Court Opinion

ID: 6907220
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:02:25.528542+00
Date Added: 2024-06-11T16:06:24.025414
License: Public Domain

McBRIDE, J.
The length of the pleadings and the volume of the testimony have necessitated a preliminary statement exceeding the usual compass, and even with every abridgment possible it is difficult to make the issues tried entirely clear.
Leaving out of consideration the question of fraud assigned by the defendant as a reason for not complying with the terms of his agreement,'we must determine by the terms of that covenant what the defendant promised to buy and plaintiffs agreed to sell. All previous negotiations and conversations of the parties, so far as the contract is not affected by false representations and deceit, are merged in that document. The written, contract is npt difficult .of interpretation. The plaintiffs were contracting to sell and the defendant to buy all the stock of the Durkee Mercantile Company. It was an agreement for the sale of that stock. Incidentally, such purchase would give the defendant entire control of the merchandise and property of the company, the value of which represented the value of the stock, and without which the stock itself would be of little or no worth, unless the goodwill of the corporation had in itself some value. In the present instance the parties agreed upon the value of the store and the land upon which it stood, and agreed among themselves as to the method of fixing the value of the stock, or rather the amount that defendant should pay for it, by adding to the value of the store, fixtures, and ground, which was placed at $3,500, the flat cost of the merchandise as it should appear from an inventory to be taken for that purpose.
1. If the plaintiffs have seasonably furnished" such an inventory, then defendant is in default, and has *411violated the terms of his agreement, unless he was induced to enter into it by reason of the alleged false representations of plaintiff. The first question, therefore, is whether or not a true inventory was taken. We are of the opinion that the preponderance of the testimony indicates that an inventory substantially correct was taken, and after a few minor corrections was acquiesced in by the defendant. The method of taking it was seemingly by the consent of both parties, and, considering the fact that it was necessary to beep the store open and transact business while the inventory was progressing, it appears to have been a reasonable and convenient method. The parties worked in concert. The goods had upon them or upon the boxes containing them the cost mark of the Durkee Mercantile Company. This mark was explained to defendant, and was one that could be readily comprehended. The writer had no difficulty in understanding it from the brief explanation in the testimony. J. T. Giroux, because more familiar with the store, took down the goods and called the cost mark, which the defendant without objection wrote down in the inventory book; the extension or translation into dollars and cents being for the time omitted on account of the pressure of business. These extensions were -subsequently made by J. T. Giroux in the evenings after business hours and the inventory after some minor corrections was turned over to the defendant, and while defendant has charged numerous fraudulent entries which to consider in detail would consume much space uselessly, he has, in our opinion, failed to establish by any preponderance of testimony the falsity of a single item. It is true that several witnesses testified as to their estimate of the *412value of some articles mentioned, but much of the testimony discloses a lack of recent experience in. the lines concerning which they testified, and the agreement did not provide for an inventory at the then present value of the articles, but at the original flat cost. Nor does this appear unfair when we consider that from 1916 to 1918 the prices of most classes of merchandise greatly advanced, so that depreciation in quality by time might be more than compensated by increase in the selling price of such portions of the stock as had been purchased prior to 1918. In addition to this, there is testimony of other witnesses for plaintiffs, of equal or greater experience and opportunity for observation, who estimate the value of the stock as quite equal to that shown in the inventory. After a careful examination of the whole testimony we are satisfied that the inventory prepared by the joint efforts of J. T. Giroux and defendant substantially complied with the written agreement, and that failure to furnish an inventory cannot be urged as an excuse for defendant’s refusal to execute the notes and make the payments stipulated in, the contract.
2. We will now consider the alleged false representations by reason of which defendant claims he was induced to enter into the contract of purchase. Chief among these is the claim that 'J. T. Giroux, acting for Giroux Brothers, represented that the Durkee Mercantile Company was doing a cash business of from $3,300 to $3,500 per month, when in fact it was doing a cash business of only $700 or $800 monthly. The sole testimony that such a representation was made is that of defendant, and this is stoutly denied and contradicted by the testimony of J. T. Giroux. As we have not the advantage of see*413ing the witnesses and observing their demeanor on the stand, and as there is nothing in their testimony on this point which should induce us to credit that of one above the other, we must necessarily find that this charge of fraud is not established by the preponderance of the testimony. Such evidently was the conclusion of the learned trial judge, who has filed a written opinion in this case. The same may be said of other alleged misrepresentations occurring prior to the execution of the written agreement.
3. As the case stands, we do not find sufficient evidence to permit us to hold that defendant had any legal or equitable justification for refusing to execute the notes or make the payments called for in the written agreement, and the only other subject that calls for extended discussion is the propriety of the remedy decreed by the Circuit Court. Upon this subject we quote from the opinion of the learned circuit judge:
“Plaintiffs’ prayer is for general relief as well as for specific performance of the contract. Since there can be no rescission under the state of facts proved and no damages, and since by his acts in the premises defendant has in any event precluded a restoration of the statu quo either by return of the property or its equivalent, and has refused to carry out that part of the contract which calls for execution of the promissory notes, plaintiffs would be entitled to a decree carrying out the provisions of the contract in its ultimate effect. No such decree, however, can be entered or enforced as to compel the execution of promissory notes and compelling the faithful conduct of the business until such notes become due; nor can the court by any decree and through a receiver assume to superintend such a business with its numerous details during so great a length of time.
*414“By the written contract defendant agreed to-execute- and pay when due interest-bearing notes as follows: $2,000 due April, 1919; $1,000 due November 1, 1919; the balance of the inventory price of the merchandise November 1, 1920; and $3,500, the agreed value of the realty, due November 1, 1921. His default consists in his refusal to pay the amouiits past due and in refusing to execute the notes as agreed to.
“It is further to be observed that under the terms of the written contract and the negotiations between the parties the defendant was given possession of the property, with power and authority to sell the merchandise and from such sales to pay the promissory notes. The foregoing outlines the only remedy whereby the contract as a whole may by a decree be carried out in its ultimate effect, having in mind in this connection the facts heretofore mentioned that the negotiations and the manner and means whereby the parties set about to carry the written contract' into effect incontrovertibly establish that the merchandise and the store and ground were, upon completion of the payments of the notes, to be the property of defendant, while in the meantime the funds whereby those notes were to be paid were to be realized by defendant from sales of that merchandise. Under such state of facts the seller could not maintain assumpsit as upon such notes as would not, under the terms of the contract, be due at the time of commencement of the suit; but where the defendant is in default in payments that were due arnf he also refuses to perform the contract by executing the notes that would become due, at the future dates under the terms of the contract, the seller is on such state of facts entitled to the remedy against such breach by immediate enforcement of the whole obligation, such right existing by reason of the buyer’s breach of agreement as a whole: 24 R. C. L., pp. 97, 98; Kelley v. Pierce, 16 N. D. 234 (112 N. W. 995, 12 L. R. A. (N. S.) 180); Stephenson v. Repp, 47 Ohio St. 551 (25 N. E. 803, 10 L. R. A. 620); Pasha *415v. Bohart, 45 Mont. 76 (122 Pac. 284, Ann. Cas. 1913C, 1250).
. “Before outlining in terms what is in the opinion of the court the only proper and consistent remedy, reference may be had to the matters of what occasioned the ñecessity of a receiver and the consequent expenses thereof, with a, view to equitable adjustment in view of all the circumstances. On the one hand, had the defendant executed the notes and proceeded to manage the business in the manner each of the parties contemplated, the plaintiffs could have had no cause of suit until those notes became due, unless he violated the agreement in the meantime. Such a course, had it been chosen, could not have deprived defendant of adjustment of or redress for any errors, mistakes, or other defects, if any, that might exist, and not open and known to him at the time, and which he might, while acting in good faith, subsequently discover. For reasons that appear obvious in view of the nature of the contract, had the contract been thus consummated, self-interest of each of the parties to the present controversy would itself have virtually compelled co-operation to the end of the success of defendant’s venture. On the other hand, had plaintiffs proceeded as greater care and prudence would have suggested, no absolute delivery of possession and control and no mingling of goods should have been permitted until the transaction was closed and the notes delivered simultaneously. In either of these events the transaction would have been either wholly consummated or wholly rescinded. These circumstances, however, do not obviate or alter the fact that defendant did take possession and thereupon proceeded as heretofore mentioned and obligated himself as stated above. The result was the necessity of a receiver. That does not effect the remedy, except that in view of all those circumstances the court is of the opinion that when it comes to application of the proceeds, from which the expenses of the receivership must be met, those expenses should be so apportioned as to be *416borne equally between plaintiffs and defendants: 23 R. C. L. 106. _
_ “In connection with the remedy heretofore suggested, the following facts are observed: That the legal title to the property named, i. e., the merchandise and the realty, was not under the agreement vested in defendant, but he has an equitable interest therein by virtue of the agreement and the payments he made; that the subsequent payments to be made were in the main to be realized from sales of the merchandise; that the merchandise and the realty together constitute the buisness institution — the property involved in the contract; that defendant continued as long as he was in charge so to mingle the merchandise delivered into his possession by plaintiffs with the merchandise that he brought and later supplied, and so mingled the proceeds of sales made from the indiscriminate whole, and so managed and treated the same as one and the same stock and as one fund and as one business that it cannot be segregated.x Therefore, and consistent with the ultimate effect of the contract, and those several acts, the only available remedy whereby the rights of each are subserved and enforced is a decree for the payment of the balance due under the contract, to .be secured by sale of the property in question, such sale to be effected by and through the receiver at the highest obtainable price after due publication of notice of such sale; and the proceeds of such sale, when such sale shall have been confirmed to be applied in the following order: To the expenses of the receiversliip and of the sale; to any unpaid bills contracted by defendant in the purchase of goods thus mingled; to the balance found due to plaintiffs, less one half of said receivership expenses, upon due transfer of all of the capital stock; the remainder to the defendant as his interest in such proceeds. In connection with the authorities last cited, see 24 R. C. L., pp. 445, 446, par. 744; 23 R. C. L., p. 98; 39 Cyc. 1794. The court is further of the opinion that *417upon equitable principles neither party should recover costs or disbursements of the other.”
These observations appear sound, and we adopt them.
4. Incidentally, a question is raised as to the legality of the appointment of a receiver in the first instance. The application was presented to the judge before the complaint was filed, and the order was then signed and dated by him, either upon the theory that the complaint had already been filed or that the order and complaint would be filed on that date, which was April 14, 1918. The complaint and order were taken to the clerk on the morning of April 15th, and he noticed the discrepancy between the date of filing and the date of making the order, which he corrected by erasing the original date and inserting the figures “15th.” The date attached by the judge was evidently an inadvertence; but, as the order took effect only upon the date of its filing, and not upon the date of the signature, it was not such an irregularity as would render the proceeding void. The filing gave the order validity, not the date affixed to it; Smith v. City of New York (Super. Ct.), 4 N. Y. Supp. 449; Young v. Hamilton, 135 Ga. 339, (69 S. E. 593, Ann. Cas. 1912A, 144, 31 L. R. A. (N. S.) 1057). It further appears that while the court disregarded the objection made to the regularity of Mr. Glenn’s appointment, it did, on May 12, 1918, reappoint him, so that at the time of the trial there was no question as to the' regularity of his appointment. We think] however, that the original appointment was sufficient.
5. It seems evident from the testimony that while a man of wider business experience and greater *418business capacity might have succeeded in the mercantile venture which the defendant embarked upon, it was a larger business than he was capable of handling successfully, and that the result of his management would have been the bankruptcy of the company and of himself, if he had been permitted to continue in charge. We think the court acted wisely in appointing a receiver, and nothing appears in the testimony to indicate that as such officer Mr. Glenn in any way has .discriminated between the parties to the litigation. The fact that some years before he had been a clerk in the employ of the Durkee Mercantile Company may well have been a reason for his appointment, inasmuch as his familiarity with the business and with the customers of the concern would enable him to perform his duties as a salesman to greater advantage than would be the case with a stranger.
The decree of the Circuit Court is affirmed.
Affirmed.