Juergens v. Venture Capital Corp.
| Decision Date | 02 May 1973 |
| Citation | 295 N.E.2d 398,1 Mass.App.Ct. 274 |
| Parties | Walter M. JUERGENS v. VENTURE CAPITAL CORPORATION et al. |
| Court | Appeals Court of Massachusetts |
Douglas G. Moxham, Boston, for plaintiff.
Sumner H. Woodrow, Boston, for Venture Capital Corp.
Before HALE, C.J., and KEVILLE and GRANT, JJ.
This is a bill in equity in which the plaintiff (Juergens) seeks to establish a debt of of the corporate defendant (Venture Capital) and to reach and apply in satisfaction of that debt the obligations of two individual defendants to Venture Capital. The case is here on Juergens' appeal from the trial judge's decree dismissing the bill.
Since we have before us the judge's findings of fact and a transcript of the evidence, all questions of law, fact and discretion are open for our decision. From the evidence we can find facts not expressly found by the judge. If convinced that he was plainly wrong, we can find facts contrary to his findings. Lowell Bar Ass'n v. Loeb, 315 Mass. 176, 178, 52 N.E.2d 27.
Venture Capital was organized in April, 1969 for the purpose of engaging in the business of loaning money and providing venture capital for other corporations. Its articles of organization contained broad powers for the performance of all acts incidental to these purposes. Maurice Shear (Shear) was the promoter of Venture Capital. In February, 1969 he was president of the Industrial Bank and Trust Company. Juergens was a customer of the bank. Shear was engaged in obtaining subscribers to capital stock of the corporation which he planned to form. He invited Juergens to become one of the original subscribers. Juergens agreed to subscribe to shares of the corporation. On or about February 24, 1969, Juergens executed written subscription agreements for 35,000 shares and gave Shear checks payable to Venture Capital totaling $26,000. Venture Capital received the proceeds of the checks. Juergens received his stock certificate on or about February 12, 1970. Approximately twenty other persons became subscribers to the original shares. Shortly after its formation, Venture Capital began to do business and made two loans to the individual defendants, one for $120,000, and the other for $23,000.
In the latter part of 1969, Juergens became concerned about the fact that there had been no public offering of the shares of Venture Capital. He had been told by Shear in their initial discussions that it was expected that there would be a public offering of shares. Juergens received evasive explanations from Shear as to the status of the corporation and the public issuance of shares. He told Shear that he wanted his money back.
Beginning in January, 1970, Juergens made numerous telephone calls to Shear. Shear told him that he would get his money in April. Juergens telephoned Shear in April, demanded the return of his money and threatened suit unless he obtained the refund. Shear promised that he would send him a check for $26,000 if Juergens returned the stock certificate properly endorsed. Juergens mailed his stock certificate to the corporation but in return received a check for only $10,000. He inquired about payment of the balance of $16,000. Shear told him that it would be paid in June, 1970. In June Shear gave him an evasive answer as to why payment could not be made at that time. Juergens here seeks to recover the unpaid balance of $16,000. Balance sheets prepared by a certified public accountant from the corporate records at the direction of the board of directors and addressed to them for periods ending September 30, 1970, and November 30, 1970, each carry a liability entry 'Common Stock Refunds Payable $16,000.00.' The entries pertain to the refund claimed by Juergens. The balance sheets also show a capital surplus of $131,450 and an excess of assets over liabilities of at least $140,000.
In June, 1970 Shear also told Juergens that he would be reimbursed by Venture Capital for the interest charges on the loan which he had taken out with Industrial Bank and Trust Company in order to finance the purchase of his shares. We agree with the judge that there was no consideration for this promise.
Shear was not only Venture Capital's promoter, he was its principal stockholder owning at least fifty-three percent of the outstanding shares. He was president, treasurer and one of three directors. The others were his attorney and his secretary. The latter was present at all times in the corporation's office; telephone calls relating to the corporation came through her; she kept the corporate checkbook and checks were made out under her direction.
Under the by-laws, as president, Shear was designated as chief executive officer. The by-laws also provided that the president 'subject to the direction of the Board of Directors, shall have general charge of the business, affairs and property of the Corporation and general supervision of its officers and agents.' Shear actively managed all the corporation's business; and the other directors permitted him to exercise complete control over and management of all corporate affairs.
The sole meeting of the board of directors was held in April, 1969. At that meeting the directors adopted a plan under which Shear, as president was given exclusive authority to offer for sale, sell and issue stock of the corporation. He handled the sale of all the corporate stock which was sold, negotiated the only two loans made by the corporation, and prior to November 30, 1970, made refunds to thirteen shareholders who requested a return of their money in exchange for their share certificates. All who requested refunds were paid except Juergens.
The by-laws provided that 'The Treasurer (Shear) shall . . . (d) Render to the President or the Board of Directors whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer; and render a full financial report at the annual meeting of the stockholders if called upon to do so.' On March 6, 1971, there was a special meeting of stockholders in lieu of the annual meeting. The three directors were present and Shear presided. The entire financial picture of the corporation was brought before the meeting. A vote authorized the treasurer to repurchase for ten cents a share all of the capital stock of the corporation which had been issued for ten cents a share except for those shares issued to Shear. Juergens' subscription was for 25,000 shares at $1.00 a share...
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...College, 389 Mass. at 61, 449 N.E.2d 331 (failure to establish adequate system of supervising guards); Juergens v. Venture Capital Corp., 1 Mass.App. 274, 278, 295 N.E.2d 398 (1973). The absence of any procedure to check gold deliveries, and a key system which enabled an employee who had ac......
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