Baye v. Airlite Plastics Co.

• Decision Date: 22 September 2000
• Docket Number: No. S-99-631, No. S-99-632.
• Citation: 260 Neb. 385,618 N.W.2d 145
• Parties: Lawrence M. BAYE, Personal Representative of the Estate of John L. Baye, deceased, appellant, v. AIRLITE PLASTICS CO., a Nebraska corporation, et al., appellees. Gertrude Crosby and Norwest Bank Nebraska, N.A., Trustee of the Robert F. Crosby Qualified Marital Trust dated February 2, 1996, appellees, v. Lawrence M. Baye, Personal Representative of the Estate of John Baye, deceased, appellant.
• Court: Nebraska Supreme Court

618 N.W.2d 145

260 Neb. 385

Lawrence M. BAYE, Personal Representative of the Estate of John L. Baye, deceased, appellant, v. AIRLITE PLASTICS CO., a Nebraska corporation, et al., appellees.

Gertrude Crosby and Norwest Bank Nebraska, N.A., Trustee of the Robert F. Crosby Qualified Marital Trust dated February 2, 1996, appellees, v. Lawrence M. Baye, Personal Representative of the Estate of John Baye, deceased, appellant.

Nos. S-99-631, S-99-632.

Supreme Court of Nebraska.

September 22, 2000.

Gary L. Hoffman and Thomas J. Culhane, of Erickson & Sederstrom, P.C., Omaha, for appellant.

Gerald P. Laughlin, of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, for appellees.

HENDRY, C.J., WRIGHT, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

McCORMACK, J.

FACTUAL AND PROCEDURAL BACKGROUND

In 1987, Gertrude Crosby and Robert F. Crosby (the Crosbys) entered into a written stock option agreement (Agreement) with John L. Baye and Opal A. Baye (the Bayes). The Agreement provided, inter alia, that Robert would have the option to purchase 380 shares of common stock of Airlite Plastics Co. (Airlite) and that Gertrude would have the option to purchase 1,139 shares of Airlite stock. The price for the stock was set at $330 per share. As consideration, the Crosbys agreed to make an annual payment to the Bayes of $20,000. Contemporaneously, the Crosbys and the Bayes entered into an escrow agreement (Escrow Agreement), pursuant to which the Bayes' stock certificates were held in escrow with Robert as the escrow agent.

The Agreement was, by its terms, binding on the heirs and personal representatives of the signatories. The Agreement further provided that the Bayes were to receive the dividends from the stock prior to the options' being exercised. The Agreement also prohibited the Bayes from selling or otherwise transferring the shares, and the Bayes were prohibited from granting proxies to vote the shares except that they were required to grant proxies to the Crosbys upon request. The parties were required to keep the existence of the Agreement secret.

Opal died in 1989 and John died in 1994; consequently, all of the Bayes' shares became part of John's estate. Lawrence M. Baye is the personal representative of John's estate. During the Bayes' lifetimes, the Crosbys made, and the Bayes accepted, all the payments required under the Agreement. In addition, Lawrence accepted the 1995 payment on behalf of John's estate. In 1996, Robert assigned his rights under the Agreement to the Robert F. Crosby Trust. Robert died in 1996. Norwest Bank Nebraska, N.A. (Norwest), the trustee of the Robert F. Crosby Trust, transferred the rights to the Robert F. Crosby Qualified Marital Trust.

The payments due under the Agreement for 1996 were tendered to Lawrence but were refused. Lawrence also demanded that since a new escrow agent had not been appointed since Robert's death, the certificates held in escrow be returned to John's estate. In case No. S-99-632, Gertrude and Norwest, as trustee of the marital trust, brought a declaratory judgment action seeking to have the Agreement declared valid and enforceable. In response, Lawrence claimed that the Agreement was void and unenforceable. Lawrence also brought a counterclaim seeking damages for conversion of the stock certificates, which had not been returned to John's estate. Lawrence also claimed that Gertrude and Norwest had not timely tendered a claim to the estate as required by Neb.Rev.Stat. § 30-2485 (Reissue 1995). Finally, Lawrence brought a separate petition for dissolution of Airlite, alleging that appellees Airlite; Bradley J. Crosby and Norwest, copersonal representatives of Robert's estate; and Gertrude breached fiduciary duties owed to the minority stockholders and engaged in a course of oppressive conduct. That action is appealed as case No. S-99-631.

Upon cross-motions for summary judgment, the district court generally rejected all of Lawrence's claims and entered summary judgment for appellees on all claims. The district court primarily found that the Bayes and John's estate accepted the benefit of the Agreement for several years. Thus, the district court determined that the Agreement was enforceable. The district court also determined that Lawrence failed to show that Gertrude and Norwest oppressed the minority shareholders or that Gertrude and Norwest converted the shares of stock.

ASSIGNMENTS OF ERROR

Lawrence generally claims that the district court erred in sustaining appellees' motions for summary judgment. Consolidated and restated, his specific assignments of error can be grouped as follows:

Lawrence assigns that the district court erred in failing to find that the Agreement was invalid and unenforceable, because (1) the Agreement was a secret voting trust, (2) the Agreement expired upon John's death, and (3) the Agreement was a restraint on alienability.

Lawrence assigns that the district court erred in failing to find that the minority shareholders of Airlite had been oppressed, because (1) the controlling shareholders violated their fiduciary duty of candor, (2) Airlite failed to comply with Neb.Rev.Stat. §§ 21-20,112 to 21-20,115 (Reissue 1997), (3) the board of directors of Airlite breached its duty of loyalty by failing to redeem the shares of stock held by John's estate, and (4) Airlite failed to pay meaningful dividends to the Bayes and John's estate and frustrated their reasonable expectations.

Lawrence further assigns that the district court erred in failing to find that this oppression (1) barred enforcement of the Agreement, (2) entitled Lawrence to damages in the amount of the dividends that should have been declared, and (3) entitled Lawrence to dissolution of Airlite.

Finally, Lawrence assigns that the district court erred in failing to find (1) that Gertrude and Norwest converted the Airlite stock by refusing to return it upon termination of the Escrow Agreement upon the death of Robert, the escrow agent, and (2) that Gertrude's and Norwest's claims to the stock were barred by their failure to comply with the claim provisions of the Nebraska Probate Code.

STANDARD OF REVIEW

Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Adkins v. Burlington Northern Santa Fe RR. Co., 260 Neb. 156, 615 N.W.2d 469, (2000); State Farm Mut. Auto. Ins. Co. v. Cheeper's Rent-A-Car, 259 Neb. 1003, 614 N.W.2d 302 (2000). In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Adkins v. Burlington Northern Santa Fe RR. Co., supra; Alegent Health Bergan Mercy Med. Ctr. v. Haworth,

260 Neb. 63, 615 N.W.2d 460 (2000).

Standing is a jurisdictional component of a party's case because only a party who has standing may invoke the jurisdiction of a court; determination of a jurisdictional issue which does not involve a factual dispute is a matter of law which requires an appellate court to reach an independent conclusion. Mutual Group U.S. v. Higgins, 259 Neb. 616, 611 N.W.2d 404 (2000); Ritchhart v. Daub, 256 Neb. 801, 594 N.W.2d 288 (1999).

Statutory interpretation presents a question of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below. Airport Auth. of Village of Greeley v. Dugan, 259 Neb. 860, 612 N.W.2d 913 (2000); Hobza v. Seedorff Masonry, Inc., 259 Neb. 671, 611 N.W.2d 828 (2000).

The construction of a contract is a matter of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below. Fraternal Order of Police v. County of Douglas, 259 Neb. 822, 612 N.W.2d 483 (2000); Ruble v. Reich, 259 Neb. 658, 611 N.W.2d 844 (2000).

ANALYSIS

VALIDITY OF AGREEMENT

We turn first to Gertrude and Norwest's contention that Lawrence is estopped from challenging the validity of the Agreement. Gertrude and Norwest argue, and the district court found, that since the Bayes, and Lawrence as personal representative of John's estate, accepted the benefit of the Agreement by accepting payment thereunder, Lawrence cannot subsequently claim that the Agreement is invalid.

Under Nebraska law, the doctrine of equitable estoppel is frequently applied to transactions in which it is found that it would be unconscionable to permit a person to maintain a position inconsistent with one in which he or she has acquiesced or of which he or she has accepted any benefit. See, Wenzel v. Wenzel, 174 Neb. 61, 115 N.W.2d 788 (1962); Securities Acceptance Corp. v. Brown, 171 Neb. 406, 106 N.W.2d 456 (1960); Schroeder v. Ely, 161 Neb. 252, 73 N.W.2d 165 (1955); In re Estate of Lee, 137 Neb. 567, 290 N.W. 437 (1940); Brisbin v. E.L. Oliver Lodge No. 335, 134 Neb. 517, 279 N.W. 277 (1938).

The acceptance of any benefit from a transaction or contract, with knowledge or notice of the facts and rights, will create an estoppel. See, Wenzel v. Wenzel, supra; Securities Acceptance Corp. v. Brown, supra; Schroeder v. Ely, supra; Brisbin v. E.L. Oliver Lodge No. 335, supra. See, also, Pearce v. ELIC Corp., 213 Neb. 193, 329 N.W.2d 74 (1982); McLeod v. Crawford, 176 Neb. 513, 126 N.W.2d 663 (1964); Wegner v. West, 169 Neb. 546, 100 N.W.2d 542 (1960); Einot, Inc. v. Einot Sales Co., Inc., 154 Neb. 760, 49 N.W.2d 625 (1951) (general rule is that assertion of invalidity of a contract is nullified by subsequent acceptance of benefits growing out of a contract). Accord Bohrer v. Bohrer Realty Corp., 157 A.D.2d 458, 549 N.Y.S.2d 25 (1990) (...