Francis v. Stinson
| Decision Date | 17 October 2000 |
| Parties | Lou Ann FRANCIS et al. v. Charles B. STINSON et al. |
| Court | Maine Supreme Court |
Sandra Hylander Collier, Esq., (orally), William S. Silsby Jr., Esq., Ellsworth, for plaintiffs.
Kate S. Debevoise, Esq., (orally), Peter J. Rubin, Esq., Bernstein, Shur Sawyer & Nelson, P.A., Portland, for defendant.
Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, ALEXANDER, and CALKINS, JJ.
[¶ 1] Lou Ann Francis, Arnold Francis, Arnold G. Francis, Marion Alley, Eva Wight, Carla Intza, and Jean Rakoske appeal from judgments entered in the Superior Court (Hancock County, Mead, J.) dismissing some of their claims, and awarding summary judgment to the defendants Charles Stinson, Calvin Stinson Jr., and Camp Hills, Inc. (as successor in interest to Stinson Canning Company) on other claims. The court dismissed the plaintiffs' claims for breach of fiduciary duty (all but one aspect of Count I, and all of Count II), breach of contract (Count III), negligent misrepresentation (Count IV), and, as to some of the plaintiffs, constructive trust (Count V) because they were barred by the applicable statutes of limitations. The court entered summary judgments against the plaintiffs on the remaining claims for breach of fiduciary duty (part of Count I), constructive trust (Count V), interference with a legacy (Count VI), fraud (Count VII), and fraud in the inducement (Count VIII).1 Finding no error, we affirm the judgments.
[¶ 2] The parties' statements of material fact establish the following: The Stinson Canning Company was established by Calvin Stinson Sr. many years ago. Between 1950 and the late 1970s, Calvin Sr. made gifts of stock in the company to his six children and his grandchildren such that by the late 1970s each of six families owned approximately one-sixth of the company.
[¶ 3] Calvin Sr.'s two sons, Calvin Stinson Jr. and Charles Stinson, worked with him in the family business. In 1975, the company was reorganized to give Calvin Jr., Charles, and their wives 100% of the voting stock in the company. Calvin Jr., Charles, and their wives also signed an agreement with the company that allowed them, if they chose, to redeem the Stinson Canning Company stock at a value to be set every twelve to eighteen months by the company.
[¶ 4] After the reorganization and until 1990, when the company was sold, Charles was the company president, Calvin Jr. its treasurer. In addition, the two brothers, along with Calvin Sr., until his death, constituted the company's board of directors.
[¶ 5] The Stinson Canning Company profited and grew in value between 1975 and 1980. Between 1978 and 1980, other businesses began to show interest in acquiring the company. One such company, Connors Brothers Ltd., offered $14 million for the company sometime prior to 1980.2 By late 1979, the company's assets were valued at more than $20 million, and Charles believed that the company could be sold for $18 million.3
[¶ 6] The present dispute arises out of the sale of Stinson Canning Company stock by two of the six families that had been given stock by Calvin Sr. Calvin Sr.'s daughter, Lou Ann Francis, her husband Arnold, and her children, Arnold G. and Marion Alley, made the first sale in February of 1980 for approximately $700,000. Three years later, another of Calvin Sr.'s daughters, Eva Wight, her husband Carl, and her daughters, Carla Intza and Jean Rakoske, sold their stock to the company for approximately $1.9 million. The facts set out below reflect a view of the evidence most favorable to the plaintiffs.
[¶ 7] In the fall of 1979, Calvin Jr. called his sister Lou Ann and suggested that her family sell its stock to the corporation. Later that fall, Lou Ann received another phone call, this time from Charles, inquiring as to whether Lou Ann had decided to sell her family's stock. Charles told Lou Ann that her family's stock was worth $300,000. Lou Ann was surprised at such a low offer and assumed that it was because the company was doing poorly.
[¶ 8] Lou Ann and her husband Arnold met with Charles who, according to Lou Ann, told her that he was not getting along with Calvin Jr. and that the company was having a "financial problem." Charles advised Lou Ann to sell her stock now because if the company got a good buyer, it would probably be sold. Charles also informed her that if she died, her inheritance taxes might ruin her husband's business, and that if the company filed for bankruptcy protection, her family would be responsible for one-sixth of the company's debts. Lou Ann later reported at her deposition that she was aware of the estate tax problem but was not aware that the company had eliminated that problem by implementing the stock repurchase program.
[¶ 9] Lou Ann and Arnold then visited with Calvin Jr., who acknowledged that he was not getting along well with Charles, and confirmed that "the company was rocky financially." Calvin Jr. added that Charles "and the rest of them wanted to sell the company," and that if he was in Lou Ann's position, he would sell his stock.
[¶ 10] Lou Ann never participated in the management of the company and had no representation on its board of directors. As far as she was concerned Charles and Calvin Jr. She trusted her two brothers and thought that they would only tell her what was "right or good." She even considered Charles to be her "little God" and said she "would never believe him to tell [her] a falsehood."
[¶ 11] While Lou Ann and Arnold were considering the $300,000 offer, a friend of theirs, J.C. Strout, disclosed that he knew a third party who might be interested in purchasing the stock. A few days later, Strout made an offer on behalf of Shaw Mudge of $10,000 per share of common stock and $100 per share of preferred stock for the Francis family's stock in Stinson Canning (a total of approximately $2,170,000).
[¶ 12] Lou Ann believed she was required by the by-laws of the company to inform it of the offer, so she wrote a letter to the company, signed by her entire family, which detailed the terms of Mudge's offer. After the company received the letter, Charles phoned Lou Ann and told her that her letter was a "joke" and that he "didn't have to pay [her] a goddamn thing." Charles then offered Lou Ann $700,000 for all of the Francis family stock.
[¶ 13] Lou Ann discussed the offer with her family. Arnold feared the estate tax consequences and the possible family liability if the company were to file for bankruptcy protection. Lou Ann also wanted to keep the business in the family, and so she phoned Charles and accepted his offer. When asked why she would turn down a $2,170,000 offer to accept a $700,000 offer, Lou Ann responded that she believed in her brothers and that they would not "have allowed an outsider to buy [her] stock."4 Lou Ann and Arnold also relied on a statement made previously by Charles, in which he allegedly promised that, "if they sold [the company] and made a good profit out of it, then ... they would make up the difference" if Lou Ann accepted the company's offer. She further alleges that Charles also stated that if other family members sold their stock to the company at a higher price, the company would give the Francises the same amount.
[¶ 14] At some time during the negotiations, Lou Ann contacted her attorney, William Silsby Jr., and asked if he would consult with somebody to find out what the stock was worth. It is unclear what actions Silsby took on her behalf, but he did attend a meeting on January 12, 1980, along with the Wights and their lawyer, Duane Fitzgerald. Ida Trenholm, another daughter of Calvin Sr., also attended the meeting. At the meeting, Fitzgerald informed the Francises that he had reviewed the company's financial statements for 1976-1978 and had discovered that the company had had "three good years." Fitzgerald concluded, however, that the company could set the price it would pay for the stock, and he advised the Francises to take whatever the company offered.
[¶ 15] The sale of the Francis family stock to the company was held on February 4, 1980, at the company offices; the closing lasted approximately five minutes. With little discussion, the Francises signed the stock purchase agreements that the company presented to them. Lou Ann did not read the agreement because
[¶ 16] The Francis family owned 202.844 shares of common stock and 1862 shares of preferred stock, which they sold for $2991.95 per share and $50 per share respectively (approximately $700,000 total).
[¶ 17] Each member of the Francis family signed stock purchase agreements which included the following disclosure statement:
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