Brennan v. Brennan

• Decision Date: 13 July 1955
• Docket Number: No. 34146,34146
• Citation: 164 Ohio St. 29,50 A.L.R.2d 1259,128 N.E.2d 89
• Parties: , 50 A.L.R.2d 1259, 57 O.O. 71 BRENNAN, Appellee, v. BRENNAN, Appellant.
• Court: Ohio Supreme Court

Page 29

164 Ohio St. 29

128 N.E.2d 89, 50 A.L.R.2d 1259, 57 O.O. 71

BRENNAN, Appellee, v. BRENNAN, Appellant.

No. 34146.

Supreme Court of Ohio.

July 13, 1955.

Syllabus by the Court.

1. It is the policy of the law to favor and encourage arbitration, and every reasonable intendment will be indulged to give effect to such proceedings and to favor the regularity and integrity of the arbitrator's acts.

2. Where a matter is submitted to an arbitrator for decision, with an agreement that the arbitrator's decision shall be binding upon all the persons involved, such persons are bound by such decision provided there is no fraud or bad faith on the part of the arbitrator and he acts according to the instructions given him.

Ralph E. Brennan, appellee herein, hereinafter designated plaintiff, and Arthur D. Brennan, appellant herein, hereinafter designated defendant, are brothers.

For many years plaintiff and defendant were associated together in The Brennan Company, which is engaged in the printing business in Akron. That company had 120 shares of issued and outstanding stock, of which plaintiff owned 40 shares, defendant 40 shares, and their mother 40 shares.

Since the death of plaintiff's and defendant's father about 1921 or 1922, plaintiff had been president and general manager, and defendant secretary-treasurer, although the evidence shows that defendant was in the selling end of the business and had little to do with the books, which were predominantly under the supervision of plaintiff.

Differences having arisen between the brothers, they finally decided that plaintiff would sell his 40 shares of stock to defendant. They agreed to have a contract of sale drawn by Robert Guinther, and Akron lawyer.

On January 26, 1945, the two brothers met with Guinther for the purpose of entering into a written contract of sale, and the three of them discussed that terms of the contract, plaintiff doing most of the talking for the brothers.

After the discussion, Guinther called in a stenographer and dictated the form of a contract within the hearing of the brothers. After the stenographer had reduced the dictation to writing, a copy of the contract was given to each of the brothers, and they signed the same. No question is made that the contract they signed was freely and fully entered into by each of them.

The contract reads as follows:

'Agreement.

'Ralph E. Brennan, of Akron, Ohio, hereinafter called the 'seller' and A. D. Brennan, also of Akron, Ohio, hereinafter called the 'buyer,' agree with each other as follows:

'1. The Brennan Company is a corporation organized under the laws of the state of Ohio and has issued and outstanding one hundred twenty (120) shares of common capital stock.

'2. The seller is the owner and holder of record of forty (40) shares thereof, represented by certificate number eight (8) issued on October 2, 1928.

'3. The seller has endorsed said certificate and deposited it with Robert Guinther.

'4. The buyer has delivered to the seller the sum of two thousand dollars ($2,000).

'5. The buyer and seller together direct that Chandler, Murray & Chilton, certified public accountants, of Akron, Ohio, shall proceed promptly to make an examination of the property, books, accounts and assets of the corporation and shall prepare a statement showing the book value of the shares of stock of the company. Said Chandler, Murray & Chilton shall employ ordinary and usual methods of accounting in preparation of such statements: shall make inventory of all work in process and raw materials; the physical inventory shall be made by Reuben Augustine at the close of business on January 31, 1945, and may be relied on by the accountants; shall include all machinery and equipment at the depreciated values thereof; shall include all accounts receivable at the value thereof which may be attributed to them by said accountants, having regard for the age of the account receivable and the like; shall give full and complete consideration to any indebtedness or accounts payable of the corporation, and do all such other things as may be necessary to determine the book value per share of each share of stock of the corporation, as of February 1, 1945.

'6. Within ten (10) days after delivery to the corporation of such report made by accountants as aforesaid, the buyer will deliver to Robert Guinther a sum equal to the difference between the book value of said forty (40) shares of the seller and the sum of two thousand dollars ($2000) this day paid. Thereupon the certificate of stock aforesaid shall be delivered to the buyer for transfer upon the books of the corporation and the sum shall be delivered to the seller.

'7. The seller has this day executed his resignation as an officer, manager and director of The Brennan Company, which said resignation has been deposited with Robert Guinther. At the time when the payment described in the paragraph next foregoing has been made, such resignation shall be delivered to the buyer for action by the directors of the corporation.

'8. Both buyer and seller agree that the determinations made by the certified public accountants aforesaid shall be final and conclusive and will direct that a copy thereof be furnished to the seller at the same time that the account is delivered to the corporation. The reasonable charges and fees of said certified public accountants shall be paid by the corporation.

'9. The buyer will cause the corporation to pay to the seller salary at the rate presently payable to him as president and general manager up to the time when the seller's resignation is presented to the corporation or until March 1, 1945, whichever period is shorter.

'In witness whereof, the parties hereto have hereunto set their hands at Akron, Ohio, this 26th day of January, 1945.

'R. E. Brennan

'Arthur D. Brennan

'I acknowledge that I have received the certificate of stock and the resignation described foregoing and that I will hold the same pursuant to the terms thereof.

'Robert Guinther.'

In pursuance of the contract, defendant delivered to plaintiff his check for $2,000, which plaintiff cashed, and plaintiff delivered to Guinther his endorsed stock certificate for 40 shares of stock, and thereafter the certified public accountants named in the contract proceeded to ascertain the book value of each share of stock of the company as of February 1, 1945.

On March 7, 1945, the accountants furnished a report to plaintiff and defendant on the examination of the books of the company as of January 31, 1945, including statements of financial condition and surplus reconciliation.

The accountants found the book value of the stock to be $238.19 per share, and asserted that such value was determined in accordance with the instructions in the agreement.

When defendant received his copy of the accountants' report, he turned over to Guinther a check in the sum of $9,090.10, which covered the balance due on plaintiff's stock at the rate of $238.19 per share, as well as the balance due on plaintiff's salary to March 1, 1945.

At the time, plaintiff was in ill health in Arizona, so that he did not receive this last check until some time in May 1945, at which time he cashed it, and then on October 11, 1945, he instituted an action against defendant, alleging in his petition that he entered into a written contract with defendant for the sale of his stock to defendant (a copy of the contract being attached to the petition); that plaintiff did all things to be performed by him under the contract but defendant paid to him only a portion of the purchase price of the stock agreed upon; and that there is due plaintiff from defendant $2,369.55, with interest at the rate of six per cent per annum from March 16, 1945, which sum is the balance of the book value of the stock, as agreed to by the parties, unpaid by defendant by reason of the fact that defendant, in the amount which he paid plaintiff for the book value of the stock, omitted an item of valuation for machinery and equipment in the sum of $6,271.27 and an item of office equipment in the sum of $837.38, or a total of $7,108.65.

Plaintiff prays judgment against defendant for the sum of $2,369.55, with interest at six per cent per annum from March 16, 1945.

Defendant filed an answer admitting that plaintiff did all things to be done by him under the contract, but denying all other allegations in the petition.

Defendant alleges further that the contract was fully performed by both parties thereto; that defendant paid to plaintiff the book value of the shares of stock of The Brennan Company as determined by the public accountants designated by the parties for such purposes, and whose determinations were by agreement final and conclusive upon both parties; and that there has been complete accord and satisfaction between the parties.

Plaintiff filed a reply denying all allegations contained in defendant's answer, except such as are admissions of allegations in plaintiff's petition, and alleging that the contract of sale required the public accountants to make an examination of the books of The Brennan Company, to prepare a statement showing the book value of the property and assets and the book value of the shares of stock of the company, and, in doing so, to employ the ordinary and usual methods of accounting applicable to the preparation of such statements; that such accountants did not do the same but arbitrarily employed extraordinary and unusual methods in the preparation of such statement, contrary to the terms of such contract; that such statement did not show the true book value or true depreciated values of machinery, equipment and office equipment, as shown by the books of the company, but fixed them at a lower figure than, and contrary to, that shown by the books; that such statement showed and fixed the book value of the company at an amount less than that shown by the books of the company; and that such statement was not made in accordance...