Covey v. Covey's Little America, Inc.
| Decision Date | 29 January 1963 |
| Docket Number | No. 3076,3076 |
| Citation | 378 P.2d 506 |
| Parties | Owen C. COVEY and Louise C. Moyle, Executors of the Estate of Almon A. Covey, deceased, Appellants (Defendants below), v. COVEY'S LITTLE AMERICA, INC., a Wyoming Corporation; Covey Distributing Corporation, a Wyoming Corporation; Covey Oil Company, a Utah Corporation, Appellees (Plaintiffs below). |
| Court | Wyoming Supreme Court |
Wilford M. Burton, Salt Lake City, Utah, William S. Edmonds, Kemmerer, and Bard Ferrall, of Ferrall, Bloomfield, Osborn & Lynch, Cheyenne, for appellants.
Herschler & Case, Kemmerer, and Bushnell, Crandall & Beesley and Dan S. Bushnell, Salt Lake City, Utah, for appellees.
Before BLUME, C. J., and PARKER, HARNSBERGER, and McINTYRE, JJ.
In a single action, but by separate counts, the three plaintiffs sought to enforce their respective stock 'Buy and Sell' agreements with defendants' decedent and to compel the defendant-executors to convey and transfer to plaintiffs respectively the stock of its own corporation, owned by the deceased at his death. Appellants say the pleadings developed the following issues:
1. Did the agreements of Covey's Little America and Covey Distributing Corporation create options which required the executors to sell decedent's stock to those corporations, respectively?
2. Did the circumstances surrounding the execution of the agreements create only a right of first refusal should the estate of deceased decide to sell?
3. Did plaintiffs each comply with the terms of its agreement so as to be entitled to specific performance?
4. Was compliance with §§ 17-24, and 17-25, W.S.1957 (repealed, ch. 85, § 128, S.L. of Wyoming, 1961) necessary in order to obtain specific performance?
5. Should assets of 'Wyoming Operating Company' have been included in determining the book value of Covey's Little America?
6. Was the book value of the corporation determined in accordance with law or the agreements?
The trial being to the court without a jury, it found:
1. The agreements were validly executed by the deceased with full knowledge of their contents;
2. The plaintiffs substantially complied with the terms of the agreements in electing to exercise the options granted and in computing and tendering the amounts to be paid defendants;
3. 'The deceased at the time he signed the respective Buy and Sell Agreements was not suffering from mental weakness nor was the consideration inadequate or inequitable or was [sic] the contracts signed as a result of any breach of any fiduciary relationship to the advantage of any of the parties or its [sic] agents to the agreement and to the detriment of the deceased.';
4. That if there were any defects in the agreements or their terms, defendants were estopped to rely upon them as deceased had ratified, confirmed, and relied thereon to his benefit and to the detriment of the other parties resulting in a substantial change of position by the respective parties;
5. Generally for plaintiffs.
The court then concluded:
1. The contracts were not so indefinite, ambiguous or uncertain as to render them unenforceable;
2. The contracts were not so ambiguous as to require parol evidence to determine the intent of the parties;
3. The contracts were validly entered into and the deceased was not acting under any undue influence or mental weakness and no party or its agent breached any fiduciary relationship.
Thereupon the court gave plaintiffs judgment against defendants, ordering them to deliver to the clerk of court properly executed (for transfer?) certificates representing decedent's shares of stock in plaintiff-companies and directing the clerk to pay to defendants the sums deposited with the clerk by the plaintiffs, in payment therefor.
From this judgment defendants appeal, contending the court's findings are not supported by the evidence or are contrary to the evidence and its conclusions were not correct in law and contrary to the evidence.
More specifically five points or contentions are relied upon which will be stated in the language used by appellants:
Exhibits 1 and 2 executed January 14, 1959, are respectively the agreements to which Covey's Little America, Inc., and Covey Distributing Corporation were parties, and their provisions pertinent to this appeal are practically if not completely identical. They are as follows:
'(a) The party desiring to dispose of or encumber his stock must first obtain the written consent of all of the other stockholders.
'(b) In the absence of such written consent to stockholder and no transferee who has received any stock in accordance with the provisions of paragraph 1(a) shall encumber or dispose of all or any part of his stock in the corporation now owned or hereafter acquired by him without first giving to the corporation at least thirty days' written notice by registered mail of his intention to make a disposition of his stock. Within the thirty-day period a meeting of the stockholders shall be called by the corporation upon not less than ten nor more than fifteen days' notice by registered mail and such meeting shall be held at the principal place of business of the corporation during normal business hours. At such meeting all of the stock of the stockholder or transferee desiring to make any such disposition shall be offered for sale and shall be subject to an option to purchase or to retire on the part of the corporation, which option shall be exercised, if at all, at the time of such meeting. The purchase or retirement by the corporation shall be at a price equal to 200 per cent of the book value of such stock as of the last day of the month 60 days preceding the date of the meeting of the stockholders and such purchase or retirement price shall be payable by cash in the amount of 10 per cent of the purchase price and the balance evidenced by a Promissory Note payable on or before one year after the date of said meeting with interest at the rate of six per cent per annum secured by the stock to be purchased with voting, dividend rights and all rights of ownership in the purchaser.
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Appellants lay great stress upon that portion of paragraphs 4 which states that in the event of death of a stockholder the corporation shall have the option to purchase the stock of the deceased stockholder 'in accordance with the provision of paragraph No. 1' of the agreement. Appellants conclude this can only mean the corporation had no option to purchase when a party to the agreement died, but merely gained a right to purchase when and if the estate or heirs of a deceased decided to sell the stock of which the deceased died possessed. If this interpretation is correct an anomalous situation would develop in the event the estate, through its representative, the executor or administrator, decided to dispose of the stock, but the heirs decided not to have the stock sold and elected to take in kind. Of course, the right of possessory control of personal property is not in either the heirs or the next of kin of a decedent, but the right of possession and hence, at least temporarily, control of the personalty is in the personal representative of the deceased. See 26A C.J.S. Descent and Distribution § 69, p. 683.
Appellants' interpretation is further complicated by the question, In whom does the title to the stock repose immediately following the death of its owner, as well as the question of the right and duty of such titleholder to carry out any commitments the deceased may have made respecting the stock. According to 33 C.J.S. Executors and Administrators § 299, p. 1341, it is well established that in the absence of a statute to the contrary, the legal title to personal property of which a decedent dies possessed vests in the personal representative. See Seibel v. Bath, 5 Wyo. 409, 423, 40 P. 756, 760. Under that rule the provision in paragraphs 4 requiring the corporations to serve...
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