McKamey Bros. v. Jones

On Motion for Rehearing.

Appellee complains that the statement of the case by this court does not truly reflect the issues. It was alleged that &e defendants owned and controlled 170 shares of the capital stock, of the par value of $100 per share, in the Bay Trading Company; the said Bay Trading Company being a private corporation, duly incorporated under and by virtue of the laws of the state of Texas, transacting a general mercantile business at Port Lavaca, Tex.

McKamey Bros., acting through J. W. McKamey, entered into a contract in which the McKamey Bros, were to sell to plaintiff stock in Bay Trading Company and value of stock arrived at as follows: McKamey Bros, were to render to plaintiff a full statement of assets and liabilities of Bay Trading Company. Notes and accounts due to said Bay Trading Company to be invoiced at 60 cents on the dollar of their face value, and all notes and accounts which were assets were to be included as assets not barred by statute of limitations, or not otherwise in legally un-collectable shape, regardless of the solvency of the parties against whom they stood. Stock and other tangible assets were to be valued at their original cost, and from the aggregate amount of the above assets there was to be deducted the liabilities of said Bay Trading Company, and the balance, representing the net assets of the said Bay Trading Company, should be taken and accepted as a basis from which to arrive at the value of the corporation stock of said Bay Trading Company, at which said value plaintiff was to purchase said stock from said defendants. McKamey Bros, rendered to plaintiff a statement purporting to be an accurate, full, and fair invoice arid schedule of all the assets and liabilities as of said last-named date, and plaintiff, relying upon the accuracy and truthfulness of said statement, computed from the figures therein shown, arid on the basis of the net assets thereby found, in accordance with the said terms of said contract, plaintiff purchased all the said 170 shares of stock from McKamey Bros, at the price thereby arrived at.

It was agreed that McKamey Bros. were to be allowed '40 days from 31st day of December, 1915, to place the notes and accounts so involved by them in a legal and collectable shape, not, however, guaranteeing the solvency of such debtors, but to place the same in such shape that said note and *609accounts would be legally enforceable, on their face, and be legal assets of said Bay Trading Company.

Among the notes and accounts listed and invoiced as assets of said Bay Trading Company were certain notes and accounts mentioned, of the face value of $2,276.80, set out as Exhibit A, all of which are worthless and are barred by the statute of limitations, and were known to be worthless and barred when defendants invoiced them as assets of said Bay Trading Company, and in no manner assets of said Bay Trading Company, nor at the time so invoiced. Defendants were allowed the full 40 days to put them in collectable shape and make same assets, but they have wholly failed and refused so to do, and the same remain totally worthless, and not assets; and plaintiff became president and general manager of said Bay Trading Company, and has been unable to find any of the notes and accounts mentioned in said Exhibit A on the books of said company, and defendants have refused to furnish him with any such such itemized accounts or data fromi which he could procure the same, and they were wrongfully included in the statement and contrary to the agreement, and by wrongfully including same caused plaintiff to pay to them an amount in excess of the contract value of said Bay Trading Company’s stock of $1,161.17.

Said invoice- and statement of the condition of the Bay Trading Company was in many respects untrue and incorrect, and various items placed therein at a greater price than the original cost thereof, and some items did not exist at all, or were not property of the said Bay Trading Company, and plaintiff relied on the truth and correctness of said invoice and statement, which were false, untrue, and incorrect in the following items: A note for $92.50, purporting that it was signed by one T. H. 'Shumpert. Accounts due to a branch store at Kamey, Tex., $160.91, and no trace thereof can be found in the records of the Bay Trading Company, and, if existing, are in hands of defendants, do not constitute assets of the said Bay Trading Company, and did not when invoiced. -By reason of those two items being placed in the statement furnished, they caused the plaintiff to pay defendant a further excess of the contract value of Bay Trading ’Company stock the sum of seventeen-twentieths of 60 per cent, of said last-named sum, pr $129.-25. There was included also “Port Lavaca pavilion stock and equity in fire insurance policies,” invoiced at $300, when in fact Bay Trading Company did not own it. The value of the unexpired term of the insurance company was only $68.41, and by including those two last-named items there was an excess charge of $231.59, which caused plaintiff to further pay an excess value of the stock of $197.85.

In the invoice there were various and sundry items of merchandise, overvalued to an aggregate excess of $34.80, which caused plaintiff to overpay an excess of $20.74. Defendants omitted from the list of liabilities overdraft at the First National Bank of Port Lavaca of $115.02, and accounts due local merchants aggregating the sum of $61.68, which caused the statement to show an excess value of $176.70, which caused him to pay the further excess value of $150.16. AH of the items defendants became liable to refund to plaintiff.

By reason of the omissions of the items of liabilities in said statements, all of which were relied upon by this plaintiff in carrying out the contract of purchase of 170 shares of stock in Bay Trading Company, and by reason of the premises, plaintiff was damaged $1,659, which he seeks to recover.

Such are the allegations upon which the plaintiff seeks to .recover damages upon the alleged default of defendants to comply with the alleged contract. What we meant by saying “sale carried with it all the property * * * of the Bay Trading Company” was that it carried with it all the claims described in the petition, not that the plaintiff got them individually, but only as they figured in estimating the value of 170 shares of the stock, being the majority thereof, and carrying with it the management and control of said company.

The case was reversed upon what we regard as an error of law in submitting to the jury the true measure of damages .responsive to the -pleadings and issues, to ascertain what damages, if any, the plaintiff suffered. We have not discussed the various exceptions. We are inclined to believe the allegations in respect to the various claims that appellee sets out in his petition and lists included in the exhibit are sufficient to let in proof for the purpose offered on the issue of his damages. It will be borne in mind that the solvency was not guaranteed of any of the claims, or that they were hot barred by the statute of limitations. It is not shown how any insolvent or barred claims, if any, were to be figured as an asset in valuing the stock, as that was not to be taken in account in the sale.

[2] All such issues of fact as to value of the assets are jury questions, for the jury to consider in valuing the stock. As to whether there was fraud, as to errors and mistakes in failure to carry out contract, as to what accounts were to be included as assets, or as to which not owned by the company or left out, and the kindred questions connected with and relating to said sale, are jury questions, bearing upon a proper valuation of the stock under direction of the court, for plaintiff could not recover the specific value of any of such property, as the title is in the company, and plaintiff’s recovery must be limited to the damages, if any, he suffered by reason of the acts of appellant in causing him to *610pay too great a value for the stock as pleaded. This is the chief issue made by the pleadings and as shown by our opinion the correct rule in submitting it to the jury was not given. The jury were left too wide a range.

Motion for rehearing overruled.