Thompson v. Hambrick

• Decision Date: 04 April 1974
• Docket Number: No. 18268,18268
• Citation: 508 S.W.2d 949
• Court: Texas Court of Appeals
• Parties: R. L. THOMPSON et al., Appellants, v. L. N. HAMBRICK et al., Appellees.

Page 949

508 S.W.2d 949

R. L. THOMPSON et al., Appellants, v. L. N. HAMBRICK et al., Appellees.

No. 18268.

Court of Civil Appeals of Texas Dallas.

April 4, 1974.

Rehearing Denied May 2, 1974.

Jay M. Vogelson, Steinberg, Generes, Luerssen & Vogelson, Dallas, for appellants.

Sandy M. Sandoloski, Weinberg, Sandoloski & Hines, Dallas, for appellees.

BATEMAN, Justice.

The appellants were the minority shareholders, and appellees were the majority shareholders, in the American Bank and Trust of Irving, Texas, which was organized in early 1969. The appellants were plaintiffs in the trial court and now appeal from a take-nothing summary judgment. The parties will be designated as they were in the trial court.

Plaintiffs' first claim for relief is that the defendants, owning the majority of the shares of stock, and hence control, of the bank, sold their shares to Dr. B. J. Case and B. M. Grantland at a price nearly twice its market value, in violation of a written agreement dated February 4, 1969 between L. N. Hambrick and B. H. Buchanan as 'Trustees' on the one hand, and each individual shareholder, referred to therein as 'Stockholder,' on the other hand, in pertinent part as follows:

Whereas, Stockholder is one of several persons who, collectively, own 100% Of the existing outstanding capital stock of the American Bank and Trust Company of Irving, Texas, hereinafter referred to as Bank; and

Whereas, Stockholder recognizes that it is to his advantage and to the mutual advantage of all other stockholders for the stock of Bank to remain, insofar as possible, within the exclusive control of the existing stockholders during the first five (5) years of Bank's existence, in order to insure its proper management and growth; and

Whereas, all of the stockholders of Bank mutually desire to enter into this Agreement, by which each stockholder grants unto L. N. Hambrick and B. H. Buchanan, Trustees, for a period of five (5) years from the date of this Agreement, the right of first refusal to purchase the stock of any stockholder who may desire to sell his stock . . . at such price as would be determined in accordance with this Agreement;

Now, therefore, it is mutually covenanted and agreed by and between the parties hereto that, in consideration of the mutual promises, considerations and agreements contained herein, and in consideration of the execution of a similar agreement by other presently existing stockholders, the following conditions shall apply:

1. Stockholder shall neither sell nor assign to any person, firm, partnership or corporation any of his stock in American Bank and Trust Company, until he has first offered the same, in writing, to L . N. Hambrick and B. H. Buchanan, Trustees.

Then followed a formula for determining the price at which the 'Trustees' shall buy the stock to tendered to them, and other provisions not necessary to set out here in full.

In the spring of 1971, Dr. B. J. Case and B. M. Grantland became interested in buying all of the stock of the bank, or at least enough to assure them of control. Their previous offer to buy the stock at $45 per share was rejected. Thereafter Buchanan met Case at the Los Colinas Country Club and negotiated a sale to Case and Grantland of sufficient shares to assure control, the price agreed upon being $55 per share. At about this time Buchanan purchased 900 shares from the plaintiff William A. Wylie, one of the officers of the bank, at $40 per share. Case offered to buy defendants' stock at $55 per share. Defendants accepted and 16,203 shares were sold. The defendants then resigned from the board of directors.

Plaintiffs alleged that the said agreement of February 4, 1969 is ambiguous in that it does not state for whose benefit the defendants Hambrick and Buchanan agreed to act as trustees, or their obligations if a conflict of interest should arise. They prayed that the court should hear parol evidence by which to determine the intention of the contracting parties, and to declare that (a) Hambrick and Buchanan were and are trustees under the contract for the benefit of all the other shareholders, and (b) that Hambrick and Buchanan were disqualified and should have recused themselves from acting under the agreement with respect to stock owned by them.

Plaintiffs' first four points of error, in varying phraseology, say the trial court abused its discretion in not holding the agreement to be ambiguous and in refusing to hear parol evidence as to its meaning in the light of surrounding facts and circumstances. They claim that they collectively had the right under the agreements, if properly interpreted, of first refusal of the stock of the defendants, including Hambrick and Buchanan, that the purpose and intent of the agreement was to give all shareholders the right to buy the stock of any of them who wanted to sell their stock.

Defendants contend, on the other hand, that the agreement could only have been intended for the benefit and protection of Hambrick and Buchanan. The instrument does not provide what the corpus of the 'trust' was, nor who the beneficiaries were. Neither does it provide for the source of the funds that would be used to purchase the shares on behalf of the 'trust.' The agreement itself indicates that it is designed to serve 'the mutual advantage of all other stockholders,' but this is inconsistent with the argument that it was for the sole benefit of Hambrick and Buchanan. Parol evidence of circumstances surrounding the making of a contract is admissible to explain and resolve these ambiguities. 2 C. McCormick and R. Ray, Texas Law of Evidence § 1685 (2d ed. 1956); Page v. Marshall, 347 S.W.2d 656, 658 (Tex.Civ.App.--Austin 1961, no writ). Where there is a question as to the true meaning of an ambiguous instrument, summary judgment based thereon is improper. Robert v. E . C. Milstead Ranching, Inc., 469 S.W.2d 429 (Tex.Civ.App.--Beaumont 1971, writ ref'd n.r.e.); Tinnin v. Crook, 333 S.W.2d 617 (Tex.Civ.App.--El Paso 1960, writ ref'd n.r.e.).

We cannot say that the summary-judgment evidence establishes as a matter of law that the agreement was for the exclusive benefit of Hambrick and Buchanan and gave them the right to sell their stock without giving the other shareholders an opportunity to buy the same either at a price determined by the formula or at the same price that had been offered for it. We therefore sustain the first four points of error.

Whether plaintiffs have alleged the correct measure of damages to which they will be entitled if it be found that the agreement means what they say it means is not before us. We merely hold that defendants have not carried their negative burden of showing as a matter of law that in that event there are no fact issues which, if resolved in favor of plaintiffs, will entitle them to damages.

By their fifth point of error plaintiffs contend that, quite aside from the said written agreement, the defendants owed to them a fiduciary duty which was breached, and that the trial court erred by not so finding. In their sixth point they say the court erred in not finding that the premium paid for controlling shares was a corporate asset in which they were entitled to share pro rata.

The plaintiffs rely largely upon Perlman v. Feldmann, 219 F.2d 173 (2d Cir. 1955), cert. denied, 349 U.S. 952, 75 S.Ct. 880, 99 L.Ed. 1277; Jones v. H. F. Ahmanson & Co., 1 Cal.3d 93, 81 Cal.Rptr. 592, 460 P.2d 464 (1969); and International Bankers Life Inc. Co. v. Holloway, 368 S.W.2d 567 (Tex.1963).

Feldman was derivative action brought by minority stockholders of a steel company to compel an accounting for and restitution of...