Opinion ID: 1248085
Heading Depth: 1
Heading Rank: 6

Heading: statements contained in the written agreement

Text: Certain statements were contained in the written agreement entered between the parties. Specifications 1, 2, and 3, derive from the following provisions of the agreement of August 8, 1974, at pages 1 and 2: Seller represents and warrants to Buyer that: (c) Seller has furnished to buyer copies of financial statements of the corporation, together with related statements of income and expense, as set forth in attachment `A' hereto. Said financial statements accurately set forth the financial condition of the corporation as of each said date, and of the results of operation for the period represented, prepared in conformity with generally accepted accounting principles consistently applied. Two signed copies of the August 18, 1974 Stock Purchase Agreement were introduced into evidence. One copy of the Agreement entered in evidence (P-17) contains the following notation in longhand on Attachment A: Pontiac Motor Division Financial Statement. Another copy of said agreement introduced into evidence (D-5) contains the following handwritten notation on attachment A: Pontiac Motor Division Financial Statements. (Emphasis added). Both John Bradley and J.C. Gilbreth testified that the only Pontiac Motor Division Financial Statement displayed to them prior to entry of the contract was the first page of the May 31, 1974 Balance Sheet. Attachment A to Exhibit P-17 was filled out in the handwriting of J.C. Gilbreth, who testified that the reference was intended to be only to the balance sheet attached to the agreement as Attachment C. The notation on Attachment A on the Exhibit D-5 was in the handwriting of the witness Glen Covey, who testified that the only Financial Statement intended to be referred to in the agreement or in Attachment A was the Financial Statement attached to the agreement as Attachment C. Defendants offered no testimony or other evidence to indicate that any financial statements other than the Balance Sheet attached to the agreement as Attachment C were intended to be referred to by the language of the aforesaid provisions of subparagraph (c) from pages 1 and 2 of the Agreement. Regardless of whether other financial statements were involved, it is undisputed that the parties did intend the language of subparagraph (c) to refer to the May 31, 1974 Balance Sheet that was Attachment C to the agreement. Thus, the provisions of said subparagraph (c) constitute statements concerning the Balance Sheet of the corporation for the period ending May 31, 1974. I therefore find that Defendants made statements as alleged by Plaintiffs in Specifications 1, 2, and 3. The writen agreement of August 18, 1974 also contained express representations and warranties in relevant part as follows: (d) The corporation has good and marketable title to all of its property and assets (except property and assets disposed of since such date in the usual and ordinary course of business), subject to no mortgage, pledge, lien or other encumbrance except as disclosed in the financial statement of the company of May 31, 1974, or in Attachment B annexed hereto and made a part hereof. (e) As of May 31, 1974, the corporation has no obligations, liabilities or commitments, contingent or otherwise, of a material nature which were not provided for, except as set forth in such financial statement or in Attachment B. I further find that the foregoing provisions of subparagraphs (d) and (e) of the agreement constitute statements relating to the Balance Sheet of the corporation for the period ending May 31, 1974 and to the condition of the corporation as of said date. All of the foregoing statements relate to the condition of the corporation at May 31, 1974. In addition, the agreement contained representations regarding the period after May 31, 1974, in relevant part, as follows: (f) Since the date of the corporation financial statement of May 31, 1974, there has been no change in the nature of the business of the corporation, nor in its financial condition or property, other than changes in the usual and ordinary course of business, none of which has been materially adverse, and the corporation has incurred no obligations or liabilities or made any commitments other than the usual and ordinary course of business or as disclosed in Attachment B. (i) The corporation is not in default under any agreement to which it is a party nor in payment of any of its obligations. (j) Between the date of the financial statement of May 31, 1974 and date of take-over, the corporation will not have ... (iii) made any commitments or disbursements or incurred any obligations or liabilities of a substantial nature and which are not in the usual and ordinary course of business, or (iv) mortgaged or pledged or subjected to any lien, charge or other encumbrance any of its assets, tangible or intangible, or (v) sold, leased, or transferred or contracted to sell, lease or transfer any assets, tangible or intangible, or entered into any other transactions, except in the usual and ordinary course of business, except as indicated on Attachment B... Attachment B to said agreement was entitled LIST OF ITEMS AS REQUIRED UNDER PARAGRAPHS 1(d), 1(e), 1(f), 1(g), 1(h) OF STOCK PURCHASE AGREEMENT. There were no such items listed on Attachment B. Attachment B was signed by John C. Gilbreth, Paul W. Hullander, and John Bradley. I find that the foregoing provisions of the agreement of August 18, 1974 constitute statements as alleged by Plaintiffs in their specifications as follows: Specification Representation in Number Agreement 4 .................................... (f) 5 .................................... (f) 9 .................................... (i) 10 .................................... (d) 6 .................................... (j) (iii) 7 .................................... (j) (v) I further find that said statements were made by Defendants to Plaintiffs in connection with the sale of the corporate stock of Paul's Pontiac-Buick Co., Inc. to Plaintiff.