, along with an easement.

On July 5, 1979, Blackburn telephoned Robert Koenig and advised him that the station had been appraised at $3,300,000. Koenig expressed surprise “at that exact figure,” apparently because it so closely approximated the amount offered by Wooster in the June 9th letter of intent negotiated by Richard Koenig. Koenig later called Blackburn to question him about the methodology employed in the appraisal and to question him as to whether or not he had discussed Channel Seventeen with anyone outside his brokerage firm. Blackburn’s appraisal fee was later paid by Tapeswitch.

Sometime after Blackburn’s visit to the station facilities in Columbia, Richard and Robert Koenig received the three-page commitment letter which had been drafted by Timothy Dix outlining the essential terms of Wooster’s increased offer to purchase the assets of Channel Seventeen. Again, it should be noted that the commitment letter required the acceptance of all of the shareholders of Channel Seventeen, including Robert Koenig, and that it specifically apprised the Koenigs that Wooster expected an allocation of the purchase price which would result in the full recapture of depreciation and investment tax credits.

On July 11, 1979, Richard Koenig telephoned his brother to urge him to sign the commitment letter tendered by Timothy Dix. Prior to that conversation, Richard Koenig had fowarded to Robert Koenig a draft of the proposed sales agreement, a draft which was substantially similar to the agreement which was ultimately consummated. Robert Koenig had read that proposed agreement and “made some observations concerning it.” 18

At this time, Robert Koenig knew the essential terms of the proposal. Based upon the materials which he had received from his brother and Timothy Dix, he had been fully alerted to the tax consequences of the proposed sale. He knew the proposed purchase price, a figure which equaled the fair market value of the station as established by his own appraiser. He knew the essential terms of the proposal. He knew that shareholder authorization was a prerequisite to any further negotiations by Wooster. He knew that his signature represented his acceptance of the essential provisions of an agreement to sell the assets of Channel Seventeen. He knew his signature authorized his brother to negotiate a final sales agreement consistent with the terms of the commitment letter. He signed the letter. 19 That letter was then forwarded to Richard Koenig who later advised John Tupper that it had been signed by his brother and that he possessed it. Tupper, in turn, contacted Timothy Dix to confirm that the letter had been signed by Robert Koenig and that it would be *611 tendered to Dix upon his arrival in Columbia to finalize the contract. 20

Timothy Dix, Albert Dix, and John Tupper met with Richard Koenig and his attorney, Cullen Cline, 21 about 10:00 a.m. on July 17, 1979, at the offices of Channel Seventeen. The negotiations began at that time and proceeded throughout the day until about 4:00 p.m. During that period of time, the parties negotiated the essential terms of the purchase agreement which were embodied in a thirty-six page, comprehensive agreement for the sale of Channel Seventeen for the purchase price of $3,300,-000. These negotiations consisted primarily of a page-by-page, provision-by-provision discussion of the proposed contract which earlier had been provided to the brothers by Timothy Dix.

Throughout the negotiations, Richard Koenig questioned various contract clauses and provisions and sought advice from his attorney. Not only did he participate, but “he had a whole list of questions and comments and marginal notes that he had made on the draft that [Timothy Dix] had sent [on] July 6th.” Cline also actively participated in the contract negotiations, answering Richard Koenig’s questions, offering suggestions concerning the substance and form of the agreement, and negotiating various contracts negotiations. Revisions in the agreement were made upon Richard Koenig’s request.

One of the topics of discussion was the continued employment of Richard Koenig’s son, Thomas, as the general manager of Channel Seventeen. The parties unanimously agreed that a separate agreement should be made between Wooster, Channel Seventeen, and Thomas Koenig. A letter, encompassing the terms of an employment agreement, was prepared and executed by Albert Dix, as representative of Wooster.

Another topic of brief discussion was the provision of the contract which provided for the remedy of specific performance and acknowledgement by the seller that damages at law would be inadequate. The parties discussed the “mechanical aspects” and Richard Koenig was advised that Wooster “required the right of specific performance if [it was] going to enter into [the] contract.” The provisions were negotiated to a certain degree and Richard Koenig was advised that the provision “would allow [Wooster] to compel Channel Seventeen to sell its assets to [it], if [Channel Seventeen] executed and delivered [the] contract.”

The negotiations of July 17th ended at about 4:00 p.m. after the parties had covered all the provisions of the thirty-six-page contract. Albert Dix signed and executed the document at that time as the representative of Wooster. 22 However, Richard Koenig did not sign it then. Koenig had tape recorded the majority of the contract negotiations during the day. He desired to remain at the station in order to review those proceedings and indicated to Timothy Dix that, “this is my last crack at making a decision of whether or not to go forward.” 23 Dix responded, “If you have any doubts at this time you ought to think this thing *612 through and really satisfy yourself that this is really what you want to do because once we conclude the transaction by signing it, we expect to go through with it.”

There were other tasks which remained to put the written contract in final form. Both Richard Koenig and Cullen Cline, his attorney, had expressed concern about the tax consequences of the allocation of the purchase price to be made to the assets of Channel Seventeen. Cline wished to review that situation with John Tupper and the accountant of Channel Seventeen, Charles Murphy. Moreover, Timothy Dix and Cline were to “finalize” the language of the contract pursuant to the agreements of the parties. The contract was put into final form at Cullen Cline’s office on the evening of July 17, 1979 with the exception of certain schedules and exhibits that were to be attached to the contract.

One section of the final contract which differed from the earlier proposed contracts which had been sent to the brothers Koenig was the signature line. Timothy Dix wanted assurances that he could verify authorization of the sale by all Channel Seventeen shareholders. He did not have the commitment letter of July 2nd in his possession at that time. Dix asked Cline whether or not it was necessary to continue to have the shareholder approval sections in the contract. Cline indicated, in response, that “he understood there was a letter and he also reported to [Dix] that he knew the parties had been together and that they had discussed the transaction — the parties meaning Robert and Richard Koenig — and that from that, he knew that the full discussion had taken place and Robert had signed it, and he agreed that he didn’t think that the shareholder approval section was necessary.” With that representation by the attorney of Channel Seventeen, the signature section of the contract was altered to reflect the signatures of the corporate representatives of both corporations.

The following morning, on July 18, 1979, Cullen Cline and Charles Murphy, an accountant retained by Channel Seventeen, met to discuss the tax consequences of the proposed sale and the allocations of purchase price to be attached to the contract. Cline was concerned that the sale might result in a “double taxable event” for the Koenigs. Cline telephoned Tupper and requested that he meet with them to explain the tax structure of the sale. After reading portions of the tax code to them, Tupper indicated his feeling that the sale would be considered a “337 liquidation” which would not result in double taxation. His explanation satisfied Murphy who also stated that the allocations which had been set forth were acceptable to Channel Seventeen. After the meeting with the accountant of Channel Seventeen, Cline and Dix spent the remainder of the morning typing the schedules which Richard Koenig had provided.

Before meeting with Cline to finish assembly and execution of the final contract, Timothy Dix and Richard Koenig had met at the station offices to compile the exhibits and schedules. At that time, Dix informed Koenig that the commitment letter which had been signed by his brother, as minority shareholder, would have to be provided before the final execution of the contract. Richard Koenig produced the document, signed it himself as shareholder of the corporation, and tendered it to Dix. This occurred approximately 45 minutes before the group assembled in the offices of Cullen Cline to execute the contract.

At about 1:00 p.m. on the afternoon of July 18, 1979, Richard Koenig signed the contract as president of Channel Seventeen. Just prior to that signature, Timothy Dix explained to him that the signature section of the contract had been changed and that “the shareholder assent or consent or approval section” had been removed. At the time, Dix had been provided with the letter of commitment which had been signed by Robert Koenig, as minority shareholder of Channel Seventeen. He asked Richard Koenig whether or not the alteration created any problem and, in response, Richard *613 Koenig “affirmatively indicated that there was none.” 24 Cullen Cline confirmed that his client had been fully advised of the change.

At the time Richard Koenig signed the agreement, he believed that it did not contain any untrue representations of provisions. The document itself contained statements that Channel Seventeen had authority to enter into the transaction and that the agreement and transactions contemplated by the agreement had been duly authorized and approved by all of the shareholders of Cha.nnel Seventeen. Additionally, it required that a document be delivered to Wooster indicating that the sales transaction. had been duly authorized and approved by the shareholders of Channel Seventeen. The commitment letter, signed by both Koenigs as shareholders and Richard Koenig as president of Channel Seventeen, fulfilled that requirement and represented authorization for Richard Koenig, as president of Channel Seventeen, to negotiate, finalize and execute the sale of the corporate assets consistent with the terms of the letter. In that respect, there is nothing contained within the final contract, executed on July 18, 1979, by Richard Koenig which is inconsistent with the terms outlined in the letter of commitment dated July 2, 1979.

Events Following the Execution of the Contract

The day following the execution of the contract, Wooster deposited the sum of $40,000 with Kepper, Tupper and Company, as escrow agents. This sum was in addition to the $10,000 previously deposited with John Tupper in June by Wooster, and it completed the full deposit of the earnest money required by the contract. That sum of money remained on deposit with the escrow agent throughout the pretrial proceedings in this cause, and it was so deposited at the time of trial.

On August 6, 1979, Albert Dix and Steven Dix traveled to Columbia to assemble certain public questionnaire information required by the Federal Communication Commission as part of the license application by Wooster. During that time, the two met with Richard Koenig and his son who suggested certain names of community leaders for the required ascertainment study. Neither Richard Koenig nor his son indicated in any way that any problem had developed in the performance of the contract by Channel Seventeen. 25 To the contrary, Richard Koenig gathered the employees of the station to meet the Wooster representatives and to advise them that a sale had occurred. On August 8, 1979, Richard Koenig entered into a separate agreement with Albert Dix, as representative of Wooster, to allow Koenig “to hang some of [his] equipment on the [station] tower” in return for its maintenance. And during the visit, the Wooster representatives were shown a copy of an advertisement which was to be placed in the local newspaper by Thomas Koenig, as' general manager of the station, announcing Wooster as the purchaser of KCBJ — TV. That advertisement appeared in the newspaper on August 10, Í979.

Approximately one week after the visit of Albert and Steven Dix to the station in Columbia, Missouri, Richard Koenig traveled to Colorado Springs, Colorado and met *614 with Timothy Dix 26 in the coffee shop of the Antlers Hotel. Koenig desired to discuss several matters pertaining to the sale of Channel Seventeen, including the impact of a new business venture which he proposed. Apparently, Koenig did not indicate to Timothy Dix that Albert Dix had already executed an agreement which permitted Koenig to place certain two-way communications equipment upon the television tower, but instead wanted the independent reassurances of Timothy Dix that he could do so. Not knowing of the earlier commitment by his uncle, Timothy Dix advised Koenig that he would have to obtain approval from the Wooster board. Koenig addressed other matters concerning the sale, but did not indicate that any problems had arisen in the performance of the contract, or that his brother had expressed any objections to it. Instead, Koenig seemed “still happy about the transaction” and related that they were “looking forward to getting the application finished and closing the transaction.”

Five days after his visit to Colorado Springs, and a month after he had signed the contract, Richard Koenig met with his brother at Lambert Airfield in St. Louis, Missouri, ostensibly for a meeting of shareholders of Channel Seventeen. The stated purpose of the meeting was “to consider ratification of [the] contract ... to sell all of the Corporation’s assets.” Robert Koenig, acting on behalf of his corporation, Tapeswitch, asserted that he had not authorized the contract. On the other hand, Richard Koenig, speaking as president of Channel Seventeen, “stated that Robert Koenig had given his consent to the sale of the Corporation’s assets in a letter from the Wooster company.” 27 Robert reviewed the contract and reported that “he considered that various provisions of the contract were not advantageous to the Corporation.” Although he demanded that Wooster be notified that the contract “be considered null and void,” he would not discuss the perceived deficiencies of the contract and a resolution was made by the brothers to the effect that the contract would not be honored.

On August 21, 1979, Timothy Dix received a mailgram from Richard Koenig, acting as president of Channel Seventeen, which advised him that “[i]n a special Channel 17 corporate meeting, [a] decision was made to reject the proposed sales agreement of July 18, 1979” and that “there will be no sale.” Both brothers, each acting in his executive capacity with Channel Seventeen, also forwarded a letter dated August 20, 1979, to Raymond Dix, president of Wooster, notifying him that “Channel Seventeen, Inc., does not recognize and cannot honor the document of July 18, 1979 proposing the sale of KCBJ-TV” and that “the proposed transfer [would] not be pursued by Channel Seventeen, Inc., which [would] continue to operate KCBJ — TV.” By these actions, both brothers, Richard and Robert Koenig, as shareholders and officers of Channel Seventeen, intended to completely and totally repudiate the contract of July 18, 1979. That decision was not made until August 19, 1979, at their meeting in St. Louis, Missouri.

The mailgram announcing the repudiation of the contract by Channel Seventeen was received with surprise by Timothy Dix. He attempted to reach Richard Koenig by telephone, but could not. The next morning Dix arrived in Kansas City and at *615 tempted to telephone both Richard Koenig and his attorney, Cullen Cline. He could not reach Koenig. Cline reported that “he had talked to his client, and his client had . . . hung up on him.” That afternoon Dix finally reached Koenig. Koenig told Dix that the “deal just wouldn’t go through;” that he would not meet with Dix to discuss the matter; and that he would not give a reason for the repudiation of the contract. Dix urged Koenig to reconsider the repudiation of the contract. He would not.

By mailgram of August 22, 1979, Timothy Dix, acting as secretary and general counsel of Wooster, advised Richard Koenig that Wooster stood “ready, willing and able to perform its obligations under the agreement” and that unless Wooster “receive[d] written notice from Channel Seventeen, Inc. by the close of business, Monday, August 27, 1979, to the effect that Channel Seventeen [would] retract and abandon the repudiation . . . and . . . expeditiously perform its obligations under the agreement,” Wooster would proceed immediately to enforce its legal remedies. No further word was forthcoming from Channel Seventeen.

The instant action was commenced on August 28, 1979. Despite the willingness and continued ability of Wooster to perform its obligations under the contract, 28 Channel Seventeen has steadfastly refused to do so.

The Characteristics and Market of Channel Seventeen

As one expert put it, Channel Seventeen is “a very unique station in itself.” It is a UHF station with a national network affiliation which competes with two VHF stations also with national network affiliations. 29 Its network, ABC, had led the industry in audience ratings for several years. The station operates with an exceptionally tall tower which is strategically placed to serve not only Columbia, Missouri, but also Sedalia, Jefferson City, and the surrounding rural areas. It services a market which is youth and government oriented with a high “per family spendable income.” One national rating service, Arbitron, has recently upgraded this market from 134th in the nation to 129th. Both Columbia and Jefferson City are stable and growing communities with a high percentage of professionals residing within them.

Despite its strong markets and excellent potential, Channel Seventeen has not achieved the success it could attain. It has “one of the lowest rate cards ... in a market [of its] size,” and its potential profitability has not been reached. This failure to achieve full financial potential is the result of a lack of cohesiveness and uniformity in program packaging, an unaggressive sales program and insufficient infusion of working capital. With the proper management, however, the station could achieve a high degree of profitability.

Because of the failure of Channel Seventeen to reach its potential, it is one of the few television stations in the nation which would sell for under $5,000,000. There has been no contention herein that $3,300,000 was not a fair price for the assets of Channel Seventeen on July 18, 1979. To the contrary, the testimony at trial uniformly confirmed that this price was at or above the fair market value of Channel Seventeen at that time. The station has, however, since appreciated in value to approximately $900,000 over the price established by the contract of July 18, 1979. The unrefuted expert testimony at trial established the current fair market value of Channel Seventeen at $4,200,000.

The Transmitter Site and Lease

As part of the contract executed on July 18, 1979, Channel Seventeen agreed that its *616 assets included “the real property on which are located the antenna(s), transmitters, studio and offices of the Station ...” Specifically described was the “tower and transmitter site” which consisted of “a one acre tract plus road access, guy wire and anchor easements.” The parties acknowledged that “the site [was] owned by Robert H. and Sonja Koenig and Leased” to Channel Seventeen and that Channel Seventeen would be able “to transfer the site or cause it to be transferred in fee” to Wooster.

Throughout the contract negotiations, Richard Koenig represented to both appraisers and Wooster representatives that the transmitter site upon which the station tower was located was owned by his brother and was leased to Channel Seventeen. He further represented to Wooster representatives and the broker, John Tupper, that Robert Koenig would convey the one-acre site to a buyer of the station as part of the purchase price of the station. The same representation was made by Robert Koenig himself to his own appraiser, James Blackburn, in the course of his evaluation of the assets of Channel Seventeen shortly before Koenig signed the letter of commitment of July 2, 1979.

Despite their representations as to ownership of the transmitter site, it was not owned by Robert Koenig, but rather his wife, Sonja. 30 She had leased the site to Channel Seventeen for a period of several years, and more recently under a lease which had been executed as a part of the settlement of a controversy which had arisen between the brothers over control of Channel Seventeen. In 1977, Tapeswitch, Robert’s corporation, had brought suit against Channel Seventeen in this Court concerning the ownership of its stock. The minutes of a shareholders’ meeting of Channel Seventeen, attended by Richard, Robert, Sonja and Corrine Koenig 31 on January 21, 1977, reflect that a settlement agreement was ratified and approved by the brothers that day. A signed copy of that agreement was attached to the minutes. It provided, in part, for a change in the voting stock structure of the corporation, the dismissal of the pending suit, a decrease in the number of corporate directors from three to two, and a lease to be e