[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 770 In 1921, E.E. Bascom, Joe Hull, and respondent each contributed $2,000 and formed a tri-party partnership, which purchased the bottling works, including a Coca Cola franchise, from Benoit Sons, in Twin Falls. Later in the year appellant purchased Hull's interest. Bascom sold his share to appellant and respondent in 1929, repurchasing after a few months, and finally sold his share to respondent in 1936.
In 1931 appellant and respondent, retaining their respective one-third and two-thirds interests therein, converted the partnership into two corporations — to avoid partnership liability and to comply with the restrictions of the parent Coca Cola company prohibiting the sale of both fountain and bottled Coca Cola by one concern. Appellant acquiesced and participated in such transmutation and is in no position to upbraid respondent on account thereof, as he does.
In December, 1938, respondent purchased appellant's stock for $25,000, paying part down, the balance to be paid in installments secured by pledge of the stock, with the privilege of substituting other security.
In June, 1940, respondent sold the corporation for $200,-000 *Page 772 to Tyrus Cobb of baseball fame and requested the certificates of stock, offering to pay the balance due or substitute therefor other commensurate security. Appellant, learning of the sale to Cobb, rescinded the contract and refused to deliver the stock on the ground he had been overreached and deceived by appellant in that his stock was worth $50,000 at the time of the sale, tendered the amount received by him to date, and offered to deliver the note covering the balance.
Neither side giving way and each rejecting the other's overtures, respondent, to resolve the resultant impasse, sued to enforce delivery of the stock, tendering payment in full or substitution of adequate security. Appellant countered with answer and cross-complaint, detailing respondent's duplicity thus:
"That from 1929 respondent was the actual manager of the business and personally directed and carried it on, was at all times thoroughly acquainted and familiar with all details and value thereof, its Coca Cola franchise, good will, and going concern value, inherent values, earning capacity, and all angles thereof.
"That, on the other hand, appellant did not devote his whole time and energy to said business, was not actually engaged in managing and operating the same, was not thoroughly acquainted and familiar with it and its value, as was respondent. That for many years prior to December, 1938, he was engaged in other businesses and occupations, part of the time as an employee of the United States, which required his absence from Twin Falls, and by reason thereof and other facts and circumstances was not acquainted with all the facts and circumstances which reflected the true value of the business, nor was he acquainted with the inherent value of the various franchises and rights possessed and owned by it, nor whether the books truly and accurately reflected the value thereof.
"That prior to December, 1938, appellant had trusted and relied implicitly upon respondent in the conduct and management of the business and for all his knowledge as to the true value thereof, and by reason of said long partnership and business relationship there was a fiduciary relationship existing between appellant as minority stockholder and respondent as majority stockholder, who was sole manager.
"Prior to December, 1938, respondent sought to induce *Page 773 appellant to sell his interest and made, on numerous and diverse occasions, many representations that appellant's one-third interest was worth considerably less than $25,000, repeatedly intimated and told appellant said business was beset with many troubles, was besieged with competition, and its Coca Cola franchise was no longer of any particular value. Appellant was reluctant and not anxious to sell his interest but relied implicitly and absolutely upon respondent's representations and statements as to the low value of his share, which representations were made for the purpose of inducing him to sell and were relied upon by him. That said representations were not true and correct; the value of his share was $50,000 or more, as was known to respondent, and appellant was greatly damaged by such representations.
"That at the time of accepting the stock in the reorganized corporation in 1939 appellant was still ignorant of the value of his interest."
Respondent denied these allegations and interposed as affirmative defenses thereto:
"That during the partnership appellant was acquainted and familiar with the business, its books, assets, amount of business, and was just as familiar with the value thereof as respondent, and had access to and examined the books of the partnership.
"That appellant was elected a director of each of the two corporations and was president until March, 1938, when he become vice president, continuing so until he sold his stock.
"That between November, 1931, and December 5, 1938, appellant attended all stockholders' and directors' meetings, was entirely familiar and acquainted with the business operations and assets of said corporation, value of the stock, books, and had access to the latter, and received statements during all said times of the business."
The court, without a jury, entered judgment in favor of respondent, with consequent appeal herein.
The pertinent findings are:
"That between November, 1931, and December 5, 1938, when appellant sold his stock, he attended stockholders' and directors' meetings of said corporations, and was familiar with the books and the value of the stock thereof.
"That August 30, 1938, respondent and appellant discussed the sale of the stock and at no time did respondent *Page 774 knowingly and/or fraudulently make any false representations to appellant as to any material facts or material future intentions, did not fail to disclose any facts concerning the value of the stock of which he had personal knowledge; that appellant knew as much about the value of the stock at the time of the sale as respondent; that appellant did not rely upon any representations made by respondent but relied upon his own knowledge and judgment as to the value of the stock; that $25,000 was not below the fair and reasonable market value of the stock at the time of the sale; that a strained relationship and coolness had arisen between respondent and appellant not later than the March, 1938, annual meeting of the stockholders and directors; that appellant is and was at all times a man of business experience, and there existed no financial exigencies or other coercive circumstances to induce him to sell his stock, and he was not induced by respondent to sell his stock but was in fact the moving party in bringing about the sale."
The trial court concluded:
"8. That as a matter of law the plaintiff did not knowingly or fraudulently make any false misrepresentations to the defendant, and did not fail to disclose any fact concerning the value of said stock, of which he had personal knowledge and did not induce the defendant to sell to him said stock and that the defendant was charged with knowledge of the value of the said stock."
Appellant's first group of assignments of error challenges the findings as insufficient and too vague to support the judgment. The ultimate and controlling questions of fact were whether any actionable misrepresentations had been made or concealment practiced whereby respondent was induced to sell the stock for less than its true value.
While the findings did not enumerate the asserted misrepresentations exactly as narrated in appellant's pleadings, they substantially disposed of the issues as definitely as they were set forth therein. The court has held on numerous occasions that
"A failure to make specific findings on certain allegations contained in defendant's further and separate answer to the plaintiff's complaint is not reversible error, for the reason that the findings that were made by the court are inconsistent with the truth of those allegations of defendant's *Page 775 answer, and the court has therefore found against defendant on such issues.
* * *
" 'The findings made disposed of the merits of the case, and are inconsistent with the defendant's case, and in effect are against the defendant on the issue tendered by the answer. The defense urged in this case is wholly inconsistent with the finding of the court . . . The rule, as we understand it, is that, where the findings of the court upon the affirmative case are necessarily a complete negative of the case as plead by the answer, such findings are sufficient.' " (Matthews v. Coate,17 Idaho 624, at 629-30, 106 P. 990.)
(Mine and Smelter Supply Co. v. Idaho Consolidated Mines Co.,20 Idaho 300, 118 P. 301; Stewart v. Stewart, 32 Idaho 180, at 183-4, 180 P. 165.)
Findings of fact must be liberally construed. (Fouch v.Bates, 18 Idaho 374, 110 P. 265; Marysville Development Companyv. Hargis, 41 Idaho 257, 239 P. 522; Fairbairn v. Keith, 47 Idaho 507,276 P. 966; Cleveland v. Mochel, 48 Idaho 37, 279 P. 410;First Security Bank v. Zaring Farm Livestock Co., 51 Idaho 700,10 P.2d 303; Gem State Lbr. Co. v. Galion Irr. LandCo., 55 Idaho 314, 41 P.2d 620.)
Furthermore, since no more specific findings were requested, no reversible error is presented. (Gould v. Hill, 43 Idaho 93, at 110, 251 P. 167; Reid v. Keator, 55 Idaho 172, at 183,39 P.2d 926; Mitchell v. Munn Warehouse Co., 59 Idaho 661, at 674,86 P.2d 174.)
A case which might be considered strongly in appellant's favor held that an officer buying stock from a minority stockholder was required only to "acquaint her with all material facts bearing on the transaction." This, the court herein found, respondent did. (Hotchkiss v. Fischer,136 Kan 530, 16 P.2d 531.)
Whether, after the creation of the corporations, the partnership relation, imposing on respondent the duties of a fiduciary as to disclosures, continued was an issue of fact to be determined from all the facts and circumstances. (Miller v.Mitcham, 21 Idaho 741, 123 P. 141; Bussell v. Barry, 61 Idaho 216,102 P.2d 276; Commercial Security Co. v. Modesto DrugCo., 43 Cal.App. 162, 184 P. 964; Scott v. Prescott, 69 Mont. 540,223 P. 490; Sun River Stock Land Co. v. Montana Trust Savings Bank, 81 Mont. 222, *Page 776 262 P. 1039; In re Russell's Estate, 102 Mont. 301,59 P.2d 777.)
While appellant repeatedly reiterated his trust and confidence in respondent and that he relied solely on his judgment as to the value of the stock, there is evidence to the effect that between the time the sale was first actively broached in August and its consummation in December, 1938, appellant consulted with someone in San Francisco as to the value of the Coca Cola franchise and business and upon his return demanded $25,000 instead of $20,000, which respondent thought had been agreed upon. Furthermore, as to the physical assets, appellant received from an auditor employed by him in 1937 the following statement:
"Mr. T.J. Lloyd
"In compiling the audit requested and enclosed I did not attempt to go into the matter of gross sales and current expense of operation as to do so would take lengthy time and I carefully recorded the items of which I thought that you would be interested in and I find no item of expenditure which looks out of place to me.
"There will appear in the January statement that is brought to the annual meeting of the directors of the corporation a complete detailed description of gross sales and gross expense incurred in making said sales for income tax purposes. Mr. Anderson informs me that he has and will cooperate with you in all ways and you are at liberty to personally or by agent to inspect his records at any time and it is his wish that you attend all meetings of the board of directors when called and especially the annual meeting on the second Monday of January, 1938.
"Respectfully submitted this 7th day of December, 1937.
R.M. Cunningham.
"THE FOLLOWING IS A REPORT OF AN AUDIT OF THE CAPITAL INVESTMENT LABOR, AND SOME ITEMS OF EXPENSE OF THE TWIN FALLS COCA COLA BOTTLING WORKS AND THE SUBSIDIARY WESTERN SALES COMPANY, HANDLING THE BEER SALES FOR THE ABOVE CORPORATION OF TWIN FALLS, IDAHO AS OF DECEMBER 1st, 1937. COMBINING TWIN FALLS, BURLEY, SHOSHONE PLANTS.
At the request of the president of the corporation Mr. T.J. Lloyd of Twin Falls, Idaho. *Page 777
"Land at beginning of organization and still holding:
Twin Falls, 2 lots on Truck Lane, Book value ________ $4000.00 Shoshone, Idaho, 1 lot, " " ________ 800.00 Buildings, Shoshone Plant ___________________________ 1000.00 " Residence ________________________ 1200.00 Total Real Estate ___________________________________ 7000.00
Book Value Shoshone Plant $5606.08 less Dep. $3135.95 _________________________________________ 2470.13 Twin Falls Plant $8370.28 Less Dep. Net _____________ 3670.28 Burley $2513.18 Net _________________________________ 2513.18 Western Sales $1129.04 Net __________________________ 1129.04
Added 1937
Twin Falls, Washer cost $5600.00 ____________________ 5600.00 this item was purchased under contract $1000.00 paid on delivery and balance payable $190.00 per month and unpaid on December 1, 1937 $3850.00
Twin Falls Plant:
One Schlitz Bottler _____________________________ 211.50 One C. C. Cooler ________________________________ 272.00 One Plant Cooler ________________________________ 1050.00 One shed for loading and receiving ______________ 300.00
Furniture and Fixtures:
Shoshone Plant ______________________________________ 112.40 Twin Falls Plant ____________________________________ 203.43 Burley Plant ________________________________________ 190.82 Western Sales Co. ___________________________________ 181.21
Transportation Equipment:
Shoshone Plant, 2 units $3924.57 less Dep.
$2250.40 net ____________________________________ 1674.17 to this one item of replacement one new Diamond T Truck, sale of Dodge at $140 net with body ________ 1304.90 Twin Falls Plant, 3 units cost $4092.08 less Dep. $2504.00 added to this one new Diamond T unit $1765.00 net ________________________________________ 3353.08 Burley Plant, 2 units cost $2222.60 less Dep. net ___ 922.60 Total book value of capital investments December 1st, 1937 ________________________________________ 32159.64 Less contracts payable ______________________________ 3850.00 Net worth Real ______________________________________ 28309.64
"Larger items of expense noted:
Labor to July 1st, 1937 total reported $6648.53 of which 32 *Page 778 employees were reported and Carl N. Anderson received $200.00 per month and Kernell Anderson rated $30.00 weekly July 1st to Sept. 30. 51 employees drew $9848.41 of which Carl N. Anderson received $250.00 monthly and Kernell Anderson received $30.00 weekly. Also spent for current items $5258.73 for bottle replacement and $933.41 for syphon bottles for service.
"One meeting of the board of directors was held May 13th, 1937. President T.J. Lloyd absent, Carl N. Anderson, Sec.-Treasurer, and manager (present) and Kernell Anderson Vice President (present) one item of business voted on raising manager Carl N. Anderson from $200.00 to $250.00 monthly as salary and Western Sales Co. a subsidiary to pay $150.00 monthly to Carl N. Anderson as salary same does not appear in reports available to federal or state old age benefit compensation. No dividends were voted in meeting and meeting adjourned at 8:30 P. M. May 13th 1937.
"I, R.M. Cunningham of Twin Falls, Idaho, certify that the above is a true and correct statement taken from the books and records of the above mentioned corporation dated this 7th day of December 1937.
R.M. Cunningham Accountant and Manager of Security Audit Company of Twin Falls, Idaho."
Also, prior to the sale appellant had a statement of the business prepared by Mr. Gwin, the regular bookkeeper of the corporation, which is self-explanatory.
"Profit and Loss Statement 1937 TWIN FALLS COCA-COLA BOTTLING CO. AND WESTERN SALES, INC. Mdse. Sales _________________________ $416,505.13 Less returns ________________________ 10,913.21 Net Sales ________________________ $405,591.92 Purchases __________________________ 361,640.26 Less returns _______________________ 40,981.05 320,659.21 Inv. 1/1/37 (Add) __________________ 12,879.56 Total _________________________ 333,538.77 Inv. 12/31/37 (deduct) _____________ 14,225.62 *Page 779
COST OF MERCHANDISE __________________ 319,313.15 319,313.15 GROSS PROFIT FROM SALES ________________________ 86,278.77 Expense (see sheet No. 2 — itemized) _____ 70,805.41 NET PROFIT (before depreciation) _______________ 15,473.36
DEDUCT THE FOLLOWING LOSSES:
Dep. Twin Falls Natl. Bank ________ 632.30 Replacement of ice machine ________ 390.57 Total (deduct) _________________ 1,022.87 1,022.87 14,450.49
DEDUCT THE FOLLOWING DEPRECIATION CHARGES:
Plant Building ___________________ 40.00 Residence Building _______________ 48.00 Plant Equipment __________________ 2,076.68 Trucks ___________________________ 1,370.25 Res for Bad accounts _____________ 3,300.00 Furniture and fixtures ___________ 76.35 Total (deduct) ___________________ 6,911.28 6,911.28 OTHER INCOME (add) __________________ 7,539.21 Discounts taken __________________ 329.85 Rents received ___________________ 171.27 Total __________________________ 501.12 501.12 NET GAIN FOR YEAR (after depreciation) ____________________ $ 8,040.33"
"PROFIT AND LOSS STATEMENT 1937 TWIN FALLS COCA COLA BOTTLING CO. AND WESTERN SALES, INC. EXPENSE Factory Labor ____________________________________ $ 6,396.20 Rent Paid ________________________________________ 1,398.00 Light and Power __________________________________ 891.41 Fuel _____________________________________________ 474.63 Water ____________________________________________ 139.97 Machinery repairs ________________________________ 1,345.16 Insurance ________________________________________ 1,427.57 Taxes ____________________________________________ 1,210.25 Sanitation supplies ______________________________ 363.60 Repairs to buildings _____________________________ 479.26 Miscl. Factory Expense ___________________________ 176.35 Selling — Salaries _________________________ 3,383.62 Commissions __________________________________ 2,146.14 *Page 780 Traveling ____________________________________ 5,773.75 Advertising __________________________________ 2,042.67 Tel. Teleg _________________________________ 718.42 Miscellaneous ________________________________ 255.63 Delivery — Salaries ________________________ 5,813.11 Auto Exp. ____________________________________ 9,534.45 Garage Rent __________________________________ 16.00 Miscellaneous ________________________________ 12.70 Adm. Exp. — Officers Salaries ______________ 5,790.00 Managers " ___________________ 3,898.35 Office Salaries ______________________________ 2,662.48 Office supplies ______________________________ 678.19 Postage ______________________________________ 12.72 Legal Expense ________________________________ 208.40 Dues, Subscriptions __________________________ 20.00 Miscellaneous ________________________________ 31.30 Social Security Payments _________________________ 714.76 State Unemployment Ins. __________________________ 549.61 Interest Paid (washer) ___________________________ 13.30 Discounts allowed ________________________________ 207.85 Donations ________________________________________ 69.06 Beer Stamps bought _______________________________ 11,950.50 Total ____________________________________________ $70,805.41"
"BALANCE SHEET December 31st, 1937 TWIN FALLS COCA-COLA BOTTLING CO. WESTERN SALES INC. Cash on hand and in banks ________________________ $ 3,391.32 Notes Receivable _____________________ $ 2,758.13 Accounts Receivable __________________ 31,098.38 ----------- Total _____________________________ 33,856.51 Less reserve for bad debts ___________ 9,910.00 ----------- 23,946.51 Inventories of merchandise _______________________ 14,225.62 Stock Home Loan Company __________________________ 87.50 Buildings ____________________________ 2,487.65 Machinery and Equipment ______________ 26,024.56 Furniture and Fixtures _______________ 812.86 Delivery trucks and equipment _________ 14,294.82 Mills Coca-Cola Cooler ________________ 250.00 ----------- *Page 781 Total ______________________________ 43,869.89 Less reserve for depree. _____________ 20,621.55 ----------- 23,248.34 Land — Lots at Twin Falls and Shoshone _____ 4,800.00 TOTAL ASSETS ___________________________________ $69,699.29 Accounts Payable _________________________________ 20,277.60 Notes Payable (washer — $190.00 monthly) ___ 3,840.00 Capital Stock — T F Coca Cola Bottling Co. _ 24,000.00 Western Sales, Inc. ___________________________ 15,000.00 Earned Surplus ___________________________________ 6,581.69 ---------- TOTAL LIABILITIES ____________________________ $69,699.29
ACCOUNTS PAYABLE Miscellaneous ________________________ $ 4,027.10 Martin Roark _________________________ 910.16 Becker Brewing Malt Co. Becker Products Co. ______________ 8,520.23 ---------- 13,457.49
Beckers (cooperage acct.) ____________ 3,829.50 C.N. Anderson and Bascom _____________ 2,990.61 ---------- Total ____________________________ 20,277.60"
While appellant criticizes the bookkeeping and asserts the books did not sufficiently disclose the actual condition of the business, particularly that the franchise was not carried thereon, he knew all the time the company owned the franchise and that it was not so carried. Mr. Gwin, prior to the time he became bookkeeper for the companies, had for years been a bookkeeper in the bank of which appellant was a director, had occasionally performed work for appellant, and no complaint was made of his bookkeeping at the time appellant was a director and officer. At the trial two auditors, one employed by appellant and one by respondent, introduced audits and resumes made by them and were examined and cross-examined at length, and, while they do not agree in all particulars, the trial court was justified in concluding, as he did in effect, that the books were not deceivingly deficient or that they had been kept in such a way as to mislead appellant or anyone else.
Appellant contends he employed Cunningham in 1937 *Page 782 merely to secure information for his attorney (Mr. Wolfe) in connection with the consolidation of the two corporations. Respondent testified such reorganization was not even hinted at at that time, nor until 1939 after appellant had sold his stock. The employment of Cunningham, therefore, was a circumstance which the trial court might well have considered as indicating appellant did not have complete confidence in respondent's management of the business and was not then relying upon him as a fiduciary partner. Furthermore, there is testimony by both respondent and Mr. Gwin that appellant prior to 1938 was dissatisfied with the way the business was run, particularly as to expenses, and on one occasion was extremely angry over the failure of the business to return dividends, and was disappointed in the showing reflected in the statements submitted by Mr. Gwin, and they are not discredited.
Anent returns from the business, appellant received $1,000 in dividends during seven years of the total time he was interested in the concern, and $5,000 as a special dividend in 1933 (which the other stockholders also received). He paid only $2,000 for his share initially and thus received in all $31,000 in seventeen years on a $2,000 investment.
If respondent concealed no information he possessed and should have imparted, and made no false representations which induced the sale, and his conduct measured up to that required of a fiduciary, recission is not required. The asserted over-reaching revolves around the value of the so-called unlimited Coca Cola franchise and the beer agencies. The value arrived at from various estimates and criteria detailed by respective witnesses for appellant and respondent engaged in the Coca Cola and beer business throughout Idaho and adjoining states, fixed the value of the entire business at the time of the sale in 1938 all the way from $70,000 to $263,000.
Appellant testified respondent painted to him a most discouraging and gloomy picture of the business and its future and that respondent was the aggressive factor in bringing about the sale. There is ample evidence, however, to justify the trial court in finding appellant was anxious to sell. (Lyon v.Corey, 111 Kan. 470, 206 P. 1109.) Mr. Gwin, the bookkeeper of the company, gave the increase in the bottling of Coca Cola in detail for 1936, *Page 783 1937, and 1938, and it is not an unfair inference from the record that respondent knew of this increase.
"Q. Now could you for 1938, Mr. Gwin, give us in dollars and cents the gross proceeds from the jobbing division of the business? * * *
"A. $306,603.66. * * *
"Q. Now what about the manufacturing sales for 1938?
"A. They were $91,543.46. * * *
"Q. Now then can you give the jobbing and manufacturing figures for 1937, Mr. Gwin? * * *
"A. Jobbing was $333,560.71. * * *
"Q. Now then what was the manufacturing sales?
"A. $72,031.21.
"Q. Now then, for 1936 can you give us those figures?
"A. The jobbing sales was * * * $308,412.33.
"Q. And now the manufacturing?
"A. $35,969.08."
Appellant, until 1933, was conducting confectionery businesses in the same sales area, namely, the nine south central counties of Idaho. His place of business was only half a block from the bottling works, and respondent testified he had numerous talks and conferences with him. While appellant had been a most successful businessman, respondent, until he purchased into the partnership in 1921, had been a mail carrier without previous business experience of any kind.
Three other Coca Cola concerns, one in Lewiston, one in Coeur d'Alene, and one in Yakima, Washington, were sold during the same pertinent period. The trial court was justified in considering thereby and therefrom that the owners who sold the same thought the future of such businesses was no brighter than respondent did. No market value for appellant's stock was shown, nor that he could have sold it for any amount to anyone except respondent.
Appellant urges that, in addition to the increase in the Coca Cola business, the sale of the entire business 18 months after respondent had purchased appellant's one-third interest therein, proves respondent was dishonest and insincere in his discouraging prognostications. The increase in the Coca Cola business up to the time appellant sold to respondent was known by appellant or the information was as readily accessible to him as respondent. While the subsequent sale was perhaps a circumstance to be considered, because of the time elapsed and changed conditions it does *Page 784 not of itself so prove respondent knew he was wrong in his portents or was not making honest disclosures as to what he considered appellant's stock was worth in 1939 as to demand reversal. (Smith v. Johnson, 47 Idaho 468, 276 P. 320.) Mr. Cobb purchased this particular company, not a minority interest therein, in order to set his son, Hershel Cobb, the real owner, up in business, for what evidently appeared to him to be sufficient reasons, which reasons might not have actuated anyone else; at least, no one else offered to buy at the price he paid. Also, in the interim, the company had made some improvements, changed its location, and, due apparently to the national advertising of the parent Coca Cola company and the low per capita consumption of Coca Cola in the northwest, the Coca Cola business made rapid strides. By fortuitous events which it is not shown respondent foresaw, nor had any appreciable control over, the advance in the value of the business does not necessarily portray the true picture in 1938 when the stock was sold, and, as stated in Du Pont v. Du Pont, 256 Fed. 129, at 186, if conditions had taken a different turn, there would have been a different retrospective outlook.
Appellant's main point is that there was at least a confidential relationship between him and respondent whereby respondent was under the duty of making full and truthful disclosure of everything he knew about the business and its value. Conceding that there was a confidential relationship, if respondent concealed no material facts which he knew and made no erroneous or false statements, no recovery against him is justified. The following covers all of the alleged misrepresentations or concealments:
That Anderson, concerning the development of the Coca Cola franchise, said it had reached its peak; that he enumerated the brands generally considered competitive to Coca Cola and said the competition would be more keen and more extreme than it had been in the past; regarding the value, that there would perhaps be no further increase in the soda water business in 1938, however, he did not expect that there would be any decrease; that he was afraid of competition from other cola drinks. Edwin Lloyd testified to the same effect.
Respondent denied stating that Coca Cola had reached its peak, that there would perhaps be no increase in Coca *Page 785 Cola from thereon, or that he was afraid of competition from other drinks.
The statements as to the Coca Cola business having reached its peak and that competition would be more keen and more extreme were mere statements of opinion.
Appellant further testified that respondent told him he was definitely going out of the beer business, that there was no longer any profit in handling beer, that the beer business was so encumbered by regulations that it was hard to handle, and that it cost so much to procure the patronage, that he had complained before about the margin of profit being so small and the competition becoming more keen and that he thought it would be wise for the company to discontinue the beer business. Respondent testified if there was anything said about beer, he was sure he said it was a losing business, and that he had told him before he thought it would be better to discontinue it. Mr. Lloyd further testified that he has made discovery that this was one of the best beer agencies in the state, and that he also discovered that in 1933, 1934, and 1935 there was much more profit made on beer than there was in 1937 and 1938.
While appellant's witness Mitchell testified that the value of a beer business having the gross sales this company had would be at least $27,000 or $28,000, and the witness Martin testified the value of the business would be 10% of 90% of the gross sales, or $27,000, at page 91 of plaintiff's exhibit "EE", the following is shown:
Total Revenue Total Expense Net Gain
SCHLITZ BEER
1937 _____ $21,242.69 $20,142.93 $1,099.76
1938 _____ $24,109.32 $29,529.57 $5,420.25 (loss)
To Oct. 31,
1939 _____ $15,616.66 $25,182.60 $9,565.94 (loss)
BECKERS BEER
1937 _____ $20,946.84 $19,862.35 $1,084.49
1938 _____ $15,092.11 $18,485.04 $3,392.93 (loss)
To Oct. 31,
1939 _____ $ 8,482.90 $13,678.91 $5,196.01 (loss)
Apparently, therefore, the only statement regarding beer which respondent may have made which was not true was that he was going to discontinue handling it. A small profit is disclosed for 1934, and losses were suffered in the years 1935 and 1936, as well as 1938 and 1939. That *Page 786
he was going out of the beer business was a declaration of future policy and not a false representation.
Appellant testified respondent stated the business wasn't worth $15,000 but that he would give that for appellant's one-third interest; and Edwin Lloyd testified respondent said the business was not worth $20,000. Respondent testified: "then I asked him what he wanted for it and he says: 'Well I thought it was worth twenty-thousand dollars.' ", and that appellant had, while in San Francisco, "contacted the members of this board and this man stated to him that he had investigated Coca Cola stock on the coast and franchises and that he told him if he was to sell he should have twenty-five-thousand dollars for his one-third and then he turned to me and said: 'Well, I can't sell for less than twenty-five thousand dollars.' * * * I told him I would give him the twenty-five thousand, after sitting and thinking it over a little bit."
Witnesses placed the total value of the business at from $70,000 to $263,000, respondent's witnesses testifying the value was $70,000 and $77,000. Appellant argues these valuations are too low because the hypothetical questions put to the witnesses omitted the following items:
Cash average _______________________ $ 3,173.13 Accounts and notes receivable ______ $24,430.38 Real estate ________________________ $ 4,800.00 Buildings __________________________ $ 2,487.65 Inventory short ____________________ $ 6,000.00 Less debts _______________________ $24,066.97
The profit and loss statement for 1937, a copy of which was given Mr. Lloyd, contained the following:
Cash on hand _______________________ $ 3,391.32 Accounts receivable (less reserve for bad debts) _____________ $23,946.51 Real estate ________________________ $ 4,800.00 Buildings __________________________ $ 2,487.65 Accounts payable ________________________________ $20,277.60 Notes payable ___________________________________ $ 3,840.00
With the exception of the item "Inventory short $6,000.00" the items in the two lists are very nearly the same in amount. Appellant, therefore, at the time of the sale, was aware of the value of the real estate and buildings owned, the amount of the accounts and notes receivable and payable, and the amount of cash on hand (although defendant's *Page 787 exhibit 32 reveals that on December 31, 1938, only 26 days after the sale, there was no cash on hand, the bank account being overdrawn $232.59).
The 1937 profit and loss statement contains the item "Inventories of merchandise — $14,225.62." The hypothetical questions put to Harper, Bogard, Simmons, and Chaffee contained the following items:
Fountain syrup _______________________________ $ 213.20 Fountain supplies ____________________________ $3478.45 Syrup, bottles, cartons and crowns ___________ $1225.40 Other merchandise ____________________________ $3966.42 -------- $8883.47
This amount is approximately $6,000 less than the inventory of merchandise contained in the 1937 profit and loss statement, and apparently this is the item "Inventory short $6,000.00" referred to by appellant in his list of items omitted. The hypothetical question upon which Hershel Cobb placed his valuation of $75,000 contained the following items of merchandise:
Beer on hand _________________________________ $6761.30 Fountain syrup _______________________________ $ 213.20 Fountain supplies ____________________________ $3478.45 Syrup, bottles, cartons and crowns ___________ $1225.40 Other supplies _______________________________ $3966.42 --------- $15644.77
Since the amount of the debts practically cancels the amount of the accounts and notes receivable, the only items omitted from the question put to Cobb are, cash average $3,173.13, real estate $4,800.00, and buildings $2,487.65, all of which items were contained in the 1937 profit and loss statement.
Thus, the only showing that the business was worth more than $75,000 is the fact that it was resold eighteen months later for $200,000. Such increase was not a conclusive showing that Anderson either made false statements or refrained from disclosing correct information. As indicated above, at the most is was only a circumstance for the trial court to take into consideration. This court has no right to substitute its judgment as to what the facts show when there is a conflict. *Page 788
The testimony of experts has been held to be merely advisory and not binding upon the court. Even though the so-called experts did not take into consideration certain claimed items of value, they were cross-examined relative thereto, their failure to so take them into consideration was before the court, the evidence in regard thereto was fully covered on direct and cross-examination, and appellant had received the statements which contained the items claimed to have been omitted. Thus, there was no concealment with regard to them or their effect upon the value of the business at the time he sold his interest therein, and all the circumstances surrounding the effect of such items on the value of the business were before the trial court, and it was merely for him to determine therefrom, and from the other evidence, the value of the stock.
The evidence is voluminous, at least three-fourths of it having to do with the disputed value of the Coca Cola franchise both in fact and theory. We have carefully read the transcript and examined the limited number of exhibits which counsel by stipulation have agreed are the important ones and brought before us, segregated from the "truck-load" before the trial court. The evidence is conflicting, and justification for many different conclusions could be found. The trial court saw and heard the witnesses and chose to give credence to respondent's presentation, and we are justified in saying there is sufficient, competent evidence to sustain his findings and conclusions that appellant was not entitled to rescission. (McDermott v. O'Neil, 200 Wis. 423, 228 N.W. 481; Schuur v.Berry, 285 Mich. 654, 281 N.W. 393.)
Therefore, under the well known rule, the judgment is affirmed. Costs awarded to respondent.
Budge, J., and Buckner, D.J., concur.