Watkins v. Simplex Time Recorder Co.

• Decision Date: 04 May 1944
• Parties: WATKINS v. SIMPLEX TIME RECORDER CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

316 Mass. 217

55 N.E.2d 203

WATKINS

v.SIMPLEX TIME RECORDER CO. et al.

Supreme Judicial Court of Massachusetts, Worcester.

May 4, 1944.

Bill in equity by Curtis G. Watkins against Simplex Time Recorder Company and another to require the issue of certain shares of stock of defendant corporation which plaintiff alleged had been sold to him by Edward G. Watkins, deceased. The defendant Mechanics National Bank of Worcester, executor under the will of Edward G. Watkins, was allowed to intervene as party defendant, seeking the issue of the shares to it. From an interlocutory decree confirming referee's report as modified and from a final decree adjudging plaintiff to be the owner of the stock, the defendants appeal, and plaintiff filed a motion to dismiss the appeal of the defendant executor.

Motion to dismiss denied; final decree reversed; interlocutory decree confirming report of master as modified reversed; report of master set aside; and suit remanded for further proceedings in the superior court.Appeals from Superior Court, Worcester County; Pinanski, Judge.

Before FIELD, C. J., and LUMMUS, DOLAND, RONAN, and WILKINS, JJ.

A. B. Campbell, of Worcester, for plaintiff.

W. M. Quade, of Gardner, for Simplex Time Recorder Co.

P. R. O'Connell, of Worcester, for Mechanics Nat. Bank.

WILKINS, Justice.

This bill in equity was originally brought against the Simplex Time Recorder Co., a Massachusetts corporation with its place of business in Gardner, to require the issue of three hundred sixty-nine common shares of the capital stock of the company which the plaintiff alleged had been sold to him by his father, Edward G. Watkins, deceased. The defendant Mechanics National Bank of Worcester, executor under the will of Edward G. Watkins, was allowed to intervene as party defendant, seeking the issue of the shares to it. The company claimed no interest in the shares. The case was referred to a master, who filed a report, to which the plaintiff and both defendants brought in objections. The judge entered an interlocutory decree sustaining one ‘objection’ (exception) of the plaintiff, overruling all other ‘objections' (exceptions) of all parties, and confirming the report as modified. (As to the inaccuracy of sustaining objections to a master's report, see Meehan v. North Adams Savings Bank, 302 Mass. 357, 362, 19 N.E.2d 299.) A final decree was enteredadjudging the plaintiff to be the owner of the stock, and ordering the company to issue certificates therefor to the plaintiff. The defendants appealed from both decrees.

The plaintiff has filed in this court a motion to dismiss the appeal of the defendant company on the ground that it is not a party aggrieved. G.L. (Ter.Ed.) c. 214, § 19. The company, however, was ordered to pay costs. This fact, without more, made it a party aggrieved. Bolster v. Attorney General, 306 Mass. 387, 390, 391, 28 N.E.2d 475. The motion is, therefore, denied.

The following appears from the master's report: The company was organized by Edward G. Watkins, who was in charge of production for many years. He continued as president until his death, although he had been ill for several years, and in 1942 was confined to his home. He owned three hundred sixty-nine out of five hundred seventy-six shares of common stock. There was also an issue of preferred shares of which apparently he owned none. On November 25, 1942, the plaintiff, who was vice-president and sales manager, called on his father, and an oral agreement was made whereby Edward G. Watkins agreed to sell, and the plaintiff agreed to buy, the three hundred sixty-nine shares at $100 each, the purchase price to be paid as soon as a loan was obtained at the Gardner Trust Company with the stock to be part of the collateral. Edward G. Watkins requested his wife, Nellie O. Watkins, stepmother of the plaintiff, to get three certificates for three hundred sixty-eight shares, and he thereupon indorsed them in blank and handed them to the plaintiff. The latter took the certificates to one Underwood, the treasurer of the company, and requested him to transfer them into the plaintiff's name. Underwood at once went to see Edward G. Watkins, who instructed him to transfer all the common stock owned by him to the plaintiff. Pursuant thereto Underwood returned to the office of the company, removed from the safe a certificate for one share belonging to Edward G. Watkins, which was in another's name indorsed in blank, and gave all four certificates to one Lavallee, the bookkeeper, with instructions to transfer them and issue new ones. No transfer stamps were affixed to the old certificates, which Lavallee placed ‘in their respective places for the time being in the stock certificate book.’ Four new certificates for a total of three hundred sixty-nine shares in the plaintiff's name under date of November 25, 1942, were signed by Underwood as treasurer, and delivered to the plaintiff. The signatures of Edward G. Watkins, as president, were necessary to complete the issue. Later in the afternoon the plaintiff returned to his father's house to secure his signatures, and found him in great emotional distress, ‘the worst he had ever seen him.’ He ‘informed his father than if there was anything that he had done, especially with the stock transaction, to forget it that he would do nothing to displease him, that they would call the whole thing off.’ He did not on that or on any later occasion ask his father to sign the new certificates. The plaintiff carried the certificates in his pocket until November 28, when he redelivered them to Lavallee with instructions to put them back in the book as though nothing had happened and as though they never had been issued. Lavallee placed them back in the book, marking them ‘void,’ and wrote on the stock ledger, ‘reversed November 28, 1942, transfer not made’. Underwood subsequently drew a line through his signatures. Following the delivery of the stock to Lavallee the plaintiff told Underwood that the stock deal with his father was all off, that he had given the new certificates to Lavallee and hold him to cancel them and put them back in the book, and that the old certificates could be kept in the safe. As a result of what the plaintiff said, Lavallee put the old certificates in an envelope marked ‘E. G. Watkins stock,’ and placed it in the company's safe where the old certificate for one share had been. On November 25 before the plaintiff returned to the home of his father, the latter both telephoned and wrote to one Ramsdell, an officer of the defendant bank in Worcester asking him to come to Gardner, ‘as he had made the biggest mistake of his life in selling his stock to his son and did not know what he could do about it and wanted some help.’ On November 27 Ramsdell saw Edward G. Watkins, who suggested changes in his will, one being to leave his stock so as to result in equal holdings by Underwood and the plaintiff. In consequence, Ramsdell saw the attorney for Edward G. Watkins, who prepared a codicil, leaving the stock in trust, and, if it should be so held at his wife's death, bequeathing so much thereof as would, with any other shares the plaintiff might own, give the latter one half of all the common stock. The codicil was sent to Nellie O. Watkins, but was never executed. On December 7 an adjourned stockholders' meeting was held. The plaintiff presided as vice-president. Previously a proxy for the three hundred sixty-nine shares of Edward G. Watkins had been prepared by Underwood, and the plaintiff had agreed to get his father's signature. He had not obtained it, but stated they could go along with the meeting, and he would see that the proxy was taken care of. This, in fact, never happened. Edward G. Watkins was elected director. There is no provision in the by-laws that directors need not be stockholders. See G.L.(Ter.Ed.) c. 156, § 22. Subsequently, at a directors' meeting, Edward G. Watkins was elected president. His condition had been getting gradually worse, and he died on December 15 at the age of seventy-seven. Two or three weeks after his father's death, the plaintiff requested Underwood to return the new certificates and, not receiving them, later asked for the old certificates. On January 20, 1943, after the will of Edward G. Watkins had been filed for probate, at a conference in the office of Willis E. Sibley, Esquire, attorney for the estate, at which also were present Ramsdell and one Byron, a trust officer of the bank, the plaintiff stated that he had told his father the deal was off and to forget all about it. On February 4, at a directors' meeting the plaintiff presented a letter requesting the issue of the three hundred sixty-nine shares and enclosing transfer stamps to place on the old certificates. On February 8 the directors voted not to issue the shares. No loan to the plaintiff was ever made by the Gardner Trust Company.

The master found ‘that no note or memorandum in writing of a contract or [sic] sale of 369 shares of stock of the Simplex Time Recorder Co. was signed by the plaintiff or his agent in that behalf, nor was anything paid to the plaintiff in part payment of said shares, nor so far as it is a question of fact was there any acceptance by Edward G. Watkins prior to his death of any part of said shares.’ The master also made a finding, referred to below, that certain acts of the plaintiff were ‘a surrender and abandonment of any rights that he had for the ownership of the stock in question.’ Appended to the report, in accordance with requests made by each party under Rule 90 of the Superior Court (1932), was a ‘Summary of Evidence Requested by the Plaintiff and the Defendants to Determine Questions of Law Raised by Objections, the Master Having Received a Transcript of All Evidence.’

The judge sustained the plaintiff's second exception to the master's report which was as follows: ‘The subsidiary findings show that the master's conclusion (paragraph 28 master's report) t...