Albee v. Maverick Media, Inc.

• Decision Date: 06 September 1991
• Docket Number: No. 89-321,89-321
• Parties: Ronald J. ALBEE, Individually and as Personal Representative of the Estate of Bob Ray Albee, Deceased, et al., Appellees and Cross-Appellants, v. MAVERICK MEDIA, INC., Appellant and Cross-Appellee.
• Court: Nebraska Supreme Court

Page 238

474 N.W.2d 238

239 Neb. 60

Ronald J. ALBEE, Individually and as Personal Representative of the Estate of Bob Ray Albee, Deceased, et al., Appellees and Cross-Appellants, v. MAVERICK MEDIA, INC., Appellant and Cross-Appellee.

No. 89-321.

Supreme Court of Nebraska.

Sept. 6, 1991.

Syllabus by the Court

Contracts: Actions. As a general rule, a demand for performance is unnecessary for a suit to enforce an agreement unless such demand is required by the terms of the contract or the peculiar nature of the transaction.

Donald R. Witt and Gail S. Perry, of Baylor, Evnen, Curtiss, Grimit & Witt, Lincoln, for appellant.

L.W. Kelly, of Kelly, Kelly & Schroeder, Grand Island, for appellees.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

SHANAHAN, Justice.

Ronald J. Albee, personal representative of the estate of Bob Ray Albee, deceased, and the heirs of Bob Ray Albee, all the preceding collectively designated as "Albees," brought a breach of contract action based on a stock purchase agreement against Maverick Media, Inc. After a bench trial, the district court found that Maverick owed Albees $50,000 pursuant to the agreement, but awarded Maverick a setoff of $17,661.39. Maverick appealed, and Albees cross-appealed. We affirm the district court's judgment in part and reverse and modify in part.

STANDARD OF REVIEW

In a bench trial of a law action, a trial court's factual findings have the effect of a verdict and will not be set aside unless clearly erroneous.... In reviewing a judgment awarded in a bench trial of a law action, the Supreme Court does not reweigh evidence but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

Oddo v. Speedway Scaffold Co., 233 Neb. 1, 2, 443 N.W.2d 596, 598-99 (1989). Accord, Citizens Fidelity Bank v. Southwest Bank, 238 Neb. 677, 472 N.W.2d 198 (1991); Wibbels v. Unick, 229 Neb. 184, 426 N.W.2d 244 (1988); Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 390 N.W.2d 487 (1986).

In a bench trial of a law action, the court, as the "trier of fact," is the sole judge of the credibility of witnesses and the weight to be given their testimony. Among the factors entering into the trial court's resolution of any conflicts of evidence are such items as the respective interests of the parties in the litigation; the demeanor of witnesses, including the parties, while testifying before the court; the apparent fairness exhibited by witnesses; the extent to which testimony of various witnesses is corroborated; and the reasonableness or unreasonableness of testimony from the witnesses.

Lynn v. Metropolitan Utilities Dist., 225 Neb. 121, 125, 403 N.W.2d 335, 338 (1987). Accord, Citizens Fidelity Bank v. Southwest Bank, supra; State v. Craig, 219 Neb. 70, 361 N.W.2d 206 (1985).

"Regarding a question of law, an appellate court has an obligation to reach a conclusion independent from a trial court's conclusion in a judgment under review." Huffman v. Huffman, 232 Neb. 742, 748, 441 N.W.2d 899, 904 (1989). Accord, Knox v. Cook, 233 Neb. 387, 446 N.W.2d 1 (1989); In re Estate of Walker, 224 Neb. 812, 402 N.W.2d 251 (1987); Boisen v. Petersen Flying Serv., 222 Neb. 239, 383 N.W.2d 29 (1986).

THE STOCK PURCHASE AGREEMENT

On November 29, 1983, Albees and Maverick entered into a purchase agreement whereby Maverick purchased all shares of common stock in Albee Printing Co., Inc., and its property, including specified accounts receivable, for the purchase price of $150,000. Maverick promised to pay $50,000 at closing on November 29, 1983, with the remaining $100,000 payable in 10 equal and semiannual installments of $10,000, commencing 6 months after closing. The shares of stock were placed in escrow at Five Points Bank pending payments by Maverick.

Under the heading "WARRANTIES AND REPRESENTATIONS OF SELLERS," paragraph 4.1 states:

Sellers, individually and collectively, warrant and represent to Buyer as follows:

....

(p) A schedule of all of the accounts receivable of Albee which are collectible in the ordinary course of business with the exceptions noted therein is attached hereto as Schedule 6 and Sellers agree to update any changes in the accounts receivable up to the date of closing.

Paragraph 6.2(a) of the agreement provides: "Sellers' representations and warranties shall be true on and as of the closing date with the same force and effect as if again made thereon." Paragraph 8.3, in relevant parts, provides:

(b) In the event of any breach on the part of Sellers, Buyer may offset any damages relating therefrom with a direct credit against payments due and to become due the Sellers pursuant to this Agreement.

(c) In the event of any litigation with respect to this Agreement the prevailing party shall be entitled to recover, in addition to all other relief to which such party may be entitled, its costs, expenses and attorney fees incurred in connection with said litigation.

(d) Sellers hereby agree to indemnify and hold harmless Buyer and Buyer hereby agrees to indemnify and hold harmless Sellers from and against any and all claims, liabilities, losses and other damages, including all costs, expenses and fees arising out of the breach of any representation, warranty or covenant contained herein by the party against whom indemnification is sought or arising out of the actual failure of Sellers to fully perform, satisfy and pay all of Sellers' obligations and liabilities hereunder. Buyer especially agrees to indemnify and hold harmless the Sellers from any and all claims, liabilities and losses arising out of the Seller's [sic] personal guarantees with respect to the small business loans at five points [sic] Bank of Grand Island.

....

(f) All of the representations, warranties and covenants made by the parties herein or in any written statements, certificates, schedules or exhibits hereto or any other document delivered by them pursuant hereto in connection with the transactions contemplated hereby shall survive the closing date and shall be binding on the parties notwithstanding any investigations made by them.

PERFORMANCE OF THE AGREEMENT

By August 22, 1986, Maverick had paid Albees $118,399.47, which included principal of $100,000 and interest on the purchase price. The Albees allowed Maverick a $2,156 setoff against principal and interest due, based on Albees' breach of warranty and failure to transfer title for a 1978 Ford van involved in the sale. The balance of the purchase price was $50,000 on August 22, 1986.

NOTICE OF SETOFF

In its letter of October 31, 1986, to William Marshall at Five Points Bank, the escrow agent, Maverick stated:

Mr. Marshall:

As escrow agent for Maverick Media, Inc. and the Albee heirs in the sale of Albee Printing Co., Inc. to Maverick Media, Inc., would you please relay the following information to each of the heirs?

As provided in Paragraph 8.3(b) of the purchase agreement, damages from any breach of the contract by the sellers may be offset by the buyer as a direct credit against payments due to the sellers.

Pursuant to Paragraph 4.1(p) of the agreement, the sellers provided a schedule of accounts receivable which the sellers warranted to be collectible in the ordinary course of business. Despite all of the best efforts of the buyer, a large amount of the accounts receivable have proved to be uncollectible. We retained law firms to aid us in efforts to collect these accounts, and have been informed that any further legal efforts would be a waste.

I am enclosing a schedule of all accounts that have proven to be uncollectible. The total is $47,580.03. The total amount due to the heirs, according to the purchase agreement, is $50,000.00. Therefore, on November 29, 1986, the date of the next payment due, Maverick Media, Inc. will issue a check to Five Points Bank, as escrow agent, in the amount of $2,419.97. We do not feel any additional interest is due, since we have already paid considerable interest on the offset amount. Also, you will note that we have not included legal fees and expenses we incurred in our collection efforts.

The buyer's obligations under the agreement will then be fully discharged, and Maverick Media, Inc. will expect to receive from you all remaining shares of stock in Albee Printing Co., Inc., now held by Five Points Bank in escrow.

Upon receipt of the stock certificates, Maverick Media, Inc. will regard the agreement as fully performed by all parties. However, Maverick Media, Inc. reserves the right to assert any rights and claims it may have under the agreement, including additional damages not claimed herein, in the event the stock is not promptly delivered pursuant to the terms hereof or in the event any claim is asserted by the sellers against Maverick Media, Inc.

Marshall informed Albees about Maverick's proposed setoff of $47,580.03, but Albees rejected the claimed setoff. When Maverick tendered $2,419.97 on November 29, 1986, Marshall declined to deliver the remaining common stock held in escrow, but retained the tendered payment of $2,419.97.

Albees then sued Maverick for $50,000. Maverick countered that Albees warranted the accounts receivable to be collectible in the ordinary course of business and that since certain accounts were not collectible, Maverick was entitled to a setoff. Albees responded that there was no warranty concerning collectibility of the accounts and that even if there were such a warranty, Maverick was not allowed a setoff for the uncollected accounts, because Maverick had failed to notify Albees regarding the breach of warranty, that is, noncollectibility of the accounts.

TRIAL AND DECISION

One of the Albees testified that her understanding of the "warranty" provision in paragraph 4.1(p) of the agreement was simply an "accurate accounting" of the accounts...