{
  "id": 8555405,
  "name": "STANISLAW A. G. SIEDLECKI v. R. D. POWELL and PRODUCTS INTERNATIONAL, LTD.",
  "name_abbreviation": "Siedlecki v. Powell",
  "decision_date": "1978-06-20",
  "docket_number": "No. 7710SC386",
  "first_page": "690",
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      "year": 1946,
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  "last_updated": "2023-07-14T17:02:41.791978+00:00",
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    "date_added": "2019-08-29",
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  "casebody": {
    "judges": [
      "Judges VAUGHN and ERWIN concur."
    ],
    "parties": [
      "STANISLAW A. G. SIEDLECKI v. R. D. POWELL and PRODUCTS INTERNATIONAL, LTD."
    ],
    "opinions": [
      {
        "text": "BROCK, Chief Judge.\nDefendants bring forward 28 assignments of error on appeal, six of which are argued in their brief in four arguments. The rest are deemed abandoned. App. R. 28(a).\nWe first discuss defendants\u2019 second argument based upon assignments of error numbers 26 and 27, by which defendants contend that the trial court erred in awarding damages to plaintiff based upon the value of a share of stock of \u201cnew\u201d Products International as of 30 November 1973. Defendants contend that damages, if any, should be measured as of 17 March 1971, which is the date plaintiff tendered demand for 15% of the stock of \u201cold\u201d Products International. We disagree.\nThis is an action for damages for breach of contract. \u201cAs a general rule, the damages upon breach of contract are to be measured as of the date of the breach.\u201d 22 Am. Jur. 2d, Damages, \u00a7 52, p. 81. The trial court departed from the general rule for the reasons set out in the following findings of fact:\n\u201c30. No books were kept after November 30, 1970, which accurately reflect the separate operations of the merging corporations and none were kept after the merger from which the separate activity of the original Products International, Ltd. and the original Golf Carts Incorporated can be identified.\u201d\n* * *\n\u201c40. From the books and records of the Corporation it is not possible to determine the relative value of a share of stock of Products International, Ltd. compared with a share of Golf Carts Incorporated as of 17 March 1971 (the date of demand) this is in no way due to any act or omission of the plaintiff but, is on the other hand, entirely due to the acts of the defendant Powell in causing all records to be consolidated and no value to be placed on the import contract of September 1970. R. D. Powell was fully aware of the claim of the plaintiff at the time of merger and was well aware that the exclusive import contract had a substantial value.\u201d\n(Defendants are deemed to have abandoned their assignments of error based upon exceptions to these findings of fact, as noted supra.) In light of these findings, defendants will not be heard to complain of the trial court\u2019s action determining the value of the stock at issue based upon the consideration received by defendants from a sale of the assets of the merged corporation subsequent to their breach of the contract with plaintiff. We think it would be unconscionable to apply the rule for measurement of damages urged upon us by defendant. To do so would impose upon plaintiff a burden of proof made impossible by defendants\u2019 deliberate conduct relating to their accounting procedures. There is considerable authority, in cases dealing with breach of contract to deliver stocks or bonds or for conversion of stocks or bonds, for measuring damages based on valuation at a time subsequent to the commission of the wrongful act. See Annot. 161 A.L.R. 316, et seq. (1946). Furthermore, in at least one jurisdiction in cases involving conversion of stock, damages have been measured by the consideration paid to the wrongdoer by a subsequent purchaser of the converted stock. See Topzant v. Koshe, 242 Wis. 585, 9 N.W. 2d 136 (1943); Price v. Ross, 62 Wis. 2d 335, 214 N.W. 2d 770 (1974) (failure to assign franchise agreement); see also Frey v. Frankel, 443 F. 2d 1240 (10th Cir. 1971). That the instant action was for breach of contract rather than conversion is an insignificant distinction for purposes of this discussion. The subject of the action in either case is the failure to deliver stock. In the case sub judice, the ascertainment of damages at the time of defendants\u2019 wrongful conduct was rendered impossible by defendants, through no fault of the plaintiff; this, in our opinion, warranted the damage measurement adopted by the trial court. Defendants\u2019 assignments of error numbers 26 and 27 are overruled.\nIn their first argument, covering assignments of error numbers 19 and 27, defendants challenge the trial court\u2019s finding of fact number 34 and the conclusion of law based thereon.\nIn finding of fact number 33, the validity of which is not challenged by this appeal, the court found that the 1973 liquidation of \u201cnew\u201d Products International was for a total sum of $1,187,095.00. In the challenged finding of fact number 34, the court found as follows:\n\u201c34. $386,116.00 of the above amount represented physical assets owned and Golf Carts leases and sales originally belonging to Golf Carts, Inc. prior to the merger. $800,979.00 represented carts in inventory and the import contract and exclusive sales agreement originally held by Products International before the merger.\u201d\nBased upon findings of fact numbers 33 and 34, the trial court concluded as a matter of law that 67% of the total sales price ($800,979 out of $1,187,095) was derived from the sale of assets of \u201cold\u201d Products International. Defendants contend that finding of fact number 34 is not supported by any evidence which was before the trial court, and thus does not support the court\u2019s conclusion of law.\nFinding of fact number 34 essentially concerned an allocation of the assets of \u201cnew\u201d Products International between its premerger predecessors, Golf Carts and \u201cold\u201d Products International, as a means of ascertaining the component value of \u201cold\u201d Products International in \u201cnew\u201d Products International since, as further found by the court, plaintiff was entitled to recover 15% of the value of the stock in \u201cold\u201d Products International by virtue of his contract with the defendant Powell. The $800,979 figure represented the gross price paid by Pezetel for assets purchased from \u201cnew\u201d Products International.\nPlaintiff\u2019s expert witness, Dr. Thomas F. Keller, testified as to several methods of apportioning the assets between the two corporations, one of which used the gross sale figure, which was the method adopted by the trial court. Dr. Keller testified in part as follows:\n\u201cBased on [financial records and information such as tax returns, financial statements, accountant\u2019s working papers, etc.], I made a study as to the value of Golf Carts, Inc., Products International, and the two components of the merged corporation, Products International, Ltd. The data is co-mingled and it becomes very difficult to separate the two corporations after November 30, 1970, but using some of Mr. Phillips\u2019 [defendants\u2019 accountant] working papers and data supplied by the defendant, I have indeed made some studies attempting to show a breakdown, at least a feasible breakdown of the assets of the corporation. The date I have used, the terminal date, when we have a value of the corporation, is shown on a balance sheet on a tax return of November 30, 1973, which is the date the corporation held its assets, cash and accounts receivable, and some liability.\nI have also made studies as to the portion between Golf Carts and Products International in the merged corporation. I have attempted to divide the consolidated or combined corporation into two parts, again using the data provided essentially by Mr. Phillips. I have attempted to allocate the corporation, the two parts, using two methods. I have also attempted to use stock values for some of the trades that have taken place between the corporation and certain stockholders as evidence of value at particular dates, in an attempt to arrive at a value number in addition to a book value number.\u201d\n* * *\n\u201cGoing back to my two methods of apportioning the assets between the two corporations, in one case we had the sale of certain assets of the combined corporation to Eddietron. Some other assets were sold to Pezetel. My recollection is that the sale to Eddietron was during the year 1972 and constituted a sale of a building, some rental carts, or contracts which were for rental carts with certain customers of Golf Carts, Inc. I have seen the sale to Pezetel, which was apparently an inventory of the new golf carts on hand at the date of the sale, plus certain parts and other miscellaneous assets. I have used these two sales prices as an estimate of the value \u2014 let me change the word \u2018value\u2019 \u2014 of the part of the assets that were attributable to Golf Carts on one hand and the part of the assets that were attributed to Products International on the other hand. I have asserted that if, in fact, these two values did reflect the assets as of the date of their respective sales, that we could then divide the total remaining assets composed of cash and accounts receivable on a proportionate basis between these two component parts. The sale to Pezetel was in the approximate dollar value of $800,000. That would be a gross sale figure as far as I could tell.\u201d\nDefendants contend that Dr. Keller erroneously assumed that the assets sold to Pezetel were exclusively attributable to \u201cold\u201d Products International. In this regard, we note the witness\u2019 observation relating to the co-mingled financial data which rendered separation of the merged corporation very difficult; furthermore, we note once again the trial court\u2019s findings of fact relative to the deficiencies in defendants\u2019 bookkeeping, especially finding of fact number 30, supra. Dr. Keller\u2019s allocation of assets between the two pre-merger corporations was an estimate based upon his examination of defendants\u2019 financial records. Based upon the circumstances, we hold that this evidence supports the trial court\u2019s finding of fact number 34. The challenged finding of fact, supported as it is by evidence in the record, is conclusive on appeal. Blackwell v. Butts, 278 N.C. 615, 180 S.E. 2d 835 (1971). Defendants\u2019 assignment of error numbers 19 and 27 are overruled.\nDefendants next assign as error the introduction into evidence of a 1974 escrow agreement between the defendant corporation and several of its stockholders which established a fund for payment of the damages, if any, which might arise from the instant litigation. By its terms, the escrow was established pursuant to a purchase of stock by the defendant corporation from its stockholders and was funded by part of the purchase price of each share. Defendants contend that the agreement was an insurance fund, evidence of which was inadmissible. We disagree.\nEvidence of insurance coverage is admissible if it has some probative value other than to show the mere fact of its existence. 1 Stansbury\u2019s N.C. Evidence (Brandis Rev. 1973) \u00a7 88, p. 274. The escrow agreement was admissible as evidence of the value of the defendant corporation\u2019s stock. Furthermore, as argued by the plaintiff, it was admissible to show the bias of defendants\u2019 witness Clem Sharek, a party to the agreement. Id. This assignment of error is overruled.\nIn their final argument, defendants assign error to the trial court\u2019s order setting an expert witness fee for plaintiff\u2019s witness, Dr. Keller, to be taxed as part of the costs in the action. This assignment of error has merit.\nG.S. 7A-314(a) and (d) allow the court to set an expert witness fee. As interpreted by our Supreme Court in State v. Johnson, 282 N.C. 1, 191 S.E. 2d 641 (1972), the statute requires that a witness must be under subpoena before he or she is entitled to compensation. Under this interpretation, the trial court had no authority to order the fee on behalf of Dr. Keller, who admittedly did not testify in obedience to a subpoena. Plaintiff\u2019s argument that the provisions of G.S. 7A-314(a), allowing fees for a witness \u201cunder subpoena, bound over, or recognized\u201d should be read in the alternative, is persuasive; however, we are bound by the decision of the Supreme Court. We hold, therefore, that the order allowing the expert witness fee must be reversed.\nThe judgment of the trial court awarding damages to plaintiff for breach of contract is affirmed. The order as to expert witness fees for plaintiff\u2019s expert is reversed.\nAffirmed in part, reversed in part.\nJudges VAUGHN and ERWIN concur.",
        "type": "majority",
        "author": "BROCK, Chief Judge."
      }
    ],
    "attorneys": [
      "Bailey, Dixon, Wooten, McDonald & Fountain, by Wright T. Dixon, Jr., John N. Fountain and Richard G. Cheney, for plaintiff.",
      "Poyner, Geraghty, Hartsfield & Townsend, by Marvin D. Musselwhite, Jr. and Cecil W. Harrison, Jr., for defendants."
    ],
    "corrections": "",
    "head_matter": "STANISLAW A. G. SIEDLECKI v. R. D. POWELL and PRODUCTS INTERNATIONAL, LTD.\nNo. 7710SC386\n(Filed 20 June 1978)\n1. Contracts \u00a7 29.2\u2014 breach of contract \u2014 damages\u2014value of stock at time subsequent to breach\nIn an action for breach of a contract providing that plaintiff would receive 15% of the stock of a corporation being formed by the individual defendant, the trial court did not err in determining the value of the stock plaintiff was to receive based upon the consideration defendants received subsequent to the breach from the sale of the assets of a second corporation into which the original corporation had been merged, rather than basing plaintiff\u2019s damages on the value of the stock on the date of the breach, where the court found that the ascertainment of the value of the stock on the date of defendants\u2019 breach of the contract was rendered impossible by accounting procedures used by defendants.\n2. Contracts \u00a7 29.2\u2014 breach of contract to provide stock \u2014 value of stock \u2014 findings by court\nIn an action for breach of a contract provision that plaintiff would receive 15% of the stock of a corporation formed by the individual defendant and later merged into another corporation, the evidence supported the trial court\u2019s finding of fact allocating the assets of the corporation formed by the merger between its pre-merger predecessors, the corporation whose stock plaintiff was to receive and another company.\n3. Contracts \u00a7 26.3; Witnesses \u00a7 6\u2014 evidence of insurance \u2014 competency\nIn an action for breach of a contract provision that plaintiff would receive 15% of the stock of a corporation being formed by the individual defendant, evidence of an agreement between defendant corporation and some of its stockholders creating an escrow fund for payment of any damages awarded to plaintiff and funded by part of the purchase price of each share of stock purchased by the corporation from its stockholders, even if constituting evidence of insurance coverage, was admissible to show the value of the corporation\u2019s stock and to show the bias of a witness who was a party to the agreement.\n4. Costs \u00a7 4.1\u2014 expert witness fee\u2014 necessity that witness be subpoenaed\nThe trial court erred in setting an expert witness fee for plaintiff\u2019s witness to be taxed as part of the costs in the action where the witness did not testify in obedience to a subpoena.\nAPPEAL by defendants from Bailey, Judge. Judgment entered 22 December 1976 in Superior Court, WAKE County. Heard in the Court of Appeals 27 February 1978.\nThe circumstances giving rise to this breach of contract action can be summarized as follows: Plaintiff, a naturalized U.S. citizen and native of Poland, had developed contacts with manufacturers and officials in Poland. Plaintiff had done research into the idea of importing golf carts to be manufactured by a Polish company, Elektrim. By early 1970, plaintiff had arranged with a Mr. Jennings to provide the financing for the import undertaking, and had contacted and begun negotiations with Polish authorities. At some point during the negotiation stage, plaintiff discovered that Jennings was not capable of financing the undertaking, and severed his relationship with him.\nPlaintiff next contacted Mr. Troy Cotton, and through him, defendant Powell, about financing the undertaking. On 4 June 1970, plaintiff came to North Carolina and met with defendant Powell and his associates. As a result of negotiations, plaintiff and defendant Powell executed a contract on 5 June 1970 whereby plaintiff agreed to become employed by a company to be formed by defendant Powell for a salary of $12,000 per year, moving expenses from Alabama to the Fuquay-Varina area, and 15% of the stock of the proposed new company. Plaintiff agreed to assign all his contracts, agreements, options and contacts to the proposed new company, at which time the aforementioned stock was to be issued to him. Defendant Powell agreed to form the proposed company \u201cfor the purpose of establishing a business involved in importing and distributing products from various countries outside the United States\u201d and \u201cto make all necessary arrangements for adequate capitalization and lines of credit to enable the proposed new company to function in a satisfactory and efficient manner at such time and place as all preliminary investigations, considerations, negotiations and preparations have been completed to his satisfaction.\u201d\nOn 23 June 1970, the proposed company was incorporated, under the name of Products International, Ltd. (hereinafter \u201cold\u201d Products International), and 500 shares of stock were issued to Golf Carts, Inc. (hereinafter Golf Carts); defendant Powell owned 51% of the stock of Golf Carts.\nThe parties subsequently journeyed to Poland where negotiations transpired. A contract was secured in July 1970, which plaintiff forwarded to defendant Powell, who had returned home. This original contract was never executed.\nOn 15 August 1970, after his return to the United States, plaintiff met with defendant Powell and two associates, at which meeting defendant Powell expressed dissatisfaction with the contract that had been sent from Poland, especially with the requirement of two irrevocable letters of credit in the amount of $380,000 each. Defendant Powell told plaintiff that if he did not agree to reduce his equity participation in \u201cold\u201d Products International to 5%, then defendant could not go through with the contract. The evidence is conflicting as to whether plaintiff agreed to the reduction or merely agreed to consider it.\nA contract dated 18 September 1970 between Elektrim and \u201cold\u201d Products International was executed calling for the manufacture by Elektrim of 25,008 golf carts over a four-year period. The aforementioned letters of credit were issued.\nPlaintiff received compensation of $1,000 per month while employed with \u201cold\u201d Products International. At a meeting between plaintiff and defendant Powell on 24 February 1971, according to plaintiff\u2019s testimony a proposed contract dated 1 December 1970 was handed to him which was not completely what he expected (it provided for a 1 year term of employment with $12,000 salary and a bonus in the amount of 5% of the net after tax profits of \u201cold\u201d Products International). Plaintiff explained that he would like to take the document to an attorney, whereupon defendant Powell became angry and accused plaintiff of disloyalty, at which time plaintiff tendered his resignation. According to defendant Powell\u2019s testimony, the proposed agreement had been given to plaintiff in December 1970, and at the 24 February 1971 meeting, he merely confronted plaintiff with acts of disloyalty.\nOn 16 August 1971, \u201cold\u201d Products International was merged into Golf Carts, Inc., and the name of the surviving corporation was changed to Products International, Inc. (hereinafter \u201cnew\u201d Products International). Plaintiff never received shares of stock in either \u201cold\u201d Products International or \u201cnew\u201d Products International.\nIn 1973, the assets of \u201cnew\u201d Products International were sold in separate transactions to Pezetel, a Polish company, and Eddietron Leasing Corporation of the Piedmont Triad.\nThe trial court, sitting without a jury, found facts and concluded that plaintiff was entitled to recover an amount equal to the value of 15% of the stock of \u201cold\u201d Products International, and awarded judgment in favor of plaintiff in the amount of $52,511.25. From this judgment defendants have appealed.\nBailey, Dixon, Wooten, McDonald & Fountain, by Wright T. Dixon, Jr., John N. Fountain and Richard G. Cheney, for plaintiff.\nPoyner, Geraghty, Hartsfield & Townsend, by Marvin D. Musselwhite, Jr. and Cecil W. Harrison, Jr., for defendants."
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