Hollister v. Fiedler

• Decision Date: 29 October 1952
• Docket Number: No. A--410,A--410
• Citation: Hollister v. Fiedler, 92 A.2d 52, 22 N.J.Super. 439 (N.J. Super. App. Div. 1952)
• Parties: HOLLISTER v. FIEDLER.
• Court: New Jersey Superior Court — Appellate Division

Page 439

22 N.J.Super. 439

92 A.2d 52

HOLLISTER v.FIEDLER.

No. A--410.

Superior Court of New Jersey Appellate Division.

Argued Oct. 14, 1952.

Decided Oct. 29, 1952.

Harold D. Feuerstein, Newark, for plaintiff-respondent(Feuerstein and Sandles, Newark, attorneys).

Samuel R. Blaine, Newark, for defendant-appellant(Louis Auerbacher, Jr., Newark, attorney).

Before Judges EASTWOOD, GOLDMANN and FRANCIS.

The opinion of the court was delivered by

EASTWOOD, S.J.A.D.

Prior to February 1, 1944, plaintiff and William C. Fiedler, deceased, were engaged independently in the insurance business in Newark, New Jersey, and on that date they became associated in Fiedler Agency, Inc., a corporation owned by William C. Fiedler and engaged in the sale of insurance.Mr. Hollister thereafter undertook the management of the corporation and subsequently the name of the company was changed to Fiedler and Hollister, Inc.

On May 18, 1945, Fiedler and Hollister, Inc., Robinson G. Hollister and William C. Fiedler, entered into two written agreements, one providing for the employment of the individual parties and the terms thereof, the other an option agreement concerning the surviving member's right to purchase stock of the predeceasing member in their insurance corporation known as Fiedler and Hollister, Inc.It is this lastmentioned agreement about which the controversy has arisen.

William C. Fiedler died August 29, 1950.Thereafter the plaintiff gave timely notice to the defendant indicating his intention to exercise the option to purchase the decedent's stock as provided in the aforementioned agreement.After an audit had been made by the corporation's accountant from which plaintiff asserts it was determined that the shares of stock had no book value, plaintiff made no tender to the defendant, but merely demanded the delivery of the shares of stock.Consequent upon a refusal, this action was instituted in the Chancery Division for the specific performance of the agreement, resulting in a judgment for the plaintiff.It is from this judgment that the defendant appeals.

The option agreement recites that the individuals, Fiedler and Hollister, are each the owner of 11 shares of capital stock of Fiedler and Hollister, Inc., and thereafter provides, Inter alia:

'4.Upon the death of Fiedler or Hollister, the survivor of them, if still in the employ of the Company, shall have an option to purchase the shares of stock of the Company owned by the other upon the following terms and conditions:

'(a) Such survivor shall give written notice of the exercise of this option within sixty (60) days of such death to the personal representative of the deceased party or, in the absence of such personal representative, to his next of kin.

'(b) Within thirty (30) days of the giving of such notice as aforesaid, the survivor exercising the same shall tender to the legal representative of the deceased party, or, in the absence of such legal representative, to the next of kin of the ceceased party, the book value of the shares of stock of the Company held by him, and shall agree to pay or cause to be paid to the lawful widow of such deceased party, if any there be, an amount equal to 25% Of the net profits of the Company earned from and after the date of such death, determined after payment of all expenses, including all federal, state and local taxes, but before deducting therefrom the amount of any compensation payable by the Company to such surviving party, for the term of her natural life, or until the death of said surviving party, whichever shall first occur; and

'(c) Thereupon, the surviving party shall acquire all the right, title and interest in the shares of stock of the Company held by the deceased party.'

The defendant contends that the trial court erred in: (1) interpreting the option agreement in a manner that worked a forfeiture upon the defendant; (2) that 'book value' under the agreement was meant to comprehend all assets of the corporation including the value of expiration and renewal books and records, which were not included as assets in plaintiff's audit; (3) that in any event the audit presented by plaintiff does not indicate a full and complete picture of the assets of the corporation because no consideration has been given to the valuable expiration and renewal books and records of the business; (4) that the court's exclusion of testimony as to the value of these last-mentioned books and records as an asset of the company was error and similarly that testimony as to the value of the good will as an asset of the company was erroneously excluded; (5) that the court erred in concluding 'that the book value of the Fiedler stock was nil'; (6) that 'The Court erred in concluding that plaintiff was an employee of Fiedler & Hollister, Inc, within the contemplation of the terms of the option agreement and that plaintiff was thus qualified to exercise the right of option'; and (7) that one share of stock formerly registered in the name of Mrs. Fiedler and transferred at her death to Jean Hollister is the property of the decedent's estate.

The plaintiff argues that the books showed a deficit as of September 30, 1950, in the sum of $1,303.79, and as of December 31, 1950 the deficit amounted to $2,816.40; that by mutual consent, from 1945 to August 29, 1950, the books of account were set up and maintained on a cash basis, as distinguished from an accrual basis; that if the decedent desired to consider the value of the expirations, he could have provided for same in the option agreement or instructed the accountant to make provision therefor, and inasmuch as a standard practice had been maintained with respect to the corporate books over a period of years, the executor can claim no greater benefits; that 'book value' as used in the contract reflects the value as carried on the books of the corporation and, particularly, as appears on the balance sheets.

It is an elementary rule that the function of the court is not to make contracts but to enforce them and to give effect to the intention of the parties as of the time the contract was made.In Clott v. Prudential Ins. Co. of America, 114 N.J.L. 18, 20, 21, 175 A. 203, 204(Sup.Ct.1934), it was said '* * * The standard of interpretation of an integrated agreement is the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the writing, other than oral statements by the parties of what they intended it to mean, except where it produces an ambiguous result, or is excluded by rule of law establishing a definite meaning.This is termed a primary rule of interpretation which is always applicable, whether the writing seems clear or ambiguous.The ascertainment of the expressed intention of the parties is the prime object of the interpretation of all written contracts. * * *'

The court must regard the relation of the parties and the circumstances under which the contract was made, and the objects which the parties were thereby striving to accomplish.Such an inquiry is not for the purpose of changing the writing, but to secure light by which to ascertain its actual significance.Corn Exchange, &c., Phila. v. Taubel, 113 N.J.L. 605, 608, 609, 610, 175 A. 55(E. & A.1934).Cf.Verhagen v. Platt, 1 N.J. 85, 88, 61 A.2d 892, 4 A.L.R.2d 1309(1948);Moses v. Edward H. Ellis, Inc., 4 N.J. 315, 323, 72 A.2d 856(1950).And so here, the entire transaction between the parties must be considered in arriving at a determination of the intent of the parties as expressed in the agreement in question.

In the agreement dated February 1, 1944, whereby Hollister became associated with Fiedler, it was provided:

'7.* * * It is further understood and agreed that in the event of the death of said Robinson G. Hollister prior to February 1, 1945, the estate of Robinson G. Hollister shall become the owner of the...