Sunday, December 1, 2013

In re Carter’s Claim case brief

In re Carter’s Claim case brief summary
134 A.2d 908 (1957)


CASE SYNOPSIS
Appellant buyer sought review of the judgment entered upon an arbitrator's award in a proceeding under the Act of 1927, 5 P.S. § 161 et seq.

CASE FACTS
  • In June 1954, Kardon, the buyer, (P) opened negotiations to purchase the Edwin J. Shoettle Co. and 5 of its subsidiaries (D). 
  • On September 17, 1954, the parties entered a written agreement which provided that the buyer would purchase the sellers for the amount of $2,100,000. 
  • Of this amount, $187,863.60 was to be set aside to be held by an escrow agent in order to indemnify the buyer against any of the seller's liabilities. 
  • The written agreement had provided certain “warranties” offered by the sellers to the buyer, and certain “conditions precedent” impacting the buyer’s rights at the time of closing. 
  • Section 5(g) of the written agreement, which was titled “Representations and warranties,” stated that since June 30, 1954, there had not been “any changes in [the sellers’] financial condition, assets, liabilities, or businesses, other than changes in the ordinary course of business, none of which [had] been materially adverse.” 
  • In the agreement, section 9 was titled “Conditions Precedent.” 
  • Section 9(a) of the agreement, titled “Financial condition at closing,” stated that “as of the time of closing the financial condition of the [sellers] shall be no less favorable than the financial condition shown on the statements of [sellers] dated June 30, 1954.” 
  • Section 10 of the agreement provided for indemnification of the buyer by the sellers for “any damage or deficiency resulting from any misrepresentation, breach of warranty, or nonfulfillment of any agreement on the part of [the sellers].” 
  • The buyer brought forth a claim for $69,998.42 from the escrow fund. 
  • The buyer alleged that the financial condition of the sellers on the date of purchase was less favorable than that reflected in the companies’ financial statement of June 30, 1954. 
  • The buyer argued that section 9(a) of the agreement operated as a “warranty” against this fact and that it entitled him to a reimbursement from the escrow fund for the sellers loss in value. 
  • The sellers argued that section 9(a) was not a warranty, but instead was a “condition precedent” which functioned to relieve the buyer of his obligation to consummate the sale if the condition was not fulfilled. 
  • The sellers argued when the buyer went through with the sale, he waived the “condition” in 9(a). 
  • The dispute was then submitted to arbitration.
  • The arbitrator awarded $3,182.88 to the buyer. 
  • Judgment in the above amount was entered for the buyer, and the buyer then appealed.
DISCUSSION

  • On appeal, the court affirmed the entry of judgment pursuant to the arbitrator's findings. 
  • The court held that appellant's extrinsic evidence was intended to prove that the actual agreement between the parties was contrary to the written agreement. 
  • Therefore, the court held that the exclusion of such evidence was eminently proper under the circumstances. 
  • The court held that the language employed by the parties was manifestly indicative of what was intended and the meaning of the agreement, free as it was of ambiguity and doubt, and the language was to be determined by what the agreement stated. 
  • Finally, the court held that the parties carefully and scrupulously delineated between appellee sellers' undertakings which were intended to be "warranties" and those which were intended to be "conditions."

CONCLUSION
The court affirmed the judgment of the lower court, which affirmed the arbitration award in favor of appellee sellers. The court held that the language employed by the parties was manifestly indicative of what was intended and the meaning of the agreement, and it was free of ambiguity and doubt.


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