American Trust Co. v. Catawba Sales & Processing Co., 524

• Decision Date: 30 June 1955
• Docket Number: No. 524,524
• Court: North Carolina Supreme Court
• Parties: AMERICAN TRUST COMPANY, Executor and Trustee under the Last Will and Testament and Estate of Thomas Lee Wilson, Sr., v. CATAWBA SALES & PROCESSING COMPANY, a corporation.

Page 233

88 S.E.2d 233

242 N.C. 370

AMERICAN TRUST COMPANY, Executor and Trustee under the Last Will and Testament and Estate of Thomas Lee Wilson, Sr., v. CATAWBA SALES & PROCESSING COMPANY, a corporation.

No. 524

Supreme Court of North Carolina.

June 30, 1955

R. Gregg Cherry, Gastonia, Helms & Mulliss, Fred B. Helms and John D. Hicks, Charlotte, for plaintiff, appellee.

Pierce & Blakeney, Charlotte, for defendant, appellant.

PARKER, Justice.

The complaint alleges two causes of action.

First Cause of Action.

This is a summary of the material allegations of the firs cause of action--the numbering of the paragraphs is ours:

One. The American Trust Company, the plaintiff and hereafter called the Trust Company, brought this action as executor and trustee under the last will and testament of Thomas Lee Wilson, Sr., who died on 30 March 1951. This action is for the recovery of monies due under three agreements involving three parties. One, the late Thomas Lee Wilson, Sr. (hereafter called Wilson), of Gastonia. Two, Catawba Sales & Processing Co. (hereafter called Catawba), a North Carolina corporation with its principal place of business in Gastonia. Three, Bowling Green Spinning Co. (hereafter called Bowling Green), a South Carolina corporation having its principal place of business at Bowling Green, South Carolina.

Two. Bowling Green was engaged in the manufacture and sale of textile goods. Prior to 1950 Wilson had been in charge of the management and sales of Bowling Green, and through his efforts he had developed it from an insolvent condition to a profitable business in 1950. In 1950 Wilson's health became impaired. At the time Bowling Green had 645 shares of capital stock outstanding, and Wilson and his family owned 324 of these shares.

Three. After Wilson's health became impaired, he desired to provide good management and adequate sales service for Bowling Green. To effectuate his desire he sold 162 shares of the capital stock of Bowling Green to Catawba, and the three contracts set forth below were executed and delivered simultaneously in Gaston County First Contract.

This contract, hereafter called the 'Sales Agreement,' was entered into on 22 August 1950 by and between Bowling Green, party of the first part, and Catawba, party of the second part. It gave Catawba the exclusive selling rights of the entire production of Bowling Green on a 5% commission, to be paid to Catawba, whether the goods were sold by Catawba or not--the agreement being that Catawba will be paid a 5% commission on the entire sales of Bowling Green. This contract further provides:

'(3) This contract shall become effective August 22, 1950; and shall continue in effect so long as Catawba Sales & Processing Company and Thomas L. Wilson, Sr., or his executors, administrators, donees, legatees, widow, next of kin or other persons, firms, or corporations claiming under or through the said Thomas L. Wilson, Sr., own the majority of the outstanding stock in Bowling Green Spinning Company.'

Second Contract.

This contract, hereafter called the 'Management and Voting Control Agreement,' was entered into on 22 August 1950, by and between Catawba, party of the first part, and Wilson, party of the second part. After stating that Bowling Green has 645 shares of capital stock outstanding, and that Wilson and Catawba own each 162 shares of this stock, it provides as follows:

'(1) That Catawba Sales & Processing Company through its officers and agents shall manage and operate the mill, plant and business of Bowling Green Spinning Company, for such time as the said Catawba Sales & Processing Company and Thomas L. Wilson, Sr., or his executors, administrators, legatees, next of kin, widow or donees, own the majority of the outstanding stock in Bowling Green Spinning Company.

'(2) During the life of Thomas L. Wilson, Sr., Catawba Sales & Processing Company shall be, and it hereby is, given the right to vote the 162 shares of stock in the aforesaid corporation owned by Thomas L. Wilson, Sr.; and upon the death of the said Thomas L. Wilson, Sr., the said Catawba Sales & Processing Company shall continue to vote the said 162 shares owned by the said Thomas L. Wilson, Sr. at the time of his death, and continue to operate and manage the aforesaid plant, mill and business of Bowling Green Spinning Company, so long as the said 162 shares of stock in the said corporation is owned by the executors, administrators, legatees, next of kin, widow or donees of the said Thomas L. Wilson, Sr.

'(3) Neither the said Catawba Sales & Processing Company as the owner of the aforesaid 162 shares of stock nor Thomas L. Wilson, Sr. as the owner of the aforesaid 162 shares of stock, nor any person, firm or corporation claiming under, through or by either of the said two parties to be the owner of any portion of the aforesaid stock, shall sell or otherwise dispose of the same for a period of six (6) years from date. In the event that Catawba Sales & Processing Company should, after six (6) years from date, desire to sell the aforesaid 162 shares of stock in Bowling Green Spinning Company, or in the event that the said Thomas L. Wilson, Sr., his executors, administrators, trustee, legatees, next of kin, widow or donees, after six (6) years from date should desire to sell the 162 shares of the said stock in the said corporation now owned by the said Thomas L. Wilson, Sr., then such party or parties desiring to sell shall offer the said stock to the other party for such price as the seller or sellers may be willing to take. In the event that the offer to sell the said stock is not accepted by the other party, then neither party to this agreement nor any persons, firms or corporations claiming through or under them shall have the right to sell the said stock or any part of it unless the purchaser shall be willing to purchase the entire 324 shares hereinabove referred to at a price satisfactory and agreeabe to all of the owners and holders of the said 324 shares of stock. The certificates of stock issued by Bowling Green Spinning Company representing the 324 shares of stock hereinabove referred to, shall have a notation placed upon them to the effect that the same are subject to the provisions of this agreement, which shall remain on file among the records of Catawba Sales & Processing Company at Gastonia, North Carolina, or if the party of the second part so desires, instead of placing the notation on so many of the said stock certificates a evidence the 162 shares of stock owned by the said Wilson, he can place the said stock certificates in escrow with D. R. LaFar, Jr. to guarantee and assure the faithful performance of this agreement.'

Third Contract.

This contract was entered into on 22 August 1950, by and between Catawba, party of the first part, and Wilson, party of the second part. These are its provisions:

'Witnesseth, That Whereas, Catawba Sales & Processing Company has a contract with Bowling Green Spinning Company, a corporation of Bowling Green, South Carolina, dated August 22, 1950, by the terms of which the said Bowling Green Spinning Company has given to the Catawba Sales & Processing Company the exclusive selling of the entire production of the plant of Bowling Green Spinning Company on a straight five (5%) per cent commission, and the Catawba Sales & Processing Company has agreed to devote whatever time is necessary to selling the said production of Bowling Green Spinning Company; and

'Whereas, Thomas L. Wilson, Sr. has agreed to advise the Catawba Sales & Processing Company in connection with its selling efforts and to assist it in establishing outputs of a satisfactory and permanent character for the production of the said Bowling Green Spinning Company;

'Now, Therefore, for and in consideration of the mutual covenants herein contained, It Is Agreed:

'(1) That Catawba Sales & Processing Company will pay to Thomas L. Wilson, Sr. thirty (30%) per cent of all such selling commissions as may be paid by Bowling Green Spinning Company to the Catawba Sales & Processing Company.

'(2) Thomas L. Wilson, Sr. agrees to advise the said Catawba Sales & Processing Company and to assist it in an advisory capacity in selling the production of the aforesaid Bowling Green Spinning Company.

'(3) This contract shall become effective August 22, 1950, and shall remain in effect so long as the aforesaid contract between Bowling Green Spinning Company and Catawba Sales & Processing Company remains in full force and effect. However, should the said Thomas L. Wilson, Sr. die while the aforesaid contract between Bowling Green Spinning Company and Catawba Sales & Processing Company is still effective, then so long as the said contract is in full force and effect, the aforesaid thirty (30%) per cent of the aforesaid commissions to be paid to Catawba Sales & Processing Company, shall be paid to the executor or administrator of the estate of Thomas L. Wilson, Sr., or to such other person as may be designated by the said Thomas L. Wilson, Sr. in his last will and testament. However, should the said contract between Bowling Green Spinning Company and Catawba Sales & Processing Company at any time be cancelled, then this contract shall no longer be effective. Likewise, should Catawba Sales & Processing Company at any time acquire a majority of the outstanding stock of Bowling Green Spinning Company, by purchasing the one hundred sixty-two (162) shares from Thomas L. Wilson, Sr. or his estate or legal representatives, and the Catawba Sales & Processing Company should thereafter desire to cancel this contract, then the Catawba Sales & Processing Company shall be at full liberty so to do.'

Four. Since 22 August 1950 the officers and directors of Bowling Green and Catawba have had full knowledge of the three agreements set forth above. Since 1949, and now, D. R. LaFar, Jr. has been President and Treasurer, Dan S. LaFar, Vice-President and Secretary, and Robert E. Caldwell,...