White v. Perkins
| Decision Date | 12 June 1972 |
| Citation | 213 Va. 129,189 S.E.2d 315 |
| Court | Virginia Supreme Court |
| Parties | F. F. WHITE and P & W Oil Company, Incorporated v. Edgar B. PERKINS. |
T. Munford Boyd, Richmond, George Harrison Gilliam, Charlottesville (Paxson, Marshall & Smith, Charlottesville, on brief), for appellants.
Harry P. Anderson, Jr., Richmond (Anderson, Haw, Parkerson & Beazley, Richmond, on brief), for appellee.
Before SNEAD, C.J., and I'ANSON, HARRISON, COCHRAN and HARMAN, JJ.
This is an appeal from a final decree by the trial court holding a minority stockholder, Edgar B. Perkins (Perkins), entitled to relief by reason of oppressive acts by F. F. White (White), who was an officer, director and majority stockholder of P & W Oil Company, Incorporated (the company). While holding White's conduct oppressive, the court declined to decree dissolution of the company.
In lieu of dissolution the court decreed: (1) that the company should declare and pay a dividend of $8,000.00 to its stockholders; (2) that White's claims against the company in the amount of $11,240.18 be disallowed; (3) that the amount owing to the company by a service station controlled by White be kept 'reasonably current in the future;' 1 and (4) that Perkins, whose employment with the company had been terminated, be paid severance pay in the amount of $1,600.00, equivalent to ten weeks' salary.
White claims that the evidence fails to sustain the court's finding of oppression and Perkins argues the court erred in not decreeing that the company be dissolved.
The company was incorporated in June, 1967, with capital of $40,000.00. White owned 55% And Perkins owned 45% Of its stock. The company was formed primarily to act as a jobber for products of American Oil Company (American).
White and Perkins first became acquainted in 1967 when each became interested in obtaining a jobber's contract with American. White, among other business interests, controlled a gasoline service station in Fork Union which was the largest customer of American products in the area. He also controlled a storage facility for fuel oil near Fork Union.
Perkins, a native of Louisa County, had been a salaried employee of another oil company at various locations for approximately 15 years. He was interested in returning to his former home if suitable employment was available.
American owned and operated a 'bulk plant' in Mineral, Louisa County, which supplied three service stations, including White's, with gasoline, oil, tires and other related products. American's bulk plant also supplied fuel oil to other customers, including home owners, in the area.
Both White and Perkins were negotiating for a jobber's contract with American. It was apparently at the suggestion of the management of American that they began negotiating with each other with a view of jointly obtaining the jobber's contract.
Perkins initially proposed to White that they enter into an equal partnership but White declined. White had apparently had an unhappy experience with an earlier partnership arrangement and described a partnership as a 'pretty poor ship.' They finally agreed, at White's insistence, that a corporation would be formed with White as the majority stockholder.
Perkins, White and R. P. Zehler, Jr. (Zehler), White's attorney, were named the initial directors of the corporation. Perkins was named as President with White serving as Vice President and Treasurer and Zehler as Secretary. White and Perkins, the only stockholders, joined in a Subchapter S election by the company for Federal income tax purposes.
The company entered into a jobber's contract with American. American leased its bulk plant at Mineral and two service stations to the company. The company, in turn, subleased the service stations.
Perkins testified that White had originally agreed to lease his service station at Fork Union to the company but refused to do so after the contract with American was signed.
The company began operations in July, 1967, with Perkins as its only full time salaried employee. During its first fiscal year of operation, to July 1, 1968, it showed a profit, after state income taxes, of more than $14,000.00. For fiscal 1968--69 the company showed earnings, after state income taxes, of more than $10,000.00. Because of the Subchapter S election, White and Perkins were required to report 55% And 45% Respectively of these amounts as income on their Federal income tax returns. Because White would not agree, the company never paid a dividend to its stockholders.
It would appear that White's refusal to honor his agreement to lease his service station to the company created the initial conflict between Perkins and him.
A later conflict between them arose over White's refusal to Perkins' suggestion on many occasions that dividends be paid to the stockholders. Perkins was required to pay Federal income taxes on money which he was not actually receiving. His testimony is that he was financially pressed because of this, a fact of which White was aware.
As early as February, 1969, Perkins proposed to White in writing that his weekly salary be increased and that some agreement be reached to increase his stock ownership to 50% Of the outstanding stock 'at no cost to me.' White agreed to increase Perkins' salary to $160.00 per week but refused to consider Perkins' request for additional stock.
In December, 1969, Perkins sent White a memorandum proposing that he receive a salary increase, additional stock 'to give me 50% Equity at no cost to me' and 'minimum annual dividends of $2500.00 each.' In the same memorandum Perkins proposed the terms of a lease between White and the company for White's service station. White declined to agree to any of these proposals.
Thereafter, early in 1970, Perkins proposed to either sell his stock to White or buy White's stock but White would not accept either proposal.
On June 30, 1969, White's service station did not owe the company anything. Between that date and July, 1970, the outstanding balance owed the company by White's service station was permitted, over Perkins' protest, to increase until it stood at $12,424.20 at the time of the Ore tenus hearing in July, 1970. At one time during this period the company could not meet its payroll.
Perkins and White met in late May, 1970. At that meeting Perkins disclosed to White that he had consulted counsel. He told White that he would not thereafter attend stockholders' or directors' meetings and that he would attempt to dissolve the corporation.
The following day, without Perkins' knowledge or acquiescence but for the company's account, White placed an order for equipment costing almost $2,800.00 to be installed at his service station upon which the company had no lease. At the same time White placed an order for equipment, costing more than $3,500.00 installed, to be installed at one of the service stations leased from American.
At White's direction notice was given on June 10 for a special stockholders' meeting of the company on June 22.
Perkins instituted this suit on June 19.
At the stockholders' meeting on June 22 the by-laws of the company were amended on White's motion to increase the board of directors from three to five members. White nominated and voted his stock to elect a board of directors composed of himself, his wife, his son, his attorney and Perkins.
At a later directors' meeting Perkins was replaced as president by White, whose wife was elected as secretary-treasurer. Perkins was named as Vice President of the company.
On June 23, White mailed a bill to Perkins claiming the company owed him $11,240.18 for rental on his service station and fuel oil storage...
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