New England Trust Co. v. Spaulding
| Decision Date | 30 December 1941 |
| Citation | 310 Mass. 424,38 N.E.2d 672 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | THE NEW ENGLAND TRUST COMPANY v. JOHN T. SPAULDING& another, executors, & others. |
February 4, 5 1941.
Present: FIELD, C.
J., QUA, COX, & RONAN, JJ.
Corporation Transfer of shares. Contract, Death of party. Executor and Administrator, Limitation of actions, Claim against estate Contract of decedent, Stock of decedent. Limitations, Statute of. Trust Company, Transfer of shares. Equity Jurisdiction, Specific performance, Laches. Tender. Value. Laches.
An agreement by a purchaser of corporate stock to conform to the by-laws of the corporation, one of which, printed on the stock certificate, provided that on his death the executor of his will, upon demand by the corporation, must transfer the stock to it at a price appraised by the directors, was binding upon the executor when he acquired the stock upon the stockholder's death.
The right of a corporation under a by-law to require the executor of the will of a stockholder, upon demand, to transfer the testator's stock to it at a price appraised by the directors did not make the corporation a creditor within G. L. (Ter. Ed.) c. 197, Section 9, as amended by St.
1933, c. 221, Section 4; and a suit to enforce such right was not barred although it was commenced more than one year after the executor qualified.
Nothing in G. L. (Ter. Ed.) c. 155, Section 40, prevents a trust company from enforcing by-law provisions, printed on its stock certificates, requiring the offering of the shares to the corporation at an appraised price before sale elsewhere.
Under a by-law of a corporation requiring transfer of a deceased stock-holder's stock to it upon payment of a price appraised by the directors "and the dividends due thereon," where both "regular" and
"special" dividends payable to stockholders of record on a January 1 were paid by the corporation to the stockholder's executor and no further dividends were due until several months later, there was no insufficiency in a tender to the executor of the amount of an appraisal made by the directors in good faith on January 12, which included a certain sum "plus interest on par of the stock" from January 1 to
January 12 at a rate the same as the rate of the "regular" dividend, although for some years a "special" dividend had been declared and paid simultaneously with each "regular" dividend and the amount tendered did not include anything for the twelve days at the rate of the "special" dividend.
In a suit by a corporation against the executor of a deceased stockholder to enforce a requirement that the defendant transfer the decedent's stock to the plaintiff at an appraised price, there was no error in a finding that there was no laches in commencing the suit about eighteen months after the earliest time when the plaintiff was entitled to demand the stock.
BILL IN EQUITY, filed in the Superior Court on July 27, 1939. The case was heard by Baker, J.
The by-law of the plaintiff in question was as follows:
Pursuant to an order by Baker, J., a final decree was entered by order of Greenhalge, J., in substance directing the defendant executors to surrender to the plaintiff the certificates of stock in question and to execute and deliver transfers to the plaintiff thereof "upon payment or tender of payment by the plaintiff" to the executors "of the amount due in accordance with the by-laws of the plaintiff namely" the amount of the appraisal by the plaintiff's directors; directing the defendant trustees to make such delivery and assignments to the executors as would enable them "to comply with the foregoing" order; and adjudging that all dividends declared on the "stock subsequent to January 12, 1939, the date of the appraisal . . . by the directors" belonged to the plaintiff "in its own right."
P. B. Buzzell, for the defendants. B. E. Eames, for the plaintiff.
This is a bill for specific performance against the executors and trustees under the will of William S. Spaulding, who at the time of his death was a stockholder of the plaintiff, to enforce certain restrictions, relative to the transfer of its stock, providing for the purchase by the plaintiff of the stock of a deceased stockholder. The defendants appealed from a final decree ordering the transfer of the stock to the plaintiff upon the payment of a designated amount.
The case is here with a report of the evidence and a report of the material facts. Many of these facts do not seem to be in dispute. The plaintiff is a banking corporation created by St. 1869, c 182. The testator purchased the stock in different lots from 1891 to 1896, and he or his agents, upon delivery of the certificates, signed receipts agreeing to conform to the conditions and restrictions "therein referred to and to the By-Laws of the Company." The certificates stated that the shares were transferable "upon the conditions expressed in the By-Laws of the Company printed upon the back of this Certificate." These by-laws, which appeared upon the reverse side of these certificates, in so far as now material provide that the executor of a deceased stockholder shall cause the shares to be appraised by the directors and shall offer said shares for such appraisal upon the request of the actuary or secretary of the plaintiff, and for the use of the corporation at the appraised value if the directors choose to purchase them, but that the executor may sell the shares to anyone if the directors do not purchase them for the corporation within ten days after they are offered by the executor. The request upon the executor shall not be made until after the payment of one dividend and the expiration of six months from the death of the owner, but the offer may be made at any earlier period "if the party shall prefer." By a vote of the majority of stockholders, the plaintiff, on February 5, 1902, adopted the provisions of R. L. c. 116, Section 10, which, among other matters, provided that a banking corporation "may establish regulations controlling the assignment and transfer of its shares."
The testator died August 15, 1937, and the defendant executors were appointed September 21, 1937. The defendant trustees were duly appointed on October 18, 1938. They received from the executors on December 7, 1938, the shares of the plaintiff as a part of the trust estate and now have possession of these shares. The accounts of the executors, including the final account, have been filed in the Probate Court.
The secretary of the plaintiff on December 29, 1938, made a written request of the executors to offer the stock for appraisal in accordance with the terms of the by-law. The directors on January 12, 1939, appraised the value of the stock and voted to purchase the shares for the purpose of reallotting them to persons whom the officers believed would be desirable stockholders. The executors refused on April 26, 1939, to accept the appraised amount with interest from January 12, 1939, and refused to transfer the stock. The present bill was filed on July 27, 1939.
The defendants contend that this is a suit by a creditor of the testator which was not commenced within a year of the time the executors qualified, by the acceptance by the Probate Court of their bonds, for the performance of their trust and that, consequently, the suit is barred by G. L. (Ter. Ed.) c. 197, Section 9, as amended by St. 1933, c. 221, Section 4. On the other hand, the plaintiff contends that the basis of its bill is the refusal of the executors to transfer the stock in accordance with its request of December 29, 1938, that the suit was seasonably brought within one year thereafter in accordance with G. L. (Ter. Ed.) c. 260, Section 11, and that neither of these two last statutes applies as the bill seeks to enforce an equitable interest that the plaintiff has in the shares of stock. The determination of the issues thus presented depends entirely upon the...
To continue reading
Request your trial