Bley

This action arises as a result of a warranty contained in a written contract in which the appellant purchased from respondent all of the issued and outstanding stock of the National Neon Corporation, consisting of 15,000 shares. On January 25, 1962, when the sale was made, the corporation was engaged in the business of electrical contracting, and respondent, as its president, was actively engaged in its operation and management. Respondent was also the owner of all of the corporation’s outstanding stock.

Under the terms of the contract of sale appellant agreed to purchase the shares of the corporation at the purchase price of $1.72 per share, making a total purchase price of $25,800. This purchase price was based upon the net worth of the corporation as revealed by its financial statements; $15,000 was payable on February 1, 1962, and the balance, to be evidenced by a promissory note bearing 4 percent interest, was due in three equal installments. Appellant paid respondent the sum of $15,000 on the due date, and it also paid the first installment. Thereafter, however, no further payments were made.

As part of the purchase price for the corporation’s stock appellant also agreed…