Oles Envelope Corp. v. Oles

• Decision Date: 29 April 1949
• Docket Number: 145.
• Citation: 65 A.2d 899,193 Md. 79
• Parties: OLES ENVELOPE CORPORATION et al. v. OLES.
• Court: Maryland Court of Appeals

65 A.2d 899

193 Md. 79

OLES ENVELOPE CORPORATION et al. v. OLES.

No. 145.

Court of Appeals of Maryland

April 29, 1949

Appeals from Circuit Court No. 2 of Baltimore City; E. Paul Mason Judge.

Suit by Charlotte Lehman Oles against Wallace William Oles, for divorce. From a decree granting a divorce a mensa et thoro ordering defendant to pay alimony to plaintiff and to pay for support of their children, annulling a sale of stock which defendant owned, in the Oles Envelope Corporation, and appointing a trustee to hold all of defendant's assets in the state of Maryland, the defendant and the Oles Envelope Corporation appeal.

Affirmed in part and reversed in part and case remanded.

George Ross Veazey and Wendell D. Allen, both of Baltimore (Francis B. Burch, of Baltimore, on the brief), for appellee.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON and HENDERSON, JJ.

DELAPLAINE Judge.

These two appeals are from a decree granting Charlotte Lehman Oles, of Baltimore, a divorce a mensa et thoro from her husband, Willace William Oles, now engaged in business in Texas, ordering her husband to pay her permanent alimony and to pay for the support of their children, annulling the sale of stock which he owned in Oles Envelope Corporation, and appointing a trustee to hold all of his assets in the State of Maryland.

The parties were married in 1927. They have two daughters, Charlotte, age 19, and Jean, age 15. In 1924 Oles started to work with his father, Burdette S. Oles, who started in the envelope business in Pittsfield, Massachusetts, in 1898, and came to Baltimore in 1912 to embark in business here. His envelope business was successful and was incorporated in 1920. After 25 years of work in Baltimore, the father devoted more of his time to the raising of cattle on his farm in Baltimore County. In 1939 he retired as president of the corporation, and his son took his place. In 1942 the son received a commission in the United States Coast Guard and served in New Guinea. After his discharge in 1945, he returned to his home at 114 Enfield Road and to his work at the envelope plant on Loch Raven Road. His father, who managed the business in his absence, gave back to him the position of president of the corporation, for which he received a salary of $45,000 a year.

In 1946 Oles became increasingly intimate with Mrs. Adaleine Brook, a divorced woman, who owned a ranch near Brady, Texas. On December 25, 1946, he deserted his wife, and on January 2, 1947, bought a house on Erdman Avenue, having the title put in his father's name without his father's knowledge. In June, after selling that property, and borrowing $37,500 from the First National Bank on his life insurance policies as collateral, he purchased an estate known as 'Wilton Woods' in Green Spring Valley, containing about 12 acres, for $52,500, after Mrs. Brook had inspected it and given her approval. When he settled for it on July 8, the title was put in the name of Frederick J. Singley, his attorney. On July 14 his wife instituted suit for divorce a mensa et thoro. That afternoon he returned to the home on Enfield Road, and his wife, after she had been deserted for six months, agreed to reconciliation, and that evening she agreed to dismiss her suit and he agreed (1) to deed the home on Enfield Road to his wife through the medium of a 'straw party'; (2) to transfer their jointly held stock in the First National Bank to his wife; (3) to pay her attorneys, Wendell D. Allen and George Ross Veazey; and (4) to give her his Buick automobile. Later that night the couple left on a trip to Ocean City, Maryland, and on their return several days later, Oles carried out his agreement. On August 19 they left on a trip to Europe and returned September 21. On November 9 Oles left his wife, again, and resumed his trips to Texas. He telegraphed his wife that he was taking a much needed rest. About two weeks later he phoned Charlotte to tell her mother that he was not coming back. On December 4, 1947, Mrs. Oles filed the pending suit.

Ever since the war, Oles seemed 'unsettled,' and was not sufficiently industrious and economical to please his father. In addition to a Cadillac automobile, which he had at his disposal, he had an airplane, which was bought with the corporation's money for his own use at a cost of $30,000, without his father's consent, but which burned up in South Carolina in March, 1947, and afterwards an 'executive bus,' for which he paid $22,000, and on which he spent $22,000 more for elaborate improvements. His father was of the opinion that he used the plane and the bus more as a means of visiting his friend, Mrs. Brook, than as a means of increasing the sales of envelopes. Before the close of 1947 Oles' father warned him that 'he had to spend more time in the business and less time in Texas.' But he did not heed the warning, and his father, who had the controlling interest in the corporation, determined to drop him from the board of directors and take away his authority to sign checks. Accordingly, at the annual meeting of stockholders on March 1, 1948, the father nominated a new board of directors, omitting his son. At a meeting of the directors immediately afterwards, the father nominated his son as president, but the son was so disgruntled that he resigned the position, although it paid a salary of $45,000. Thereupon the father became president again.

In March, 1948, Oles decided to raise cattle on Mrs. Brook's ranch in Texas. His father had raised cattle primarily for breeding and exhibition, but he himself had acquired some experience in the cattle business. Accordingly he directed his real estate agent to sell his estate in Green Spring Valley. The agent sold it back to the original owner for $30,000. Oles thus sustained a loss of $22,500, and he also paid the real estate agent a commission of $1,500.

Oles' principal asset, which he now wanted to sell, was his stock in Oles Envelope Corporation. He owned 1,350 shares of 8 per cent preferred stock and 880 shares of common stock. His father explained that he did not desire to buy more stock, as he already held more than two-thirds of the outstanding stock. But a few days later his son offered all of his stock, with a book value of $208,427.20, for $250,000, and threatened to 'peddle it all around town' if his father would not buy it, and gave him one day to think it over. His offer and threat led to the contract, executed March 30, 1948, by which Oles Envelope Corporation agreed to buy his 1,350 shares of preferred stock, par value $100, for $135,000, and his 880 shares of common stock for $113,907.12, making a total of $248,907.12. At that time Oles owed the corporation $76,874.77, and he agreed to take the bus, which was then in Texas, at the price of $44,018.67, and that amount with other items made a total indebtedness of $125,943.74. The corporation agreed to pay $23,907.12 in cash, and the balance of $225,000 in ten annual installments of $22,500 each. However, it was understood that the corporation would pay Oles only $10,000 each year in cash and credit the remaining $12,500 on his indebtedness. Fredrick J. Singley and Frederick J. Singley, Jr., were named escrow agents to hold the stock and deliver one-tenth of it each year to the corporation upon payment of the annual instalment.

On April 13, 1948, Mrs. Oles filed a supplemental bill of complaint charging that her husband's sale of stock in Oles Envelope Corporation was in fraud of her right to alimony and her children's right to support. She made Oles Envelope Corporation and the two escrow agents codefendants. On May 21 the chancellor passed an interlocutory order requiring Oles to pay $625 per month as alimony pendente lite and as support of the two daughters. It also appointed Francis B. Burch receiver to take charge of the husband's assets in the State of Maryland, including (a) the sum of $5,371.71 in bank; (b) his interest in a lot of ground in Guilford, valued at $3,000; (c) his equity of approximately $15,000 in his life insurance policies; and (d) his stock in Oles Envelope Corporation, which he had agreed to sell to the corporation. The order also enjoined Oles from disposing of any of his assets in Maryland, and the corporation from transferring any of his shares of stock.

Among the assets taken by the receiver were ten Angus cows and two Tennessee Walking horses, but these were recovered by Oles upon payment of the sum of $1,900 to the receiver. On July 27 Oles filed a petition alleging that he needed capital for his new business, and praying for a modification of the order at least to the extent of releasing his bank account and his equity in his insurance policies. On September 16 the chancellor dismissed that petition, and filed an opinion that the consideration for the sale of the stock in Oles Envelope Corporation was inadequate and the contract was a fraud upon the wife and children.

The decree, which was passed October 25, 1948, and from which Oles and Oles Envelope Corporation appealed, (1) granted complainant a divorce a mensa et thoro from her husband; (2) awarded her the custody of the two children; (3) ordered her husband to pay $425 per month as permanent alimony, $100 per month for the support of Charlotte and $100 per month for the support of Jean, subject to the further order of the Court; (4) annulled the contract for the sale of the stock, and ordered the escrow agents to surrender the stock certificates and Oles Envelope Corporation to issue certificates in the name of Fidelity Trust Company, trustee; and also declared that the corporation shall have no claim against the stock for the value of the bus transferred to Oles or the sum of $23,907.12 paid to Oles on account of the contract.

The decree, after...