Court Opinion

ID: 3406766
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:22:20.269822+00
Date Added: 2024-06-11T13:47:19.903025
License: Public Domain

The plaintiff's amendment number one to count one alleged: "Plaintiff alleges that the written records of said partnership consisted of two books and said notes and said retention-title *Page 371 
contract executed by Frank Cannon, as aforesaid, all of which were in writing and kept among the records of the partnership, in the safe in the office of said partnership; that when said notes were paid, as herein before alleged, a credit was made in said books of said payment at one hundred cents on the dollar, which was the face value, and actual value, and the actual book value under the system of bookkeeping of said partnership, as hereinbefore alleged. 9. Plaintiff alleges that in accordance with said dissolution agreement, dissolving said partnership, dated December 8, 1941, copy attached to plaintiff's petition, marked Exhibit `A,' and expressly referred to and made a part of said petition, said plaintiff in compliance therewith did on January 1, 1942, execute to defendant a bill of sale to his interest in said partnership property, expressly including said notes hereinbefore referred to, and expressly referring to the agreement dated December 8, 1941, which was then recorded in the office of the Clerk of the Superior Court of Dougherty County, Georgia, in deed book 89, page 356, and said original agreement was specifically made a part of said bill of sale. A copy of same is attached hereto and marked Exhibit `C,' and made a part of this petition and paragraph; plaintiff alleging that he, therefore, did comply with said dissolution agreement dissolving said partnership, but that plaintiff was paid no consideration whatsoever, by anyone, for his one-half interest in said notes and said partnership assets, as defendant was obligated to pay plaintiff, under said written dissolution agreement, as hereinbefore alleged. 10. Plaintiff alleges that there was no reason why said notes, a valuable asset of said partnership, were not included in said audit by said auditors employed by said partnership, as aforesaid, and plaintiff did not discover that the same were left out of said partnership audit until the first part of the year 1945, when the United States Government Revenue Department, through one H. M. Keller, demanded from plaintiff approximately $6500, as income tax on said notes, and plaintiff then and there examined carefully said audit and discovered that said notes were not valued at any sum whatsoever, and not included at all in said partnership assets, as they should have been, and thereafter and on or about July, 1945, and prior to the institution of this suit, plaintiff demanded of defendant the payment of one-half of the amount collected by defendant on said notes, owned by said partnership, and defendant refused *Page 372 
and then and there denied that he was indebted to plaintiff in any sum whatsoever, by reason of collection or ownership of said notes. 11. Plaintiff alleges that the consideration mentioned in Exhibit C, hereto attached, in the sum of $24,690.60, was arrived at by a break-down or schedule consisting of items hereto attached as Exhibit D, and expressly made a part hereof; that, in said consideration of $24,690.60, nothing was included or paid to plaintiff by defendant for the Frank Cannon notes, as hereinbefore alleged." Exhibit D is as follows:

      "985.15         Auto Cost (1942 Chev. Sedan)
        79.35         Inc.
     ---------
     1,064.50         Total Amt.
     1,174.22         Savings
       400.00         Old Due Bills
        61.28         Cash
     ---------
     2,700.00
     4,200.00         Cannon Notes (12 at 350)
       340.00         Cash Jack (Cates, Macon)
       450.00         Apt. Rents
       360.00         Cols. Tables
     ---------
     7,950.00
     Net Worths:      92,684.77
     Deductions:      27,403.50          Apt.            8,500.00
                    -----------
                    2)65,281.27          Ragsdale Phono  1,240.00
                    -----------
                                         Do. Co. Prop.  17,663.50
                                                        ---------
                                                        27,403.50
                      32,640.60
     Cash              7,950.00
                      ---------
                      24,690.60
                                          Collateral to Amt.
             (given by Cates to Bass) to        $33,000.
                                     49 Notes $500 per month
                                   Total      24,500.00
                                   1 note        190.60
                                              ---------
                                              24,690.60."

The plaintiff's amendment to count two alleged: The written records of said partnership consisted of two books and said notes *Page 373 
and said retention-title contract executed by Frank Cannon, as aforesaid, all of which were in writing and kept among the records of the partnership, in the safe in the office of said partnership. When said notes were paid, as hereinbefore alleged, a credit was made in said books of said payment at one hundred cents on the dollar, which was the face value, the actual value, and the actual book value under the system of bookkeeping of said partnership, as hereinbefore alleged. This was the only book entry of said notes, and asset of said partnership, as aforesaid. The plaintiff traded with the defendant, wherein the defendant was to pay to the plaintiff the actual book value of the assets of said partnership, and the said auditors left off of said audit (copy attached to plaintiff's petition, as aforesaid) any value for said notes, as hereinbefore alleged, and said notes were not included in any other item in said audit. "12. Plaintiff alleges that in accordance with said dissolution agreement dissolving said partnership, dated December 8, 1941, copy attached to plaintiff's petition, marked Exhibit A, and expressly referred to and made a part of said petition, said plaintiff in compliance therewith did on January 1, 1942, execute to defendant a bill of sale to his interest in said partnership property, expressly including said notes hereinbefore referred to, and expressly referring to the agreement dated December 8, 1941, which was then recorded in the office of the Clerk of the Superior Court of Dougherty County, Georgia, in deed book 89, page 256, and said original agreement was specifically made a part of said bill of sale. A copy of same is hereto attached, marked Exhibit `C' and made a part of this petition and paragraph; plaintiff alleging that he, therefore, did comply with said dissolution agreement dissolving said partnership, but that plaintiff was paid no consideration whatsoever, by anyone, for his one-half interest in said notes and said partnership asset, as defendant was obligated to pay plaintiff, under said written dissolution agreement, as hereinbefore alleged. 13. Plaintiff alleges that there was no reason why said notes, a valuable asset of said partnership, were not included in said audit by said auditors employed by said partnership, as aforesaid, and plaintiff did not discover that the same were left out of said partnership audit until the first part of the year 1945, when the United States Government Revenue Department, through one H. M. Keller, demanded from plaintiff approximately $6500 as income tax on said notes, and *Page 374 
plaintiff then and there examined carefully said audit and discovered that said notes were not valued at any sum whatsoever, and not included at all in said partnership assets, as they should have been, and thereafter and on or about July, 1945, and prior to the institution of this suit, plaintiff demanded of defendant the payment of one-half of the amount collected by defendant on said notes, owned by said partnership, and defendant refused and then and there denied that he was indebted to plaintiff in any sum whatever, by reason of collection or ownership of said notes. 14. Plaintiff alleges that the consideration mentioned in Exhibit C, hereto attached, in the sum of $24,690.60, was arrived at by a break-down or schedule consisting of items hereto as Exhibit D, and expressly made a part hereof. That [in] the said consideration of $24,690.60 nothing was included or paid to plaintiff by defendant for the Frank Cannon notes, as hereinbefore alleged." The bill of sale, dated January 1, 1942, from Gene Bass to R. R. Cates, contained the following provisions with certain exceptions not here material: "That whereas said parties entered into a memoranda agreement on the 8th day of December, 1941, which agreement is in writing and recorded in the office of the Clerk of the Superior Court of Dougherty County, Georgia, in deed book 89, page 256, and reference to same is hereby made and the terms therein contained are specifically made a part of this instrument; now, therefore, the said party of the first part for and in consideration of the sum of five thousand dollars cash, in hand paid, and the sum of $24,690.60 secured by notes and a certain bill of sale to secure debt, the receipt of all of which is hereby acknowledged, has bargained and sold, and does hereby bargain, sell, transfer, assign, convey, and deliver unto said party of the second part all of his right, title, equity, and interest in and to the partnership business and partnership assets heretofore conducted under the name and style of Albany Amusement Company, including the trade name of `Albany Amusement Company,' the good will of said business, and all of the personal property and chattels belonging to said business, including real estate leases, notes, accounts, mortgages, or other forms of indebtedness which are payable to the Albany Amusement Company." the following language was substituted for paragraph 8 of count 1 as amended, and for paragraph 11 of count 2 as amended, and the language of those two paragraphs of the two counts as first amended *Page 375 
was stricken: "Plaintiff alleges that the written records of said partnership consisted of two books and said notes and said retention-title contract executed by Frank Cannon, as aforesaid, all of which were in writing and kept among the records of the partnership, in the safe in the office of said partnership. Plaintiff alleges that this was the only book entry of said notes, and asset of said partnership, as aforesaid; that plaintiff traded with defendant, wherein defendant was to pay to plaintiff the actual book value of the assets of said partnership, and the said auditors left off of said audit, copy attached to plaintiff's petition, as aforesaid, any value for said notes as hereinbefore alleged, and said notes were not included in any other item in said audit." The defendant renewed his original demurrers, and after the amendments to the petition were filed the defendant filed the following demurrers: "4. It further appears by said final contract that all notes (including the Frank Cannon notes) were included in the sale for the consideration paid and to be paid over a period of approximately four years time, and thus the plaintiff can not now successfully contend that the said consideration paid and to be paid did not include the notes. . . 6. It further appears that the agreement for settlement on the basis of book value as shown by the books meant the value disclosed by the statement of the audit revealing the money measure of the assets and liabilities on the company's books, and this statement and audit had been furnished, and thus plaintiff cannot go outside of his said written agreement (in the absence of the allegation of fraud, accident, or mistake) that said book value as shown by the books, and verified by the auditors, should not determine and measure the amount to be paid plaintiff for his interest in said partnership. 7. It does not appear but that plaintiff had full knowledge of all the facts and details as to the handling of the Frank Cannon transaction on June 1, 1941, and for the seven-months' period thereafter, during which notes were paid and credited, and how and to what the same were credited; and the plaintiff having alleged that the partnership held the legal title to all the machines, trucks, and equipment sold said Cannon, that the same were carried on the books of the company as physical property and as equipment at a certain valuation, and not marked or charged off as sales until payments on the Frank Cannon notes were received, and thus plaintiff, in the absence of allegations of ignorance *Page 376 
or imposition, concealment, or deception, must be charged with knowledge of the foregoing, and his pleading is evasive in its failure to allege the complete method of bookkeeping as to said transaction. The allegation in plaintiff's petition that said notes had a book value, or that the same were not included in the audit is vague, indefinite, and uncertain, and evasive, and a naked conclusion, without stating the facts as to the system of bookkeeping with reference to said matter. . . 10. Defendant further demurs to the Exhibit `D' attached to the amendments and the items therein: Apartment $8,500, Do. Co. Property $17,633.50, total $26,163.50, as being vague, indefinite, and uncertain in its failure to show that the same follows the audit or was taken from the audit; it affirmatively appearing that the plaintiff in the final consideration of his deal considered values and settled on values, and allocation of values different from said audit. 11. It plainly appears that both parties plaintiff and defendant have construed the contract as giving the defendant title to all of said Frank Cannon notes, and that all equity in said notes was sold by the plaintiff to defendant; it appearing from plaintiff's exhibit that he took back some of said notes in part payment from defendant, as a part of the purchase-price, and defendant having thus construed said contract, and this known to plaintiff, plaintiff can not assert after the lapse of approximately four years time, a different construction."
In the original petition it was alleged that the unmatured Cannon notes had an actual book value on the books of Albany Amusement Company. In the first amendment to count two, the plaintiff alleged that, when the notes were paid, a credit wasmade in the books at one hundred cents on the dollar which wasthe actual book value under the system of bookkeeping of thepartnership, and that such credit was the only book entry of thenotes and asset of the partnership. The court, however, allowed the plaintiff to amend a second time, and the plaintiff struck this allegation from his petition. I think, therefore, that the defendant's demurrer calling for information as to the manner in which the Cannon-notes transaction was handled on the books of the partnership should have been sustained, as to both counts. Presumably the assets which were sold to Cannon were recorded on the books of the company before the sale of the assets represented by the notes and, in the absence of allegations thatthe assets represented by the Cannon notes were *Page 377 
not registered on the books and in the audit, no cause of action is stated. If they were recorded on the books, the books showed the value in accordance with the company's method of keeping books, and the same is presumptively true of the audit. In the absence of allegations that the assets represented by the Cannon notes were not included in the books and the audit, and some good reason why the plaintiff did not know of such facts, neither count set forth a cause of action.
There is still another reason why no cause of action is alleged in either count. The dissolution contract was consummated by a bill of sale. This bill of sale stated that for a stated consideration the seller's interest in and to the assets of the partnership were conveyed, and notes and other evidence of indebtedness of the partnership were expressly included. The counts of the petition allege that the Cannon notes were the only notes among the assets. Therefore a one-half interest in these notes conveyed by the bill of sale was conveyed to the buyer. In the absence of fraud, duress, mutual mistake, or mistake of the seller known to the other party (and the citations of the majority do not fit this case, for in those cases fraud was alleged), the terms of the bill of sale can not be altered or contradicted. Furthermore, the seller took as part payment for his one-half interest twelve of the Frank Cannon notes, and when he did so he took them as the property of the buyer, since the buyer owned the whole interest in the notes by reason of the contemporaneous bill of sale. Under such circumstances, the seller must have known of the existence of the Cannon notes and must have known that he was selling the entire series, and in the absence of fraud, duress, or excusable mistake he is bound by the terms of the bill of sale, which was executed subsequently to the dissolution agreement and as a consummation thereof. Before such an action would lie, as is now attempted, I think that the bill of sale would have to be reformed.