A.L.G. Enterprises v. Huffman
| Decision Date | 03 November 1983 |
| Docket Number | No. 13-83-197-CV,13-83-197-CV |
| Citation | 660 S.W.2d 603 |
| Parties | A.L.G. ENTERPRISES and W. Scott Berry, Appellants, v. HUFFMAN, Robert W. and Maxine Huffman, Appellees. |
| Court | Texas Court of Appeals |
Jerry T. Steed, Roy J. True, True & McLain, Dallas, for appellants.
Kenneth F. Nye, Dallas, for appellees.
Before NYE, C.J., and YOUNG and KENNEDY, JJ.
This suit was brought by Robert and Maxine Huffman (Huffmans) to enjoin the foreclosure of real property held as security on a promissory note and to rescind all documents concerning a sale of a liquor store by defendants, A.L.G. Enterprises, to plaintiffs. The Huffmans claimed fraud and misrepresentation as grounds for the rescission or, alternatively, that there was a mutual mistake between the parties as to the current financial condition of the business which warranted rescission of the sales contract.
The defendants counterclaimed, seeking recovery of all money owed on the promissory note, attorney's fees, interest and judicial foreclosure of the collateral securing the promissory note. The trial court granted a temporary injunction pending a trial on the merits. At trial, the jury found no fraud or misrepresentation, but that there had been a mutual mistake between the parties as to the current financial condition of the liquor store. The trial court rendered judgment for the plaintiffs, rescinding the contract and awarded them $44,028.00, which represented the amount paid to the defendants since August 1980, pursuant to the contract of sale.
The appellant, Enterprises, brings ten points of error. The first seven may be considered together because they concern whether the trial court had before it any evidence or sufficient evidence on which to render judgment for the Huffmans. The jury answered Special Issue No. 5 affirmatively:
"Was the contract of sale involved in this case based upon or due to a mutual mistake of both parties as to the current financial condition of the liquor store in question?"
In August or September 1979, appellees (Huffmans) approached Enterprises through its agent, Al Grammatico, to inquire about the purchase of a liquor store owned by Enterprises. Enterprises is a small, closely held corporation. The agent of Enterprises had known the Huffmans for over twenty years. He indicated a willingness to sell and instructed the Huffmans to contact Enterprises' accountant and attorney regarding the purchase. The accountant provided the Huffmans with an Income and Expense Statement for fiscal year 1978, and a current Income and Expense Statement for an eleven-month period ending August 1979. During the first negotiations, the Huffmans enlisted the assistance of their own accountant. The parties agreed to a sale price of $125,000.00. However, the sale was not consummated at that time because Enterprises did not believe that the Huffmans were sufficiently collateralized.
The Huffmans approached Enterprises a second time in June of 1980. Mr. Grammatico, the agent, indicated an interest in selling as soon as possible since his wife, who had assisted in the operation of his business, was ill. He was spending a great deal of time with her and was unable to watch the store like he used to do. This time the sale price was reduced to $100,000.00. The Huffmans did not consult their accountant before consummating the purchase.
Huffman met with Grammatico, and, on June 18, 1980, he sent Enterprises a proposal for the purchase of the liquor store. About two weeks before the sale, Mrs. Huffman testified that she was concerned about the financial condition of the liquor store. At her husband's request, she visited Mr. Grammatico. The conversation that took place at this meeting is controversial. It forms the basis upon which the Huffmans' claim of mutual mistake is founded. Mrs. Huffman brought with her the Profit and Loss Statement reflecting an 11-month period ending August 1979 given to the Huffmans during the 1979 negotiations. She testified that she asked Mr. Grammatico what were the current gross sales for the liquor store. She testified, in response to her question about the current gross sales, that Mr. Grammatico wrote the figures 594 on the 1979 Income and Expense statement, meaning gross sales of $594,000.00. However, deposition testimony of Mrs. Huffman introduced by way of impeachment indicates that she was unclear about the question she asked Mr. Grammatico at that meeting.
Mr. Grammatico's testimony also conflicts with the testimony given by Mrs. Huffman at trial. He testified that Mrs. Huffman asked him if the figures on the 1979 Income and Expense Statement that she had brought with her were accurate, and he testified that he told her that the gross sales for the fiscal year ending September 1979 were actually approximately $594,000.00, rather than $546,000.00, which was indicated in the statement she had in her possession. The figure $594,000.00 was approximately the correct gross sales figure for fiscal year 1979. During the second negotiations, the Huffmans did not contact either Grammatico's accountant or their own accountant as they had done during the first negotiations. Mr. Grammatico had, on more than one occasion, told Mr Huffman to contact his accountant or attorney with questions regarding the business because he didn't know anything about that part of the business and had them handle everything. The testimony of all parties is in accord regarding the fact that Grammatico had encouraged the Huffmans to speak with his accountant.
After the sale had been consummated, the Huffmans learned that the gross sales for the fiscal year beginning October 1, 1980, were actually about $385,000.00 as of the time of the purchase. Testimony was introduced at trial that, at the time of the meeting between Grammatico and Mrs. Huffman, Grammatico did not have the current financial data available to him. The jury found that there had been a mutual mistake between the parties as to the financial condition of the business at the time of the sale.
"Mutual mistake"...
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