Advance Hardware Co. v. Comras

VALLÉE, J. Appeal by plaintiff from a judgment awarding plaintiff $3,408.26 as the unpaid balance on a promissory note after allowing a credit claimed by defendant. Plaintiff’s claim is that the credit should not have been allowed.

On August 20, 1949, defendant entered into an agreement with plaintiff’s assignor, Advance Hardware Company of Pasadena, for the purchase of a hardware business. The agreement provided that the sales price would be “the total value of the inventory of said business as of August 21st., 1949 at prevailing wholesale prices plus the sum of one thousand dollars, ($1,000.00) for fixtures . . . ,” payable $5,000 down, $15,000 when the seller had approved the sale by appropriate resolution and procured written consent to the assignment of a lease, $5,000 thirty days from the date of execution of the agreement, and the balance at the rate of $400 a month including 5 per cent interest. An escrow was opened on August 22. The contract of sale was deposited in the escrow.

The inventory was taken at the time the agreement was entered into. A “lot” of the items were priced and the inventory was sent to Union Hardware Company for appraisal with respect to items that could not be priced at that time. It was then deposited in the escrow. In order to complete the escrow prior to checking the inventory totals, defendant agreed to sign a promissory note for $25,345.46 subject to adjusting its face amount after an opportunity to verify the inventory totals. This was necessary because some of the inventory prices were not available at the time the parties wanted to close the escrow and the note had to be signed in order to close the escrow. Accordingly, on August 30 a further agreement was entered into. It read:

“The following is to be made part of the escrow for the purpose of expediting in taking possession and also the close of escrow.

“It is agreed between the seller and the buyer that the buyer is to accept the amount totaled on the inventory taken for the present.

“It is also agreed that at the close of escrow the buyer is to be given the opportunity to check the total figures on inventory that has been taken and in the event that any discrepancies are found as to pricing or through error in bringing out any of the extensions, the seller is to adjust the balance due from the buyer and given [sic] credit on the note that has been signed which carries monthly payments.

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