Norden Laboratories, Inc. v. Rotenberger

• Decision Date: 28 November 1984
• Docket Number: No. 10711,10711
• Citation: 358 N.W.2d 518
• Parties: NORDEN LABORATORIES, INC., Plaintiff, v. W.A. ROTENBERGER, Defendant and Third-Party Plaintiff and Appellee, and Patrick H. Robertson and Marilyn B. Robertson, Third-Party Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 518

358 N.W.2d 518

NORDEN LABORATORIES, INC., Plaintiff, v. W.A. ROTENBERGER, Defendant and Third-Party Plaintiff and Appellee, and Patrick H. Robertson and Marilyn B. Robertson, Third-Party

Defendants and Appellants.

Civ. No. 10711.

Supreme Court of North Dakota.

Nov. 28, 1984.

Ward M. Kirby, of Mackoff, Kellogg, Kirby & Kloster, Dickinson, for defendant and third-party plaintiff and appellee.

T.L. Secrest, Hettinger, for third-party defendants and appellants.

VANDE WALLE, Justice.

Dr. Patrick Robertson and Marilyn B. Robertson, third-party defendants and purchasers of a veterinary clinic from Dr. W.A. Rotenberger, appealed from the civil judgment entered by the district court, Bowman County, on April 18, 1984, awarding Dr. Rotenberger, third-party plaintiff, $4,495 plus interest in payment for supplies and medicines received from Dr. Rotenberger. We affirm.

This action arises out of a dispute concerning the purchase of the veterinary clinic business by the Robertsons from Dr. Rotenberger during August of 1979. In negotiating the sale of the business the parties signed two instruments: an earnest-money purchase agreement entitled "Purchase Contract and Receipt" dated July 27, 1979, and the final contract entitled "Contract of Sale" dated August 31, 1979. On July 27, 1979, the Robertsons paid $10,000 as earnest money and down-payment on the condition that the $10,000 would be returned to the Robertsons if they could not obtain financing for the purchase of the business.

In the purchase contract the Robertsons agreed to pay $220,000 for the assets of the business including inventory worth $20,000. The parties agreed that the sale would become final upon the signing of the contract of sale.

Prior to August 31, 1979, the date the contract of sale was signed, Dr. Rotenberger had ordered additional veterinary medicines and supplies in the sum of approximately $4,400. Dr. Rotenberger made these purchases in order that he might have sufficient inventory to continue the business in the event that Dr. Robertson failed to complete the agreement to purchase the clinic. The additional supplies and medicines arrived at the clinic sometime prior to August 31, 1979.

By agreement of the parties an inventory was taken of supplies and medicines prior to the signing of the contract of sale. This inventory, verified by subsequent inventories, indicated that the value of the supplies and medicines exceeded $20,000.

After the contract of sale was signed the Robertsons took possession of the clinic including the additional supplies and medicines. Dr. Rotenberger was subsequently billed by the various suppliers of the additional supplies and medicines. One such supplier, Norden Laboratories, Inc., brought suit against Dr. Rotenberger for payment of the supplies he had ordered. Dr. Rotenberger in turn requested Dr. Robertson to pay for the supplies and medicines. Dr. Rotenberger claimed that Dr. Robertson had agreed, prior to signing the contract of sale, that certain supplies and medicines would either be paid for by Robertson or returned to Rotenberger for credit. Dr. Robertson kept the supplies and medicines but refused to make payment to Dr. Rotenberger. Dr. Robertson argued that the additional supplies and medicines were a part of the inventory and included in the property that he purchased in the contract of sale.

Dr. Rotenberger paid the amounts due for the supplies and medicines to the medical supply companies including Norden Laboratories, Inc., and subsequently brought a third-party action against the Robertsons to recover these amounts.

The dispute between the parties focused on the two instruments of sale, the purchase contract and receipt dated July 27, 1979, and the contract of sale dated August 31, 1979.

The contract of sale differed from the purchase contract and receipt in two respects. The first difference between the instruments was in the manner in which the required $20,000 of inventory being sold to Dr. Robertson was dealt with in each instrument.

The contract of sale included two separate provisions concerning inventory. The first provision which mentioned the sale of supplies and inventory stated that Dr. Rotenberger "... hereby sells and assigns to the Purchasers the business and property ... including all equipment, supplies and inventory, ..." That provision also listed items that Dr. Rotenberger was excluding from the sale of the business. The supplies and medicines ordered prior to the closing date of the sale were not included in the list of exclusions. Dr. Robertson contended that any assets of the business that Dr. Rotenberger wanted excluded from the sale should have been mentioned in the paragraph containing the exclusions. The second provision in the contract of sale that mentioned supplies and inventory allocated $20,000 of the purchase price into $5,000 for supplies and $15,000 for inventory.

The above provisions in the contract of sale concerning supplies and inventory differed from the inventory provisions found in the purchase contract and receipt in that the latter stated that the sale included "all buildings, land, equipment, supplies, trees, fences, corrals, water system, sewer system, and $20,000 of inventory."

The second difference between the instruments of sale was in the manner in which each instrument set forth the commencement date for accrual of interest on the principal amount financed by the Robertsons. The purchase contract and receipt provided that the Robertsons were to make a down-payment and finance the balance with monthly payments starting on January 10, 1980. The purchase contract and receipt specifically provided that interest was to start accumulating on ...