HK Porter Company v. Wire Rope Corp. of America, Inc.

• Citation: 367 F.2d 653
• Decision Date: 08 November 1966
• Docket Number: No. 18259.,18259.
• Parties: H. K. PORTER COMPANY, Inc., a Corporation, Appellant, v. WIRE ROPE CORPORATION OF AMERICA, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

367 F.2d 653 (1966)

H. K. PORTER COMPANY, Inc., a Corporation, Appellant, v. WIRE ROPE CORPORATION OF AMERICA, INC., Appellee.

No. 18259.

United States Court of Appeals Eighth Circuit.

October 7, 1966.

Rehearing Denied November 8, 1966.

COPYRIGHT MATERIAL OMITTED

Paul Van Osdol, Jr., of Terrell, Van Osdol & Magruder, Kansas City, Mo., for appellant; Guy A. Magruder, Jr., and Richard M. Erickson, Kansas City, Mo., on the brief.

O. W. Watkins, Jr., of Strop, Watkins, Roberts & Hale, St. Joseph, Mo., for appellee; R. Eugene McGannon, Kansas City, Mo., on the brief.

Before VOGEL, Chief Judge, and MATTHES and MEHAFFY, Circuit Judges.

VOGEL, Chief Judge.

Wire Rope Corporation of America, Inc., hereinafter referred to as Wireco or appellee, brought this suit against H. K. Porter Company, Inc., hereinafter known as Porter or appellant, in which Wireco sought to recover in Count 1 the amount it paid out allegedly in behalf of Porter for accrued vacation liability due by Porter to its Leschen Division employees on March 31, 1962, and in Count 2, a determination that it was the owner of a group annuity contract, hereinafter referred to as AC-364, issued by the Equitable Life Assurance Society. Porter had sold to Wireco its Leschen Division. Disputes between the parties developed after closing of the sale and required an interpretation of the sales contract and the instrument which conveyed the business from Porter to Wireco.

The case was tried in the District Court without a jury and resulted in judgment for Wireco in the amount of $31,950 on Count 1 and a determination on Count 2 that Wireco was the owner of AC-364. Porter thereupon brought this appeal from the judgment entered in the District Court. We affirm.

Beginning in late 1961 Wireco sought to purchase from Porter a portion of the latter's business, hereinafter referred to as Porter's Leschen Division. Final draft of the sale contract was negotiated during the period from March 8 to March 10, 1962. Present at the negotiating sessions were the vice president (Mann) and general counsel (Obert) representing Porter and the board chairman (Barclay), president (Josendale), treasurer (Heim), and attorney (McGannon) of Wireco. The final contract (hereinafter referred to as the sale contract) entered into on March 10, 1962, called for Wireco to purchase the assets of Leschen at book value and to assume certain of Leschen's obligations. The total purchase price was some $3,000,000.

The sale contract in pertinent part provided as follows:

"WHEREAS, Wireco desires to purchase from Porter and Porter desires to sell to Wireco certain assets of Porter\'s LESCHEN WIRE ROPE DIVISION (herein called `Leschen Division\'),

"NOW THEREFORE * * *

"1. Assets to be Sold: Wireco agrees to purchase as of the close of business March 31, 1962 from Porter and Porter agrees to sell to Wireco the following assets of the Leschen Division:

certain property

"(c) * * * and all other assets and property of the Leschen Division not specifically included in this paragraph 1 and not specifically excluded in paragraph 2.

2. Exclusion of Assets: The following assets of the Leschen Division are specifically excluded from the sale of assets under this agreement:

"(a) All cranes and scales in the warehouse buildings.

"(b) All land and buildings, including power plant equipment and boilers.

"(c) Cash.

"(d) Notes and accounts receivable — customers, more than ninety (90) days old on March 31, 1962; inter-company and inter-division notes and accounts receivable; and notes and accounts receivable other than from customers.

"(e) Prepaid items.

* * * * * *

"7. Assumption of Contracts: Concurrently with the purchase of the foregoing assets, Wireco will assume and take over and perform, in accordance with their terms, the following:

* * * * * *

"(d) Union contract, effective July 4, 1960, entered into with the following three unions:

"(i) District #9 of the International Association of Machinists;

"(ii) International Brotherhood of Electrical Workers, Local #1;

"(iii) Building Service Employees Union Local #50,

and related agreement with the same unions dated November 30, 1960, and providing for pension plan for hourly paid employees of the Leschen Division, copies of which agreements have heretofore been furnished to Wireco. Also, union contract with Teamster Union Local #860 — IBT at San Francisco Warehouse.

"8. Proration of Taxes, Insurance, etc.: Personal property taxes, insurance (other than on buildings), utility charges, rentals and prepayments on any operating or servicing contracts concerning or affecting Porter\'s Leschen Division shall be pro rated as of the closing date.

* * * * * *

"10. Agreements of Porter: * *

"(d) Porter will deliver at the closing to Wireco such instruments of assignment and transfer as may reasonably be deemed advisable by counsel for Wireco to vest in Wireco good title to all of the assets to be purchased hereunder. Porter agrees following closing to deliver such additional instruments of assignment and transfer not obtained at closing as may reasonably be deemed advisable by counsel for Wireco to vest in Wireco good title to all assets to be purchased hereunder." (Emphasis supplied.)

Pursuant to paragraph 10 of the sale contract, Porter delivered to Wireco at the time of closing (March 31, 1962) a document entitled "General Instrument of Conveyance and Transfer from Porter to Wireco", (hereinafter referred to as the conveyance document). Pertinent portions of the conveyance document were as follows:

"* * * Porter, for good and valuable consideration, receipt of which is hereby acknowledged, does by these presents bargain, sell, grant, convey, transfer and deliver to Wireco, its successors and assigns, the following assets of Porter\'s Leschen Wire Rope Division (`Leschen Division\'):

* * * * * *

"(d) All other assets, properties and rights of the Leschen Division of every name and description, tangible and intangible, wherever located, and not specifically listed in this instrument, but Excepting, However, the following:

* * * * * *

"(iv) Notes and accounts receivable; and

"(v) Prepaid items." (Emphasis supplied.)

As indicated, Count 1 of Wireco's complaint concerns accrued liability for vacation pay due to Leschen's employees pursuant to a contract entered into between Porter and the union representing Leschen's employees (hereinafter referred to as the union contract). The union contract was assumed by Wireco in paragraph 7 of the sale contract. Article IV of the July 4, 1960, labor contract provides in part as follows:

"ARTICLE IV

"Vacations

"Section 1. All employees of one (1) year\'s continuous service with the Company immediately preceding June 1st in any year shall receive one (1) week\'s vacation with pay based on forty (40) hours\' pay. * * * All employees of three (3) years\' continuous service immediately preceding June 1st in any one year shall be entitled to two (2) weeks\' vacation with pay. All employees of twelve (12) years\' continuous service immediately preceding June 1st in any one year shall be entitled to three (3) weeks\' vacation with pay.

"Section 2. For the purpose of the foregoing clause, an employee employed prior to December 1st in any one year will be deemed to have been employed one year as of June 1st following. Thereafter, one-twelfth (1/12) of vacation credit shall be earned for each full month worked.

"The first two (2) weeks of vacation shall be in the period between June 1st and September 1st and the third week of vacation shall be at any time during the year: * * *.

"Section 3. Employees terminating ing their employment with the Company for any reason whatsoever, or laid off, after one year of service shall receive one-twelfth (1/12) of their regular vacation allotment due them at the time of such termination for each full month worked after the start of last vacation period.

* * *

* * * * * *

"Section 5. Employees will receive vacation pay at the time they take their vacation in accordance with the above section."

The vacation pay in question, stipulated by the parties to amount to $31,950, had accrued prior to the time Wireco took control of Leschen. The accrued sum, however, did not become due until the affected Leschen employees took their vacations, which occurred sometime after March 31, 1962. The District Court found as follows:

"The date of the contract was March 10, 1962, and plaintiff took over the assets as of the close of business March 31, 1962.

"On March 31, there were certain employees of Leschen whose earned vacation pay was then accrued and due. These amounts were thereafter paid by Wireco, and upon demand, were reimbursed by Porter. There were other employees to whom benefits had accrued and which became due between March 31 and June 1, 1962. The amounts had accrued on a monthly basis under the labor contract during the twelve month vacation period.

"As Wireco paid these amounts it billed Porter as it had done after paying the amounts due before March 31, and Porter declined to pay on the ground that under the terms of its contract, Wireco had assumed the obligation to pay such amounts."

In contrast to the District Court's findings, supra, Porter alleges that any payments it made on accrued vacation pay due to Leschen's employees before March 31, 1962, were made directly to the Leschen employees involved and were not made as a reimbursement to Wireco. Regardless of this, the accrued vacation pay appeared as a liability on Leschen's balance sheet on the date of the sale of Leschen to Wireco. The trial court found from the testimony that it was agreed that Wireco was not to assume any liabilities showing on Leschen's balance sheet. Porter paid off other of Leschen's liabilities but not the vacation pay which had accrued up to March 31, 1962. The accrued vacation pay was not deducted from the purchase price at closing. As to Count 1, Judge Duncan entered judgment for Wireco in the amount of $31,950,...