Hayden v. Beane

• Decision Date: 30 January 1936
• Citation: 293 Mass. 347
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: GEORGE W. HAYDEN v. CHARLES H. BEANE & others.

293 Mass. 347

GEORGE W. HAYDEN v. CHARLES H. BEANE & others.

Supreme Judicial Court of Massachusetts, Middlesex.

January 30, 1936

November 7, 1935.

Present: RUGG, C.

J., CROSBY, PIERCE DONAHUE, & QUA, JJ.

Contract Consideration, Under seal, Validity. Corporation Stockholder.

A written contract purporting to be sealed but without seals affixed is a sealed instrument by force of G.L. (Ter. Ed.) c. 4, Section 9A, and imports consideration.

A contract by the holders of the entire common stock of a corporation with a person elected to be its president and a director, who had agreed to serve as its general manager for a certain term, to elect his nominee a director, and to vote their stock so as to ensure the election of a board of directors favorable to his continuance in the offices of president and director so long during the term as he should faithfully fill such offices, was not illegal nor against public policy.

BILL IN EQUITY, filed in the Superior Court on February 1, 1935. A demurrer by the defendants was overruled by Morton, J., who reported his order.

R. B. Owen, (E.

R. Anderson with him,) for the defendants.

P. D. Turner, (C.

W. Spencer with him,) for the plaintiff.

CROSBY, J. This is a bill in equity brought to reach and apply shares of stock owned by the individual defendants in the Old Medford Rum Distillery, Inc., the corporate defendant, in satisfaction of the plaintiff's claim for the alleged breach of a contract entered into by him with the individual defendants. The bill alleges that the corporate defendant is a corporation organized under the laws of this Commonwealth having its usual place of business in Wakefield, in this Commonwealth; that on or about May 18, 1934, the plaintiff entered into a written agreement with the defendants Charles H. Beane, Arthur M. Cripps and Henry V. Greene, copy of which is annexed marked "A"; and that on said date the plaintiff was elected president of the defendant corporation and a member of its board of directors. The agreement recites that, in consideration of the plaintiff's entering into a contract with the defendant corporation to serve as its general manager for a term of seven years, "it is mutually understood by and agreed by and between the said stockholders and the said Hayden as follows": (1) the stockholders, upon the plaintiff's accepting said office in the company and the employment by it, will transfer or cause to be transferred to him twenty-four shares of the common capital stock of the defendant corporation; (2) they will cause to be elected to the board of directors of the company such director as the plaintiff may nominate in addition to himself, "so that said Hayden and his nominee fill two vacant directorships now existing," thereby resulting in a board of five members; (3) "they will at all times vote stock held by them so as to ensure the election of a Board of Directors favorable to the continuance of said Hayden in the offices of President and Director of the Company so long as he shall honestly and faithfully serve it" in said offices; (4) they will not sell, assign or transfer their stock excepting "one to another, or the others, or to said Hayden without first offering the same to the Board of Directors of said Company for purchase by said Board of Directors for said Company or for themselves individually, as said Board of Directors may elect at the same price as may be offered elsewhere before said stockholders shall be free to sell said stock elsewhere"; (5) Hayden "will accept an election to the office of President and Director of said Company should said election be made, provided he is also tendered a contract, acceptable to him, arranging for his services as General Manager of said Company."

It is alleged in the bill that on May 18, 1934, after the written agreement above referred to was entered into, the plaintiff "was duly elected president of the defendant . . . [corporation] and a member of its board of directors, and accepted said elections, and has duly performed all terms and conditions of said agreement by him to be performed, and honestly and faithfully served the company in said offices, as agreed in said agreement"; that after the making of the agreement the individual defendants refused to transfer to the plaintiff twenty-four shares of the common capital stock of the company as provided in the agreement; that they have refused to vote the stock held by them so as to ensure the election of a board of directors favorable to the continuance of the plaintiff in the offices of president and director of the company, but in disregard of the plaintiff's rights in the premises, on or about September 25, 1934, without notice to him, secretly met, and by agreement among themselves in fraud of his rights, caused a person other than the plaintiff to be elected...