Holscher v. Ferry

• Decision Date: 28 February 1955
• Docket Number: No. 17421,17421
• Citation: 131 Colo. 190,280 P.2d 655
• Parties: Celesta Johson HOLSCHER, as the Administratrix of the Estate of Paul F. Holscher, Jr., deceased; Celesta Johnson Holscher, Paul F. Holscher, III, minor, Franz S. Holscher, minor, and Marianne Holscher, minor, as the known heirs of Paul F. Holscher, Jr., deceased, Plaintiffs in Error, v. Charles N. FERRY, Defendant in Error.
• Court: Colorado Supreme Court

Page 655

280 P.2d 655

131 Colo. 190

Celesta Johson HOLSCHER, as the Administratrix of the Estate of Paul F. Holscher, Jr., deceased; Celesta Johnson Holscher, Paul F. Holscher, III, minor, Franz S. Holscher minor, and Marianne Holscher, minor, as the known heirs of Paul F. Holscher, Jr., deceased, Plaintiffs in Error, v. Charles N. FERRY, Defendant in Error.

No. 17421.

Supreme Court of Colorado, En Banc.

Feb. 28, 1955.

Rehearing Denied March 21, 1955.

Kenneth W. Robinson, Robert D. Charlton, Richard L. Schrepferman, Denver, for plaintiffs in error.

Richard H. Simon, Richard N. Graham, Englewood, for defendant in error.

KNAUSS, Justice.

Defendant in error was plaintiff in the trial court and plaintiffs in error were defendants, in an action to rescind a contract between Charles N. Ferry and Paul F. Holscher, who was deceased at the time the action was commenced. We will for convenience refer to plaintiff as Ferry and the defendants (who are the administratrix of the Holscher estate and the heirs of said decedent), as the estate. The trial court entered judgment in favor of Ferry and decreed a rescission of the contract. The estate brings the cause here by writ of error.

The facts were stipulated. Prior to May 23, 1952 Ferry was an active partner in a construction firm known as Winslow & Associates Construction Co. For some time prior thereto Paul F. Holscher was employed by said partnership. For personal reasons Ferry desired to leave the construction business, and after consulting with his other partners, conferred with Paul F. Holscher in regard to the latter's purchase of Ferry's interest in said partnership. A sale was agreed upon and an agreement, dated May 23, 1952, was executed and approved by the other partners. The deceased Paul F. Holscher is referred to as Paul Holscher in the agreement, which in substance is as follows:

'Witnesseth: That in consideration of the covenants herein and the execution and payment of four (4) promissory notes in aggregate amount of $20,000.00, the receipt of which is hereby acknowledged, Charles N. Ferry hereby grants, bargains and sells to Paul Holscher, all of his interest in and to the firm of Winslow & Associates Construction Co., * * * to have and to hold said goods, chattels and interest unto the said Paul Holscher, his heirs, executors, administrators and assigns for his own use forever.' The agreement further provided: 'that any transfer of any interests of Paul Holscher in or to the firm of Winslow & Associates Construction Co., on or before September 1, 1955, will not be made without the written approval of Charles N. Ferry, his heirs or assigns, or, in the alternative, full payment of the remainder of the four (4) promissory notes signed this date by the said Paul Holscher.'

Mr. Holscher died July 10, 1952, and none of the notes had been paid. The complaint in the instant action was filed February 11, 1953 and alleged that Mr. Holscher's estate had insufficient funds to 'meet the claims of all creditors; that if the agreement as set forth herein is permitted to stand, the partnership interest will be sold by representatives of the estate for an amount far less than the $20,000 agreed upon between the parties; that because of the insolvency of the estate, other creditors will have priority to and equal shares with plaintiff in and to the proceeds of any sale of the interest' of Mr. Holscher in and to the Winslow partnership. It further was alleged 'That it is inequitable to permit the heirs and creditors of Holscher to benefit from an agreement made by him for which he paid no actual consideration and upon which plaintiff would be forced to accept only a very small percentage of the agreed consideration.' Plaintiff tendered a return of the notes and prayed for a cancellation and rescission of the agreement 'and the transfer made pursuant thereto.' Ferry's demand for rescission was made on January 28, 1953. A motion to dismiss the complaint was denied. By answer, the estate admitted the contract; alleged that the estate of Mr. Holscher was being administered in the county court of Arapahoe County, Colorado; that decedent's interest in said partnership was inventoried in said estate, and by court order had been appraised as of the value of $12,000; that on August 28, 1952 Ferry filed in said estate his claim on all of the notes set forth in the complaint and later attached said notes thereto, and that the claim had been allowed by the county court; that the transaction between decedent Holscher and Ferry 'was a fully executed transaction and completed in the 23rd day of May, 1952.' The answer further set forth that Ferry was estopped to rescind the contract, and that the only relationship between Ferry and Holscher was that of creditor and debtor; that by his election to proceed in the county court on the notes, Ferry 'is now forever barred from prosecuting the action set out in his complaint.' A motion for summary judgment, filed by counsel for the estate, was denied.

The trial court found 'that there was a breach of a dependent covenant (the payment) and that the deceased party to the contract will never be able to perform that covenant.' He also said: 'equity and good conscience could not and should not stamp approval on such a contract.'

In the instant case, Ferry by filing his claim for $20,000, based on the notes, affirmed the contract and waived his right to rescind, especially as he never withdrew this claim, and it was allowed. The notes were filed in support of the claim and were within the jurisdiction of the county court where the Holscher estate was pending. They were merged in the judgment of that court when the claim was allowed. Hiller v. Matheny, 81 Colo. 459, 256 P. 10.

A remedy based on the theory of an affirmance of the contract is inconsistent with a remedy arising out of the same facts based on the theory of its disaffirmance or rescission, so that the election of either must be an abandonment of the other. It is the inconsistency of the demands that makes the election of one remedial right an estoppel against the assertion of the other, and not the fact that the forms of action are different.

Here, the interest in the partnership was sold for $20,000; the identical property was appraised in the estate at $12,000 and by stipulation the parties agree that the best offer made to the administratrix for the same property was $6,500.

The bar is not effective and there is no estoppel where the party in selecting his legal or equitable remedy acts in ignorance of the facts, or where both are predicated on the affirmance or on the disaffirmance of a contract. An inconsistency between the legal and the equitable remedy exists where one proceeds in affirmance and the other in disaffirmance of the contract upon which the suits are based or where relief...