Peterson v. Freeman

• Decision Date: 14 December 1970
• Docket Number: No. 6140,6140
• Citation: 86 Nev. 850,477 P.2d 876
• Parties: Ray A. PETERSON, Jr., and Robert E. Peterson, Appellants, v. Orrin D. FREEMAN and Bonnie Freeman, his wife, Respondents.
• Court: Nevada Supreme Court

Page 876

477 P.2d 876

86 Nev. 850

Ray A. PETERSON, Jr., and Robert E. Peterson, Appellants, v. Orrin D. FREEMAN and Bonnie Freeman, his wife, Respondents.

No. 6140.

Supreme Court of Nevada.

Dec. 14, 1970.

Rehearing Denied Feb. 11, 1971.

A. D. Jensen, Reno, for appellants

Leo. P. Bergin, Reno, for respondents.

OPINION

MOWBRAY, Justice.

This is an appeal from an order of the district court granting a $20,000 summary judgment in favor of respondents, the Freemans, and awarding them an additional $1,500 for their attorney's fees. We approve the $20,000 award, but we reject the $1,500 allowance for attorney's fees. The judgment as so modified is affirmed.

1. In 1965, the Freemans sold all of the stock in their business, known as Chesnut and Freeman, Inc., to appellants, the Petersons, and Warren M. Brown. The business was primarily concerned with the sale and repair of motor trucks. The partners finalized their negotiations in a written agreement dated June 30, 1965. The agreement provided that the appellants would pay the Freemans $45,000 for all the common stock of the corporation, consisting of $24,000 shares, payable by depositing $15,000 in escrow with Leslie M. Fry of Reno and the remaining balance of $30,000 to be paid in six annual installments of $5,000 each, commencing July 1, 1966. In the agreement of June 30, 1965, the Freemans warranted 'that as of March 31, 1965, the net worth of CHESNUT AND FREEMAN, INC.' was $38,230.28. The net worth figure was based principally on the physical inventory of the company and its accounts receivable. In this connection, the parties agreed that a physical inventory of the business would be taken within 15 days, 'priced at the unit cost invoice price appearing on the last invoice in point of time,' and the Freemans agreed, among other things, to deposit for the appellants' inspection with the escrowee a list of the accounts receivable. ¹

The parties further agreed that the esscrowee, among other things, should hold the $15,000 down payment and not release it to the sellers until the completion of the taking of the inventory, 'which shall be approved by SELLERS and BUYERS,' and the receipt in escrow of a list of all accounts receivable plus a balance sheet of Chesnut and Freeman, Inc. as of June 30, 1965. ²

The physical inventory was taken and approved in writing by the appellants on June 30, 1965. The schedule of the accounts receivable and the balance sheet of June 30 were deposited with the escrowee, as provided in paragraph 11 of the agreement. Thereafter, the escrowee released the $15,000 down payment to the Freemans. Appellants took possession of the business and operated it. They paid the $5,000 annual installment payments due on July 1, 1966, and July 1, 1967. They thereafter sold the business to a third party. They have refused, however, to pay the annual installment due July 1, 1968. The Freemans then commenced this action in district court by filing a complaint to recover the remaining purchase price of $20,000 due under the terms of the agreement. The appellants-defendants answered by alleging that the net worth of the business did not equal $38,230.28, as warranted by the Freemans, because (1) the physical inventory was obsolete and (2) certain accounts receivable were found to be uncollectible. Thereafter, the Freemans moved for summary judgment in their favor, which the court granted, plus allowing them $1,500 for their attorney's fees.

2. It is axiomatic that summary judgment may not be granted if there exists a material issue of fact that must be determined by the trier of the facts. See Brewer v. Annett, 86 Nev. ---, 475 P.2d 607 (1970). We reject appellants' contention that in this case there exists a material issue of fact to be resolved by the court. The appellants' refusal to pay is based on two contentions: (1) that the physical inventory was obsolete and (2) that certain accounts receivable were found to be not collectible. There is nothing in the agreement of the parties warranting the nonobsolescence of the inventory, or guaranteeing that all of the accounts were collectible. A physical inventory was taken prior to close of escrow. Appellants had a representative present when it was taken. They later approved it by letter form dated June 30, 1965, and they deposited the letter with the escrowee as provided in the agreement. The schedule of accounts receivable was also deposited in escrow and was subject to inspection by the appellants. Thereafter, the escrowee released the $15,000 down payment to the sellers. All of the conditions from (a) through (g) of paragraph 11(1) of the agreement were satisfied before 'the $15,000.00 * * * (was) paid to SELLERS.'

Appellants have argued that, under the provisions of paragraph 11(1)(g) of the agreement, the adjustment, if any, of the purchase price of $45,000 could have been determined at any time prior to the payment of the last annual $5,000 installment on July 1, 1971. We do not agree. Paragraph 11(1)(g) provides in part that when '(t)he adjustment, if any required, is made in the sale price * * * (it) shall be done in accordance to the formula set forth in paragraph 6,' which provides in part: 'If, upon the taking of the physical inventory and the preparation of the balance sheet as of June 30, 1965, the net worth is less than the above stated figure, then the purchase price shall be reduced proportionately.' ³ (Emphasis added.) Paragraph 11(1)(g) merely adds that if an adjustment in the price is required it shall be deducted from the final annual installment of the total price paid. After the close of escrow, the appellants took possession, operated the business, and eventually sold it to a third party. They made the first two annual installment payments due on the remaining purchase price in July 1966 and July 1967.

Viewing the evidence in the light most favorable to the appellants, we find no material issue to be resolved by the court and that therefore the respondents-plaintiffs were entitled to a summary judgment. Kaminski v. Woodbury, 85 Nev. 667, 462 P.2d 45 (1969).

3. NRS 18.010 grants to the trial court the power to award attorney's fees to a prevailing party when the principal amount recovered does not exceed $10,000. ⁴ Here, the respondents-plaintiffs recovered a $20,000 judgment, and the judge granted them $1,500 for their attorney's fees. They argue that such is permissible in this case because they sued in two counts--one for the $5,000 annual installment due July 1, 1968, and the other for $15,000, representing the remaining annual installments due on the total purchase price. Respondents claim that the $1,500 attorney's fee was awarded on the first count only, where they recovered only $5,000, and is therefore allowable. We reject this contention, and we hold that it is the total judgment that governs and that where the amount recovered exceeds the statutory limit of $10,000 the court may not grant an award of attorney's fees.

Affirmed as modified.

ZENOFF, Acting C.J., BATJER and THOMPSON, JJ., and YOUNG, D.J., concur.

1 '3. SELLERS shall within fifteen (15) days following the execution of this agreement cause or allow the following to be done:

'(a) SELLERS and BUYERS, or their agents or nominees shall forthwith cause a physical inventory to be taken. The inventory price of each item shall be priced at the unit cost invoice...