Dick v. Woolson

SHINN, P. J.

J.From a money judgment for plaintiff rendered after trial to the court, defendants Builders Supply Corporation and Corporation Management, Inc., appeal. The judgment was for the balance due on a contract for sale of a business by plaintiff to defendant Woolson. The corporate defendants are successive assignees of Woolson of the sales contract and plaintiff sues as third party beneficiary of the assignments by which the corporations assumed Woolson’s obligation.

The business transactions to be reviewed were involved, and the evidence wandered far from the issues to be tried. The principal facts are that plaintiff Dick and defendant Woolson entered into an agreement whereby, for a consideration of $25,000, Dick sold to Woolson a going business, The Home Improvement Company. The payment terms were $5,000 on the signing of the agreement, an additional $5,000 within 90 days, and the remaining $15,000 in equal monthly installments of $1,000 or more beginning September 1, 1947. Woolson agreed to form a corporation which would give a note to Dick for the balance due on the contract and would be jointly liable with Woolson on the contract. On May 31, 1947, Woolson assigned the sales contract to defendant Corporation Management, Inc., which assumed all the liabilities and obligations under the contract. On June 4, 1947, Corporation Management assigned the sales contract to defendant Builders Supply Corporation, which assumed the contractual liabilities and obligations. (The corporate defendants will be referred to as Management and Builders.) Both corporations were formed just prior to taking the assignments

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and after the two assignments Builders’ major asset was the Home Improvement Company and Management’s major asset was the common stock of Builders. At this point in the transaction, if the sales contract was still operative and there had been no rescission of the assignment contracts, plaintiff was a creditor under the contract with Woolson, was creditor-beneficiary under a contract between Woolson and Management, and a creditor-beneficiary under the contract between Management and Builders. In August, 1947, plaintiff received from Builders the second $5,000 payment together with a promissory note for $15,297.22, the balance due on the contract, plus interest from May 1st. As provided in the contract, Builders made additional payments on September 1 and October 1, 1947. These payments were made even though the note was not due until November, 1948. Plaintiff received no other payments and brought this action against Woolson and Builders on March 18,1948, claiming the accrued payments due under the contract plus interest. On November 23, 1948, the complaint was amended to include Management as a defendant and to add a cause of action on the note against Builders, and further to change the amount claimed to the full contract price which was by that time past due.