Consolidated Copperstate Lines v. Frasher
| Decision Date | 28 May 1956 |
| Citation | 141 Cal.App.2d 916,297 P.2d 692 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CONSOLIDATED COPPERSTATE LINES, a California Corporation, Plaintiff and Respondent, v. Isabelle F. FRASHER, Ernest E. Frasher, Gail H. Crawford, and Morris A. Atkins, as executors of the Estate of Harold B. Frasher, Deceased; Hattie Harm; George Robert Harm; Valley Express Company, a California Corporation; Valley Motor Lines, Inc., a California Corporation; United Motor Transport Lines, a California Corporation; Isabelle F. Frasher, Ernest E. Frasher, Gail H. Crawford, and Morris A. Atkins, as Executors of the Estate of Harold B. Frasher, Deceased, and Hattie Harm, copartners, doing business under the firm name and style of Terminal Warehouse, Does One through Thirty, inclusive, Defendants, Isabelle F. Frasher, as Executrix, Ernest E. Frasher, and Morris A. Atkins, as Executors of the Estate of Harold B. Frasher, Deceased; Valley Express Company, a California Corporation; Valley Motor Lines, Inc., a California Corporation; United Motor Transport Lines, a California Corporation, Defendants and Appellants, Hattie Harm and George Robert Harm, Defendants and Respondents. Civ. 5327. |
Leslie C. Gillen, John R. Golden, C. J. Goodell, San Francisco, for appellant executors.
James T. Barstow, Fresno, for appellant Corporations.
Lawrence W. Young, Fresno, Hill, Farrer & Burrill, Robert Nibley, Los Angeles, Lopez & Hyde, Floyd H. Hyde, Fresno, for respondents.
This is an appeal from a judgment decreeing the specific performance of two contracts to sell personal property. The contracts were entered into on July 5, 1951, by the executors of the last will of Harold B. Frasher, Deceased, and provided for the sale to the plaintiff of all the stock owned by the testator in three corporations and also of the testator's half interest in a partnership known as 'Terminal Warehouse', the other half of which was owned by defendant Hattie Harm. These contracts were a part of a single transaction by which these executors and the Harms agreed to sell to the plaintiff practically the entire business being conducted by the corporations and the partnership. Three of the four executors later sought to avoid enforcement of the agreements and are appealing while the Harms, although named as defendants, have at all times sought enforcement of the agreements.
The three corporations, which will be referred to as the 'Valley' corporations, were the outgrowth of a business started by Harold B. Frasher and George B. Harm. They became the principal stockholders of the three corporations and also the owners of the Terminal Warehouse business. Mr. Harm died first and Mr. Frasher died on February 23, 1949, leaving a will in which he authorized his executors to sell the property of his estate.
The Valley corporations and the Terminal Warehouse partnership are interrelated, being operated as one organization, and the sellers in this transaction represent all of the ownership therein except for 14.30% of the stock of one of the corporations. Valley Motor Lines, Inc. operates as a common carrier in hauling freight on certain highways. Its stock was owned as follows: 32.35% by Valley Express Company, 34.22% by the Frasher Estate, 19.13% by the Harms, and 14.30% by a few other stockholders who are not parties to this sale or to this litigation. Valley Express Company operates entirely within cities and towns, picking up freight to be hauled by Valley Motor Lines, Inc. All of the stock in Valley Express Company was owned by the Frasher Estate and the Harms. United Motor Transport Lines merely holds the legal title to certain property used by the other two corporations, and all of its stock is owned by Valley Motor Lines, Inc.
After the death of Mr. Frasher unsuccessful negotiations were carried on by the Frasher Estate with various motor truck companies for the sale of all of the estate's stock in the Valley corporations, and also its interest in Terminal Warehouse. In the spring of 1951, negotiations were begun by the plaintiff with the executors of the Frasher Estate and the Harms which resulted in the execution of three contracts on July 5, 1951. In the first of these contracts (Exhibit 1) the Frasher executors agreed to sell to the plaintiff all of the estate's stock in the Valley corporations for $518,353.15. In the second contract (Exhibit 2) the Harms agreed to sell to the plaintiff all of their stock in the Valley corporations for $300,659.65, on substantially the same terms. In the third contract (Exhibit 3) the Frasher executors and the Harms agreed to sell to the respondent the business and assets of Terminal Warehouse for $100,000. While only the first and third of these contracts are directly involved here, all three constitute in effect a single agreement to sell since by their terms if one fails for any reason all must fail. In summary, the Frasher Estate agreed to sell its interest in this business to the plaintiff for a total of $568,353.15; and the Harms agreed to sell their interest therein for a total of $350,659.65.
The Frasher agreement (Exhibit 1) provided that the purchase price was to be paid as follows: On the signing of that agreement $25,917.66 was to be delivered to the attorney for the sellers, to be held in escrow, one of the conditions being that it should be deposited in an interest-bearing account in a certain bank, the interest earned to eventually go with the principal. When title to the shares was transferred, on the closing date provided for in the agreement, the buyer was to pay another $113,533.39 which, with the original deposit, makes a down payment of $139,451.05 or 26.9% of the entire purchase price. The balance of the purchase price, $378,902.10, was to be paid in six equal annual instalments, the first instalment to be due on or before one year from the closing date, with 5% interest on the deferred payments to be paid annually. It was further agreed that the buyer would execute and deliver to the executors a negotiable note for the balance of $378,902.10, payable on those terms and dated as of the closing date; the note to be secured by a pledge of the corporate stock executed at the closing date, in the form attached to the agreement. The buyer reserved the right to prepay any or all of said instalments at any time.
The Valley companies are subject to regulation by the Interstate Commerce Commission and the Public Utilities Commission, and the contract provided that it was subject to the conditions precedent that the transaction should be approved by those two Commissions, and by the probate court. In this connection it was agreed that it was the responsibility of the buyer to procure the approval of the two Commission, and of the sellers to procure the approval of the probate court; and that both parties would cooperate fully to that end.
It was further provided that this transaction should be closed concurrently with the closing of the sales under the other two contracts (Exhibits 2 and 3); that the closing date should be the second Wednesday after all three of these approvals had been secured; and that 'the order of the Court or of either Commission which last becomes final shall determine the closing date.' It was also agreed that, in the event of a longer delay in the closing date, the buyer should pay the seller 5% interest on the purchase price, beginning nine months after the date of the agreement and running to the closing date.
The executors agreed that pending the closing of the sale it would not cause or permit the corporations to make any changes in their corporate structure; to declare a dividend or make any payment in respect to their capital stock; to enter into any transaction other than in the ordinary course of business; to increase the rate of compensation of their officers or directors; or to default in the filing of any reports or returns due to any federal, state or municipal authority.
In accordance with the terms of the various contracts $50,917.66 was deposited with the seller's attorney when the agreements were executed on July 5, 1951. The buyer immediately filed an application with the Interstate Commerce Commission for approval of the transaction. That proceeding was strongly contested by competing carriers, but approval was finally obtained on April 19, 1954. The approval of the Public Utilities Commission was finally obtained on August 18, 1954. In September, 1951, the executors filed a petition in the probate court seeking an order approving the agreements and authorizing the executors to complete the transaction in accordance therewith. Notice was given of the hearing at which the attorney for the executors appeared, and Isabelle F. Frasher testified on behalf of the executors. On October 5, 1951, the probate court made its order confirming and approving these sales in accordance with the terms set forth in the agreements, directing the executors to execute and deliver the necessary instruments of transfer 'and to accept from the purchasers the purchase price in the form and in accordance with the terms and provisions of said (agreements)'. No appeal was taken from that order and it became final.
When the contracts were signed in 1951 the Fresno terminal used by the Valley companies occupied most of a city block in Fresno. Thereafter, the State Division of Highways required a large part of this property for a new freeway, and the plaintiff consented in writing to the sale of this property to the state for $160,000 and to the purchase for $43,000 of a nine-acre parcel farther from town as a new terminal site. Later, a dispute over the erection of buildings and facilities on the new terminal site arose, which brought on this litigation. The Valley corporations were preparing to build in a certain manner, and the plaintiff took the position that if and when...
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