Cobb v. Library Bureau

• Citation: 167 N.E. 765,268 Mass. 311
• Parties: COBB v. LIBRARY BUREAU. WASHBURN v. SAME.
• Decision Date: 12 September 1929
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

268 Mass. 311

167 N.E. 765

COBB

v.LIBRARY BUREAU.

WASHBURN

v.SAME.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 12, 1929.

Report from Superior Court, Suffolk County; Winfred H. Whiting, Judge.

Actions by Charles H. Cobb and by Walter R. Washburn against the Library Bureau. On report from the Superior Court. Judgment for defendant.E. A. Whitman, of Boston, for plaintiffs.

M. F. Weston, of Boston, for defendant.

CROSBY, J.

These are actions of contract for money had and received by the defendant for the plaintiffs' use. The cases were submitted to a judge of the Superior Court on a statement of agreed facts for a decision on the merits, and are before us on his report without decision, in accordance with G. L. c. 231, § 111. Both cases depend upon substantially stantially the same facts with minor differences. The subject matter has been previously before this court in suits in equity for specific performance, and are reported in 260 Mass. 7, 157 N. E. 46, and 162 N. E. 902. In the earlier suits for specific performance it was held that they could not be maintained as the bills had been prematurely brought; and in the later suits the plaintiffs' tender of moneys to make up the agreed price of stock came too late. The bills in both cases accordingly were dismissed.

The present actions are brought to recover amounts alleged to be respectively due the plaintiffs from the defendant under certain contracts entered into between the parties. The pertinent facts are recited in 260 Mass. 7, beginning on page 10, 157 N. E. 46, as follows: ‘The plaintiffs on January 2, 1925, then being substantial stockholders in, and two of the three vice-presidents of, the defendant corporation, each subscribed for shares of the common stock of the Library Bureau and agreed to pay therefor the sum of $100 per share in the manner set forth in a written contract, and the company agreed to issue and sell the said stock and receive payment for the same as provided in the agreement, and subject to all the terms thereof. Under these contracts each plaintiff was in each calendar year to pay in cash 6 1/4 per cent. of the total amount of his subscription, and the company at the end of each calendar year undertook and agreed to credit or pay in cash to the subscriber, as extra compensation for his services during the preceding calendar year, 6 1/4 per cent. of the subscription; this was to be applied upon the purchase price of the shares subscribed for, provided the subscriber was not in default in his payments, so long as any balance remained unpaid and the subscriber was still in the active employ of the company. After full payment, the subscriber was entitled to receive the stock issued free from all restrictions, and the same dividend on his stock as other holders of common stock received. But as long as any part of the subscription was unpaid, and the option in the agreement remained in force, the stock subscribed for, the subscription, or any right thereunder, could not be assigned, sold, pledged, or otherwise transferred by the subscriber, except with the consent of the board of directors.’

The agreement further provided, clause II: ‘* * * In case the Subscriber shall cease to be an officer or employee of the Company or its business successor or assigns from any cause whatsoever other than death or physical disability prior to the completion of payment of the above subscription, said Company shall have the following options, one or the other to be exercised within sixty (60) days from the date of such termination: (1) Of cancelling this Agreement by returning and paying to the Subscriber all the amounts theretofore paid upon the purchase price of the shares subscribed for; or (2) Of selling the stock subscribed for or the subscription rights hereunder at any broker's board or at public auction in the City of Boston, Massachusetts, at any time or times without advertisement or notice, and with the right to the Company to become a purchaser thereof freed and discharged of any equity of redemption, and applying the net proceeds to the liquidation of any unpaid balance hereunder, returning the overplus, if any, to the Subscriber; and the Subscriber shall still remain liable for any amount so unpaid’; clause IV: ‘If the Subscriber shall fail to pay, in any calendar year, the amount required to be paid by him in cash hereunder the Company shall have the right at any time on thirty days' notice in writing to the Subscriber by mail, to cancel this agreement and to declare the whole unpaid balance of the principal due and payable at once; and may sell the stock subscribed for or the subscription rights hereunder at any broker's board or at public auction in the City of Boston, Massachusetts, at any time or times, without advertisementor notice, and with the right to the Company to become a purchaser thereof, freed and discharged of any equity of redemption and apply the net proceeds to the liquidation of any unpaid balance hereunder, returning the overplus, if any, to the Subscriber, and the Subscriber shall still remain liable for any amount so unpaid, this being cumulative and not exclusive of any other rights which the Company may have hereunder’; clause V: ‘In the event of a cancellation of this agreement in any manner above provided or in the event of a termination of the Subscriber's employment by the Company from death or any other reason, the Subscriber's account shall be credited with only a pro rata proportion of the extra compensation payment for the calendar year in which such cancellation or termination shall occur, representing the period from the first of the calendar year to the date of such cancellation or termination of employment, and thereafter all credits for extra compensation shall cease.’ In clause VII of the contract it is stated that ‘The object of this contract * * * [is] to cement the relations between’ the plaintiffs and the defendant.

It is agreed that payments were made by the plaintiffs under the contracts during the year 1925, and credits entered by the defendant upon its books. At about the time of the execution of the contracts the defendant set aside, that is, refrained from taking subscriptions for or issuing to any other persons out of its authorized and unissued capital stock, sufficient stock to meet the obligation of the agreements. The capital structure of the defendant later was altered and new stock to the amounts called for by the agreements as applicable to the changed situation similarly was set aside, and such stock never has been issued or otherwise disposed of.

On January 31, 1926, the plaintiffs ceased to be officers and employees of the defendant within the meaning of the extra compensation agreements. On March 31, 1926, the defendant mailed letters to the plaintiffs enclosing checks and attempting to exercise the option given to the defendant by clause II (1) of the extra compensation and subscription agreements. These letters were not received until April 3, 1926, and the plaintiffs promptly returned the checks. It was held in 260 Mass. 7, 14, 157 N. E. 46, that this attempt by the defendant to exercise the option...