Appeal, No. 51, Jan. T., 1950, from judgment of Court of Common Pleas of Montgomery County, Feb. T., 1948, No. 253, in case of Fischer & Porter Company v. George K. Porter. Judgment reversed; reargument refused April 10, 1950.
Henry S. Drinker, with him Albert M. Hoyt, Jr., for appellant.
D. Stewart McElhone, with him Edward B. Duffy and Desmond J. McTighe, for appellee.
Before Maxey, C.j., Drew, Linn, Stern, Stearne and Jones, JJ.
OPINION BY MR. JUSTICE JONES
The plaintiff corporation sued on a written contract to recover from the defendant the amount of a Federal income tax refund received by the defendant for a specified year covered by the contract. The questions on this appeal are (1) did the construction of the contract present a question of law for the court or one of fact for the jury and (2) if the former, what was the intent of the parties as evidenced by the terms of the contract.
In December 1937, Kermit Fischer admitted George K. Porter, the defendant, to partnership with him in an instrument-manufacturing business owned and conducted by Fischer who furnished all of the capital of the partnership. For some time prior, Porter had been an employee of Fischer. The partnership endured until May 1942 when the partners incorporated the business, Porter's share of the capital stock of the corporation being paid for out of the accumulated profits then standing to his credit on the books of the partnership. The corporation (Fischer & Porter Company), whereof
Fischer became president and Porter secretary, is the present plaintiff. At the end of 1942, Fischer and Porter had a disagreement and, in consequence, Porter's employment by the company was terminated on December 30, 1942. He promptly retained counsel to represent him and from then until early March 1943, the contract, here in suit, was negotiated; it was signed by the parties on March 11, 1943, each of them having acted throughout on the advice of respective counsel.
By the terms of the contract Porter sold to the company, for a specified sum, all of his stock in the company. It so happened that he had received from the business for the year 1942 a large taxable income whereon his Federal tax would be $40,723.71. He asked that he be relieved of this tax liability by the agreement. To that, Fischer assented. Accordingly, the company undertook in the contract to pay whatever income taxes should be owing by Porter for the year 1942*fn1 and, also, any deficiency of income taxes as might later be found owing by him for the years of the partnership prior to 1942. A correlative provision of the contract provided that any moneys which might come to Porter "by reason of any claims for refund of income taxes" should belong to the company; and Porter expressly agreed to pay over any such refunds to the company forthwith upon his receipt of them. The presently relevant provisions of the written contract are as follows:
"(e) PORTER hereby assigns, transfers and sets over unto COMPANY, its successors and assigns, any and all claim or claims for refund or refunds of his Income Taxes which may now exist or hereafter come ...