Alperin v. Eastern Smelting & Refining Corp.

Fine, J.

(dissenting). I view the stock purchase agreement and the transaction which took place on July 18, 1984, differently from the way in which the majority views them. In my view, Conroy’s letter on Peat stationery setting forth the *552final price, whether so labelled or not, constituted the “certificate” which, according to the contract, was to be “given effect as a final arbitral award . . . .” Also, I think the contract, and in particular the reference to price adjustments “for any reason whatsoever,” afforded greater flexibility in the formula for determining the purchase price.

Even assuming the majority’s conclusions on those points to be correct, however, I part company with them on the consequences flowing from the July 18, 1984, meeting among Maurice, Conroy, and, representing the defendant corporation, John Friberg and Kenneth Rosenberg. Based upon what transpired at that meeting, the conclusion is inescapable that all parties accepted Conroy’s letter as the “certificate” which was to be “given effect as a final arbitral award.”

At the meeting, Conroy presented the letter stating the final price of $10,604,279, and the $251,221 payment to the corporation required of Maurice as a final adjustment. The judge found that Friberg and Rosenberg, acting on behalf of the defendant corporation, thought the adjustments they had suggested to Conroy to be fair and reasonable, that Conroy reviewed the suggested adjustments and made some minor changes in the calculations in Maurice’s favor, and that another Peat partner reviewed the calculations and reported to Conroy that, the figures were correct. Maurice’s testimony, by which he is bound, was that he did not at the time of the July 18 meeting ask for a breakdown of the adjustments. Instead, he simply asked Conroy, whom he trusted, whether the amount stated was correct, and Conroy answered affirmatively. (Conroy had provided personal accounting services to Maurice both long before and long after the meeting.) Maurice then obtained a check in the specified amount and handed it to Rosenberg and Friberg. Both of them then signed a handwritten receipt at the bottom of Conroy’s letter stating that the check was received “in final settlement.” The letter, so annotated, was then given back to Maurice. It wasn’t until three years later, after an unrelated dispute arose between Maurice and Conroy, that Maurice first asked for and received a breakdown of the price adjustments and *553commenced this action against the corporation for breach of contract.

The majority affords relief to Maurice, notwithstanding the use of the term “final settlement” and the absence of any fraud or bad faith on the part of the defendant, presumably on the theory that he accepted the adjustments and made the payment as the result of a mistake. The factual mistake on Maurice’s part, if any, was as to the basis for the adjustments to the final price. Only Maurice among the parties present at the July 18 meeting was unaware of the basis for the adjustments. Any mistake, therefore, was unilateral. “There are limited circumstances in which a party may avoid a contract on the basis of a unilateral mistake: ‘if he does not bear the risk of mistake . . ., and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.’ Restatement (Second) of Contracts § 153 (1979). See Covich v. Chambers, 8 Mass. App. Ct. 740, 749-750 & n.13 (1979).” First Safety Fund Natl. Bank v. Friel, 23 Mass. App. Ct. 583, 588 (1987).

In the circumstances, any unilateral mistake on Maurice’s part should not afford him the right to recover. Having been responsible for the corporation’s sales and financial affairs, and having sold his share in the business for over $10,000,000, he must be regarded as a sophisticated businessman. He had every opportunity at the meeting to ask for a breakdown of the adjustments. He chose to rely on Conroy, however, for several obvious reasons. Their past relationship was one of trust and confidence. The amount Maurice was being asked to pay was a small percentage of the over-all purchase price, and the payment would benefit Maurice’s brother, the owner of the remaining fifty percent of the shares in the defendant corporation. The contract language was not entirely clear as to the right to adjustments for costs of the transaction. Conroy was a partner in Peat, and the parties had agreed in the contract that Peat’s expert appraisal would ultimately establish the price. Had Maurice *554obtained the breakdown at the meeting and differed with it, his only remedy under the contract would have been to press his interpretation in arbitration before Peat.

Unquestionably, Maurice made a conscious decision to treat his limited knowledge as sufficient and to forgo the only alternative he then had to accepting the adjustments, namely, to assert his right to dispute the adjustments in arbitration before Peat. Maurice’s own actions required him to bear the risk of any mistake. See Covich v. Chambers, 8 Mass. App. Ct. at 751; Restatement (Second) of Contracts § 154, comment c, and § 296. Compare Rosenfeld v. Boston Mut. Life Ins. Co., 222 Mass. 284, 290 (1915). Moreover, any mistake on his part about whether the $251,550 payment was called for hardly made it “unconscionable” for him not to have the funds restored. Nothing the officers of the defendant corporation did before the payment was made prevented Maurice from learning the basis for the adjustments. In these circumstances, particularly in light of the length of time that had elapsed after the meeting on July 18, 1984, before Maurice made any claim, he should be deemed to have accepted Conroy’s letter as the “certificate” and be barred from recovering his claimed overpayment.