Court Opinion

ID: 3952391
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:14:07.313307+00
Date Added: 2024-06-11T07:43:35.445657
License: Public Domain

I cannot agree with my brethren in the holding that Johnson, by his obligation, assumed the unpaid additional income tax.
The important question in construing contracts is to determine the intention of the parties, and they should be so construed as to give effect to such intention. 31 C.J., § 18, p. 426; 14 R.C.L. § 4, p. 46, and as said in the latter authority: "Contracts of indemnity, therefore, must receive a reasonable construction so as to carry out, rather than defeat, the purpose for which they were executed. To this end they should neither, on the one hand, be so narrowly or technically interpreted as to frustrate their obvious design; nor, on the other, so loosely or in-artificially as to relieve the obligor from a liability within the scope or spirit of their terms."
The trial court found: "I find that in the meeting of said stockholders at the time said $27,500 was paid to each of them, each and every one of said stockholders mutually agreed that in consideration of the $27,500 paid to him that the matter of the payment of said income tax as and when it became due and payable should not be a liability of the Upton County Light and Power Company and should not be carried on the books of said corporation as a liability, but that each and every one of said seven named stockholders accepted, as his own liability, and each individually agreed to pay his proportionate part (1/7), of said income tax as and when the same became due and payable, and that each and every one of said seven named stockholders agreed that his said proportionate part of said income tax would be his individual debt."
The writer has carefully read the evidence introduced and is of the opinion that there is evidence to support such finding.
If this be true, then is it not equally true that by that agreement the parties excluded any amount due the federal government for income tax, from Johnson's agreement to hold appellants harmless as to any debts or liability, present, past, or future, by virtue of having been holders and owners of said stocks?
It must be admitted that the language used is certainly broad enough to include the debt in question, but the writer is of the opinion that when the parties, by their own agreement, removed the income tax from the affairs of the company, and agreed that one-seventh of the amount due for such tax should be the individual debt of each stockholder, it ceased then to be a debt or liability arising by virtue of their having been stockholders in the company and was a debt arising by virtue of the agreement.
It must be conceded that the part of the income tax over which this suit was brought was not in the contemplation of the parties at the time the option was taken, and the fact that payments were made on the first assessment, after the option agreement was made, is also *Page 628 
indicative of the fact that this obligation was not included in the indemnity agreement.
I have reached the conclusion that the judgment as to Rose should be reversed and rendered in favor of Johnson, and, as to Ellis and Gowen, should be affirmed.