McGrath v. Dubs

• Decision Date: 24 April 1953
• Docket Number: No. 9093,9093
• Citation: 257 P.2d 899,127 Mont. 101
• Parties: McGRATH v. DUBS
• Court: Montana Supreme Court

Page 899

257 P.2d 899

127 Mont. 101

McGRATH v. DUBS

No. 9093.

Supreme Court of Montana.

April 24, 1953.

As Amended on Denial of Rehearing June 18, 1953.

Hall, Alexander & Burton, Great Falls, for appellant.

Swanberg & Swanberg, Great Falls, for respondent.

ANGSTMAN, Justice.

In January 1949, Frank McGrath and Edmund Dubs and his wife, Clara Dubs, formed a corporation known as McGrath-Dubs Motors Inc., for the purpose of selling automobiles in Great Falls. Dissention soon developed and in November of the same year they entered into a written agreement for the liquidation of the business and division of the assets. By the terms of the agreement all the assets of the corporation were turned over to defendant, Edmund Dubs, after January 5, 1950, and he agreed to liquidate the business not later than January 15, 1950. McGrath was to operate the business until January 5, 1950, he having an option to purchase it at any time before that date, but which option was never exercised.

Upon liquidation, Frank McGrath was to be paid $2,000, Clara Dubs $5,000 and Edmund Dubs $10,000, these amounts being the sums contributed by each respectively to the corporation at the time the business was started. The excess obtained upon liquidation was to be distributed fifty percent to McGrath and fifty percent to the Dubs. Defendant commenced liquidation by turning over a car to Mr. McGrath and enough cash to make up his original investment of $2,000 and sometime before the trial of this action $5,000 was returned to Mrs. Dubs.

This action was brought by Frank McGrath, but before the case was tried, Frank died and Frances McGrath, administratrix, was substituted as party plaintiff. The jury found for plaintiff in the sum of $15,150 with interest. Defendant has appealed from the judgment entered on the verdict.

The complaint alleges that when the business was turned over to defendant Edmund Dubs for liquidation, the total assets amounted to $64,215.63 and the liabilities amounted to $15,637.25, leaving capital and surplus of $48,578.38; that after returning to plaintiff $2,000 and $10,000 to defendant, Edmund Dubs, and $5,000 to Clara Dubs, there remained for division between Frank McGrath and defendant the sum of $31,578.38, of which Frank McGrath was entitled to one-half or $15,789.19. It is alleged that defendant after the assets were turned over to him sold the business in its entirety, but plaintiff is not informed of the purchase price of such sale; that between January 5th and January 15th, the business could have been sold and liquidated for its full value, but that defendant Edmund Dubs failed and refused to do so to plaintiff's damage in the sum of $15,789.19; that plaintiff has demanded an accounting of the proceeds of the liquidation and the payment of plaintiff's share of the proceeds but defendant has failed, neglected and refused to make any accounting and the defendant is indebted to plaintiff in the sum of $15,789.19.

Defendant filed a demurrer containing grounds both general and special. The special grounds were for uncertainty as to whether the action is one for accounting or for damages for failure to liquidate the assets for their full value and uncertain because it cannot be determined how or for what reason plaintiff is entitled to the sum of $15,789.19. The demurrer was overruled.

It is defendant's contention that the complaint contains contradictory allegations; that in one paragraph it is alleged that defendant sold the business in its entirety and has failed to account to plaintiff for his share, whereas in another paragraph it is alleged that the business could and should have been liquidated for its full value as alleged in the complaint but that defendant failed and refused to do so to plaintiff's damage in the sum of $15,789.19.

In construing the complaint attacked upon the ground of uncertainty we keep in mind the well settled rule that, 'a special demurrer will not lie even as to uncertain and ambiguous allegations * * * if the matters with respect to which the pleading is uncertain or ambiguous are peculiarly within the knowledge of the opposite party. * * * and, notwithstanding the allegations may not be as clear and as detailed as might be desired, a special demurrer should not be sustained if the allegations are sufficiently clear to apprise the other party of the issues which must be met.' 71 C.J.S., Pleading, § 224, page 435.

The same rule applies in those states where uncertainty must be raised by motion to make more definite and certain. Id. § 481, page 995.

A motion to make more definite and certain is a discretionary matter with the court. Id. § 475, page 983 and 41 Am.Jur., Pleading, § 360, p. 537. And the same rule should obtain as to a special demurrer questioning the complaint on the ground if uncertainty.

Here it sufficiently appears from the complaint that the defendant had full knowledge of what he had done in the way of liquidating the business of the corporation. The complaint discloses that plaintiff did not know just what had been done by defendant in that connection. The complaint is susceptible to the interpretation that the allegations are in the alternative, i. e., that defendant had liquidated the business in its entirety for an amount unknown to plaintiff; that it could and should have been liquidated for its full value but that defendant had failed and refused to do so and has failed to account to plaintiff for his share of the proceeds under either alternative. Since defendant knew exactly what he had done with respect to the liquidation it cannot be said that he was in any sense taken by surprise as to what issues he was called upon to meet. Modern authorities permit pleading in the alternative to meet the exigencies of the proof.

In 41 Am.Jur., Pleading, § 42, p. 317-318, it is said, 'where the exact relations existing between the defendants at the time the cause of action arose are not definitely known to anyone but themselves, and for this reason the plaintiff is doubtful about the particular facts which he can establish on the trial, he is allowed to plead alternative allegations, and a like rule applies where the pleader has no knowledge as to which of two sets of facts should be alleged, and the opposite party would be equally liable under either. Of course, an immaterial inconsistency between averments will be disregarded.' And see Peck v. Woomack, 65 Nev. 184, 192 P.2d 874, and Saliba v. Saliba, 202 Ga. 791, 44 S.E.2d 744. This court has likewise sanctioned this practice. Wilson v. Milner Hotels, Inc., 116 Mont. 424, 154 P.2d 265; Fitzgerald v. Eisenhauer, 62 Mont. 582, 206 P. 685. Inconsistent allegations have been held to nullify each other in White v. Hagbery, 54 Mont. 593, 172 P. 1034; Stricklin v. Chicago, M. & St. P. Ry. Co., 59 Mont. 367, 197 P. 839 and Jones v. Hall, 90 Mont. 69, 300 P. 232. However, there was nothing in the last cited cases to indicate that plaintiff was without knowledge of the exact facts and that defendant was in possession of all the facts and circumstances and knew more about them than did plaintiff. Additionally, the allegations here are not inconsistent. The one is that the business was sold for an amount unknown to plaintiff; and the other that it could have been sold for its full value, but this defendant failed and refused to do. It was the amount of the sale price that was left uncertain, but as to that defendant knew the facts and could not have been misled.

Likewise defendant could not have been prejudiced by any uncertainty in the complaint because at the opening of the trial plaintiff upon motion of defendant elected to proceed in the trial of the action as one for breach of contract. The record in that connection shows the following 'The Court: The question now arises whether the Court will try this case as a court case or a jury case, with questions on Findings of Fact to be submitted to the Jury; in other words, special findings.

'Mr. Hall: The defendants take the position the action is one for accounting of the proceeds of a liquidation under a contract between the parties, and not an action for a breach of contract or an action on a contract, and if there is any question about it, we now request that the plaintiff elect upon what theory he proceeds in the case.

'Mr. Swanberg: We believe it is an action to be submitted to the Jury on a breach of contract action.'

The court did not err in overruling the demurrer to the complaint.

The evidence shows that while the McGrath-Dubs Motors, Inc. was a going concern, Louis A. Lanouette, a certified public accountant, was employed by it to balance the books each month and to prepare reports for the Chrysler Company and for income tax purposes. These reports were received in evidence and furnish a principal ground for this appeal.

Defendant contends that the court erred in admitting Exhibits, 3, 4 and 5 in evidence as well as testimony of Mr. Lanouette with reference to these exhibits.

Exhibit 3 is a financial report of McGrath-Dubs Motors, Inc. as of December 31, 1949, prepared by Louis A. Lanouette.

Exhibit 4 is a tentative balance sheet of McGrath-Dubs Motors, Inc. as of December 31, 1949, before adjustments.

Exhibit 5 is a financial report of the corporation as of March 4, 1950, made by Mr. Lanouette.

Lanouette testified that he prepared Exhibit 3 from the books of the company, bank statements and from information submitted on inventories from members of the corporation. It correctly reflects the figures that appear on the corporation's books and records. Speaking of Exhibit 4 he said: 'These figures are before any adjustments for inventories, and there were some other expenses to be paid in the interim between this statement and that one. This was taken off a day or two before adjusting the books. * * *

'Q. * * * would it be true that the figures on 'Exhibit 4' were those used by the company through the year as from the inventory, and the...