Victor G. Bloede Co. v. Bloede

• Decision Date: 18 June 1896
• Citation: Victor G. Bloede Co. v. Bloede, 84 Md. 129, 34 A. 1127 (Md. 1896)
• Parties: VICTOR G. BLOEDE CO. OF BALTIMORE CITY v. BLOEDE.
• Court: Maryland Court of Appeals

34 A. 1127

84 Md. 129

VICTOR G. BLOEDE CO. OF BALTIMORE CITY v. BLOEDE.

Court of Appeals of Maryland

June 18, 1896

Appeal from circuit court of Baltimore city.

Bill by Victor G. Bloede against the Victor G. Bloede Company of Baltimore City to compel defendant corporation to transfer on its books nine shares of its capital stock to complainant. From a decree for complainant, defendant appeals. Affirmed.

Argued before McSHERRY, C.J., and BRYAN, RUSSUM, PAGE, and FOWLER JJ.

Steele Semmes & Carey, for appellant.

George R. Willis and Robert Biggs, for appellee.

McSHERRY C.J.

The bill of complaint, which was filed in circuit court No. 2 of Baltimore city, by the appellee against the appellant, a body corporate, prayed that a decree might be passed enjoining and requiring the appellant to transfer upon its stock books to the appellee nine shares of its capital stock that were then and still are standing in the name of Louis Zakle, but which are claimed by the appellee to belong to and to be owned by him. It is averred in the bill that, upon the formation of the Victor G. Bloede Company of Baltimore, which is the party appellant in this cause, the appellee became entitled to a large part of the company's capital stock; that believing that Louis Zakle intended to purchase from him nine shares thereof, he instructed the treasurer to make out a certificate in the name of Zakle for that number of shares, which was accordingly done; that the appellee then tendered the certificate to Zakle, who declined to receive or to pay for it, because, as he insisted, its issue to him was unauthorized and erroneous, and because he claimed no interest in or title to it; that the certificate remained and still is in the possession of the appellee; that the issue of the certificate to Zakle was a mistake on the part of both the appellant and the appellee; and that the nine shares of stock represented thereby are the property of the appellee. The bill further alleges that the appellee made a demand upon the company for a transfer of these shares to himself, but that the demand was refused, upon the ground that a by-law of the company regulating transfers had not been complied with. The by-law in question reads as follows: "If any stockholder shall desire to dispose of his stock, he shall at least thirty days before a transfer shall be made, notify the president, in writing, of his intention to sell, and of the price he can obtain, which notice the president shall communicate to the other stockholders, who thereupon shall have the option to purchase the stock at the price named, in amounts pro rata to the stock held by them, respectively, and the corporation shall have the option to take any such stock as may not be taken by any stockholder individually." The answer relies on this by-law, and insists that the stock certificate was regularly issued to Louis Zakle, and that the nine shares were properly placed in his name, and that the certificate cannot be transferred to the appellee except in accordance with the provisions of the by-law just transcribed. The answer further goes into a detailed statement as to the method in and by which the appellant company was formed, sets forth the substance of an agreement alleged to have been entered into between the appellee and the Joseph Bancroft & Sons' Company, a Delaware corporation, whereby, as a condition precedent to the latter corporation becoming a large stockholder in the yet unformed appellant company, a list of stockholders, including Zakle, with the number of shares which each was to hold, was arranged, and then insists that the nine shares in controversy were issued to Zakle pursuant to this agreement, and not by error or mistake at all. A large mass of testimony was taken, much of which, as is usual in such controversies, is irrelevant. After a hearing the court below signed a decree granting the relief prayed. From that decree this appeal has been taken.

It appears that the appellee, who is a chemist, has for some years past been conducting a large business in Baltimore city as a manufacturer of dyes and colors, made according to his own secret processes. The Joseph Bancroft & Sons' Company of Wilmington, a body corporate engaged in dyeing cloth, was one of the appellee's largest customers, and dependent to a considerable extent upon him for some of the dyes and colors used by it. With a view of more closely identifying the interests of the two industries, it was proposed that the appellee should cause a corporation to be formed to take over his entire business, and that the Joseph Bancroft & Sons' Company should be allowed to have a part of the capital stock of the new corporation in exchange for an equal amount of the stock of the Wilmington company. Thus the appellee would receive in the Bancroft Company an interest equal in value to the interest which the latter corporation would obtain in the business of the appellee. It is not material who proposed this scheme, and we need not discuss this controverted question. After several interviews and some negotiations, the scheme was finally consummated. There is wide and abrupt conflict in the evidence as to the results reached in these negotiations, but it would serve no useful purpose to enter into an analysis thereof, or to set forth the reasons or the lines of reasoning which influence and sustain the conclusions to which we have come in respect thereto; and hence we proceed, not to discuss the testimony bearing thereon, but, after weighing it, as we have carefully done to state the deductions of fact which a due consideration of all its details, in our opinion, warrants and justifies. When the Victor G. Bloede Company was formed for the purpose of taking over the business of the appellee, the articles of association fixed the capital stock at $150,000, $50,000 of which was retained in the company's treasury. Six shares were issued to six of the incorporators and 994 shares in one certificate to the appellee in payment for the plant and business turned over to the appellant company. Of the 994 shares the appellee transferred to the Joseph Bancroft & Sons' Company, in exchange for an equal amount in value of its stock, 474 shares. He sold and transferred to John Hutton, an employé of the Bancroft company, 20 shares, and he caused certificates to be made out in the name of Glacken for 10 shares, and in the name of Brown for 5 shares, under a special agreement with these parties as to the method of payment, and 1 additional share to Nowlin and 9 to Zakle;...