Storer v. Ripley

• Decision Date: 24 February 1958
• Citation: 12 Misc.2d 662,178 N.Y.S.2d 7
• Parties: Douglas F. STORER, Plaintiff, v. Douglas RIPLEY, Herlart, Inc., John Arthur, Robert Herlinger, and Matthew H. Brandenburg, as Receiver of Believe It or Not, Inc., and Christl Ripley, as sole Executrix under the Last Will and Testament of Douglas Ripley, Deceased, Defendants.
• Court: New York Supreme Court

Page 7

178 N.Y.S.2d 7

12 Misc.2d 662

Douglas F. STORER, Plaintiff, v. Douglas RIPLEY, Herlart, Inc., John Arthur, Robert Herlinger, and Matthew H. Brandenburg, as Receiver of Believe It or Not, Inc., and Christl Ripley, as sole Executrix under the Last Will and Testament of Douglas Ripley, Deceased, Defendants.

Supreme Court, Special and Trial Term, New York County, Part XII.

Feb. 24, 1958.

Goldwater & Flynn, New York City (Richard M. Goldwater and Edward C. Bloom, New York City, of counsel), for plaintiff.

Howard H. Spellman, New York City, for receiver Matthew H. Brandenburg, defendant. Fennelly, Eagan, Nager & Lage, and Liebman, Eulau & Robinson, New York City (Walter H. Liebman and Charles J. Nager, New York City, of counsel), for all other defendants.

SAMUEL C. COLEMAN, Justice.

The decision of Mr. Justice Eager, 1 Misc.2d 235, 125 N.Y.S.2d 831, affirmed 282 App.Div. 950, 125 N.Y.S.2d 339, and the later decision by the Court of Appeals (309 N.Y. 506, 132 N.E.2d 87) on another aspect of the controversy give very fully the history of the seemingly endless litigation and enable me to state my views on the questions before me compendiously.

Following the invalidating of the defendants' attempt to circumvent the effect of Mr. Justice Eager's judgment, the differences among the several stockholders became more and more exacerbated. Matters reached an impasse, the affairs of the corporation are in the hands of a receiver appointed by this court, and Colwell resigned as director. Storer thereupon brought this action to have his rights determined with respect to a successor to Colwell and for other relief and also for money damages. Pending the action Ripley died, and his widow, his executrix, has been brought in as a defendant. The present posture is this: There is only one director, Storer, where three are authorized. Storer asserts that 'it is now plaintiff's principal contention that he is entitled to buy in the Ripley stock from his widow and his executrix.' If this is decided against him, he says that the question before me is 'whether or not Storer and Ripley agreed as stockholders in February, 1951 that Storer was to have practical working control of Believe It Or Not, Inc. through the perpetual election, so long as Storer held stock in the corporation, of a 3-man board of directors, each of whom had to meet with his approval.'

There are expressions here and there in the opinion of Mr. Justice Eager, and in the opinion of the Court of Appeals which tend to support Storer's present contention that in effect he was to be the corporation and that the rights of other stockholders were subject to his domination. But the courts did not so decide. Mr. Justice Eager decided that there was an agreement whereby Storer and Colwell were to be directors (out of three) so long as Storer or one Millar owned stock and that the other stockholders were to do nothing to interfere with that arrangement. And the Court of Appeals held that the attempt on the part of the other stockholders who held a majority of the stock to increase the number of directors from three to five and so dislodge Storer from his position of dominance violated the decree of Mr. Justice Eager and would not be countenanced. Nothing more was decided. The question whether the death of either Storer or Ripley gave the survivor the option to purchase the stock of the one dying was not discussed in any way; that question is open.

I do not think plaintiff's principal contention is sound.

Of course agreements may provide for their continuance after the death of one of the parties; and of course restrictive agreements on the alienability of property after death will be upheld (cf. Allen v. Biltmore Tissue Corp., 2 N.Y.2d 534, 161 N.Y.S.2d 418; Scruggs v. Cotterill, 67 App.Div. 583, 73 N.Y.S. 882). But there must be such an agreement and if it is to operate as such a restriction, that consequence must be clearly expressed (Stern v. Stern, 79 U.S.App.D.C. 340, 146 F.2d 870; Lane v. Albertson, 78 App.Div. 607, 79 N.Y.S. 947; Taylor's Administrator v. Taylor, Ky., 301 S.W.2d 579; see 65 Harvard Law Review, 773, 791). I cannot find that there was such an agreement. The parties did not mention it in any of their writings; and the oral testimony, whether on the trial before Mr. Justice Eager or before me is too meager to justify any conclusion as to the consequences of death. Storer and Ripley may have thought about it; but they said nothing about it, either in writing or orally. And there are no reasons calling upon me to say that from the nature of things they must have intended it. Storer says that must have been so, else he would not have made the agreement he did; to which Ripley's widow replies that it is just as unthinkable that Ripley would have considered having his shares of stock leave his family--his widow and his two sons--and go to a stranger.

The written part of the agreement is scant in itself. It refers to the fact that Ripley was to purchase 14 shares, Storer 17, 'other interested parties' 29 shares. No other 'interested parties' appeared except possibly Millar, who obtained 6 shares under a later agreement. Then came this provision: 'The undersigned [Storer and Ripley] agree that the stock interest of the parties hereto shall not be sold, signed [sic], transferred or...