Court Opinion

ID: 8194763
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:17:57.395141+00
Date Added: 2024-06-11T16:40:43.848869
License: Public Domain

The following opinion was filed April 7, 1925:
Vinje, C. J.
At the time the contract of December 31, 1923, was made the following facts are admitted by both sides to have existed: Read and Neacy each owned one half the stock in the Filer & Stowell Company and in the Beaver Manufacturing Company; the Beaver Manufacturing Company was about to be dissolved; it was indebted to Neacy in the sum of $587,797.98 (called exceeding $575,000 in the agreement) ; it was indebted to the Filer & Stowell Company in a sum exceeding $479,283.96, which debt was to be released in the amount of the sum mentioned; it was indebted to Read or Neacy in the sum of $175,000 for money furnished by Read to pay notes to the bank, some of which were indorsed by Read and Neacy.
With these facts existing and in consideration of Read’s assignment to Neacy of all his stock in the Beaver Manufacturing Company and the purchase of Neacy’s stock in the Filer & Stowell Company at $208.33-* per share, Neacy agreed “to release and discharge all indebtedness of the said Beaver Manufacturing Company owing to or held by him, without regard to whether the same may heretofore have been guaranteed by him, or by him and said Walter Read, or in any other manner secured or wholly unsecured, and to assume and pay all of the indebtedness of said Beaver Manufacturing Company, including that portion of its indebtedness to the Filer & Stowell Company over and above *339the sum of $479,283.96, as to which last named sum the parties hereto agree to procure a release by the Filer & Stowell Company, it being expressly understood that such agreement to pay such indebtedness is part of the consideration for the agreement on the part of said Walter Read, now partly executed, to purchase stock in the Filer & Stowell Company held by said Thomas J. Neacy, and which purchase so partly executed is hereby confirmed and ratified.”
The question presented by the appeal is whether, under the facts existing, Neacy, through the contract above set out, agreed to pay Read the $175,000 he had advanced to take up the Beaver Manufacturing Company’s debt to the banks or to allow him credit for said amount on his purchase of Neacy’s stock. Either would be equivalent to a payment to Read of the amount.
The trial court found as a fact that the amount of $175,000 had been paid at the time the contract was entered into and hence was not covered by the agreement. This is also the claim of the respondent. From the reasoning used by the trial court and respondent, the only inference we can draw is that they regarded the debt as having been paid by the Beaver Manufacturing Company, whereas such is admittedly not the fact. It is a verity that Neacy received credit for the payment on the books of the Beaver Manufacturing Company. And whether he did or not, the fact is that the Beaver Manufacturing Company owed this amount either to Read or Neacy. If the sum of $175,000 was credited to Neacy on the books of the Beaver Manufacturing Company, as it was, then the Beaver Manufacturing Company owed Neacy this amount and Neacy owed it to Read, for he furnished the money. If it be said Neacy owed Read only one half, then the Beaver Manufacturing Company owed Read the other half, and Neacy must pay his own debt of one half, and by the contract he agreed to pay the Beaver Manufacturing Company’s one half, so he must pay the whole to Read.
The money furnished to pay the notes to the bank was not a gift to any one. It was either to be repaid to Read *340or1 credited to him if he owed it. But he did not owe it. The Beaver Manufacturing Company owed it. He should have been credited with it on the books- of the Beaver Manufacturing Company, but the amount was credited to Neacy, and he became liable to Read for its repayment.
In his contract with Read Neacy agreed to pay all the debts of the Beaver Manufacturing Company. This debt is included in that promise. To do so he must pay the money to Read or give him credit for it on his stock-account purchase.
The simplest way to look at it is to ignore the bookkeeping of the Beaver Manufacturing Company and then we have this situation: The Beaver Manufacturing Company owed the banks $175,000. Read paid the banks this sum and the Beaver Manufacturing Company became indebted to him in said sum instead of to the banks; Neacy agreed to pay him this sum by agreeing to pay all the indebtedness of the Beaver Manufacturing Company.
The vital error in the trial court’s conception of the case was that he found the notes had been paid in full. They had not been paid by the Beaver Manufacturing Company. It had simply changed its creditors from the banks to Read or Neacy. It still owed the whole amount.
It was no doubt owing to the conception that the notes were paid that the trial court concluded that, as applied to the existing facts, the contract was ambiguous and so permitted oral testimony to be given and the transactions between the parties to be opened up for years previous to the execution of the contract.
As we view it there is no ambiguity in the contract as applied to the existing facts. It fits them accurately and disposes of all controversies existing between the parties. In such a situation, oral testimony to explain or vary the terms of a written contract is inadmissible.
The contract speaks of the advance by Read to Neacy of certain sums to take up the indebtedness of the Beaver Manufacturing Company. In the contract Neacy agreed “to release and discharge all indebtedness of the said Beaver *341Manufacturing Company owing to or held by him, without regard to whether the same may heretofore have been guaranteed by him, or by him and said Walter Read, or in any other, manner secured or wholly unsecured.” This fits the situation exactly as disclosed by the books of the Beaver Manufacturing Company. Neacy was credited with the amount of $175,000 on its books for payments made for the notes in question, some of which were indorsed by Neacy and Read and some of which were not. Neacy, as the contract recites, held the debt against the Beaver Manufacturing Company and he specifically agreed to pay it. Further on in the contract he agrees “to assume and pay all of the indebtedness of said Beaver Manufacturing Company,” except a sum owed to the Filer & Stowell Company to be released and not material to the present inquiry.
The consideration for Neacy’s agreement to pay the indebtedness of the Beaver Manufacturing Company is ample and is recited in the contract.
It follows from what has been said that the trial court erred in receiving testimony opening up the account between the parties and in finding that the estate of Read was indebted to Neacy in any sum whatsoever on this part of the claim filed.
By the Court. — Judgment reversed, and cause remanded with directions to dismiss the claim here involved upon the merits.
A motion for a rehearing was denied, with $25 costs, on June 22, 1925.