I concur in the result for the reasons stated in the opinion of Mr. Justice Blease. Besides, if there was not a warranty, there was a failure of consideration, and in such a sum that it is not reasonable to infer that the purchaser would have stood this loss, and especially so in view of the prorating of similar items which were known to seller and buyer.
Mr. Justice Cothran :I do 'not concur in the opinion of Mr. Justice Blease in this case, being of opinion that the defendant’s motion for a directed verdict should have been granted, for the reasons which I shall endeavor to make clear.
This is an action for damages on account of an alleged breach of an express warranty in the sale of certain stock in a corporation.
The facts are these: Prior to January, 1920, Kimbrell Furniture Company, a corporation, was doing business in *328the city of Columbia. The capital stock consisted of 30 shares (the par value thereof does not appear in the record, nor is it material) ; it was owned by the defendant W. M. Kimbrell, 10 shares, one Taylor, the husband of the defendant Emma D. Taylor, 10 shares, and other or others (not stated in the record) 10 shares. Mr. Taylor died, and his holdings, 10 shares, were acquired, in some way not explained, by his widow, the defendant Emma D. Taylor. During the lifetime of Mr. Taylor, the business was operated by W. M. Kimbrell and Mr. Taylor. After his death and the acquisition of his stock by Mrs. Taylor, it does not appear that she took any part in the operation of the business, or knew anything of its affairs.
On January 12, 1920, Mrs. Taylor and W. M. Kimbrell, the defendants, entered into a written agreement with the pliantiffs, J. E. Buyck and W. E. Kleckley, for the sale to them of 20 shares of stock owned by them, separatély, at the price of $30,000, a part of which was paid in cash and the remainder provided for in deferred payments. The complaint alleges:
“Said sale being base°d on a percentage valuation of the said corporation’s assets, after deducting the liabilities as shown by the corporation’s books.”
The defendant W. M. Kimbrell testified, and it was not objected to or controverted:
“We took the assets and liabilities, deducted the liabilities from the assets and were supposed to sell at 50 cents on the dollar all the way through, which amounted to a little bit more than we got for it. They made a flat offer of $30,-000, and it (that is, the 50 cents on the dollar, I interpolate), was really more than that, but we accepted that figure.”
The contract entered into contained the following statement :
“The foregoing sale is based on the statement heretofore given by the sellers to buyers: Approximating assets $123,098.43; liabilities $26,022.50. It is agreed by both the sellers and buyers that the taxes for the current year *3291920 and the insurance and license will be duly prorated up to the time of the consummation of the said sale.”
On January 23, 1920, the plaintiffs Buyck and Kleckley, who had purchased the stock from W. M. Kimbrell, and Mrs. Taylor, entered into an agreement with their coplaintiff, W. E. Kimbrell, for the sale of five of the 20 shares of that stock, “upon the same basis of valuation as goverened the first agreement” (quoting complaint). The latter agreement was in fact contemplated in, and was virtually a part of the agreement first referred to, between the buyers and the sellers of the 20 shares. Both agreements were carried out; five shares were transferred to W. E. Kimbrell and the other 15 to Buyck and Kleckley, in what proportions does not appear.
At some time after the trade for the stock had been consummated, the date not appearing in the record for appeal, the Federal Government, reviewing the income-tax returns of the corporation for the years 1916, 1917, 1918, assessed it with the following additional taxes:
1916 ............................$ 64.43
1917 ............................ 1,424.68
1918 ............................ 2,413.70
Total.......................$ 3,902.81
Two-thirds of this amount, the proportion which the stock sold bore to the whole stock, 20 to 30, amounts to $2,601.88, for which the plaintiffs demanded judgment against the defendants.
The case was tried before his Honor, Judge Whaley, of the Richland County Court, and a jury. At the close of all of the evidence, his Honor, overruling the motion of the defendants for a directed verdict, directed a verdict in favor of the plaintiffs against both of the defendants for $2,601.88, that being two-thirds of the income tax deficiency which had been paid, by the corporation, as it is stated in the record, in 1923 and 1924. From the. judgment entered *330upon this verdict the defendant Emma D. Taylor alone has appealed.
The plaintiffs have united in one action what are in reality six separate and distinct causes of action: Two in favor of each plaintiff, one against each of the defendants. No objection, however, has been interposed to the misjoinder. That fact does not prevent a consideration of the cause of action against the appellant Mrs. Taylor, as if she had been sued alone by any one of the plaintiffs, and that I will proceed with.
As explained in the opinion of Mr. Justice Blease, no judgment in excess of one-half of the loss sustained by the combined plaintiffs, $1,300.94, can be entered against Mrs. Taylor. Of that amount the plaintiffs, respectively, if entitled to recover at all, would be entitled to $325.24, $487.85, $487.85 — total $1,300.94 — against each of the defendants.
Now take the case of the plaintiff W. E. Kimbrell: I do not think that he has the shadow of a claim against Mrs. Taylor. He was either a stockholder or a very important employee of the corporation at the time of the transfer of the stock. It was he who prepared the statements upon which the erroneous income taxes for the three years in question had been estimated. He knew a great deal more about the business than Mrs. Taylor; he admits it in his' testimony, and I see no earthly reason for him now to take advantage of his own errors. This obstruction to his claim is in addition to the same herein after urged against the claims of the other two plaintiffs, who do not appear to have been connected in any way with either the statement or the income tax returns.
The claims of the other two plaintiffs, Buyck and Kleckley, are identical and will be taken up- together. They claim that Mrs. Taylor, by the clause in the contract above quoted, expressly warranted that the liabilities of the corporation did not exceed $26,000 (in round numbers), that as a matter of fact they were $3,900 more, and that she is *331liable to the three plaintiff-stockholders for one-half of two-thirds of that amount, $1,300. I think that there are absolutely conclusive reasons why this contention cannot be sustained. In the first place it is specifically alleged in the complaint that the sale was “based on a percentage valuation of the said corporation’s assets after deducting the liabilities as shown by the corporation’s books.” The plaintiffs themselves have interpreted the clause in the contract in reference to the statement of liabilities to mean “the liabilities as shown by the corporation’s books.” The warranty then, according to the complaint, can extend no further than the plaintiffs claim that it did; and there is no contention even that the Habilites as stated in the statement did not conform to the liabilities as they appeared on the books.
I really do not think that it is necessary to go a step further in the case than this; but there are still other matters which sustain the same conclusion and a consideration of them appears out of place.
It is insisted that the clause in the contract constitutes express warranty of the liabilities of the corporation, and an approximate estimate of the assets; in other words ,“that this particular word (approximating) had no reference to liabilities.” A reading of the clause it seems to me demands, grammatically, the construction that the word qualifies the word “statement” which included both assets and liabilities, and that both were therefore approximate.amounts. It is: “The foregoing sale is based on the statement heretofore given, by the sellers to buyers: Approximating assets, $123,098.43; liabilities, $26,022.55.” Omitting the qualifying or rather identifying phrase, heretofore given by the sellers to buyers,” it reads: “The foregoing sale is based on the statement: * * * Approximating assets, $123,098.-43; liabilities, $26,022.55.” Can it be doubted that the word “approximating” qualifies the word “statement,” which in-*332eludes both assets and liabilities? If so, necessarily, both assets and liabilities were approximated, estimated.
The argument is plausible that ordinarily the assets of a business are variable, uncertain, that the liabilities are supposed to be capable of exact ascertainment, and that therefore the construction is forced upon the Court that in this particular case, Mrs. Taylor intended to warrant the liabilities but only to approximate the assets. Usually the presumption is well founded, but it is not necessarily so. Many instances of contingent liabilities may be imagined, and the circumstances of this case demonstrate that the presumption is not well founded, • for here a liability has developed that no one connected with the business had the slightest idea existed.
The trial Judge, in granting the motion for a directed verdict, placed his ruling solely upon the construction contended for by the plaintiffs, for he adds:
“If the word 'approximating5 was to go with liabilities, then it would allow a margin there that might have included variations in the taxes and it would not have warranted exactly, but approximately.55
While this is the law of the case, it may be proper to say, lest that statement “be drawn into a precedent,55 that if the sale had been upon a basis of par value or near it, there might arise a question whether a variation of $3,900 in the amount of the liabilities stated, as $26,000 would have .constituted a legitimate approximation. But the circumstances of this case, where the plaintiffs purchased upon a basis of less than 50 per cent, of the net valuation of the assets, and practically acquired $64,000 worth of property for $30,000, the rule of approximation may well be liberally applied.
The estimated assets were ...................$123,000
The liabilities ............:................. 26,000
Net assets .................................$ 97,000
*333One-third for other stockholders.............. 32,335
$64,667
If the deficiency tax of.......................$ 3,900
Be added to liabilities....................... 26,000
Making ...................................$ 29,900
And this deducted from assets................ 123,000
Leaving net assets......................•.....$ 93,100
One-third for other stockholders............... 31,033
$ 62,067
—the plaintiffs would be acquiring $62,000 worth of property for $30,000, $1,000 less than the 50 per cent, in contemplation. I think that this fact may well be taken into consideration in determining whether the seller intended to warrant the liabilities at $26,000, knowing that the buyers could easily make up the estimated liabilities out of the other 50 per cent,, and also in determining whether the statement of the liabilities at $3,900 less than they proved to be was within the rage of approximation.
Assuming that there was an express warranty of the amount of the liabilities: If the plaintiffs had purchased the stock at its full book value, two-thirds of $97,000, $64,000, there would be no difficulty in ascertaining the amount of thier loss by the amount of the tax deficiency, $3,900. It is significant however that while the plaintiffs allege that, “had the plaintiffs been aware of the true amount of the liabilities of the said corporation, they would not have purchased said shares at the price at which they were quoted,” they do not allege at what price they would have bought had they known of the unincluded tax deficiency, or that they would not have bought at all. The measure of their damage caused by the misrepresentation is the excess over what they were willing to buy at and could have bought, had the liabil*334ity been known, and that has not been shown. Buying at $1,000 less than 50 per cent, upon the valuation of the net assets, it is not improbable that if they had known of the deficiency the offer of $30,000, for a $64,000 interest would still have been made or very slightly reduced. At any rate it was incumbent upon the plaintiffs to establish the necessary elements of their damage.
The defendant W. M. Kimbrell testified that even if the tax deficiency had been known at the time of the sale the proposed offer of 50 per cent, would not have been altered.
There are such marked distinctions between the case of Iler v. Jennings, 87 S. C., 87; 68 S. E., 1041; and Id., 93 S. C., 185; 76 S. E., 276; and the case at bar, that it affords little assistance in deciding this case. It is important only in the declaration that a direct representation by a director of a corporation as to its financial status, as an inducement to the purchase of his stock, acted upon by the buyer, is an express warranty.
I think that the case at bar falls very far short of the above declaration. I do not believe that Mrs. Taylor ever intended to bind herself to make good a most undefined and unknown liability of the corporation. She doubtless was bound by the statement of the liabilities as they appeared on the corporation’s books and no further, and interpretation of the contract which the plaintiffs have alleged and cannot get away from.
I think that in any event, should my position that the plaintiffs are bound by the allegations of the complaint be not sustained, the case should be remanded to the county Court for the determination of the issues whether the defendant under the circumstances intended an express warranty of the liabilities, and whether the variation was within the rule of approximation.