Schaffer v. Below, Civ. No. 230-1957

• Decision Date: 23 June 1959
• Docket Number: 138-1958.,Civ. No. 230-1957
• Citation: 174 F. Supp. 505
• Parties: Alfred M. SCHAFFER, Irving L. Young, James Alderman Evans, Jr., and William Houston Evans, Executors of the Estate of Charles R. Vose, deceased, v. Ethel May Pressey BELOW, also known as Ethel May Bishop, individually and as Administratrix C.T.A. of the Estate of Cornelius Comstock Below, also known as Cory Bishop, deceased, David Jenckes and Antilles Enterprises, Inc. Ethel May BISHOP, individually and as Administratrix C.T.A. of the Estate of Cory Bishop, deceased, v. Alfred M. SCHAFFER et al., Executors of the Estate of C. R. Vose, Alfred M. Schaffer, et al., Officers and Directors of Antilles Enterprises, Inc., Antilles Enterprises, Inc., and Ward and Virginia French.
• Court: U.S. District Court — Virgin Islands

174 F. Supp. 505

Alfred M. SCHAFFER, Irving L. Young, James Alderman Evans, Jr., and William Houston Evans, Executors of the Estate of Charles R. Vose, deceased, v. Ethel May Pressey BELOW, also known as Ethel May Bishop, individually and as Administratrix C.T.A. of the Estate of Cornelius Comstock Below, also known as Cory Bishop, deceased, David Jenckes and Antilles Enterprises, Inc.

Ethel May BISHOP, individually and as Administratrix C.T.A. of the Estate of Cory Bishop, deceased, v. Alfred M. SCHAFFER et al., Executors of the Estate of C. R. Vose, Alfred M. Schaffer, et al., Officers and Directors of Antilles Enterprises, Inc., Antilles Enterprises, Inc., and Ward and Virginia French.

Civ. Nos. 230-1957, 138-1958.

District Court, Virgin Islands D. St. Thomas & St. John.

June 23, 1959.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Croxton Williams, Charlotte Amalie, St. Thomas, V. I., for Ethel May Pressey Below et al.

Maas & Bailey, Charlotte Amalie, St. Thomas, V. I. (William W. Bailey, Charlotte Amalie, St. Thomas, V. I., of counsel), for Alfred M. Schaffer et al.

MARIS, Circuit Judge.

From the admissions in the pleadings and the evidence in these consolidated cases, I make the following

Findings of Fact

1. On July 27, 1953, Charles Redfield Vose, Cory Bishop (also known as Cornelius Comstock Below) and David Jenckes entered into a joint venture for the development of land on the island of St. John, Bishop and Jenckes contributing approximately 850 acres of land and Vose contributing $50,000 in cash. It was agreed that the division of the profits of the joint venture was to be 30% to Vose and 35% to each of the other two venturers. It was also agreed that if it should be decided to incorporate, the stock would be divided in the same ratio.

2. On September 2, 1953, the joint venturers agreed to add to the joint venture the purchase of approximately 635 acres of land in St. Thomas, the funds for the purchase to be advanced by Vose and to be repaid to him by the joint venture.

3. On November 25, 1953, Vose, Bishop and Jenckes organized under the laws of the Municipality of St. Thomas and St. John a corporation under the name of Antilles Enterprises, Inc., with capital stock of $10,000 divided into 100 shares of the par value of $100 each, of which Vose subscribed for 30 shares and Bishop, and Jenckes for 35 shares each. On the same day Vose, Bishop, Jenckes and Antilles Enterprises, Inc., entered into the following stockholders' agreement:

"Stockholders' Agreement

"Agreement made this 25th day of November, 1953, between Charles Redfield Vose, of Litchfield, Connecticut, referred to hereafter as `Vose'; Cory Bishop, of St. John, Virgin Islands, U. S. A., referred to hereafter as `Bishop'; and David Jenckes, of St. Thomas, Virgin Islands, U. S. A., referred to hereafter as `Jenckes'; and Antilles Enterprises, Inc., a Virgin Islands corporation, referred to as the `Corporation',

"Witnesseth

"Whereas, the individual parties have entered into a joint venture as to Bishop's Eight Hundred Fifty (850) acres on St. John, V. I., conveyed to him and wife by deed from Alvin C. Schlenker, dated June 13, 1952, recorded August 11, 1952, in Protocol 4E, P. 206, Sub. No. 218, as evidenced by agreement dated July 27, 1953, and a supplementary joint venture as to Smith and Falck property at Red Hook, St. Thomas, V. I., under contract dated September 25, 1953, as per agreement signed September 2, 1953; and

"Whereas, Vose has to date advanced Fifty Thousand Dollars ($50,000.00) on St. John Venture and agrees to advance balance necessary to complete St. Thomas purchase:

"Now, Therefore, it is mutually agreed:

"1. The Corporation has been organized in the Virgin Islands for One Hundred (100) shares of common stock at One Hundred ($100.00) Dollars per share. Title in both aforesaid property in St. Thomas and St. John ventures are to be put in the Corporation which will assume the mortgages thereon, and the debt for all moneys advanced by Vose is to be owned sic and the stock issued in following proporitions sic:

                    Vose           30 Shares
                    Bishop         35 Shares
                    Jenckes        35 Shares
                                  ____
                      Total       100 Shares
                

"The consideration for the issuance of all shares shall be the transfer of all interests in Estates Rustenberg, Beverhoudtsberg, Guinea Gut and Sans Souci (St. John) to the Corporation and the transfer by Bishop to the Corporation of the $50,000 paid by Vose for his interest in the aforementioned estates. Bishop and Jenckes are immediately to endorse their certificates for their shares and deliver same to Vose to hold until Vose is repaid his advances, when the stock is to be redelivered to them. Meanwhile, they have the right to vote on stock, but all dividends, if any, are to be applied to reduction of debt due Vose. Any salaries to be paid shall be reasonable and approved by the parties hereto. Accountings shall be rendered to Vose of corporate activities and finances at least every three months.

"2. The stockholders agree that so long as they are alive, each shall not without consent of all otherwise encumber or dispose of the stock he now owns, or may hereafter acquire, except he may transfer all or part as gift to or for benefit of wife or other member of his direct family, who shall hold it subject to terms of this agreement. No stockholder may sell his stock until indebtedness to Vose has been paid off, except with his written consent, and all certificates of stock of the Corporation owned by stockholders shall be endorsed with following statement:

"`The shares of stock represented by this certificate are subject to the terms of an agreement between the stockholders and corporation dated November 25, 1953, a copy of which has been filed at the Office of the Corporation.'

"3. The stockholders agree to vote their stock to provide as follows:

"(a) A Board of Directors of three (3) members, each to be the individual party hereto or his nominee, and to vote for the parties or their nominees, for the following offices:

President—Cory Bishop Treasurer—Charles Redfield Vose Secretary—David Jenckes

"4. In the event of death of Vose, the survivors, together, or by the other if one refuses, shall have the right to purchase from Vose Estate, his stock at a price which shall be the unpaid amount of moneys advanced by him, plus Vose' share of undistributed actually realized profits of Corporation up to the time of his death, to be calculated by book value on said date.

"Payment for Vose stock shall be made by paying ten (10%) percent on the exercise of the option and within six (6) months after qualification of personal representative of Vose, and the balance of ninety (90%) percent by three (3) notes for thirty (30%) percent each, with interest, one for each of three (3) successive years. While not in default, the purchasers shall have voting and dividend rights, and on full payment shall receive back their stock if then in the hands of Vose or his Estate plus all of Vose stock duly endorsed for transfer. Purchasers have privilege of prepayment of unpaid amounts on thirty (30) days written notice. In the event said option is not exercised against Vose Estate, the Corporation shall have a maximum of five (5) years to pay all of said debt; notwithstanding the provisions of Paragraph Five (5) hereof "In case of death of either Bishop or Jenckes, Vose and the other survivor, together, or the other if one refuses, shall have the right to purchase from decedent's estate, his stock at book value, but no allowance for good will, payments to be made one-quarter (¼) on exercise of the option to purchase and within six (6) months from qualification of deceased's representatives, and by three (3) notes for balance, one for each of three (3) successive years with interest, and with privilege of prepayment. While not in default, purchaser shall have voting and dividend rights, and on full payment, shall receive decedent's stock duly endorsed for transfer.

"5. The Corporation's debt to Vose on the St. Thomas land shall increase annually in the amount of 5% and the time limit on the debt shall be ten (10) years.

"6. All matters involving the major policies of the Corporation or the sale of the assets thereof, shall be determined upon by the unanimous consent of the stockholders of the Corporation.

"7. This agreement shall be binding upon and shall operate for the benefit of the stockholders and their respective executors, administrators, successors and assigns."

The foregoing agreement was signed by Vose, Bishop and Jenckes, individually and by Bishop as President of Antilles Enterprises, Inc.

4. Pursuant to the foregoing agreement and in payment of their subscriptions to the stock of the corporation, Vose, Bishop and Jenckes caused the land in St. John, which had been devoted to their joint venture, to be conveyed to Antilles Enterprises, Inc., and the sum of $50,000 in cash, which had been paid in by Vose to the joint venture, to be transferred to Antilles Enterprises, Inc.

5. The land in St. John, which Bishop had purchased for $24,000 ($5,000 in cash and $19,000 secured by a mortgage) was placed on the books of Antilles Enterprises, Inc., at a valuation of $135,666.67, and the mortgage of $19,000 thereon was placed on the books as a liability of the corporation. The sum of $50,000 in cash which Vose had paid in to the joint venture was placed on the books in that amount. Of the property and cash amounting, net, to $166,666.67 thus received by the corporation upon its organization, $10,000 was credited on its books to capital stock in payment of the subscriptions of Bishop to 35 shares, Jenckes to 35 shares and Vose to 30 shares. The balance of $156,666.67 was credited to paid-in surplus and no part of it was credited to Vose as indebtedness or an advance.

6. Thereafter, by agreement between Vose, Bishop and Jenckes 20 shares of Antilles Enterprises, Inc., subscribed by...