136 Conn. 468 | Conn. | 1950
Morris Brochin and Sol Rabinowitz each owned or controlled 1000 shares of stock in the defendant corporation. This comprised its total capitalization. On July 26, 1944, the plaintiffs, Rabinowitz and his wife, agreed to sell their stock to the defendant. The agreement was in writing. It set the price at $25,000 plus the book value of the shares as of July 28, 1944, as determined by Reuben Pollowitz, C. P. A., under a formula set forth in the agreement. Included in the determination of book value was merchandise owned by the defendant to be taken at cost. The two sections which caused the dispute read as follows: “3. (h) Federal, State and municipal taxes and assessments shall be apportioned and charged as a liability as of July 28, 1944. ... 7. The sellers and said corporation agree to mutually release each other from all claims and demands whatsoever, except that if any claim is enforced against the said corporation based upon some legal liability to the United States Government or some governmental agency, which arose prior to the date of this agreement, then the sellers shall assume and pay their proportionate share of such liability.” As is found, this and a supplemental agreement “were carefully prepared. All parties were diligent and thorough throughout the many days required to close the transaction and they were represented by separate groups of attorneys and accountants.”
Pollowitz drew up a statement which conformed in all respects to the formula and the facts. He deter
The plaintiffs object that the defendant’s defense is not available under the pleadings. No such claim was made on the trial. It is too late to raise such an issue after the case has been fully tried on the pleadings filed. Conn. App. Proc. § 26.
The plaintiffs practically admit that no specific provision of the contracts provides for the payment to them of one-half of any savings in the amount set aside as a liability for income taxes. They claim that the intention of the parties to share the savings in taxes is plain from the terms of the contract. They stress the principle “that whatever may be fairly implied from the terms or language o.f an instrument, is, in judgment of law, contained in it.” Lawler v. Murphy, 58 Conn. 294, 309, 20 A. 457. The defendant, on the other hand, relies on the rule of interpretation which has been expressed as follows: “The intention of the parties to a contract is to be
While we have thus stated the principle in differing ways, its true meaning is that a provision may be read into a contract by implication when its language, read in connection with the circumstances of the parties, makes it apparent that the term sought to be implied was understood and intended by both parties. Leventhal v. Stratford, 121 Conn. 290, 295, 184 A. 587; Rockwell v. New Departure Mfg. Co., 102 Conn. 255, 286, 128 A. 302; Rifkin v. Safenovitz, 131 Conn. 411, 415, 40 A. 2d 188. As stated above, there is no reference in the contract to a duty of the defendant to share its savings in income tax payments with the plaintiffs. There is nothing in the circumstances which requires the addition of this term to the contract.
The plaintiffs claim unjust enrichment. Their brief lacks neither emphasis nor clarity but it tells the truth without telling the whole truth. The changes are rung on the proposition that $148,000 in round figures was set aside for income taxes, that only $107,000 was paid and that half the difference belongs to the plaintiffs. The purpose of the contracts was to determine the fair value of the stock owned by the plaintiffs in accordance with the agreed formula. The plaintiffs seek to change one element of the formula without changing another, dependent, element. Concretely, the contract fixing the price of the stock required that inventory of merchandise be taken at cost. This resulted in an esti
As to the counterclaim, in 1946 the federal internal revenue department made assessments on the defendant for a deficiency in income tax payments for 1943 of $20,959.17, and for 1944 (to the date of the sale of the business) of $9779.28. In addition, a penalty was assessed for 1943 of $31,621.08. The penalty was ultimately abated and the balance paid by the application of credits earned during 1945 and 1946 as a result of operating losses and by cash.
In its counterclaim, the defendant claims one-half of these sums under § 7 of the contract quoted above. The plaintiffs claim that the defendant is not entitled to contribution because it did not pay these sums but applied income tax credits to liquidate them. The statement of undisputed findings shows that this claim is without merit. If the credits had not been used for this purpose, they would have been paid to the defendant. There was no provision in the contract which would have given the plaintiffs the right to recover these sums. The plaintiffs further claim that the assessments were not “enforced” against the defendant, as that word is used in the contract, but were compromised. Incidentally, the compromise resulted in a saving to the parties of over $31,000, a result of which the plaintiffs should not complain. It is true that the de
The plaintiffs assigned certain rulings on evidence as error. Two of the answers were favorable to them. One question sought to test the credibility of the witness and its admissibility was within the court’s discretion. The effect of the rest was to show that the inventory was taken at cost in arriving at the trial balance which determined the value of the shares of stock and at market value in arriving at the amount of income tax actually paid. The plaintiffs claimed that the agreement called for inventory at cost and that no further explanations were relevant or admissible under the general denial. They pleaded that they did not know how much the defendant actually paid in income taxes. In supplying this information, the defendant was entitled to show how the figure was determined. The plaintiffs also pleaded that the defendant should not in equity and good conscience retain more than one-half the savings over the estimate. This was denied. The evidence was admissible to support the
There is no error.
In this opinion the other judges concurred.