Bielinski v. Miller

• Decision Date: 23 January 1978
• Docket Number: No. 7750,7750
• Citation: 118 N.H. 26,382 A.2d 357
• Parties: Richard J. BIELINSKI v. Joan A. MILLER, Richard A. Miller, Windham Enterprises, Inc.
• Court: New Hampshire Supreme Court

Page 357

382 A.2d 357

118 N.H. 26

Richard J. BIELINSKI v. Joan A. MILLER, Richard A. Miller, Windham Enterprises, Inc.

No. 7750.

Supreme Court of New Hampshire.

Jan. 23, 1978.

Winer, Lynch, Pillsbury & Howorth, Nashua (Sharon A. Coughlin, Nashua, orally), for plaintiff.

Anthony R. DiFruscia and Michael James Gorham, Lawrence, Mass., for defendants.

BOIS, Justice.

Petition pursuant to RSA 294:80-a (Supp.1975) requesting that the powers of the board of directors of Windham Enterprises, Inc. be suspended and that the powers of the board be thereafter exercised by the shareholders. Trial by a Master (Leonard C. Hardwick, Esq.) resulted in a verdict (approved by Perkins, J.) for the defendants. Plaintiff seasonably excepted to the denial of his motion to set aside the verdict. All questions of law raised by the foregoing exception or any exceptions appearing in the record were reserved and transferred by Loughlin, J. We remand.

The master found that the plaintiff and the defendant Richard A. Miller set about organizing a corporation to be known as Windham Enterprises, Inc. Articles of agreement were drafted and at the first meeting of the incorporators, held on January 2, 1973, the plaintiff was elected president, Richard A. Miller treasurer, and defendant Joan A. Miller (Richard's wife) clerk of the corporation. All three were elected to the board of directors. It was voted that the capital stock consist of 500 shares of no par value stock and "(t)o issue one hundred shares each to Richard D. J. Bielinski and Richard A. Miller for one thousand dollars, in cash." Additional authorized stock could be issued by the board of directors if certain specified procedures were followed. Proposed bylaws were presented and adopted. Neither the articles of agreement nor the bylaws contain a provision for resolving a disagreement between two equal shareholders relative to the election of a board of directors.

Five months before August 6, 1973, at which time a certificate of incorporation for Windham Associates was approved by the Secretary of State, the plaintiff had paid $1,300 towards the purchase of an automobile which was registered in the corporate name but which was in his possession and exclusively used by him. The balance of the purchase price was paid with proceeds from a bank loan to the corporation.

In order to obtain a loan, plaintiff and Richard Miller, under penalties of perjury, represented to the Small Business Administration that each was a fifty percent owner of the corporation. As security for the loan, the plaintiff pledged a savings account passbook in the amount of $16,000, and both plaintiff and defendant gave second mortgages on their residences.

At a specially called meeting of the board of directors held on July 2, 1975, the plaintiff, due to illness, resigned both as a member of the board and as president of the corporation. At that meeting, the remaining board members subsequently voted to "authorize one (1) share of stock to Joan A. Miller." The defendants claim that this vote was confirmed at the annual meeting of stockholders and directors held on October 14, 1975. Plaintiff, alleging that notice as provided for by the bylaws was lacking, did not attend. The master made no determination as to whether the one share of stock was actually issued or paid for. Plaintiff subsequently brought this petition to regain a voice in the management of the corporation. The master recommended dismissal of the action, holding that "Bielinski is not a stockholder of Windham Enterprises, Inc. and therefore has no standing to bring a petition under RSA 294:80A." He found "that Bielinski never paid anything into the corporation for stock and that no stock certificate was ever issued to him. In fact there is grave doubt whether Miller ever paid anything to the corporation for his stock, and on the evidence the master finds that no stock certificates were ever issued to Miller."

The statute under which the plaintiff seeks relief provides:

"294:80-a Deadlock Provisions for Certain Corporations. A shareholder in a closely held corporation having two shareholders each of whom own fifty percent of the voting stock may, in the event of a deadlock as defined in 294:80-b, petition the superior court of the county of the principal place of business of the corporation to have the powers of the board of directors suspended, which powers shall then be exercised by the shareholders. If the shareholders shall not resolve the deadlock within six months from the filing of the petition, the corporation shall be dissolved.

"294:80-b Definitions. For the purpose of RSA 294:80-a 'deadlock' shall mean a situation where two equal shareholders cannot agree upon the election of a board of directors and there is no provision in the articles of agreement of incorporation for resolving such disagreement."

Plaintiff's principal argument is that the master erred in finding that he "never paid anything into the corporation for stock." He argues that various documents prepared and executed by the parties, including the state and federal tax returns filed by the corporation and the applications submitted by it to the Small Business Administration, are strong evidence of plaintiff's fifty percent ownership of the corporation. He asserts that the master took an unduly restrictive view of the down payment made on the automobile purchased as a company car. According to the plaintiff, stock may be validly purchased by money or property given to the corporation even if not formally ear-marked as being given in exchange for stock.

A requirement that there be a formal tender of consideration for stock may be unduly technical. 18 C.J.S. Corporations § 240 (1939). This is especially true...