Sher v. Malden Taxi, Inc.

Decision Date25 June 1976
Citation4 Mass.App.Ct. 404,349 N.E.2d 366
PartiesMelvin SHER v. MALDEN TAXI, INC., et al.
CourtAppeals Court of Massachusetts

John P. Birmingham, Jr., Boston, for plaintiff.

Laurence M. Johnson, Boston, for defendants.

Before HALE, C.J., and GOODMAN, and GRANT, JJ.

GOODMAN, Justice

The plaintiff's amended bill in equity brought in the Superior Court against the defendants David Goldberg (Goldberg) and Malden Taxi, Inc. (Malden) sought a determination that the plaintiff 'is entitled to ownership of such shares of common stock of Malden Taxi, Inc. as represent the same proportion of ownership in Malden Taxi, Inc. as his investment bore to the total equity investment in the common stock of Malden Taxi, Inc.' The defendants denied the plaintiff's version of the arrangement between the plaintiff and the defendants and counterclaimed for damages and an accounting, alleging that the plaintiff in his capacity as treasurer and general manager of Malden had not properly performed his duties.

The dispute has its origin in the purchase by Malden of the assets of various taxi cab companies controlled by two individuals (the Weiners). Malden was organized on May 13, 1969, to receive the assets and operate the companies, and the closing took place the following day. At the closing the sellers were paid $50,000 in cash, made up of $15,000 which Goldberg had previously procured from the plaintiff, $10,000 which Goldberg had borrowed from relatives, and $25,000 which Goldberg had borrowed under an arrangement with the Gibbs Oil Co. (Gibbs) to be more fully described hereafter; Malden also paid the sellers $25,000 in notes which Goldberg guaranteed. 1 In addition, Malden entered into a seven year lease of real estate, from which the taxi cab business was to operate, with a realty trust of which the Weiners were the trustees. Goldberg and his wife guaranteed the lease.

Thereafter the plaintiff, until March, 1972, when he left, operated Malden's taxi cab business as general manager and was also treasurer and director of the corporation. He testified that he left because Goldberg had not given him the stock to which he was entitled. The plaintiff claims that the $15,000 which he gave Goldberg represented his proportion of the total equity investment in Malden, that the entire equity invested was $25,000, and that he is therefore entitled to 15/25 or sixty percent of the issued capital stock. Goldberg claims that the $15,000 represented a loan from the plaintiff. The court made findings and rulings dated September 26, 1974 (Mass.R.Civ.P. 1A, par. 3 and Mass. R.Civ.P. 52(a), 365 Mass. 731 and 816--817 (1974)), that the plaintiff was entitled to 15/75 or twenty percent of the capital stock of Malden. He rejected Goldberg's testimony that the $15,000 was a loan as well as the defendants counterclaim. All parties appealed; the evidence is reproduced in the appendix.

The defendants attack the trial judge's finding that the plaintiff is entitled to any stock and, in the alternative, urge that the amount of stock due the plaintiff should be reduced by reason of Goldberg's guarantee of the lease. The defendants make no argument contesting the dismissal of their counterclaim. The plaintiff urges his claim that the total capital investment is $25,000 and that his capital contribution of $15,000 therefore entitles him to 60% of the stock. We discuss these contentions in turn.

The defendants' appeal.

1. The trial judge's findings. The trial judge found that, as a result of a number of conversations between April, 1969, and May 14, 1969, Goldberg, an accountant who 'has become very familiar with the overall taxi business in the last twenty years . . . promised the plaintiff that if he invested $15,000 in the contemplated purchase of the Malden Taxi, Inc., at the price of $70,000, that he, Melvin Sher, would receive 15/70ths of the common stock to be issued of the contemplated corporation Malden Taxi, Inc.' and 'that the reason why Melvin Sher left the employ of Malden Taxi, Inc., in March of 1972, was because the defendant, David Goldberg, refused to issue him the proportionate share of common stock in Malden Taxi, Inc., that he had agreed to in April-May of 1969.' The trial judge rejected 'the explanation of the defendant (Goldberg) that the $15,000 received by him from Mr. Sher was a loan made with the understanding that if Mr. Sher also went to work for Malden Taxi, Inc., as general manager and did a good job, as such, that he, Mr. Sher, would receive 'some stock in Malden Taxi, Inc., in the future,' without any commitment whatsoever to issue any particular number or proportion of shares of stock.' The trial judge found 'that the total equity investment in Malden Taxi, Inc. was $75,000'; he analyzed the transaction and concluded that 'the valid contributions to the capitalization of the Malden Taxi, Inc., for the shares of stock that should have been issued on May 14th, 1969, would be . . . $75,000--(o)f which 15/75ths, or twenty percent, would be the capital investment of Melvin Sher, and the remaining eighty percent the capital investment of David Goldberg.'

Reading the trial judge's findings and rulings as a whole it is clear that he chose to believe the plaintiff, who testified that Goldberg told him that the Weiners wanted to sell their cab operations in Malden, that Goldberg 'said it would require an investment of about $70,000', and that the plaintiff 'could invest any portion that I felt I could handle of the total investments, which he (Goldberg) said were approximately $70,000.' The trial judge refused to believe Goldberg, who categorically denied that he 'told him (the plaintiff) that in return for his $15,000, he would become entitled to a proportional share of the stock in the company' and maintained that the plaintiff had lent him $15,000, on which no interest was apparently paid and which was not evidenced by a note. The defendants point out various circumstances which raise inferences inconsistent with the plaintiff's contention. But it is undisputed that the plaintiff was treasurer, director, and general manager of Malden and was a guarantor of Malden's contract with Gibbs to buy its requirements of petroleum products and of a $25,000 loan from Gibbs to Malden. Our examination of the evidence leads us to conclude that giving 'due regard . . . to the opportunity of the trial court to judge of the credibility of the witnesses' (Mass.R.Civ.P. 52(a), 365 Mass. 816 (1974)) the judge was not clearly erroneous in resolving the clear cut issue between the parties as he did and in concluding that stock interests should be allocated between the plaintiff and Goldberg in proportion to their capital contributions.

2. The guarantee of the lease. Goldberg also claims that as part of the 'equity investment', on which the trial judge based his calculation of the stock due the plaintiff, Goldberg was entitled to include the value of his guarantee of the seven year lease (also guaranteed by his wife) at $3,500 per month, creating a potential liability of $294,000. The trial judge was well warranted in his finding that the guarantee 'was not a capital contribution.' He found that the only stock which had been authorized and issued on May 14, 1969, as evidenced by a certificate of condition filed by Goldberg, was one hundred shares for $25,000. 2 The trial judge's point is well taken that '(i)t is incongruous that the Certificate of Condition filed by David Goldberg, an experienced accountant, would show that the 100 shares of stock issued to him was in consideration of $25,000, but that as a result of the present litigation, David Goldberg now wishes to be credited with a $294,000 capital contribution.' He also found that there was no 'intention that it be so considered at the time it was given on May 14th, 1969.' 3 The trial judge was justified in accepting the transaction as Goldberg had cast it. See Cain v. Cain, --- Mass.App ---, --- - ---,a 334 N.E.2d 650 (1975). Indeed, Goldberg testified that the...

To continue reading

Request your trial
9 cases
  • Williams v. Charles, 12–P–1216.
    • United States
    • Appeals Court of Massachusetts
    • October 3, 2013
    ...3 Mass.App.Ct. 662, 674–675, 339 N.E.2d 197 (1975), S.C.,372 Mass. 620, 363 N.E.2d 493 (1977). See also Sher v. Malden Taxi, Inc., 4 Mass.App.Ct. 404, 408, 349 N.E.2d 366 (1976). 10. Article 4.2(a), titled “Profit or Loss Other Than From a Capital Transaction,” provides: “After giving effec......
  • Anderson v. K. G. Moore, Inc.
    • United States
    • Appeals Court of Massachusetts
    • May 30, 1978
    ...oral testimony. Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578, 580, 328 N.E.2d 505 (1975). Sher v. Malden Taxi, Inc., 4 Mass.App. ---, --- - --- a, 349 N.E.2d 366 The judge found that the plaintiff signed the contract in the expectation, reasonable under the circumstan......
  • Sanguinetti v. Nantucket Const. Co., Inc.
    • United States
    • Appeals Court of Massachusetts
    • April 14, 1977
    ...of Lancaster v. Sanderson, --- Mass. ---, --- - --- h, 360 N.E.2d 1051 (1977); Sher v. Malden Taxi, Inc., --- Mass.App. ---, --- i, 349 N.E.2d 366 (1976). We summarize portions of the detailed and extensive findings of the judge supplemented by our own. Nantucket Construction Company, Inc. ......
  • Hanewald v. Bryan's Inc., 870324
    • United States
    • North Dakota Supreme Court
    • September 20, 1988
    ...before its operations were abandoned, the loan cannot be considered a capital contribution. See Sher v. Malden Taxi, Inc., 4 Mass.App. 404, 349 N.E.2d 366, 370-371 (1976); Amfac Mechanical Supply Co. v. Federer, 645 P.2d 73, 79-80 (Wyo.1982); J.L. Brock Builders, Inc. v. Dahlbeck, 223 Neb. ......
  • 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