JOHN T. SIMPSON, JR., ET AL., APPELLANTS,
v.
ROY G. YOUNG, APPELLEE
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Simpson and Peele appealed a judgment awarding Young $41,660 as his one-third interest in a dissolved professional association. The trial court disregarded the shareholder's agreement and reinterpreted "accounts receivable" to include cash on hand minus liabilities. The appellate court reversed, holding that courts cannot rewrite contracts and must apply the agreement as written.
The trial court properly rejected the claimed compromise due to conflicting testimony about the settlement terms, and courts must affirm credibility determinations. However, the trial court erred by rewriting the contract; "accounts receivable" ordinarily means only amounts due from debtors, not cash on hand, and courts cannot reconstruct contracts to achieve perceived equity.
[1] A court may not rewrite a contract to relieve a party from an improvident bargain.
[2] The interpretation of a contract term is a question of law for the court.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“the trial court effectively rewrote the agreement by interpreting accounts receivable to include cash on hand less liabilities. "Accounts receivable" ordinarily means "a balance due from a debtor on a current account".”
Establishes the core error: the trial court's misinterpretation of a contractual term contrary to its ordinary meaning.
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Join FLexlaw to unlock all legal intelligenceIn June 1974, Young, Simpson, and Peele formed a professional association with a shareholder's agreement specifying how stock would be purchased upon …
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PER CURIAM.
Peele and Simpson appeal a judgment awarding Young $41,660 as Young’s one-third interest in the professional association previously composed of the three parties. Appellants allege that the trial court erred in determining this amount since the court effectively rewrote the shareholder’s agreement. Appellants also claim the court erred in finding that there was no compromise and settlement. We agree on the first point and reverse.
In June of 1974, Young, Simpson and Peele formed a professional association and entered a shareholder’s agreement which was drawn up by attorneys representing the association. The agreement provided that in the event of retirement the stock would be purchased by the corporation at a purchase price to be determined as follows: (a) 90% of one-third of the accounts receivable as of the date of retirement, omitting any receivables which shall have been referred for collection (b) one-third of the fair market value of all the equipment and furnishings and (c) a factor for good will equal to $1,000 per year for each year of practice not to exceed $15,000. This amount was payable one year from the date of retirement and no payment would be forthcoming if the retiring stockholder resumed practice within one year. Later Young sought to withdraw from the P.A. and in March 1976, the partners held a meeting to determine the monies owed Young. A figure of $35,000 was agreed upon.
However, while Peele, Simpson and Costin testified that the settlement included a factor for good will, Young testified that good will was not included in the settlement.
The trial court found that there was sufficient confusion surrounding the March 1976 settlement discussion to have permitted separate conclusions as to what had been agreed upon.
Therefore, he found that there was no compromise and settlement. Thereafter, the trial court settled the claims of the parties based upon the shareholder’s agreement. He interpreted the term “accounts receivable”, in the agreement, to include “cash on hand minus liabilities.” Since a settlement of $35,000 had already been paid, it was determined that a balance of $6,660 was owed to Young.
It was within the trial court’s province to determine the credibility of the witnesses and to determine the weight of the evidence. Accordingly, although this court may have found that there was a compromise and settlement of all claims at the March 1976 meeting, we will not disturb the trial court’s contrary finding. See Westerman v. Shell’s City, Inc., 265 So. 2d 43 (Fla.1972).
Since the trial court determined that there was no compromise and settlement, it was bound to apply the written contract of the parties.
The trial court effectively rewrote the agreement by interpreting accounts receivable to include cash on hand less liabilities. “Accounts receivable” ordinarily means “a balance due from a debtor on a current account”. Webster’s New Collegiate Dictionary (1st ed. 1977). We have failed to discover any definition permitting the interpretation that accounts receivable includes cash on hand. We recognize that the trial court sought to fairly divide the P.A.’s assets so as to award Young his one-third interest.
However, by reconstructing the contract of the parties to accord with what he deemed to be the equities of the situation, the trial court ignored the well settled rule that the courts may not rewrite a contract or interfere with the freedom of contract or substitute their judgment for that of the parties thereto in order to relieve one of the parties from the apparent hardship of an improvident bargain. Home Development Company of St. Petersburg v. Bursani, 178 So. 2d 113 (Fla.1965).
Accordingly, the judgment of the trial court is reversed and the cause is remanded for the entry of a judgment consistent with this opinion.
MILLS, Acting C. J., MASON, ERNEST E., Associate Judge, and ERVIN, J., concur.
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Steiner v. Physicians Protective Tr. Fund, 388 So. 2d 1064 (Fla. 3d DCA 1980)…parties from the apparent hardship of an improvident bargain. Beach Resort Hotel Corporation v. Wieder, 79 So. 2d 659, 663 (Fla.1955). Accord, Home Development Company of St. Petersburg v. Bursani, 178 So. 2d 113, 117 (Fla.1965); Simpson v. Young, 369 So. 2d 376, 377 (Fla. 1st DCA 1979). Accordingly, the summary final judgment in favor of the appellees is affirmed. . 14. In the event of the dissolution of this Trust, whether voluntary or involuntary, the Trustees shall distribute the monies, securities, r…
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Lane, Gelety, Woolsey & Centrone, P.A. v. Woolsey, 377 So. 2d 743 (Fla. 4th DCA 1979)…gment for that of the parties thereto and rewrite a contract in order to relieve one of the parties from the apparent hardship of an improvident bargain. Home Development Co. of St. Petersburg v. Bursani, 178 So. 2d 113 (Fla.1965); Simpson v. Young, 369 So. 2d 376 (Fla. 1st DCA 1979). The appellee admits that neither the stockholders’ memorandum nor the stock redemption agreements are ambiguous. Instead, appellee argues that because in actual practice the appellant corporation did not follow the dictates of…
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Balto v. Maley, 464 So. 2d 579 (Fla. 4th DCA 1985)…t reductions in the purchase price, impose harsh consequences on the seller due to an unexpected large-scale departure by the clients, it is not the duty of this court to relieve a party from the hardship of an improvident bargain. Simpson v. Young, 369 So. 2d 376 (Fla. 1st DCA 1979). Consequently, we reverse and remand this cause, with instructions that the trial court determine the revised purchase price, based upon a reduction equal to the annual billing of each client that departed during the first year…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Westerman v. Shell's City, Inc., 265 So. 2d 43 (Fla. 1972)
- Home Dev. Co. OF ST. Petersburg, Inc. v. Bursani, 178 So. 2d 113 (Fla. 1965)