LACY J. MILLER MACH. CO., INC. v. Miller

293 S.E.2d 622 (1982)

LACY J. MILLER MACHINE COMPANY, INC., Joseph T. Buie, Jr., and James T. Donley v. Gary M. MILLER, Individually and Gary M. Miller, Executor of the Estate of Lacy J. Miller.

No. 8122SC1139.

Court of Appeals of North Carolina.

July 20, 1982.

*625 House, Blanco & Osborn by Don R. House and Lawrence U. McGee, Winston-Salem, and Wilson, Biesecker, Tripp & Sink by Joe E. Biesecker, Lexington, for plaintiffs-appellants and appellees.

White & Crumpler by Fred G. Crumpler, Jr., G. Edgar Parker, and Craig B. Wheaton, Winston-Salem, for defendant-appellant and appellee.

WEBB, Judge.

The plaintiffs have not assigned error to the dismissal of all claims against Gary Miller individually and the claims for punitive damages. These portions of the judgment are affirmed.

As to the portion of the judgment which ordered the executor to deliver the stock formerly owned by Lacy J. Miller to the corporation upon payment of the tendered amount, we hold this was error. One of the material facts in this case is whether the book value of the corporation, upon which the price of the stock is based, was properly determined according to the contract. The plaintiffs have the burden of showing there is not a material issue as to this fact. They will also have the burden of proof as to this fact at the trial. The stock purchase agreement provides that the book value of the corporation at the designated date shall be determined by a certified public accountant in accordance with sound accounting practices. In order to show there was not a genuine issue as to this material fact, the plaintiffs relied on the affidavits of W. H. Turlington and W. Leon Rives who are certified public accountants. These affidavits showed there was a review of the financial statements of the company and the review conformed to sound accounting practices. The affidavits were not contradicted on this point, and there is nothing in the record to show Mr. Turlington and Mr. Rives are not creditable witnesses. A party with the burden of proof may be entitled to summary judgment where he relies on the uncontradicted affidavit of a witness to establish that a genuine issue does not exist as to a material fact. If the circumstances show, however, that a material issue exists, the motion should be denied. See Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392 (1976). In this case we do not believe the plaintiffs have shown there is not a genuine issue as to the proper determination of the book value of the corporation. W. H. Turlington and Company reviewed the audited financial statements of the company in order to determine the book value as of 30 April 1980. The validity of W. H. Turlington and Company's review depended upon the accuracy of the 31 December 1979 audit. The affidavit of Rachel Hailey was to the effect that a substantial part of the company's inventory was concealed from the auditors at the time of the December 1979 audit. This indicates that the audit upon which the review was made was inaccurate. For this reason we believe there is an issue as to the correctness of the review and the book value of the stock.

If the defendant can establish that the review of the audit was impaired because of the concealment of assets, the plaintiffs would also not be entitled to an equitable decree enforcing the contract because they would not have clean hands. See Hood v. Hood, 46 N.C.App. 298, 264 S.E.2d 814 (1980).

The defendant also contends the plaintiffs did not tender payment within the time specified by the contract. He argues that the 1968 agreement provides that payment shall be made within 10 days after receipt of the life insurance proceeds and the 1973 agreement provides payment from the insurance proceeds shall be made within 30 days after the qualification of the personal representative of the estate. The defendant contends the failure of the plaintiffs to tender within either of these times is a material breach by the plaintiffs of the contract. We believe the contract shows that a failure to tender within either of these times is not a material breach. It provides that "in any event the purchase price must be paid within a period of six months after the death of the Stockholder." We believe this language contemplates that there may be reasons why the tender cannot *626 not be made within the shorter periods. In this case not all the insurance proceeds had been collected and the ownership of all the stock had not been determined within these periods. The tender was made within six months of the death of the decedent which is the outside limit provided in the contract.

The defendant argues further that specific performance is not appropriate because the plaintiffs engaged in inconsistent conduct. He says this is so because the plaintiffs asserted ownership to a part of the stock in a separate action. We do not believe this bars the plaintiffs from bringing this action. It is not inconsistent to determine first the ownership of the stock before tendering the consideration for it. The defendant argues that if the plaintiffs had been held to own this part of the stock, they could have then disregarded the stock purchase agreement. This is not correct. The agreement is binding on all parties to it, and if the defendant had so chosen, he could have enforced it.

The defendant also contends the plaintiffs were guilty of laches, that the terms of the agreement are not specific, and there is not a mutuality of remedy. We believe the record shows the plaintiffs moved expeditiously to execute the contract. They are not guilty of laches. We also hold that the terms of the contract are specific and mutually enforceable on all parties.

In allowing the plaintiffs' motion for summary judgment, the court dismissed its claim for judgment against the estate for $445,067.00. This claim is based on what the plaintiffs contend is what should be a reduction in the book value of the stock. Since we have held that there must be a trial as to the book value of the stock, we reverse this portion of the judgment.

Affirmed in part; reversed in part, and remanded.

CLARK and WHICHARD, JJ., concur.