Collins v. Universal Parts Co.

• Decision Date: 04 April 1972
• Docket Number: No. 4735,4735
• Citation: 260 So.2d 702
• Parties: Mrs. Bernadine Brady COLLINS et al. v. UNIVERSAL PARTS COMPANY, Inc., et al.
• Court: Court of Appeal of Louisiana — District of US

Page 702

260 So.2d 702

Mrs. Bernadine Brady COLLINS et al. v. UNIVERSAL PARTS COMPANY, Inc., et al.

No. 4735.

Court of Appeal of Louisiana, Fourth Circuit.

April 4, 1972.

Pierre F. Gaudin, Gretna, James J. Grevemberg, New Orleans, for plaintiffs-appellees.

Pilie, Pilie & Landry, Patrick J. Browne, New Orleans, for defendants-appellants.

Before SAMUEL, CHASEZ and GUIDRY, JJ.

GUIDRY, Judge.

This is a suit on a contract instituted by the heirs of Everett G. Collins against Universal Parts Company, Inc. and Stanley J. Massett, the remaining shareholder of said corporation, wherein plaintiffs demand that the named defendants purchase the corporate shares owned by Everett Collins at his death for the sum of $35,000.00 together with legal interest, costs and attorney's fees of ten percent (10%). Exceptions of no right or cause of action and prematurity were filed by the defendants. On the matter of the exceptions the trial court dismissed the suit against Stanley J. Massett individually but allowed plaintiffs leave to amend to name Mr. Massett as receiver of the corporation as a party defendant. The exception of no right or cause of action against the corporation was dismissed as was the exception of prematurity.

Plaintiffs subsequently amended their petition to name the receiver of Universal Parts Company, Inc., as a party defendant. In due course the receiver of the corporation answered plaintiff's petition and filed a reconventional demand against the original plaintiffs seeking contribution should the corporation be held liable under allegations that the deceased was responsible for any failure on the part of the corporation to buy the shares in question and that the plaintiffs are liable to the same extent as the deceased for having unconditionally accepted his succession. The receiver likewise sought alternatively $2,627.10 representing interest, penalties, attorney's fees and accountant's fees incurred by the corporation allegedly because of the failure of the deceased to carry out his corporate duties conscientiously and in the further alternative $3,559.50 being the amount of the premiums paid by the corporation on insurance policies on the life of the deceased.

The trial court rendered judgment in favor of plaintiffs and against the corporation in receivership in the sum of $35,000.00 together with legal interest and further ordered defendant to take title to the stock owned by Everett G. Collins prior to his death. The lower court did not rule on the reconventional demand of defendants. From this adverse judgment defendants have perfected this appeal.

The facts of the matter are essentially as follows:

On March 11, 1965, Universal Parts Company, Inc. and its two sole shareholders and officers, Everett G. Collins and Stanley J. Massett, entered into a buy-sell agreement funded by four life insurance policies, each in the amount of $25,000.00, on the lives of the two shareholders. Under the agreement, the corporation agreed to buy and each shareholder bound his heirs or estate to sell all the shares in the company which he owned at the time of his death. The corporation was to make the purchase with the insurance proceeds derived from these life insurance policies, Universal Parts Company, Inc., being the beneficiary thereof.

For the purpose of fixing the purchase price of the stock the contract contained the following provision:

'Upon the execution of this agreement, the value of each appearer's interest in the aforesaid corporation of the Par Value Capital Stock of this corporation is hereby fixed at the sum of $35,000.00, which amount shall remain the value for the purpose of this agreement until such time as the aforesaid interest is reappraised by the parties hereto, commencing on August 1, 1966, and on the same date of each successive year thereafter the appearers Shall place an appraisal on their respective interest, and such appraisal together with the date thereof attested to by the signatures of all appearers herein shall be noted on the exhibit attached hereto and made a part hereof. This agreement shall be executed in multiple original, and the notation of appraisal shall be made on the original maintained at the business of Universal Parts Co., Inc., but need not appear on the original kept in the Notary's records nor the original filed with New York Life Insurance Company. The parties hereto Shall fix the valuation each year by mutual consent according to their determination of the net worth of said corporation, provided that in the event said appearers do not mutually agree as to the 'net worth' then and in that event the valuation of each appearer's interest shall be based upon the sum total of the book value of their respective interest in the corporation as shown by the immediately proceeding (sic) annual statement of the corporation, without any valuation being made for 'good will'. In the event any appearer...