Burns v. Gould

• Decision Date: 11 January 1977
• Citation: Burns v. Gould, 172 Conn. 210, 374 A.2d 193 (Conn. 1977)
• Court: Connecticut Supreme Court
• Parties: , 20 UCC Rep.Serv. 1294 Donald W. BURNS v. Harry J. GOULD.

Page 193

374 A.2d 193

172 Conn. 210, 20 UCC Rep.Serv. 1294

Donald W. BURNS v.Harry J. GOULD.

Supreme Court of Connecticut.

Argued Oct. 6, 1976.

Decided Jan. 11, 1977.

Robert K. Lesser, Bridgeport, for appellant(defendant).

A. Reynolds Gordon, Bridgeport, with whom was Arthur A. Hiller, Bridgeport, for appellee(plaintiff).

Before HOUSE, C. J., and LOISELLE, BOGDANSKI, LONGO and MacDONALD, JJ.LOISELLE, Associate Justice.

The plaintiff, Donald W. Burns, and the defendant, Harry J. Gould, developed a convalescent home in Newtown known as Buckingham Gardens, hereinafter Buckingham.They formed a corporation, and the plaintiff received 25 percent of its stock and an option to buy 24 percent more from the defendant for $12,000.In 1967, the defendant formed a second corporation, Bentley Gardens, Inc., hereinafter Bentley, to develop a nursing home in West Haven, but none of its stock was issued to the plaintiff.The plaintiff alleged that the parties had an oral agreement concerning the second corporation.According to this alleged agreement he was to receive the same percentage of ownership 25 percent immediately and an option for an additional 24 percent for $12,000 in exchange for his services in developing the nursing home.The plaintiff sought specific performance and $300,000 damages.The defendant denied having made such an agreement and entered a special defense of failure of consideration if such an agreement existed.

Certain issues of fact were tried to the jury with the aid of interrogatories.The jury found that there was an oral agreement as alleged by the plaintiff, that he had given consideration and had performed on his part, and that the defendant had breached the agreement by preventing the plaintiff from performing.¹

The court additionally found as facts that "Burns was employed by Gould to lend his expertise in the nursing home field towards the planning, construction, supervising and managing" of Bentley, and that without his help the defendant could not have successfully developed the project.The plaintiff, in addition to stock and the option for more stock, was to receive $200 per week and the use of a car, and would not have agreed to the deal unless he was to receive all the items.The consideration for the 24 percent option was not merely the $12,000 cash, but also Burns' services.The stock had no fixed market value.The Bentley deal was based on the Buckingham agreement and the Bentley negotiations contained express reference to the Buckingham terms.Under the plan, Bentley was to be owned solely by the plaintiff and the defendant.After the suit was brought, the defendant admitted that he and his wife formed a second corporation, Terrace Corporation, hereinafter Terrace, to lease the nursing home from Bentley and to operate it, and that the two corporations together performed the functions originally contemplated for Bentley.

The court concluded that the plaintiff substantially performed his part of the agreement and that the defendant wrongfully prevented him, by discharge, from completing performance.The court made no finding as to the exact services to be performed by the plaintiff, the term of his employment, or what portions of those services were actually performed by the plaintiff.It concluded that the parties intended the entire consideration to be the essence of the contract, and that the services rendered and to be rendered by the plaintiff were inextricably interwoven with the possible requirement of the $12,000 payment for the stock option.It found that the defendant's obligation to transfer stock applied to both Bentley and Terrace.It found that the contract did not involve the sale of land or the sale of securities at a stated or defined price, but was an employment contract.

The court granted specific performance, ordering the defendant to transfer to the plaintiff 25 percent of the stock of Bentley and Terrace, and to put another 24 percent of the stock of both corporations in escrow for six months, to be transferred to the plaintiff if he tendered $12,000.It further ordered the defendant, if either corporation should issue more stock, to transfer 25 percent or, if the option for the additional 24 percent had been exercised, 49 percent, of the newly issued stock to the plaintiff.

On appeal, the defendant, having abandoned certain assignments of error addressed to the finding, pressed several other claims of error.

The court denied the defendant's motion to expunge two paragraphs of the complaint.The defendant's motion alleged that the paragraphs, which related the transactions between the parties in regard to Buckingham, were unnecessary, irrelevant and immaterial.Inasmuch as the plaintiff alleged that the Bentley agreement was "in line with the same terms and conditions" as the Buckingham deal, the paragraphs were not irrelevant.They were "not so foreign to the issues in the case that the justice should have granted the motion to expunge."O'Keefe v. Atlantic Refining Co., 132 Conn. 613, 620, 46 A.2d 343, 347.SeeLaFrance v. LaFrance, 127 Conn. 149, 153, 14 A.2d 739.The defendant also complains that the court's leaving the paragraphs in permitted the plaintiff to introduce evidence of the prior agreement which would not otherwise have been admissible.As a general proposition, prior contracts, even between the same parties, are often held inadmissible to prove the making of the contract at issue.SeeMcCormick, Evidence (2d Ed.) § 198;cf.Wigmore, Evidence (3d Ed.) § 377(2)(a).The plaintiff alleged that the Bentley deal was "in line with" the Buckingham deal.Thus the Buckingham contract was independently admissible to prove the terms of the Bentley deal." 'Unless excluded by some rule or principle of law, any fact may be proved which logically tends to aid the trier in the determination of the issue.Evidence is admitted not because it is shown to be competent, but because it is not shown to be incompetent. . . .'Plumb v. Curtis, 66 Conn. 154, 166, 33 A. 998."Pitt v. Kent, 149 Conn. 351, 357, 179 A.2d 626, 629.

The defendant claims that specific performance is not a proper remedy in this case.Under our practice, specific performance, like other equitable relief, is not conditioned on an allegation that there is no adequate remedy at law.SeeGaul v. Baker, 105 Conn. 80, 84, 134 A. 250.Generally contracts for the transfer of stock are not specifically enforceable because damages will suffice.71 Am.Jur.2d, Specific Performance, § 158.When the stock, however, is that of a closely held corporation, which is difficult to value in money, specific performance may be the only just remedy.Crofut v. Layton, 68 Conn. 91, 101, 35 A. 783;cf.Corbin v. Tracy, 34 Conn. 325, 327-28(involving patent rights).To be specifically enforceable, a contract must be "fair, equitable, certain and mutual, consistent with policy and made on good consideration."Burns v. Garey, 101 Conn. 323, 330, 125 A. 467, 469.Contracts of personal service are not specifically enforceable.Wm. Rogers Mfg. Co. v. Rogers, 58 Conn. 356, 364-65, 20 A. 467.Therefore the plaintiff could not be compelled to complete his performance.There is no lack of mutuality, however, in ordering the employer to perform as much of his obligation under the contract as the employee has already performed of his.71 Am.Jur.2d, Specific Performance, § 167.General Statutes § 42a-8-319 clearly contemplates that a transferee may receive the portion of the stock for which he has paid.

The defendant also claims error in the admission of a letter to the plaintiff from the defendant's attorney.The defendant objected and took exception, but he gave as his reason only that "Mr. Green will be here, I expect."The expected arrival of the author of a letter is not a ground of objection recognized by the law.

The defendant claims that, because under the Buckingham contract the plaintiff was required to surrender his stock on termination of employment, the same requirement must be found in the Bentley deal.The court found that the Buckingham agreement formed the "basis" of the Bentley deal, but not that the terms were identical.

The defendant's claim that the court cannot order the defendant to transfer stock in the two corporations to the plaintiff because the corporations are not parties is without substance.He does not allege that the transfer is beyond his power to effect.As to stock which may in the future be issued by the corporations, the court's order runs against the defendant, not against the corporations, and it is his responsibility to assure compliance by exercising his powers as principal stockholder of the corporations.

The defendant's principal argument is that the agreement, being oral, was barred by one or more statutes of frauds requiring that certain agreements must be in writing in order to be enforceable.The statutes claimed to be operative by the defendant require a writing for: (1) the sale of an interest in land, General Statutes § 52-550;(2) a suretyship contract, § 52-550;(3) the sale of personal property for more than $5000, § 42a-1-206; and (4) the sale of securities, § 42a-8-319.

It is true that Bentley's basic asset was land.An agreement to transfer the stock of a corporation which owns an interest in real estate, however, is simply not an agreement for the sale of an interest in real estate.

In the eyes of the law, a corporation is a person, not the sum of its holdings.A contract by a corporation to buy or sell land is within the statute, and insofar as the purpose of the statute is to assure that contracts involving land are definite in their terms, that purpose is served.No similar purpose is served in requiring that an agreement to transfer stock be in writing, for the land owned by the corporation is adequately identified by the other contract, as is the price to be paid for the land.

The defendant claims that the promises by the defendant were...