Jones v. McGahey, 44001

• Citation: 187 So.2d 579
• Decision Date: 06 June 1966
• Docket Number: No. 44001,44001
• Parties: Mrs. Altie McGahey JONES (Revived by Executor) v. T. A. McGAHEY, Jr. T. A. McGAHEY, Jr. v. Mrs. Altie McGahey JONES and R. L. Edmonson, Jr.
• Court: United States State Supreme Court of Mississippi

Page 579

187 So.2d 579

Mrs. Altie McGahey JONES (Revived by Executor) v. T. A. McGAHEY, Jr.

T. A. McGAHEY, Jr. v. Mrs. Altie McGahey JONES and R. L. Edmonson, Jr.

No. 44001.

Supreme Court of Mississippi.

June 6, 1966.

Fred Smith, Ripley, and Hunter M. Gholson, Columbus, for Mrs. Altie McGahey Jones.

John H. Holloman, Columbus, for R.L. Edmonson, Jr.

Threadgill & Hicks, Columbus, and Watkins & Eager, Jackson, for T. A. McGahey, Jr.

ETHRIDGE, Chief Justice.

These two cases were consolidated for hearing in the Chancery Court of Lowndes County and in this Court, although they involve different issues, because they were concerned with many interrelated facts. Essentially they involve two issues: (1) the enforceability of an oral contact between two persons to purchase jointly corporate stock for the joint benefit of both; and (2) the propriety of the trial court's decree ordering corporate stock returned to a testamentary trust, and prohibiting without court order its sale by the trustees, who owned the corpus subject to a life estate in the income in another. We hold the oral contract is enforceable, and thus reverse the trial court's decree denying its validity. In the second case, we affirm the decree directing return of the corporate stock to the trust and restricting its subsequent transfer.

The two suits, concolidated for hearing, will be identified by their separate cause numbers in the chancery court. The statement of facts is limited to those essential to an understanding of this decision.

CAUSE NO. 9447

This is a suit by Mrs. Altie McGahey Jones against her brother, T. A. McGahey, Jr., to enforce an oral agreement for the joint purchase from Fred Harrison of a certificate of stock for 18 1/2 shares in Moretti-Harrah Marble Company, Inc. (called Moretti). Mrs. Jones appealed from a dismissal of her bill of complaint.

T. A. McGahey, Sr., of Columbus, Mississippi, died testate in 1958. He was survived by his widow, Mrs. Hortense Wood McGahey, and two children, T. A. McGahey, Jr., (sometimes called Son), the defendant-appellee, and Mrs. Altie McGahey Jones, the complainant-appellant. His other child, Mrs. Wilda Harrison, predeceased him in 1954 and left surviving her minor child by a former marriage, R. L. Edmonson, Jr., and her husband, Fred Harrison. Both Mrs. Jones and Harrison have died during this litigation. After her death following the decree, the action was revived in the name of the executor.

McGahey, Sr.'s will was executed in 1954, while all of his three children were living. He left his property to his three children, but in trust for the purpose of paying the income to his widow during her lifetime. The children were made executors and trustees, with control of the trust in a majority of the trustees. The will provided that, if any of the children should die, then the children of the deceased trustee or executor upon attaining the age of twenty-one should become additional executors or trustees.

Mrs. Harrison died in December 1954, and by will she left half of her property to her husband, Fred Harrison, and one-half to her son, Edmonson, who became twenty-one in August 1963. In December 1963 Edmonson qualified and was appointed an executor and trustee under the will of McGahey, Sr.

Between 1912 and his death in 1958, McGahey, Sr., developed a number of highly successful businesses. They were substantial and were interrelated, dealing in marble, granite, the manufacture of headstones, and allied activities, and consisted of partnerships and corporations engaging in the mining, manufacturing and selling of such stone products. In his lifetime McGahey, Sr., took the members of his family into these businesses and gave them interests in them. The original business was Columbus Marble Works (called Columbus), which manufactured monuments out of granite and marble, and sold these monuments. In the early 1920's Son went to work for his father in this business and has worked there continuously since then. In 1940 Columbus became a partnership by formal articles of partnership, with interests established as follows: McGahey, Sr., 6/24ths; Mrs. Harrison, 6/24ths; Son, 6/24ths; and Mrs. Jones, 6/24ths. After the death of McGahey, Sr., and the purchase of Harrison's interest, the partnership of Columbus Marble Works was owned as follows: Mrs. Jones, 7/24ths; Son McGahey, 7/24ths; the estate of McGahey, Sr., 7/24ths; and Edmonson, 3/24ths.

The various businesses, partnerships, and corporations owned by the McGaheys were interrelated and closely connected, being substantially dependent upon each other for their operations and management. McGahey, Sr., left these businesses so that no one of his three family branches, represented by his two daughters and one son, owned control of any part of them. These businesses were managed from the offices of Columbus at Columbus, Mississippi. Another partnership, composed of Mrs. Jones, her husband, W. L. Jones, Mrs. Harrison, and Son, operated five mail order organizations selling the products of Columbus. Also, Columbus operated as affiliated or subsidiary organizations certain sales units in Alabama, Georgia, Memphis, Tennessee, and Greenwood, Mississippi.

The McGahey family owned and managed two corporations, Moretti, an Alabama corporation located at Sylacauga, Alabama, and Columbia Marble Company, located at Marble, North Carolina. Moretti has 250 shares of stock, all of which is owned by members of the McGahey family except one share belonging to Wilkins, resident manager at Sylacauga.

From McGahey, Sr.'s death in 1958 to late 1963, the partnership of Columbus Marble Works continued to be operated as a partnership by Altie, Son, Edmonson and Harrison. Altie took no active part in this business. Her interests were managed by her husband, W. L. Jones, who was an executive in the business, operating it along with Son. He held a general power of attorney from Altie. Columbus was a successful business, with assets in December 1963 of $975,068.

Son McGahey was the president of Moretti, and W. L. Jones its vice president. The board of directors included them, Edmonson and Wilkins. Son Jones, Edmonson, and Fred Jones worked for Columbus, and had their offices in its building. The stockholders and directors held their meetings in the offices of Columbus, and the latter was in frequent telephone contact with Moretti. The employees of Moretti made daily and monthly reports to Columbus, addressed to Columbus. Columbia Marble Company also made daily reports to Columbus. Columbus and Moretti had the same auditor. Columbus printed in its annual catalogue a page showing marble furnished for the United States Supreme Court Building in Washington. The marble was quarried by Moretti. Columbus' only practical source of white marble is Moretti, and its business would be substantially affected if Columbus lost the Moretti supply. For a number of years Columbus has filed bids with the U.S. Government for headstones, and in such bids has listed Moretti as an affiliate. This federal headstone business of Columbus amounted to $300,000 in 1963. The great weight of the evidence, we think, reflects that Moretti has been operated as an affiliate, supplier and subsidiary of Columbus Marble Works.

Shortly after the death of Mrs. Harrison in 1954, McGahey, Sr., suggested to McGahey, Jr., and Mr. Jones that they buy the interest of Fred Harrison in the property which he had inherited from Mrs. Wilda M. Harrison. The chancellor found that the defendant and Jones agreed to this and pursuant to this agreement, several years later (in 1959) purchased certain of these properties, including Harrison's interest in the partnership of Columbus and certain real property.

Further conversations were had between McGahey, Jr., and W. L. Jones about their joint acquisition of the Moretti stock from Fred Harrison. The chancellor found that McGahey, Jr., and W. L. Jones, acting for his wife, agreed to purchase the Moretti stock. However, he thought that it was a 'rather loose agreement,' with no price or guaranty to purchase, and was not enforceable in equity.

However, after a careful consideration of all the evidence on this issue, we have concluded that the evidence reflects a definite agreement between Mrs. Jones, acting for herself, and also through her husband, and Son McGahey, that they were to purchase the Fred Harrison stock in Moretti together and divide it between them. The great weight of the evidence reflects this, as shown by testimony of Mrs. Altie Jones, W. L. Jones, Mrs. Hortense Wood McGahey, and Fred Jones, Altie's son. Son McGahey denied that he had ever agreed with his sister for a joint acquisition of the Moretti stock owned by Harrison. The chancellor found against him on this issue.

On September 17, 1963, appellee purchased for $5,000 a share the 18 1/2 shares of Moretti stock from Fred Harrison at a bank in Columbiana, Alabama. Son said that Harrison did not want the Joneses to get any part of this stock, so before he left Columbus, he prepared a statement, not endorsed on the certificate, that it would not be sold or given to anyone other than the wife or children of McGahey, Jr., or Edmonson. Two or three months later Son endorsed this document, 'Accepted and agreed to, T. A. McGahey, Jr.' This circumstance does not prevent enforcement of the contract.

There is some dispute as to when Mr. and Mrs. Jones heard about Son's purchase from Harrison, but in December 1963, according to Jones, Son told him about it in his office at Columbus Marble Works. Jones undertook to find out what Son had paid for the stock and to pay Altie's half of it, but Son declined, stating in effect that he had changed his mind, and wanted his children to have the stock. Appellee admitted that he wanted to acquire personal control of Moretti, which he had a right to do, without violating an agreement with his sister. The Harrison purchase, together with the nine shares from the estate in...