Rotermund v. United States Steel Corporation, 71 C 596(2).
Citation | 346 F. Supp. 69 |
Decision Date | 26 May 1972 |
Docket Number | No. 71 C 596(2).,71 C 596(2). |
Parties | Adolph M. ROTERMUND, Plaintiff, v. UNITED STATES STEEL CORPORATION, a Delaware corporation, et al., Defendants. |
Court | U.S. District Court — Eastern District of Missouri |
James L. Sullivan, St. Louis, Mo., for plaintiff.
Thomas L. Croft and John R. Musgrave, Coburn, Croft, Shepherd & Herzog, St. Louis, Mo., for defendants Basic Materials Co. and Raymond F. Powell.
Albert E. Schoenbeck, St. Louis, Mo., for defendant U. S. Steel Corp.
In this action, removed from the Circuit Court of the City of St. Louis, defendants have moved for summary judgment as to each of the three counts of the complaint.
Count I, directed only against defendant United States Steel (USS), seeks specific performance of an alleged agreement to purchase certain shares of stock in Basic Materials Company (Basic) allegedly owned by plaintiff. In Count II plaintiff prays for actual and punitive damages allegedly resulting from a conspiracy of all defendants to induce USS to violate its alleged contractual obligation to plaintiff under the agreement. Count III seeks damages against defendant Basic only by reason of an alleged violation of the Missouri Service Letter Statute.
On June 28, 1965, defendant Powell, then the owner of over 75 per cent of the then outstanding shares of the common stock of Basic, entered into the agreement with USS as to which plaintiff is an alleged third-party beneficiary. It appears from said agreement (1) that of the 77,307 shares of common stock of Basic then owned by Powell, 59,284 were theretofore pledged to the First National Bank in St. Louis, pursuant to a 1962 loan agreement, (2) that Powell had an option to purchase 60,000 shares of common stock at a price of $9.7625 per share, and (3) that USS owned warrants to purchase 51,150 shares of Basic common stock at $8.73. By said agreement, USS agreed to lend to Powell up to $465,000 on a long-term note bearing no interest prior to maturity and Powell agreed to use part of the proceeds of the loan to repay the bank loan and to purchase from USS for $40,000 all of its warrants. As security for the note Powell was to pledge 25,000 shares of Basic common stock. One provision of the agreement precluded Powell, except with the consent of USS, from exercising his option to purchase Basic stock and from exercising his rights as holder of the warrants during the effective period of the agreement.
Paragraph 5 of the 1965 agreement granting an option to USS provides as follows:
Paragraph 6 of the 1965 Agreement granting an option to Powell is as follows:
The agreement sets forth a formula for determining the purchase price of the Powell stock in the event either of the foregoing options is exercised, together with the manner in which the party is to exercise said option. Another provision in the agreement (Paragraph 12) in addition to limiting Powell's right to sell or transfer any of his stock, manifests the intention of the parties that at all times while the agreement is in effect "the stock subject to the right of USS to purchase (t)hereunder constitutes at least 75% of the voting power of the sum of all issued and outstanding stock of Basic."
Plaintiff, an officer of Basic at the time the 1965 agreement was entered into, was the owner, jointly with his wife, of 2000 shares of Basic common stock. Paragraph 10 of the 1965 agreement, upon which plaintiff premises his Count I claim, provides as follows:
On July 30, 1968, Powell and USS entered into another agreement whereby Powell granted USS a 90-day option to purchase 25,000 shares of his Basic common stock for $1,966,000 on condition that at the time of closing the sale Powell would surrender to Basic the warrants to purchase 51,150 shares of Basic stock at $8.73 per share he had acquired under the 1965 agreement. On the same day and immediately following the execution of the July 30, 1968 agreement, Powell and USS executed an amendment to the 1965 agreement, to become effective only if USS exercised its option to purchase 25,000 shares of Basic common stock pursuant to the 1968 agreement. Among the various amendments to the 1965 agreement was one deleting the original Paragraph 5 and substituting the following new Paragraph 5:
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