Kell v. Gross, 12337.

• Decision Date: 21 February 1949
• Docket Number: No. 12337.,12337.
• Citation: 171 F.2d 715
• Parties: KELL et al. v. GROSS et al.
• Court: U.S. Court of Appeals — Fifth Circuit

171 F.2d 715 (1949)

KELL et al. v. GROSS et al.

No. 12337.

United States Court of Appeals Fifth Circuit.

January 11, 1949.

Rehearing Denied February 21, 1949.

Leslie Humphrey, of Wichita Falls, Tex., and Eugene DeBogory, of Dallas, Tex., for appellants.

James E. Henderson, of Dallas, Tex., for appellees.

Before HUTCHESON, SIBLEY, and McCORD, Circuit Judges.

SIBLEY, Circuit Judge.

The appellees recovered judgment for $118,353.69 and interest on a contract for the purchase by them of the entire capital stock of the Missouri and Arkansas Railway Co., to be paid out of a fund deposited by appellants under the contract in the hands of Republic National Bank. The petition in its first count was founded on the exhibited contract. In the second count it alternatively alleged a precedent verbal agreement which by accident or mistake was deviated from in writing the contract and a reformation was prayed. The answer in effect alleged there was no agreement except the writing, that it was the contract, and that its terms precluded the recovery sought. Much evidence was introduced as to the negotiations, covering several weeks, and the drafting of the writing carefully and deliberately, there being present Gross, who is one of the purchasers, his attorney, the attorney of the other purchaser and a public accountant on behalf of the purchasers, and on behalf of the sellers, one Bullington, who is the husband of one of them and is a lawyer, and wrote the preliminary draft of the contract, and the husband of another seller, who was the president of the Railway Company. The writing was signed by the two purchasers and later by one of the eight sellers who held a formal power of attorney from the other seven. The district judge found no accident or mistake and adjudged no reformation, but construed the contract to mean what the petitioners asserted it meant.

On this appeal it is not contended that anything was mistakenly put into or left out of the contract. Neither side insists that the contract is even ambiguous. But they differ as to its meaning. We also see no evidence of accident or mistake. The writing was deliberately adopted by all parties as the expression of their contract. All previous negotiations are merged into it. Each party must be held to its provisions. The interpretation of its terms is merely a question of law. The finding of the district judge as to its meaning is not a fact finding, but a conclusion of law.

The contract, dated November 15, 1946, covers twenty-six printed pages, but the controversy is limited to the provisions about a deposit in escrow of $245,000 in the bank, and especially Paragraphs 5 and 6. In interpreting these paragraphs, however, all the provisions of the contract are to be considered in arriving at the true meaning expressed. So doing, it appears from the introductory clauses that the sellers, eight sisters, own the entire 3500 shares of the stock of the Railway Company, the interest of each being set forth, and individually and severally each is selling her stock. They agree to sell for an aggregate sum of $645,000, the stock to be delivered at once at the Republic National Bank, of which price $400,000 is to be paid cash to their attorney in fact, and the remainder, $245,000 is to be held by the bank in escrow "to accomplish the purposes and fulfill all the obligations and agreements of stockholders as hereinafter set forth", it representing a deposit by each stockholder of her part in it. It is next agreed that the stockholders will cause retirement of the present directors and officers of the Railway Company and fill the vacancies with persons named by the purchasers, thus giving full control of the Railway Company. The stockholders next represent and declare to be true a number of facts, and especially that an attached balance sheet of the company as of the close of business September 30, 1946 (Exhibit B), is correct, with seven exceptions, the last being "Assets and liabilities unknown at this time". The balance sheet shows what we may term the fixed assets, such as road and equipment and rolling stock and miscellaneous physical property, with no bonds or fixed liabilities....