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J. & R. Elec. Co. v. Edward P. Allison Co.

JUNE 22, 1970.

J. & R. ELECTRIC CO., A CORPORATION, PLAINTIFF-APPELLEE,

v.

EDWARD P. ALLISON CO., INC., A CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Jackson County; the Hon. PEYTON H. KUNCE, Judge, presiding. Judgment reversed and remanded with directions.

GOLDENHERSH, J.

Rehearing denied August 12, 1970.

Defendant, Edward P. Allison Co., Inc., appeals from the judgment of the Circuit Court of Jackson County entered in favor of plaintiff, J. & R. Electric Co. in the amount of $32,381 after a non-jury trial.

In this action plaintiff seeks to recover from defendant one-half of the loss allegedly sustained in the completion of the jobs enumerated in paragraph 10 of the contract hereafter discussed and construed.

The record shows that on December 30, 1964, plaintiff, defendant and J. & R.-Allison, Inc., hereafter called J. & R.-Allison, entered into a written agreement, the preamble of which states that plaintiff and defendant own respectively 49% and 51% of the outstanding shares of stock of J. & R.-Allison which by mutual agreement has been, for several months, in the process of dissolution, and the parties prefer that rather than dissolve J. & R.-Allison, plaintiff buy defendant's shares.

The agreement provides for the purchase by plaintiff of defendant's shares for the sum of $510, and the resignation of certain directors and corporate officers who are defendant's "representatives" in the management of J. & R.-Allison. It further provides that defendant will release plaintiff and J. & R.-Allison of all claims which it may have against either except those provided in the agreement, that defendant will not in any manner deal with the assets or liabilities of either plaintiff or J. & R.-Allison and will not do any act which will create any liability on the part of either plaintiff or J. & R.-Allison.

It further provides that defendant will make an assignment of all of its right, title and interest in and to the assets of J. & R.-Allison except its rights under this agreement and it also agreed to deliver to plaintiff all the books, seals, records, etc. of J. & R.-Allison. Defendant also agreed to execute all documents necessary in the opinion of plaintiff, J. & R.-Allison or its counsel "to satisfactorily complete the transfer herein provided for and carry out the manifest intent of this agreement, namely: for J. & R. (plaintiff) to completely purchase all the right, title and interest of Allison (defendant) in The Corporation (J. & R.-Allison)."

Paragraph 8 of the agreement provides:

"8. J. & R. (plaintiff) agrees that it will not in any manner whatsoever deal with the assets or liabilities of ALLISON, (defendant) and will do nothing which might give rise to any suit, claim, claim for lien, lien, or the like whatsoever, and will not in any manner whatsoever make any contract, undertake any obligation, borrow any money, pledge any asset of any nature whatsoever, or in any way encumber any asset in any manner whatsoever of THE CORPORATION (J. & R.-Allison) or of ALLISON which might in any manner whatsoever make ALLISON liable or responsible in whole or in part therefor."

In paragraph 9 plaintiff agreed to execute such documents as in the opinion of defendant or its counsel are necessary "to satisfactorily complete the transfer herein provided for and carry out the manifest intent of this Agreement, namely: for J. & R. to completely purchase all the right, title and interest of ALLISON in the CORPORATION."

The remaining paragraphs of the agreement provide:

"10. It is mutually agreed and understood that there are eight jobs yet to be completed by THE CORPORATION, which are now in progress, which are designated as follows: JR 183, JR 161, JR 164, JR 108, JR 110, JR 111, JR 112, and JR 114. It is also understood that there are numerous accounts receivable and accounts payable of said CORPORATION, together with substantial sums owed by THE CORPORATION to both ALLISON and J. & R., which are hereinafter referred to as INVESTMENT ACCOUNTS. It is mutually agreed that THE CORPORATION will continue in business hereafter for the principal purpose of completing the jobs above noted, collecting the accounts receivable, paying the accounts payable, paying the INVESTMENT ACCOUNTS, and then distributing the net profit or loss of THE CORPORATION. The balance of this Agreement has to do with such continued operation.

"11. It is mutually agreed that the jobs in progress shall be completed as rapidly as possible and that the accounts receivable shall be collected as rapidly as possible.

"12. J. & R. Agrees to furnish the necessary manpower to operate THE CORPORATION to completion for which it shall be paid twenty per cent (20%) of the productive labor necessary and performed in that regard as an overhead charge to the CORPORATION. In this regard, it is mutually agreed that J. & R. has full power and authority as the sole stockholder of THE CORPORATION to do and perform any and all acts necessary to the continued operation of THE CORPORATION, but that in so doing, it shall protect ALLISON from any liability or responsibility in accordance with the terms of Paragraph 8 hereof.

"13. It is mutually agreed that the INVESTMENT ACCOUNTS of J. & R. and ALLISON in THE ...


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