Rosenberg v. Garfinkel

• Decision Date: 01 April 1936
• Citation: 294 Mass. 196,200 N.E. 907
• Parties: ROSENBERG v. GARFINKEL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

294 Mass. 196

200 N.E. 907

ROSENBERG

v.GARFINKEL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

April 1, 1936.

Suit by Samuel G. Rosenberg against Samuel Garfinkel and others. From an adverse interlocutory decree overruling the plaintiff's exceptions to the master's report and a final decree dismissing the bill, the plaintiff appeals.

Affirmed.Appeal from Superior Court, Suffolk County; Weed, Judge.

H. Kahn, of Boston, for appellant.

W. E. Sisk, R. L. Sisk, and C. J. Goldman, all of Lynn, for appellees.

FIELD, Justice.

This suit in equity was brought by the plaintiff to enforce an alleged obligation of the defendant Garfinkel to the plaintiff and to reach and apply to the payment thereof stock in the defendant Barr Bloomfield Shoe Manufacturing Company and money on deposit with the defendant Essex Trust Company. The bill alleges that the defendant Garfinkel (herein referred to as the defendant), in June, 1930, induced the plaintiff and other stockholders in the Harold Shoe Manufacturing Company, for the purpose of reorganizing the corporation with additional capital, to transfer their stock therein to the defendant, that the defendant promised the plaintiff that ‘whatever benefit would accrue to the stockholders, he would distribute to each of them their share of the proceeds, together with the shares assigned to said Garfinkel,’ that the plaintiff, relying on this agreement, transferred twenty shares of common stock of said corporation to the defendant, that the corporation voted to issue additional shares of stock for cash, to be paid by one Gallant, and that thereafter the additional capital was invested in the corporation, but the defendant, though requested by the plaintiff, refused to transfer to the plaintiff the stock which belonged to him, and that the defendant converted to his own use this stock and the accrued earnings thereof. The plaintiff prays that the value of the stock transferred by him to the defendant be ascertained, that the defendant be ordered to pay to the plaintiff the value thereof and the earnings of such stock, and that in accounting of the profits of such stock be had and the defendant be ordered to pay the amount thereof to the plaintiff.

The case was referred to a master who made a report. He was not required to report the evidence. The plaintiff filed objections to this report-which are treated as exceptions-and a motion to recommit the report to the master ‘for the purpose of his making subsidiary findings of facts upon which his final finding is based.’ An interlocutory decree was entered overruling the exceptions, denying the motion to recommit and confirming the report. Thereafter a final decree was entered dismissing the bill. The plaintiff appealed from the interlocutory decree and from the final decree.

1. The interlocutory decree was proper. The exceptions to the master's report were overruled rightly. Exceptions must be founded on errors shown by the report itself. Israel v. Sommer (Mass.) 197 N.E. 442. These exceptions were not so founded. All but one of them were directed to the failure of the master to make further findings. The plaintiff's remedy was by motion to recommit for further report and not by exception. Mason v. Albert, 243 Mass. 433, 437, 438, 137 N.E. 661. The other exception fails for a like reason. This exception was based on the ground that the finding that the corporation was ‘solvent even for purposes of liquidation’ is inconsistent with the finding ‘that there was a substantial operating deficit.’ These findings are not necessarily inconsistent. Whether they are inconsistent depends upon other facts. But the report does not purport to state all the facts explanatory of the financial situation of the corporation as shown by these findings. Nothing, however, in the report takes the case out of the ordinary rule that recommittal of a master's report is discretionary with the trial judge. New Method Die & Cut-Out Co., Inc., v. Milton Bradley Co., 289 Mass. 277, 194 N.E. 80. There was, therefore, no error in confirming the master's report.

2. The final decree was right on the facts found by the master. Material allegations of the bill were not sustained. And the plaintiff on the facts found is not entitled to any equitable relief which is within the scope of the bill.

The findings of the master include these: On May 12, 1930, ‘a special meeting of the directors of the Harold Shoe Mfg. Co. was held * * * at which all the directors, including the plaintiff, who comprised all the stockholders, were present. At this meeting the defendant stated * * * that he was not satisfied with the condition of the Harold Shoe Mfg. Co., that the corporation was not making money and that he was not going to allow it to get into a worse condition, that credit had been extended to the Harold Shoe Mfg. Co. by people who relied upon him personally and his connection with * * * [another corporation] and he wanted these bills paid in full. The defendant offered to give his stock to any one of the stockholders who would give him a satisfactory guaranty that all bills of the Harold Shoe Mfg. Co. would be paid. Each of the other stockholders including the plaintiff stated that he could not or would not undertake to do this. The defendant then offered to give each of the other stockholders a written guaranty that he would pay all outstanding obligations of the corporation, appearing on its books, in return for the transfer by them of their shares of stock in the company, to which all stockholders agreed. The defendant stated that the liquidation of the business might be necessary if a customer could not be obtained to take over the plant as a going concern; that if he could not get anyone to take over the business, the chances were that there would be a substantial deficit, but that he would pay all creditors of the company in full. Accordingly, the other stockholders, including the plaintiff * * * assigned their stock to the defendant, executed releases to the Harold Shoe Mfg. Co. and received from the defendant a written guaranty * * * [in the form shown by the report] that he would pay all obligations of the corporation appearing on its books.’

The master found ‘as a fact that, at that time, all of the stockholders, including the plaintiff, were informed and understood that they were relinquishing all their interest in the Harold Shoe Mfg. Co.,’ and further found ‘that it did not become necessary for the defendant to pay any obligations of the Harold Shoe Mfg. Co. ...