Loughery v. Bright
| Decision Date | 08 June 1929 |
| Citation | 267 Mass. 584,166 N.E. 744 |
| Parties | LOUGHERY v. BRIGHT. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Superior Court, Suffolk County; Winfred H. Whiting, Judge.
Action by James J. Loughery against Almer H. Bright. From an order sustaining a demurrer to the declaration, plaintiff appeals. Affirmed.
M. E. Nash, of Boston, for appellant.
J. A. Daly, of Boston, for appellee.
This case is before us on an appeal from an order sustaining a demurrer to the plaintiff's declaration. The declaration is in three counts. The action is in tort or contract.
It is alleged in the first count that on August 28, 1922, the plaintiff owned a number of shares of the common stock of the American Ammonia Company which represented the voting control of said company; that on August 12, 1922, he entered into an agreement in writing with the American Ammonia Company (hereinafter called The Company), the Central Trust Company (as executor under the will of Richard Hittinger), Morton B. Howard, Elbridge R. Anderson, Horace Guild and George B. Howard. A copy of the agreement is attached to the declaration and made a part thereof. This agreement provided that the plaintiff was to transfer to the defendant Bright, to Joseph H. O'Neil and to Charles H. Olmsted, thirty-eight thousand shares of the common stock of The Company, to be held by them as trustees under a voting trust agreement, for three years from August 12, 1922, ‘to the end that the aforesaid voting trustees should have voting control of a majority of the issued and outstanding shares * * * and might determine the election of a board of five (5) directors.’ The agreement also provided that it was entered into for the purpose of procuring the necessary capital to carry on the business of The Company by borrowing or by selling its stock; that the plaintiff was to resign as treasurer and general manager but The Company was to employ him for three years at a salary of $3,250 a year. It is further alleged that the plaintiff resigned as treasurer and general manager, and on August 28, 1922, delivered to Bright forty-three thousand one hundred fifty and one-half shares of stock, receiving a receipt therefor, a copy of which is attached to the declaration; that when the stock was delivered, the plaintiff was the owner of a secret formula under which The Company's products had been manufactured, and that he held a promissory note of The Company for $21,228.22, which note he gave up to The Company in payment for preferred stock in accordance with the agreement of August 12, 1922; that upon the execution of this agreement all the officers and directors of The Company, except the plaintiff who remained as a director only, resigned prior to the delivery of the stock; that when the defendant received the stock he knew of these resignations and, although frequently requested to do so, neglected to take any action ‘looking toward the election of a board of directors or the procuring of the necessary capital for the carrying on of’ the business of The Company; that the defendant has never consulted with his co-trustee O'Neil, he has refused to consult with him, and has failed to return the stock to the plaintiff, ‘in consequence of which said American Ammonia Company lost all its assets; all to the great damage of the plaintiff.’
The second count is substantially similar to the first count, except that it is there alleged that ‘the defendant, although frequently requested, willfully, and intending that the plaintiff should be injured thereby’ failed to take any action. The third count differs from the second in alleging that the defendant ‘thereby converting to his, the defendant's own use’ the plaintiff's stock in consequence of which said Ammonia Company lost all its assets. The demurrer is a general one.
The agreement recites that The Company is heavily indebted in the sum of $146,704.68; that it has disputed claims against ‘certain parties to this agreement’; that it is desired by all parties that the affairs of The Company be settled, ‘to the end that there may be no further litigation or threats of litigation, between * * * the parties interested in said corporation’; that the said Corporation may be unhampered, in so far as the parties to this agreement may provide, in pursuing its regular business without embarrassment from attachments or judgments or threats of litigation and may be in a position to procure the necessary capital for carrying on its business, either by borrowing or by selling its stock. The agreement sets out that The Company has certain notes of one Cheney as assets. It provides that the Central Trust Company and other parties shall release The Company and that The Company shall release them from all claims; that The Company agreed to deliver its preferred stock to these parties in an amount equal to the amount of the debts owed them, and to deliver to trustees the Cheney notes ‘for the purpose of collecting any money due it’ from Cheney.
By the seventh clause of the agreement ‘The said James J. Loughery hereby agrees to assign * * * unto Joseph H. O'Neil * * * Elmer Bright * * * Charles H. Olmsted * * * thirty-eight thousand (38,000) shares of the Common Capital Stock of the said American Ammonia Company to be held by them as trustees under a voting trust agreement to continue for three years (3) from the date hereof,’ so that the voting trustees would have the voting control of a majority of the shares of The Company to determine the election of a board of five directors during the term of the voting trust agreement; and in the event of the incapacity, resignation, death, failure or refusal to act of the said O'Neil, Loughery was to appoint his successor and ‘any written instrument addressed to the said American Ammonia Company * * * by said new trustees shall be sufficient notice to all the parties hereto of the appointment and qualification of such new trusfee; and in the event of the death, resignation,...
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