Samia v. Central Oil Co. of Worcester

CourtUnited States State Supreme Judicial Court of Massachusetts
Citation339 Mass. 101,158 N.E.2d 469
PartiesElizabeth Rachel SAMIA and others v. CENTRAL OIL COMPANY OF WORCESTER and others.
Decision Date28 April 1959

Page 469

158 N.E.2d 469
339 Mass. 101
Elizabeth Rachel SAMIA and others
Supreme Judicial Court of Massachusetts, Suffolk.
Argued Feb. 3, 1959.
Decided April 28, 1959.

[339 Mass. 105]

Page 472

Richard Wait, and Andrew C. Bailey, Boston, for defendants George D. Kaneb and others.

J. Newton Esdaile, Boston, for defendant Beton M. Kaneb.

Charles B. Rugg, Levin H. Campbell, III, Boston, Harry M. Lack, Everett, for defendant Central Oil Co. of Worcester.

Samuel Abrams, Ruth I. Abrams and George S. Abrams, Boston, for plaintiffs.

Before [339 Mass. 101] WILKINS, C. J., and RONAN, SPALDING, WILLIAMS and CUTTER, JJ.

[339 Mass. 105] CUTTER, Justice.

This is a minority stockholders' suit filed by three sisters alleging themselves to be stockholders in Central Oil Company of Worcester (hereinafter called Central) seeking relief against their brothers, Beton, Kenneth, and George Kaneb, 1 and against Central and the defendant Union Oil Company of Boston (hereinafter called Union). Central's answer included a counterclaim seeking relief against the brothers and Union.

A master filed a report and, in accordance with Rule 90 of the Superior Court (1954), summaries of evidence with respect to certain objections. By interlocutory decree, (1) motions by George, Kenneth, and Union to recommit the report were denied; (2) their exceptions were overruled; (3) exceptions of the sisters and Central, as well as certain exceptions of Beton, were sustained; and (4) the report as modified was confirmed. A final decree was entered, which gave substantially all the relief sought by the sisters and Central. George, Kenneth, and Union appealed from the interlocutory decree and they and Beton appealed from the final decree. The facts are stated on the basis of the master's findings.

The Interests in Central.

1. The brothers and sisters, together with a deceased brother Albert, are the children of Mrs. Nerzeh Kaneb. In early 1934, Beton Kaneb and his sister Rachel Samia [339 Mass. 106] 'formed a partnership * * * to carry on the oil * * * business' and each 'contributed $2,600 in cash to the partnership and * * * received a fifty per cent * * * interest.' In 1934, 'family conferences were held, looking toward the organization of a corporation to carry on the * * * business.' Agreement was reached about 'ownership of stock.'

Early in August, 1934, Beton, Albert (the brother now dead, a recent law school graduate who did the legal work), Rachel, and Kenneth executed articles of organization for Central. Its authorized stock of one hundred shares of no par common stock was described as 'now to be issued' and to be paid for wholly in tangible personal property (the partnership's assets). Beton subscribed for forty shares. Albert, Rachel, and Kenneth subscribed for twenty shares each. It was provided that a stockholder wishing to transfer stock must offer it to the corporation at the price fixed by three arbitrators or, at the election of the directors, the price of the proposed transfer.

Page 473

The directors could waive this restriction in any instance.

On August 28, 1934, Albert and Beton filed the articles of organization with the State Secretary. Albert was fatally stricken the next day and died intestate on September 5, 1934. His mother, Nerzeh Kaneb, his next of kin, died intestate on February 13, 1937. Beton was appointed administrator of Albert's estate and of Nerzeh's estate. The inventory of each estate 'did not list any shares of stock in Central.'

The master found that 'Albert did become a shareholder in Central to the extent of twenty * * * shares * * * at the time these four parties signed the articles of organization * * * and * * * the certificate of incorporation * * * was issued.' Despite the fact that no bill of sale was in evidence and the absence of 'direct testimony as to the date that * * * the partnership property passed to Central,' the master found that 'it is a fair inference and * * * it was intended by the partners Rachel and Beton and the defendant Central, that title to the assets * * * should pass to Central [339 Mass. 107] when * * * legally organized.' He further found that 'title * * * did pass to Central on August 28, 1934.' In a summary of supporting evidence (under Rule 90), the master stated that after August 28, 1934, 'Central continued to carry on the business formerly conducted by the partnership, using the assets of the * * * partnership * * *.' Beton took charge, assisted by Kenneth and Rachel Samia's husband.

Late in 1934, Samia ceased working for Central. Beton and Kenneth 'thereafter * * * determined to eliminate the interest which Rachel had in the business. They did this by * * * neglecting * * * to recognize her as a director * * * or as a stockholder.' The brothers 'simply appropriated' her shares after her husband left Central's employ and 'considered the stock as being in the treasury from the time they 'took' it, although * * * [it] did not actually go into the treasury until' September 20, 1938, when Central in behalf of the brothers repaid Rachel's original investment of $2,600 (plus $221.96) in return for a release to Beton as 'executor of the will of Nerzeh Kaneb' and a purported assignment to Central of all her interest in the shares. In 1945, 'Rachel complained [that] she had not received enough money, and the * * * [brothers] gave her notes totaling $7,500.' The master justifiably found that 'this release referred solely to the twenty * * * shares * * * for which Rachel had originally subscribed and * * * at the time of signing * * * Rachel was unaware' of any 'right to a proportionate part of Albert's stock and * * * had no intention of releasing any interest in that stock.'

In 1936, Beton told his brother George that the latter was the owner of six and two thirds shares of Central. 'At the same time, Beton and Kenneth were each considered * * * to have acquired an additional six and two thirds * * * shares. There is no vote or corporate record extant with respect to these twenty * * * shares.' The master found the shares to have been 'Albert's stock * * * which under the laws of intestate succession passed to Albert's mother Nerzeh on his death.' In thus dividing Albert's stock the master stated that the brothers 'acted in the belief that [339 Mass. 108] since they * * * the male members of the family * * * were going to conduct * * * Central they should have Albert's stock.' The master also found (a) that they concealed 'from the plaintiffs * * * what had been done' by a 'conspiracy of silence * * * [and] the plaintiffs had no knowledge of the facts * * * until * * * 1952, when they were informed by Beton as to the original 'taking' * * * and the subsequent concealment,' and (b) that in 'a closely knit family such as the Kanebs, the sisters had a right to rely on the complete good faith of their brothers,' a 'confidence

Page 474

and trust' which the brothers 'abused * * * by concealing * * * the real facts' about Albert's stock.

On December 31, 1936, a dividend of $120 on each share the brothers then held was paid from funds borrowed by Central from a bank. The amount thus paid as a dividend was then repaid by each brother to Central to purchase a number of new shares equal to the shares then in his name, thus doubling each brother's holdings. The bank loan was then repaid. No such dividend was paid, or new stock issued, in respect of Rachel Samia's stock. In 1940, the twenty shares formerly owned by Rachel were sold to Beton at $200 per share and the brothers also subscribed to varying amounts of new stock at the same price. In 1947, the brothers made further subscriptions to Central stock.

In 1952, Beton, claiming to be 'troubled by the wrong * * * he and his brothers had done to their sisters,' but also, as the master found, to further his own interests against his brothers, informed his sisters of the 1936 distribution of Albert's shares among the brothers. On November 6, 1953, each sister was issued three and one third shares of Central stock pursuant to a vote of Central's directors, purportedly by reason of their claims as next of kin of Nerzeh Kaneb to the shares originally subscribed for by Albert. Kenneth and George did not join in this action and object to it. The present suit was commenced in February, 1954.

2. We first consider whether the master could properly find that Albert became a stockholder in Central prior to his death. If he did not, the sisters have no interest in Central.

[339 Mass. 109] The Kanebs' business activities 'through the years * * * have been characterized by the utmost informality.' In forming Central their actions were ambiguous and their intentions vaguely expressed. In this laxly handled family situation, where no rights of creditors or outsiders are involved, the master might reasonably have felt that he could not judge what the parties intended and did by standards of corporate procedure properly applicable to more widely owned business corporations. This is a case where it might be appropriate to regard formal acts as done promptly which in equity ought to have been done, Morris Gordon & Son, Inc. v. Totoni, 324 Mass. 182, 185-186, 85 N.E.2d 319, and cases cited, and where, to do equity among the parties, undue emphasis cannot fairly be placed upon strict compliance with corporate formalities.

The subsidiary findings about the formation of Central already stated justify the master's conclusion that Albert acquired twenty Central shares upon the filing of the corporate papers paid for by the immediate transfer of the partnership assets. 2 Beton and Rachel, owners of the partnership assets, at the family conference had 'agreed * * * that * * * twenty per cent [of the stock] * * * should be issued to * * * Albert,' although he owned no part of the partnership assets to be transferred to Central. In context this must be viewed as a finding 3 that Beton and Rachel...

To continue reading

Request your trial
93 cases
  • USM Corp. v. Marson Fastener Corp.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • August 29, 1979
    ...199 (1978); Wormstead v. Town Manager of Saugus, 366 Mass. 659, 660, 322 N.E.2d 171 (1975). See also Samia v. Central Oil Co. of Worcester, 339 Mass. 101, 122, 158 N.E.2d 469 (1959). Cf. Blanchette v. Blanchette, 362 Mass. 518, 522, 287 N.E.2d 459 (1972).4 We need not describe the details o......
  • Donahue v. Rodd Electrotype Co. of New England, Inc.
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • May 2, 1975
    ...the close corporation (e.g., Brigham v. M. & J. Corp., 352 Mass. 674, 678, 227 N.E.2d 915 (1967); see Samia v. Central Oil Co. of Worcester, 339 Mass. 101, 112--113, 158 N.E.2d 469 (1959)), but have never defined precisely what is meant by a close corporation. There is no single, generally ......
  • Markell v. Sidney B. Pfeifer Foundation, Inc.
    • United States
    • Appeals Court of Massachusetts
    • May 29, 1980
    ...278 Mass. 44, 51, 179 N.E. 241 (1931); Ranicar v. Goodwin, 326 Mass. 710, 713-714, 96 N.E.2d 853 (1951). Samia v. Central Oil Co. of Worcester, 339 Mass. 101, 112, 158 N.E.2d 469 (1959); Meskell v. Meskell, 355 Mass. 148, 151-152, 243 N.E.2d 804 (1969). Whether a relationship of trust and c......
  • Puritan Medical Center, Inc. v. Cashman
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • July 20, 1992
    ...("silence can be fraudulent concealment by a person, such as a fiduciary, who has a duty to disclose"); Samia v. Central Oil Co. of Worcester, 339 Mass. 101, 113, 158 N.E.2d 469 (1959) ("mere failure to reveal may be fraudulent where there is a duty to reveal"), quoting Stetson v. French, 3......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT