This is an action of contract to recover under an indemnity clause in a stock purchase agreement. A judge sitting without a jury made findings of fact and
Findings of the judge include the following. On or about December 30,1959, the plaintiff Sloan entered into an agreement to purchase all the outstanding stock in Mattson & Rowse, Inc. (Mattson) from its owner Burrows, the defendant. Sloan had been employed by Mattson since 1950, first as a truck driver and, from 1957, as treasurer. In 1958 Burrows had purchased all the stock of Mattson. In the stock purchase agreement between Burrows and Sloan the seller covenanted and warranted “(Y]hat the company then had no liabilities of any nature whether accrued, absolute or contingent,” that were not reflected on an attached balance sheet. He also warranted that all income taxes had been paid. Paragraph 5 (b) of the agreement provided that the seller would indemnify the buyer and the company against any tax liability which later became due. 1 Three thousand dollars of the purchase price was placed in an escrow account in the names of the buyer and seller to be disposed of in accordance with a procedure set out in paragraph 7 which was dependent on the seller’s receipt by March 31, 1960, of written notice of liabilities (including tax liabilities) of Mattson.
In January of 1960, the Internal Revenue Service took possession of Mattson’s books for the purposes of an audit. Sloan, both individually and as officer of the company, had no knowledge until sometime in 1962 that a serious tax problem existed between himself and Mattson, and the Internal Revenue Service. On or about May 12, 1960, Sloan and Burrows met for the disposition of the $3,000 escrow fund. At this meeting $327.16 from the fund was paid to Mattson, the remainder of the fund going to Burrows.
In September, 1962, an attorney representing Sloan and Mattson was notified by the Internal Revenue Service that a tax problem existed. The Government claimed additional income taxes of approximately $35,000 from Mattson for the years 1957, 1958 and 1959 because of Mattson’s failure to report as income volume rebates, or discounts, credited to its account by one of its suppliers. After considerable negotiation, which necessitated the hiring of a special tax counsel, the Internal Revenue Service agreed on May 5, 1967, to settle the claim for $7,473.05.
The judge found for each plaintiff in the sum of $10,823.54. This sum includes the amount of the tax settlement ($7,473.05) together with interest on that amount from May 5, 1967, to February 13, 1968 (the date of the finding), plus the sum of $3,000 in attorneys’ fees which the judge found had been reasonably incurred by the plaintiffs in settling the tax liability. It was stipulated by the plaintiffs that there shall be recovery only in one amount for one of the plaintiffs. The points hereinafter discussed were duly raised by the defendant’s exceptions to various rulings of the judge.
1. The defendant argues that the document signed by him and Sloan on May 12, 1960, upon disposition of the escrow fund constituted a general release, supported by consideration, of all claims against Burrows. The judge rejected this contention, finding that the payment of $327.16 was already owed under the terms of the agreement, and thus could not be consideration for the purported release.
We find no reason to disturb this conclusion. For a general release to be given effect, even against claims
2. The defendant further argues that the payment of $327.16 from the escrow fund to Sloan gave rise to a completed accord and satisfaction that barred all subsequent claims by Sloan arising from the sale of Mattson. He bases this argument on the theory that in setting up the escrow fund, the parties were creating an executory accord, and that payment of all or any part of this fund would constitute a complete accord and satisfaction of all claims against Burrows. The plain language of paragraphs 3 (b) and 7
3. The defendant’s argument that Mattson, one of the plaintiffs, cannot maintain an action on the stock purchase agreement because it was not a party to that agreement, need not detain us. As indicated, it was stipulated that despite the fact that there were two plaintiffs there was to be but one recovery. We were informed at the arguments that recovery was sought only by the plaintiff Sloan. Thus any discussion of Mattson’s right to recover would be academic.
Exceptions overruled.
Notes
Paragraph 5 (b) is as follows: “That he will indemnify the Buyer and the Company against, and save each of them harmless from, all loss, damages, claims, liabilities, costs and expenses, including reasonable attorneys’ fees, suffered by them or either of them arising out of or resulting from (i) any Federal, State or municipal excise, income, sales or other taxes of the same or different nature which may now be due or which may hereafter be claimed, imposed, levied or assessed against the company . . ..”
At the meeting between Burrows and Sloan on May 12, 1960, a check for 1327.16 was written out to Mattson. Since the money was clearly owed to Sloan, we treat this payment as if made to Sloan, or made to Mattson at Sloan’s request.