Halsey v. Boomer, 14.

• Decision Date: 04 October 1926
• Docket Number: No. 14.,14.
• Citation: 236 Mich. 328,210 N.W. 209
• Parties: HALSEY v. BOOMER et al.
• Court: Michigan Supreme Court

236 Mich. 328

210 N.W. 209

HALSEY

v.BOOMER et al.

No. 14.^*

Supreme Court of Michigan.

Oct. 4, 1926.

Appeal from Circuit Court, Wayne County, in Chancery; Theodore J. Richter, Judge.

Suit by H. Ray Halsey against Isaac E. Boomer and others with cross-bill by defendant named. From a decree in favor of plaintiff, defendants appeal. Reversed and rendered for defendant on his cross-bill.

Argued before BIRD, C. J., and SHARPE, SNOW, STEERE, FELLOWS, WIEST, CLARK, and McDONALD, JJ. Prentis, Pugh, Fitch & Carpenter, of Detroit, for appellants.

Bratton & Bratton, of Detroit, for appellee.

SHARPE, J.

Prior to 1912, Isaac E. Boomer, hereafter called the defendant, was engaged in business under the name of Michigan Builders' Supply Company. On December 12th of that year the defendant corporation was organized with a capital stock of $25,000. The property and assets of the company were turned in as full payment of the capital stock. The plaintiff had been in the employ of the defendant for some time, and when the corporation was organized it was arranged that he should become a stockholder. On January 9, 1913, 100 shares of stock were issued in his name of the par value of $1,000. He executed a note, payable to defendant, for that amount. It contained a provision that the stock should be held as collateral and might be sold on default in payment. At the same time the parties entered into an agreement which, after reciting that defendant was willing to sell this stock for $1,000 and plaintiff was desirous of purchasing it, provided, among other things:

(1) That plaintiff should indorse his certificate of stock in blank and place it in escrow in the hands of Roy E. Boomer, a son of defendant, who had been elected secretary and treasurer of the corporation.

(2) That defendant should have the right to repurchase said stock at any time he desired to do so on payment to plaintiff of the said sum of $1,000, and Roy E. Boomer was authorized to turn over the certificate left in his hands on payment of said sum.

(3) Plaintiff was to receive all dividends declared on said stock, and was given the right to vote the same. He agreed not to sell or assign it without the written consent of defendant.

Plaintiff's note was paid largely, if not altogether, out of dividends declared on the stock issued to him. On June 28, 1916, the business showed a large suprlus and action was taken increasing the capital stock to $100,000, of which $60,000 was acknowledged to have been paid in, $35,000 of which was taken from the surplus account. A stock dividend of 140 per cent. was thereupon declared and an additional certificate for $1,400 of such stock issued to plaintiff. On that date the plaintiff and defendant executed another agreement relative to this stock of the same tenor and effect as that entered into when the $1,000 certificate was issued.

In the latter part of December, 1923, plaintiff was discharged from the employment of the company for alleged inattention to its business. On January 14, 1924, defendant, through his attorney, tendered to him the sum of $2,400, being the par value of all of the stock in the company issued to him. Plaintiff refused to accept, demanding $6,360, which he claimed was the then book value of the stock. The certificates issued to him were thereupon canceled and a new certificate issued to defendant for 239 shares and one to his wife, Catherine Boomer, for one share. Two days later plaintiff filed his bill of complaint herein, alleging that he is the owner of 240 shares of said stock and that defendant and his son, Roy E. Boomer, have conspired to deprive him of his interest in the company and in the management of its affairs, and praying that they be enjoined from holding meetings without giving him an opportunity to be present and from transfering the certificates of stock which had been issued to him. The defendant Isaac E. Boomer filed a separate answer, and by way of cross-bill set up the agreements heretofore mentioned and prayed...