Appeals, No. 389 and 390, Jan. T., 1958, from judgment of Court of Common Pleas No. 7 of Philadelphia County, March T., 1956, No. 7367, in case of Ethel M. J. Hallar, executrix of the Estate of Charles W. Hallar, deceased v. Maxwell Milstone et al. Judgment reversed in part and affirmed in part.
Leon I. Mesirov, with him William D. Valente and Mesirov and Leonards, for appellants.
Henry W. Maxmin, with him Jacoby & Maxmin, for appellee.
Before Jones, C.j., Musmanno, Jones, Cohen and Mcbride, JJ.
OPINION BY MR. JUSTICE COHEN
On January 3, 1951, an agreement was entered into whereby Charles W. Hallar agreed to sell the outstanding capital stock of a corporation, holding an automobile and truck franchise, to the appellants, Milstone and Rosenfeld.
The agreement stated that the price of the stock was to be $115,000 and further provided as follows:
"2. The purchase price of One Hundred Fifteen Thousand Dollars ($115,000.00) is based upon the Balance Sheet of CORPORATION at the close of business on October 31, 1950 ... and shall be adjusted to the Balance Sheet of CORPORATION at the close of business on December 31, 1950, which shall be prepared in accordance with sound accounting principles and as conforming to the following requirements:
"(a) Current and prepaid assets on said Balance Sheet shall be stated at the actual dollar value.
"(b) Inventories on said Balance Sheet shall be valued on the basis of a physical count thereof made in cooperation with the BUYERS and priced at cost.
"(c) A reserve shall be set up for the payment of all taxes due by CORPORATION by reason of its operation from May 1, 1950, to December 31, 1950, as follows: (1) As to Pennsylvania Capital Stock Tax, an amount equal to two-thirds (2/3) of five (5) mills applied to the sales price of the Capital Stock of CORPORATION. (2) As to Federal Income and Excess Profits Taxes, an amount equal to the tax which would be payable if CORPORATION changed its accounting period to end as of December 31, 1950, and reported for the short period expiring December 31, 1950, in conformity with the Internal Revenue Code applicable thereto. (3) As to Pennsylvania Corporate Income ...