In re American Range & Foundry Co.
| Decision Date | 25 November 1927 |
| Citation | 22 F.2d 558 |
| Parties | In re AMERICAN RANGE & FOUNDRY CO. In re NYE. |
| Court | U.S. District Court — District of Minnesota |
Todd, Fosnes & Sterling and Richard Converse, all of St. Paul, Minn., for petitioner.
H. V. Mercer and E. J. Lien, both of Minneapolis, Minn., for claimant.
In 1920, the American Range & Foundry Company and the Minnesota Stove Company, both of Shakopee, Minn., were solvent corporations, the stock in which was substantially all owned by G. L. Nye and his son, C. W. Nye; the former owning the controlling interest. The business of these companies had been built up by G. L. Nye, who was then a man more than 60 years of age. For years the business had been known as the "Nye Stove Works," and the name "Nye" had a value in connection with the business, and Mr. Nye himself was well known to be the man who had built it up. Mr. Nye then turned over his stock to his son, C. W. Nye, and a contract was entered into, pursuant to which the two corporations agreed that Mr. Nye should continue in their service for 10 years from June 15, 1920, the date of the contract, and would not promote or aid any competing business, and that each company should pay him one-half of an annual salary of $10,000 during that time.
Of necessity, the contract was made by the Nyes as directors of the companies and Mr. G. L. Nye as an individual. In practical effect, the Nyes were the companies and the companies were the Nyes. Later on, the American Range & Foundry Company took over the assets of the Minnesota Stove Company and assumed its obligations.
Mr. Nye rendered services to the company and received his salary for several years and up to the time it became financially embarrassed. For a time before bankruptcy, he received and accepted a less amount than called for by his contract. So far as the record shows, no stockholder has ever complained of the contract, and no one who was a creditor of the companies when the contract was made has ever objected to it.
Mr. Nye is now over 70 years of age, and is receiving a salary of $1,800 a year as a salesman. He filed a claim against the American Range & Foundry Company in the bankruptcy proceeding, on the theory that his executory contract was breached by the adjudication in bankruptcy. The referee allowed him the present worth of future payments to become due under his contract, less what he would earn, assuming $1,800 as representing his yearly earnings.
The trustee...
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