Madden v. Hart

Conley Byrd, Justice. Prior to August 25, 1969, there were two ready mix cement plants in Ashdown. One was known as “Ashdown Ready-Mix” and the other as “Associated Ready-Mix.” The “Ashdown Ready-Mix”, originally owned by Robert Earl Priest, an experienced cement finisher, was acquired by appellant Sheldon Madden for his adult married son, appellant Jack Madden. At the time of trial the Ashdown Ready-Mix was owned by Madden Manufacturing Co., Inc., and operated by Jack Madden. Associated Ready-Mix was owned by Hart, Thomas & Hart, Inc. L. E. Hart, John Robert Bowman and Jack Hart were the sole stockholders. Associated Ready-Mix was having financial difficulties. Its outstanding liabilities as of August 25, 1969, totaled $48,194.16 and the equipment in its possession had a value of only $29,900.00. Its outstanding and unpaid checks as of that date totalled $2,590.85. Shipments of cement from Foreman Cement Company had been on a C. O. D. basis since April 18, 1969. Some of the stockholders wanted to shut down the operation, some wanted to sell, and some did not want to sell. The disharmony had resulted in at least one fist fight. The First National Bank of Ashdown had participated in a Small Business Administration loan, its share being $12,900.00. In addition, the bank had loaned L. E. Hart $1,834.31 and held obligations of John Robert Bowman for $2,832.50 and $4,685.00. Also it held unpaid and outstanding checks of Associated Ready-Mix amounting to $2,590.85. Some time prior to August 25, Jack Hart had contacted Robert Earl Priest concerning a possible sale of Associated. As a result of that contact, negotiations were had with Sheldon Madden, Jack Madden and Robert Earl Priest as prospective purchasers and with L. E. Hart, John Robert Bowman and Jack Hart as the sellers. During all of the negotiations the bank officials evidenced more than a mild curiosity as to the results of the negotiations. Pursuant to a common understanding, all of the parties — L. E. Hart, John Robert Bowman, Jack Hart, Sheldon Madden, Jack Madden and Robert Earl Priest —met at the bank on the afternoon of August 25th. J. Darrell Bell, the bank’s president, and Roy Staggs, the bank’s vice president and cashier, were also present at the meeting. As a result of the negotiations a purchase figure of $48,194.16 was arrived at. At this point some one suggested that something should be put in writing to reflect what agreement had been reached. Exhibit No. 1 was then typed by Roy Staggs under the direction of Mr. Bell and Sheldon Madden. Exhibit No. 1 was signed by L. E. Hart, John R. Bowman and Jack Hart as sellers and Jack Madden as one of the purchasers. Robert Earl Priest declined to sign the agreement. Exhibit No. 1 is as follows: “August 25, 1969 We the undersigned stockholders of Hart-Thomas & Hart Inc., do hereby agree to transfer all stock in said corporation to Robert Earl Priest and Jack Madden for the consideration of the assumption of all obligations in the name of the corporation and an obligation in the name of L. E. Hart of $1,884.31 plus interest, an obligation of John Robert Bowman of $2,852.50 and another obligation of John Robert Bowman of $4,685.00 plus interest. These notes are payable to the First National Bank in Ash-down. It is further understood that Mr. Priest and Mr. Madden as of this date, do assume the bills payable, accounts receivable and credit balances due as shown on the list attached to this document. This agreement also covers the assumption of outstanding checks of the corporation totaling $2,590.85. We the undersigned also agree to refrain from entering the Ready Mix Concrete business in Little River County for the next 36 months. /s/ L. E. Hart /s/ John R. Bowman /s/ Jack Hart We, the undersigned Robert Earl Priest and Jack Madden do hereby agree to the above. /s/ Jack Madden Sworn and subscribed to this 25th day of August 1969. ,, On August 26th following the meeting at the bank, Jack Madden obtained permission from Associated to use one of its trucks to aid Ashdown Ready-Mix in finishing a highway construction job that Associated had been furnishing some of the cement on. Associated Ready-Mix closed its business on Friday before the Monday, August 25th meeting. It remained closed thereafter. However, its equipment, other than the mixing plant and concrete trucks, was used by Bowman. The Chancellor found that Sheldon Madden and Jack Madden had entered into a contract on August 25th to purchase Associated Ready-Mix for $48,194.16, which they had breached, and awarded appellees a judgment against Sheldon Madden and Jack Madden for $18,294.16 for the breach thereof. At the same time the Chancellor found that no contract existed between ap-pellees and Robert Earl Priest. For reversal appellants Sheldon Madden and Jack Madden contend that no sales purchase agreement was consummated on August 25th. Roy Staggs testified that he was a neighbor of Robert Earl Priest and that his first involvement in the negotiations was that of August 25 th. At this meeting a discussion by all the parties took place to determine the sales price. Associated’s total liabilities were something over $48,000.00. After Mr. Sheldon Madden’s $45,000 offer was refused, he then asked his son and Mr. Priest if the $48,000 figure was agreeable and both answered in the affirmative. At this time witness knew that Associated was to be purchased in the name of Jack Madden and Robert Earl Priest. Around 5:30 P.M. Mr. Priest suggested that an attorney should be obtained to draw up the papers. Because it was too late to obtain an attorney Staggs went to a typewriter and, under the direction of Bell and Sheldon Madden, typed Exhibit No. 1. Admittedly the exhibit covers the items that the bank was primarily interested in. On cross-examination Staggs admitted that subsequent negotiations had been had between the parties. Neither would he deny that he had stated on the morning of August 26th that he knew that Priest was not going to get “involved in that mess.” With reservations, Stagg testified that he did not expect Priest to agree to the instrument that was drawn. Jack Hart stated that the Maddens and Priest all agreed to the proposed $48,000 figure on the 25th and that constituted an acceptance. of appellees’ proposal. He admitted, however, that there were further negotiations after August 25th and that he had insisted throughout that he was not interested in selling unless he was relieved of the S. B. A. obligation. According to him, the S. B. A. loan was to be retired by Sheldon Madden. Bowman testified that Sheldon Madden made it clear at the meeting that he was not to be involved in the ownership and that Jack Madden and Robert Earl Priest were the actual purchasers. The only thing he remembered about the S. B. A. loan was the amount of the loan. Nothing was said in his presence about paying off or assuming the S. B. A. loan. On Tuesday morning following the August 25th meeting, Jack Madden called and asked him about getting a mixer truck meeting the requirements for pouring on State highway jobs. Bowman said he told Jack Madden that he assumed it would be all right but he would talk to Jack Hart about it. He then did talk to Jack Hart and Robert Earl Priest even though the deal was not finalized. On cross-examination Bowman admitted that the business was going in the hole and that L. E. Hart had told him that whether or not he was going to sell, they were going to close the business one way or the other. He also admitted that Jack Madden did not, on August 25th, agree to purchase Associated without Mr. Priest. J. Darrell Bell, president of the First National Bank of Ashdown, testified that the bank had an interest in the sale because of its loans to appellees and its participation in the S. B. A. loan. Before the August 25th meeting he had ascertained that the S. B. A. loan could be assumed by the purchaser. No mention had been made as to whether the Harts and Bowman would be released, so he had assumed that they would. He also understood that Sheldon Madden had arranged for a $46,000 loan to pay off S. B. A. and other obligations. After the parties at the August 25th meeting agreed to the $48,194.16 figure, some one mentioned that something should be put in writing to reflect what agreements had been reached. His main reason for wanting a written instrument was to set out the indebtedness of Bowman and L. E. Hart. He was surprised to learn that the plant had been shut down on Friday before the meeting. None of the buyers mentioned anything about the shutdown of the plant prior to the August 25th meeting and he did not recall anything being said at the meeting regarding the shutdown. He was also surprised two days after the meeting to find out that Jack Madden was using the cement truck. Mr. Bell assumed that Mr. Sheldon Madden was going to be in the operation and management of the business. Fred Pickett, an attorney in Ashdown, testified that he represented Mr. Priest. He first became aware of the negotiations around the end of July but he was not actively engaged in the negotiations. On August 26th, he talked with both Bell and Staggs. At that time Staggs laughingly said that he knew that Priest was not going to get involved in that mess. At the same time Bell stated that Priest did agree to go through with the transaction and Bell expressed his concern over it. On October 2, 1969, he again spoke with Bell concerning whether Priest had entered into an agreement to purchase. He quoted Bell as saying, “No, I think Mr. Priest is all right, but if there was an agreement between them on August 25th, he’s right in the middle of it.” Some three weeks after August 25th, Jack Hart and Bowman came into Pickett’s office and informed him that Sheldon Madden had agreed for him to draw up the necessary papers to consummate the sale. After talking with all the parties, he realized that they did not have the necessary ingredients for a contract. As a result of that conclusion he caused another meeting to be set up at the bank for the purpose of laying the whole matter out in the open so no one would be confused. Robert Earl Priest testified that he met Bowman at a cafe after he had received the October 2nd letter from Mr. Stroud, Bowman’s counsel, and that he said to Bowman, “John, did I ever agree to buy this thing from you?” According to him Bowman replied, “No.” Priest also said that the offer made by Sheldon Madden was on behalf of Jack Madden and himself. Priest said that at a meeting at Mr. Bell’s house on August 23rd, Bell told Jack Hart that it looked like they were going to have to shut the plant down in order to get specific figures because the figures were changing every time they talked. Shelton Madden testified that his interest in negotiating the purchase was to get Robert Earl Priest and his son Jack in an operation together. That he was not interested in the purchase of this property for his son unless Mr. Priest, who was more experienced, would be involved. After they had agreed on a price, he and Mr. Priest and his son Jack were trying to decide whether or not Mr. Priest and Jack were going to be able to work out their agreement and whether or not to go ahead and purchase the plant. While Priest and Jack Madden were still discussing the deal, he, Sheldon Madden, and Staggs went after a cup of coffee. When he learned that Priest was not going through with the deal, he told the group that he was not interested. Mr. Madden denied that he had reported to anyone before August 25th that he could borrow $46,000 or any other amount. He pointed out that Hart wanted to go into the contracting business and that in order to comply with the licensing law he would be required to make a bond which he would be unable to do with the S. B. A. loan hanging over his head. Because of this problem, he quoted Hart as saying that Mr. Bell had advised Hart to dispose of the concrete plant in order to get off the S. B. A. loan. Two or three weeks after August 25th they founcj out that Hart’s name could not be removed from the loan. Upon both direct and cross-examination, Mr. Sheldon Madden stated that it was not anticipated that he would own any part of the property. His only interest was to have his son and Mr. Priest in business together. He said that He had been informed two weeks before August. 25th that the plant was going to be shut down. Mr. Jack Madden stated that he agreed to purchase the business if Mr. Priest and he could agree to a partnership — that he did not intend to purchase the business by himself. When he discovered that Mr. Priest would not go through with the deal, he decided that he did not want it either. When the negotiations surrounding the August 25th meeting are considered in the light of Mr. Staggs’ testimony that he did not expect Priest to agree to the instrument that was drawn, and in the light of Fred Pickett’s testimony of the statements made by Bell and Staggs.the day after the meeting, together with Priest’s undenied testimony that Bowman acknowledged at the cafe that Priest had not agreed to purchase the plant, we agree with the trial court that Priest did not agree to purchase the plant on August 25th. A decision to the contrary would have been contrary to the weight of the evidence. However, we believe that with respect to the Maddens, the Chancellor failed to take into consideration the contract law principle that it is as essential to the finality and completeness of assent that all the parties intended should be bound as it is that all terms should be definitely agreed upon. See Consolidation Coal Co. v. Yonts, (6th Cir. 1928) 25 F. 2d 404; Wilson v. McDaniel, 247 Ark. 1036, 449 S. W. 2d 954; 17 Am. Jur. 2d Contracts, § 23. We can find no evidence in the record to support a finding that the Maddens on August 25th were consenting to the purchase without Priest’s obligation to do likewise. Exhibit No. 1 typed by Staggs at the direction of Bell and Sheldon Madden leaves no room for doubt on that issue. It is also suggested that Jack Madden in using the cement truck belonging to Associated and in hiring Associated’s employee Raymond Fields is estopped to deny his assent. Here again the suggestion is not supported by the record. The testimony of Charles Winning, vice president of Foreman Cement Company, shows that Associated at time of trial had accumulated outstanding invoices of $3,711.40. According to him, these invoices were from sales prior to April 18th when Associated was placed on a C. O. D. basis. The bank officers showed that the outstanding and unpaid checks of the corporation in its hands as of August 25th amounted to $2,590.85. While it is true that Mr. Staggs testified that Associated could have operated after August 25th, we note that the statement is not consistent with their avowed interest in the results of the negotiations nor with the testimony of Mr. Bell relative to the shutdown. Rather we believe that the evidence preponderates in appellants’ favor that the August 25th negotiations did not cause the plant shutdown as Bowman testified on cross-examination. Mr. Hart had told him they were going to close the business one way or the other. Thus, when the facts are viewed in their business perspective, it appears to us that Associated, being shut down, was not in a position to deliver to the State highway job and that since Ashdown Ready-Mix had only one truck that would meet the requirements for pouring concrete on a highway job, Jack Madden merely asked for permission to use Associated’s truck which he obtained from Bowman. All during the same time Bowman used other equipment of Associated under a claim of right. As we view the evidence, it is insufficient to sustain an estoppel. What we have said here makes it unnecessary for us to determine whether Sheldon Madden could be held as a principal in view of his admitted agency relationship. Reversed and remanded for proceedings not inconsistent herewith. Fogleman, J., dissents in part.