Fanchon & Marco Enterprises v. Dysart

• Decision Date: 04 September 1945
• Docket Number: No. 39458.,39458.
• Citation: Fanchon & Marco Enterprises v. Dysart, 189 S.W.2d 291 (Mo. 1945)
• Parties: FANCHON & MARCO ENTERPRISES, Inc., v. DYSART et al.
• Court: Missouri Supreme Court

189 S.W.2d 291

FANCHON & MARCO ENTERPRISES, Inc., v. DYSART et al.

No. 39458.

Supreme Court of Missouri, Division No. 1.

September 4, 1945.

Appeal from St. Louis Circuit Court; Robert L. Aronson, Judge.

Suit by Fanchon & Marco Enterprises, Inc., a corporation, against Thomas N. Dysart and another, as members of Central Properties First Mortgage Bondholders' committee, and others, for specific performance of an option to purchase 52 per cent. of the shares of the capital stock of St. Louis Amusement Company. From a decree dismissing its bill, plaintiff appeals.

Cause transferred to St. Louis Court of Appeals.

Burnett, Stern & Liberman, of St. Louis (Herman J. Weisman, of Waterbury, Conn., of counsel), for appellant.

Rhodes E. Cave and Robert H. McRoberts, both of St. Louis (Bryan, Cave, McPheeters & McRoberts, of St. Louis, of counsel), for respondents.

VAN OSDOL, Commissioner.

Appeal from a decree dismissing plaintiff's bill for the relief of specific performance of an option to purchase 52% of the shares of the capital stock of St. Louis Amusement Company. Facts, pertaining to various corporations, which form the background of the instant litigation, are complicated but fully stated in Warner Bros. Pictures, Inc., et al. v. Lawton-Byrne-Bruner Ins. Agency Co. et al., 8 Cir., 79 F.2d 804; and Scherck, Richter Co. v. Dysart, 8 Cir., 123 F.2d 364.

Shares (52%) of the stock of St. Louis Amusement Company were among assets of Skouras Bros. Enterprises, Inc., a bankrupt, which had guaranteed payment of first mortgage bonds of Central Properties Corporation, in receivership. The defendants-respondents Thomas N. Dysart and Frederick W. Straus, committee for first mortgage bondholders of Central Properties Corporation, contemplated acquiring, and later acquired, the stock for the benefit of the bondholders. The option provision in question was contained in a contract dated July 30, 1936, and is in part as follows:

"5. The parties of the first part (committee), in consideration of the premises and in consideration of the sum of One Dollar to them in hand paid by Fanchon & Marco Enterprises, Inc., agree that if at any time within ten (10) years from the time when parties of the first part shall have acquired the said shares of stock in the St. Louis Amusement Company they shall desire to sell such stock or any part thereof and shall have a bona fide offer for the same, Fanchon & Marco Enterprises, Inc., shall have an option for sixty (60) days within which to purchase the stock at the price and upon the terms of such bona fide offer, * * *. It is agreed, however, that the parties of the first part shall have the right (subject to the foregoing option) to sell, assign and transfer said St. Louis Amusement Company stock to the Ambassador Building Corporation or the Missouri Theatre Building Corporation, or to a corporation which said companies or either of them may create for the purpose of taking title to said stock." (Our italics.)

It may be here noted that, on the date of this contract, appellant was the owner of 42% of the stock of St. Louis Amusement Company.

Respondents, committee, having acquired the 52% of stock of St. Louis Amusement Company (and other assets) from the bankrupt estate of Skouras Bros. Enterprises, Inc., undertook to transfer the stock to Ambassador Investment Corporation, subject to plaintiff's option, pursuant to contract dated July 26, 1940 (and plan for distribution of the assets so acquired), between respondents, committee, and respondent Ambassador Building Corporation. The plan had been examined and approved in the federal courts. Scherck, Richter Co. v. Dysart, supra. The Ambassador Investment Corporation was a new entity, its capital stock being divided into 100 shares of common (voting) stock of no par value and 36,557 shares of preferred (non-voting) stock of no par value (the preferred stock to be retired upon payment of $12 per share in liquidating dividends or upon dissolution, and to have priority of payment in that sum per share over the common stock as to profits, and as to corporate assets). Its shares of preferred stock (except 1875 shares thereof) were issued to holders of certificates of deposit (which certificates had been issued in lieu of the first mortgage bonds of Central Properties Corporation). The 100 shares of common stock are held by Ambassador Building Corporation. Ambassador Building Corporation also acquired 3641 shares of the preferred stock of Ambassador Investment Corporation by purchase (in accordance with the plan) from certain certificate holders — it is asserted that Ambassador Building Corporation purchased the 3641 shares of preferred stock, and subscribed for and procured the 100 shares of common stock of Ambassador Investment Corporation at the net cost of $17,007.93.

The trial chancellor indicated by a memorandum the theory of the finding for defendants-respondents — the sale of St. Louis Amusement Company stock to Ambassador Investment Corporation "came within the exception in plaintiff's option * * *." The "exception" is the sentence of the option provision which we have italicized supra.

Appellant contends the court erred in finding that the sale of the stock of St. Louis Amusement Company to Ambassador Investment Corporation did not "violate" the option provision in the contract of July 30, 1936. Appellant further contends that the decree of the federal district court (affirmed in Scherck, Richter Co. v. Dysart, supra), approving the sale to the Ambassador Investment Corporation, did not adjudicate the rights of appellant under the option provision (the trial chancellor had found for appellant on this issue); and that appellant is entitled to the equitable relief of specific performance in a manner as expressed by the language of its brief,

"* * * plaintiff (appellant) was entitled to acquire the St. Louis Amusement Company stock upon the same basis, terms and conditions as in the proposed sale by the Committee to the Ambassador Investment Corporation. This would have involved the organization of a corporation by the plaintiff with the same authorized capital and quality of stock as the Ambassador Investment Corporation and with the distribution of stock for the considerations as involved in the plan of the Committee. The preferred stock of such corporation would then have been issued to the holders of certificates of deposit, and the common stock would have been taken by the plaintiff for the same consideration as was paid by the Ambassador Building Corporation.

"Since the Ambassador Investment Corporation has, in fact, been organized and the preferred stock has been distributed to the holders of the certificates of deposit, it is unnecessary to disturb that situation, and complete relief can be given to plaintiff by requiring the Ambassador Building Corporation, which acquired the common stock in the Ambassador Investment Corporation, to transfer the stock to the plaintiff for the consideration which it paid. The net amount paid by the Ambassador Building Corporation is...