Title: Geiger v. Hansen

State: kansas

Issuer: Kansas Supreme Court

Document:

214 Kan. 83 (1974)
519 P.2d 699
F.H. GEIGER and ADA B. GEIGER, his wife, Appellees,
v.
THURMAN C. HANSEN and JEANNE M. HANSEN, his wife, Appellants.
No. 47,107

Supreme Court of Kansas.
Opinion filed March 2, 1974.
J. Roger Hendrix, of Marshall, Hawks, McKinney & Hendrix, of Topeka, argued the cause, and Robert L. Marietta, of Marietta, Kellogg & Lord, of Salina, was with him on the brief for the appellants.
Howard A. Spies, of Schroeder, Heeney, Groff & Spies, of Topeka, argued the cause, and John F. Gernon, of Gernon & Gernon, of Hiawatha, was with him on the brief for the appellees.
The opinion of the court was delivered by
FONTRON, J.:
This action was filed to recover a balance of $42,500 claimed to be due on a contract for the sale of corporate *84 stock. The plaintiffs, Mr. and Mrs. Geiger, recovered judgment in the lower court and the defendants, Mr. and Mrs. Hansen, have appealed.
Mr. Geiger commenced the operation of a grain elevator in Everest, Kansas, in about 1933. For a good many years Mr. Hansen was employed as assistant manager and bookkeeper for the business. He was apparently a valued and trusted employee, as well as a friend, and relations between the Geigers and the Hansens were cordial. In 1962 Mr. Geiger determined to incorporate the business under the style of F.H. Geiger Grain, Inc. Seven hundred fifty shares of capital stock were issued, seven hundred forty-five shares being issued to Mr. and Mrs. Geiger and five shares to Mr. Hansen.
Sometime prior to January 2, 1964, the Geigers and the Hansens entered into discussions for the sale and purchase of the elevator. The negotiations culminated in a written agreement dated January 2, 1964, for the sale of seven hundred forty-four shares of Geiger stock to Mr. and Mrs. Hansen, with Geiger retaining one share. The business was valued at $110,000, making the stock worth approximately $145.85 per share. The total purchase price of $110,000 was payable $25,000 in cash and the remainder in ten annual payments of $8500 each on the second day of January of each year beginning January, 1965. The agreement called for the reissue of the Geigers' stock, less one share, in the names of Mr. and Mrs. Hansen, and that the certificates be placed in escrow with the Union State Bank of Everest. It was agreed that two hundred shares should be released as security for the initial $25,000 down payment and that additional shares would be released to secure the subsequent annual payments on a prescribed basis. Reference will be made to other pertinent provisions as this opinion progresses.
Following execution of the agreement, so the record reflects, Mr. Hansen was elected president of the corporation. Mr. Geiger became vice-president, Mrs. Hansen took over the chores of secretary-treasurer, and the Hansens assumed active management of the elevator business. In 1966 the corporate name was changed to Hansen Grain Inc. The shares of stock were reissued in the new name and placed in the file cabinet at the elevator office.
Difficulties began to beset the company late in 1968 and eventually led to a receivership in the District Court of Brown County, Kansas, from which the company has never emerged so far as the *85 record reflects. The Hansens made the principal payment due January 2, 1969, but they defaulted in the interest payable at that time and the contract has been in default ever since. The petition in the present lawsuit was filed July 23, 1970.
The Hansens have not denied that they have defaulted in payments due under the contract, but they have filed a counterclaim in the amount of $33,750 which they premise on the following clause found in the contract:
In response to the counterclaim the Geigers filed a reply asserting the following defenses:
A number of the findings made by the trial court appear pertinent to the issue on which we believe this case must turn:
In material part the trial court concluded:
Since the Geigers have asked that the contract be reformed on the ground of mutual mistake, the crux of this lawsuit, as we see it, is two-fold: (1) Was the testimony of Mr. Geiger admissible, and (2) was the evidence sufficient to sustain the findings?
The Hansens take the position that the 50 per cent clause is clear and unambiguous; that oral testimony is not admissible to vary or explain its provisions; and, hence, it was error on the part of the trial court to admit Geiger's testimony.
We are aware of the general rule that parol evidence is inadmissible to explain or vary the terms of a plan, unambiguous contract, and this court has long adhered to the same. (See 2 Hatcher's Kansas Digest [Rev. Ed.] Evidence, § 186, p. 564.) However, we believe the rule does not preclude resort to parol testimony under the circumstances of this case. Here it is contended that the 50 per cent clause was gratuitously placed in the contract to protect Mrs. Hansen in case something happened to her husband and she did not care to continue the business. Hence it is claimed the clause was not to be operative unless such a contingency occurred within two years.
The general subject is treated in 3 Jones on Evidence, (6th Ed.) Gard, § 16.4 in these words:
Continuing the discussion of the subject matter in § 16.40, Judge Gard goes on to say:
..............
In Brown v. Bradley, 259 S.W. 676, 678 (Tex. Civ. App.), the court said:
There is authority, also, to the effect that while unilateral error is not of itself sufficient to avoid a contract it may be a good defense where hardship amounting to injustice would otherwise be inflicted on a party by holding him to the agreement and where it would be harsh and unreasonable to enforce the agreement against him. (17 Am.Jur.2d Contracts, § 146, p. 493; Buck v. Equitable Life Assur. Society, 96 Wash. 683, 165 Pac. 878.)
Mr. Geiger's testimony is clear and positive that his gratuitous proposal was conditioned in this respect: that Mrs. Hansen would not care to continue operation of the elevator in the event something happened to her husband, and that the proposal would apply for a term of two years. Such were the conditions on which the clause was to be effective, according to Mr. Geiger. In our opinion his testimony was admissible on that point, not to vary the terms of the clause, but to show on what contingency it was to apply.
It is true that Mr. Hansen's testimony was considerably different. He said he understood that if he defaulted in payments, 50 per *88 cent of what he paid would be returned to him. But it is clear also from his testimony that he did not bargain for or request the provision but that the same came gratuitously from his friend, Mr. Geiger.
The trial court, at first hand, heard the evidence regarding the circumstances under which the clause was inserted in the agreement. It was the trial court's function to reconcile whatever conflict there may have been in the testimony and to determine what were the conditions on which the clause was to be operative. If there be evidence to support the court's conclusion it must be sustained on appeal. (1 Hatcher's Kansas Digest [Rev. Ed.] Appeal & Error, §§ 507, 508.)
In his testimony given at the trial, Mr. Hansen conceded that all payments made to the Geigers came from corporate funds with the single exception of the last $8500, and that he owed the company $60,000. The trial court was aware of the receivership proceedings pending in its own court, of the Olin Mathieson indebtedness of $130,000, secured by pledge of the Hansen stock, of other outstanding indebtedness and of the generally gutted condition of the corporation.
Taking the evidence as a whole, we cannot say that the findings and conclusions entered by the trial court with respect to the clause in controversy are not supported by the record.
In view of what has already been said we believe it is unnecessary to mention or discuss other matters included in the defendants' statement of points.
The judgment of the court below is affirmed.
SCHROEDER, J., not participating.