Forbes v. Wells Beach Casino, Inc.

• Citation: 307 A.2d 210
• Parties: Vander W. FORBES v. WELLS BEACH CASINO, INC. and Elias M. .loew.
• Decision Date: 28 June 1973
• Court: Supreme Judicial Court of Maine (US)

Page 210

307 A.2d 210

Vander W. FORBES v. WELLS BEACH CASINO, INC. and Elias M. .loew.

Supreme Judicial Court of Maine.

June 28, 1973.

J. Armand Gendron, Sanford, for plaintiff.

Preti & Flaherty, by John J. Flaherty, Robert E. Burns, Portland, for defendants.

Before DUFRESNE, C. J., and WEATHERBEE, POMEROY and ARCHIBALD, JJ.

WEATHERBEE, Justice.

The Plaintiff brought an action in the York County Superior Court for specific performance of an alleged contract between him and the Defendant, Wells Beach Casino, Inc., for the sale of certain real estate and personal property of the Defendant and for other incidental relief. A Justice in the Superior Court dismissed Plaintiff's complaint and supplemental pleadings for failure to state a claim upon which relief can be granted. M.R.C.P., Rule 12(b). We sustain Plaintiff's appeal. The pleadings and exhibits-all taken as true for the purposes of this appeal-authorize the following summary of facts:

In early 1960 Elias M. Loew and Lawrence G. Laskey each owned 50% of the capital stock of Wells Beach Casino, Inc. which owned and had operated real estate housing a dance hall, bowling alleys and other facilities. Laskey was President and a Director and Loew was Treasurer and a Director. The business relationship of Loew and Laskey had become less than harmonious and in July of 1960 Laskey filed a complaint against the Corporation, Loew and another (not of interest here) charging corporate mismanagement, asking (among other things) appointment of a receiver for the corporation and for its dissolution. ¹ After two hearings had taken place on Laskey's complaint on September 13 and October 3, 1960 the matter was continued ² and on October 6, 1960 Laskey and Loew sought to resolve the disposal of the corporate property and the division of its assets, out of court, by means of the contract which forms the basis of the present action. The contract which was executed by Laskey and Loew on that date is as follows:

'AGREEMENT made this sixth day of October, 1960, by and between ELIAS M. LOEW, (hereinafter called 'Loew'), and LAWRENCE LASKEY, (hereinafter called 'Laskey') each being fifty per cent (50%) stockholders of WELLS BEACH CASINO, INC., (hereinafter called 'Corporation') a Maine corporation.

Whereas Loew and Laskey wish to terminate their business relationship in the Corporation they hereby contract and agree, for valuable considerations, as follows:

1. Within seven (7) days from this day Loew and Laskey shall each appoint one appraiser. Within seven days (7) thereafter, the two appraisers so selected shall choose a third appraiser. The three appraisers shall within thirty days (30) from this date appraise and determine the fair value of all the real and personal property owned by the Corporation at Wells, Maine. The Board of three appraisers shall act by majority vote.

2. The board then shall at once list said property with one or more real estate brokers in order to secure binding offers for the sale and purchase of said property. Any broker recommended by either Loew or Laskey shall be retained by the board to list said property.

3. Within one hundred twenty (120) days after this date and after reports from the brokers the highest cash offer which is equal to, or in excess of, the value so set by the board and which the board determines to constitute a reasonable offer under the circumstances shall be accepted and the property shall be sold in accordance with this offer and acceptance.

4. All expenses arising from the procedures herein shall be paid by the Corporation.

5. After the sale, the Corporation shall be fully liquidated; prior to liquidation there shall be no corporate disbursements, stock transfers or other activity of any nature or description except for ordinary maintenance and except that the parties shall complete all corporate matters necessary to carry out the foregoing provisions.

6. This agreement is binding upon the parties hereto and their respective heirs, executors, administrators and assigns.

(signed) Lawrence G. Laskey (seal)

(signed) Elias M. Loew (seal)

Three real estate brokers were named as appraisers. They determined the fair value of the corporation's property to be $28,834.00, listed the property for sale and solicited binding offers.

The brokers failed to sell the property by the usual methods and, by a supplemental agreement, Loew and Laskey agreed that each of them could, if he wished, submit a single sealed bid for the property without deposit and that their bids, if any, and the sealed bids of other persons were to be opened on February 6, 1961 and the highest bid was to be certified by the appraisers and the property was to be sold to the highest bidder.

On February 6, 1961 the appraisers met and opened the only sealed bids received. It was then revealed that Laskey's bid was $45,000.00 for the property free and clear of encumbrances, without deposit. The Plaintiff's bid was for $39,100.00 and was accompanied by a certified check for $1,000.00. Loew's bid was for $35,000.00 subject to 'the outstanding lease on the Variety Store', ³ without deposit.

The Plaintiff alleges that the bids of Laskey and Loew were not made in good faith and are, therefore, null and void and of no legal effect and that he, the Plaintiff was the highest good faith bidder. The sale of the property to the highest good faith bidder has never been completed. Plaintiff has demanded title and one of the appraisers still holds Plaintiff's $1,000 deposit.

The Plaintiff asked that specific performance of their contract to convey the Corporation property to Plaintiff be ordered of the Corporation, Laskey and Loew and that the purported lease to Moritz Loew be declared null and void, or if valid, that it should be ordered assigned to the Plaintiff.

Elias Loew's motion to dismiss for want of personal jurisdiction over him was reported to this Court and on May 11, 1966 we held that the 'long arm' statute gave the Court personal jurisdiction. Forbes v. Wells Beach Casino, Inc., Me., 219 A.2d 542 (1966).

In the meantime, tax lien mortgage certificates had been recorded against the property for unpaid real estate taxes and the Corporation's equity of redemption expired. On April 11, 1966 the Town brought a civil action to establish and confirm its title to the premises.

On April 11, 1968 Elias M. Loew, individually, paid all taxes, interest and costs due on the property to the Town and the Town gave him, individually, a deed to the property, with some exceptions and reservations.

Plaintiff filed a supplemental pleading alleging these facts and that Loew's taking title individually was a fraud on all parties in interest and especially the Plaintiff and asking that Loew be held to hold the property as a constructive trustee for all interested parties and especially for the Plaintiff, subject to Plaintiff's demands for specific performance.

Laskey was defaulted and a default judgment issued against him in 1969. On May 29, 1970 Plaintiff acquired from Laskey four shares and from one Mintz one share of the Corporation stock and thus became the owner of 50% of all the shares of capital stock of the Corporation issued and outstanding.

On February 23, 1971 the Plaintiff voluntarily dismissed as to Moritz Loew, ⁴ leaving only the Corporation and Elias M. Loew remaining as Defendants.

On the same day Plaintiff filed a second supplemental pleading alleging his acquisition of 50% of the ownership of the Corporation, that Elias M. Loew owns the other 5 shares of the Corporation, that Loew's failure in his duty as Treasurer to pay the corporate taxes and his taking title to the property in himself, individually, constituted a fraud on the Corporation and on Plaintiff's shares. Plaintiff further alleged that Loew paid for the property only a minor fraction of its fair value and that, by permitting title to pass to the Town and by accepting a deed with reservations and exceptions, Loew and the Corporation have placed themselves in a position where they cannot convey to Plaintiff the entire property and so should respond to the Plaintiff in damages for the difference between the fair market value of the property not subject to the reservations and that subject to the reservations.

Plaintiff repeated his request that Loew be declared a constructive trustee subject to Plaintiff's demand for specific performance and for damages. He also alleged that the corporation is deadlocked in its management and that there is no possibility of agreement between Plaintiff and Loew over the management, that his attempts to obtain redress through Loew have failed and he asks that the Corporation be dissolved, that receivers be appointed to wind up the Corporation affairs, to convey the property in question to the Plaintiff and to distribute the corporate assets.

The Corporation and Loew moved to dismiss the second supplemental pleading. The Single Justice who acted upon this motion treated it as a motion to dismiss the complaint and the two supplemental pleadings. At argument the parties have adopted this treatment and we will do the same.

The Single Justice held that the complaint and supplemental pleadings failed to state a claim upon which relief can be granted and ordered the complaint and supplemental pleadings dismissed.

Plaintiff's appeal raises only this question-do the complaint and supplemental pleadings allege facts which if presented in evidence and accepted by the trier of the facts would entitle Plaintiff to relief on any one or more of the three theories which he presents?

In our opinion the Plaintiff has made allegations which entitle him to present his proof.

The Contract.

Plaintiff's claim as to this issue may be summarized in this manner. He urges us that he has alleged facts from which, with the correct application of established principles of law, it may be found that:

1) Loew and Laskey made an agreement on October 6, 1960 to sell the Corporation property...