Opinion ID: 1248085
Heading Depth: 1
Heading Rank: 5

Heading: plaintiffs' specifications

Text: The specific untrue statements or omissions sought to be proved by Plaintiffs are as set forth in a set of specifications entitled Stipulation dated April 10, 1975 and an addendum thereto entitled Addendum to Stipulation dated May 29, 1976. Together, these set forth nineteen (19) specifications. By agreement of counsel, these specifications are treated as a part of Paragraph 12 of the First Cause of Action of the Amended Complaint. No proofs were developed at trial with reference to specifications numbered 8, 11, 14 or the following items under No. 15(a) (6), (b) (1), (4), (5) or (6). The court therefore gives no consideration to these specifications. Specifications 1, 2, 3, 12, 13, 15 and 19 deal with the accuracy of the Balance Sheet at Page 1 of the Operating Report of the corporation for the period ending May 31, 1974. Plaintiffs contend that Defendants represented as to said balance sheet: (1) That it accurately set forth the financial condition of the corporation; (2) That it accurately set forth the results of operation from January 1 through May 31, 1974; (3) That it was prepared in conformity with generally accepted accounting principles consistently applied; (12) That ninety (90%) per cent of the accounts receivable of the corporation shown thereon were less than sixty (60) days old; and (15) That each asset and liability account shown thereon was substantially correct. Plaintiffs further contend (19) that the Defendant Paul Hullander failed to advise Plaintiffs of changes and inconsistencies in accounting methods reflected on the Operating Report of May 31, 1974 as compared to methods previously followed. Specifications 4, 5, 6, 7, 9 and 10 deal with representations made by Defendants as to the operation of the business of the corporation after May 31, 1974. Plaintiffs contend that Defendants represented that between May 31, 1974 and August 18, 1974  (4) There has been no change in the financial condition or business of the corporation which has been materially adverse; (5) The corporation has incurred no obligations or liabilities or made any commitments other than in the usual and ordinary course of business; (9) The corporation is not in default under any agreement to which it is a party or in the payment of any of its obligations; and, (10) The corporation had good and marketable title to all of its property and assets, except property and assets disposed of since May 31, 1974 in the usual and ordinary course of business. Plaintiffs further contend that Defendant represented that between May 31 and the date of takeover  (6) The corporation will not have made any commitments or disbursements or incurred any obligations or liabilities of a substantial nature not in the usual and ordinary course of business; and (7) The corporation will not have sold or transferred any assets except in the usual and ordinary course of business. Specifications 16, 17 and 18 deal with alleged misstatements or omissions in connection with the prospectus. Plaintiffs contend that Paul Hullander orally respresented to Glen Covey (16) That the corporation has been making Seventy Thousand and no/100 ($70,000.00) Dollars profits before tax regularly plus paying him salary and bonus of $75,000.00  $100,000.00 annually; and (17) that an accounting procedure on some corporate leased vehicles resulted in an understatement of the net worth of the corporation. Plaintiffs further contend (18) that Paul Hullander, knowing of such misstatements, omitted to advise Plaintiffs of their incorrectness and misleading nature.