Butler v. Attwood
| Decision Date | 12 December 1966 |
| Docket Number | No. 16763,16808.,16763 |
| Citation | 369 F.2d 811 |
| Parties | George W. BUTLER, Plaintiff-Appellant, v. James W. ATTWOOD and Warren Russell Attwood, Co-executors of the Estate of Charles W. Attwood, deceased, George J. Finzel, George J. O. Finzel, Adam E. Finzel, Shirley A. Finzel, Johanna W. Finzel, Ruth M. Finzel, Leile Finzel and Unistrut Corporation, Defendants-Appellees. George W. BUTLER, Plaintiff-Cross-Appellee, v. James W. ATTWOOD and Warren Russell Attwood, Co-executors of the Estate of Charles W. Attwood, deceased, and Unistrut Corporation, Defendants-Cross-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Charles J. O'Laughlin, Chicago, Ill., and John Feikens, Detroit, Mich., for George W. Butler. Feikens, Dice, Sweeney & Sullivan, Joseph Levin, Detroit, Mich., on the brief, Raymond, Mayer, Jenner & Block, Chicago, Ill., of counsel.
Roscoe O. Bonisteel, Ann Arbor, Mich., and George E. Bushnell, Jr., Detroit, Mich., for James W. Attwood and others. Roscoe O. Bonisteel, Jr., Ann Arbor, Mich., on the brief, Miller, Canfield, Paddock & Stone, Detroit, Mich., of counsel.
Before O'SULLIVAN, PHILLIPS and EDWARDS, Circuit Judges.
O'SULLIVAN, Circuit Judge.
Plaintiff-appellant, George W. Butler, sought a decree requiring defendant Charles W. Attwood1 and the several defendants Finzel to transfer to Butler one half of those shares of stock of a Michigan corporation, Unistrut Corporation, which had become the subject of a buy-and-sell agreement between Attwood and the Finzels. Right to such relief was bottomed upon a claim that an antecedent contract between Butler and Attwood entitled Butler to purchase one-half of any stock in the corporation which became available for purchase by Attwood. Butler offered, with proper tender, to purchase one-half of the 34,000 shares covered by the Attwood-Finzel contract at the contract price of $12.50 per share. The District Judge in the United States District Court for the Eastern District of Michigan, Southern Division, sustained plaintiff's claim that Attwood's refusal to accord Butler the right to purchase such shares breached the earlier agreement between Butler and Attwood. He held that Butler was entitled to specific performance against the defendants Attwood, but denied such relief as to defendants Finzel because of his holding that "Attwood did not enter into the Attwood-Finzel contract as an agent or fiduciary of Butler." The complaint was dismissed as to the Finzels. Butler appeals, arguing that relief against the Attwoods alone is worthless to him inasmuch as defendants Attwood and Finzel have failed to consummate the sale of the involved shares to the Attwoods and assert that it has been mutually abandoned.2 Butler claims that equity can and should grant relief against the Finzels as well as the Attwoods. Defendants Attwood's cross-appeal asks reversal of the judgment against them on the asserted ground that, contrary to the District Judge's holding, the Attwoods' refusal to allow Butler to share in the purchase of the Finzel stock did not breach any contractual duty owed to Butler. This is a diversity action, Michigan law controlling substantive rights.
George W. Butler, plaintiff-appellant, a citizen of Illinois, Charles W. Attwood, defendant-appellees' decedent, and appellee George J. O. Finzel, were, prior and subsequent to December 5, 1944, substantial owners of shares of the capital stock of the Unistrut Corporation, a fabricator of a metal framing system. These men were all directors of Unistrut and participated in its operation during the times here involved. Until his death, Attwood was president and the chief executive officer of the corporation; Butler and a corporation owned by him were its sales representatives; and Finzel was the company's treasurer.
Shortly before December 5, 1944, Butler, Attwood and Finzel attended a Unistrut directors' meeting where it was disclosed that brothers by the name of Henderson desired to sell their holdings of 36,091 shares of Unistrut. Butler raised the money to buy this stock, and on December 5, 1944, he and Attwood went to the Hendersons and paid the purchase price, Butler acquiring the Henderson shares. Returning from this visit to the Hendersons, Attwood remarked to Butler that acquisition of the Henderson shares would give Butler "the controlling stock of the company" and then stated: "you ought to agree to sell me enough stock out of this block that you have just purchased * * * so that you and I will hold identically the same number of shares." Butler acquiesced, and at his office Attwood wrote out the agreement (Exhibit D) which is the basis of this lawsuit. It was signed by Attwood and Butler and, in Attwood's handwriting, is in words and figures as follows:
and that any future purchases of stock shall be made on a 50-50 basis between the two parties and that at some future time an agreement for coverage of all contingencies will be drawn between the parties.
"Signed — Chas W. Attwood Geo W. Butler."
Thereupon 7,961 of the 36,091 shares acquired from the Hendersons were transferred from Butler to Attwood at the price which Butler had paid for them. Butler took Attwood's note for the price "to be paid off as he Attwood could." At the end of this transaction, the share holdings of Attwood and Butler, with shares held by their respective wives, were Butler, 42,085 and Attwood, 42,085, out of a then outstanding total issue of 100,000 shares.
From the foregoing beginning and until the making of the Attwood-Finzel contract on March 13, 1964, Attwood and Butler, with a few insubstantial exceptions hereinafter noted, fulfilled their 1944 agreement by advising each other of opportunities to acquire blocks of Unistrut stock and purchasing the same on a "50-50 basis," including additional shares issued by the corporation. In these acquisitions Attwood and Butler were mutually accorded the privilege of vesting parts of the acquisitions in members of their families and in the case of Butler, in a corporation owned by himself and his wife, which acted as the then exclusive sales agency of Unistrut products. These acquisitions were substantial and, as the price of the stock was going up, at substantial prices. By the time of the Attwood-Finzel contract of 1964, the shareholdings of the Butler and Attwood "groups" were Butler, 157,622 and Attwood, 159,136 shares.
The above slight disparity and departure from a strict "50-50" ownership by the parties came about through separate acquisitions of a few odd lot shares by the Attwood and Butler groups at different times and under special circumstances. Appellees Attwood and Finzel, however, now assert that these separate acquisitions demonstrate that the 1944 "50-50" contract was not considered a binding agreement by the parties, had been mutually abandoned, or so breached as to now forbid equitable relief to Butler. The District Judge considered that these odd lot acquisitions did not support such contentions and, without detailing the evidence of the circumstances involved, we agree with the District Judge. Parts of his findings which we quote below portray the District Judge's view in this regard.
We proceed then to consider such of the remaining contentions of the appeal and cross-appeal as call for discussion: first, cross-appellants' charge that the December 5, 1944, contract was not a binding, complete and enforceable contract; and, second, appellant's contention that equity required a decree directing the Finzels to complete the sale of the 34,000 shares of Unistrut stock which was the subject of the 1964 buy-and-sell agreement between them and Attwood.
In lieu of relevant discussion by us and with the supplementary qualifications which we will discuss hereinafter, we set out the following recitations from the findings and conclusions of the District Judge, Honorable Wade H. McCree, now a member of this Court:
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