Williams v. Maryland Glass Corp.

• Decision Date: 09 April 1919
• Docket Number: 30.
• Citation: 106 A. 755,134 Md. 320
• Parties: WILLIAMS v. MARYLAND GLASS CORPORATION et al.
• Court: Maryland Court of Appeals

106 A. 755

134 Md. 320

WILLIAMS v. MARYLAND GLASS CORPORATION et al.

No. 30.

Court of Appeals of Maryland

April 9, 1919

Appeal from Circuit Court of Baltimore City; Morris A. Soper, Judge.

Suit by J. Harry Williams against the Maryland Glass Corporation and another. Decree for defendants, and plaintiff appeals. Affirmed.

Argued before BOYD, C.J., and BRISCOE, BURKE, THOMAS, and URNER, JJ.

Arthur W. Machen, Jr., of Baltimore (Machen & Williams and Herbert C. Forrester, all of Baltimore, on the brief), for appellant.

George Ross Veazey and Vernon Cook, both of Baltimore, for appellees.

BURKE J.

This suit involves the ownership of 40 shares of the capital stock of the Maryland Glass Corporation, incorporated under the laws of Maryland. This stock at one time appeared upon the books of the corporation in the name of J. Harry Williams the appellant, but was subsequently transferred to Isaac E Emerson under the circumstances hereinafter stated.

The primary object of this suit, as appears from the bill of complaint, is to obtain a decree requiring the defendants to restore the appellant's name to the registry or list of stockholders in the defendant company, and to accord to him all the rights of such stockholder in respect to said 40 shares of the capital stock of the said company, and requiring the defendant company to issue to him a certificate for said 40 shares, and that the transfer of said shares to Isaac E. Emerson may be canceled and annulled.

A statement of such facts as appear to us to be necessary to present the questions raised upon the record will now be made. In 1907 Isaac E. Emerson founded and organized a corporation for the purpose of manufacturing glass bottles. This corporation was incorporated under the laws of New Jersey, and its corporate name was the Maryland Glass Corporation. Its plant was located at Mt. Winans, Md., and its capital stock was $100,000, divided into 1,000 shares of the par value of $100 each. Practically the whole capital stock was owned by Mr. Emerson; he having furnished all the money for the erection of the plant and starting the business of the company. Mr. Emerson did not understand the business of manufacturing bottles, and wanted a capable and experienced man to take charge of the plant. The appellant was recommended to him as a qualified man for that position and on January 17, 1908, the Maryland Glass Corporation of New Jersey and J. Harry Williams, the appellant, entered into the following agreement:

"This memorandum of agreement made this 17th day of January, 1908, by and between the Maryland Glass Corporation, hereinafter referred to as the corporation, party of the first part and J. Harry Williams, hereinafter referred to as the manager, party of the second part, witnesseth:

The corporation agrees to employ the manager for a period extending from November 1, 1907, to August 31, 1908, as manager of its glass plant at Mr. Winans, Md., after its erection, and as supervisor of its construction up to that period, and the party of the second part agrees to accept this position upon the following conditions:

The manager agrees to take charge of manufacture of all bottles produced at above works, make all glass, hire all blowers, hire all other labor and office force necessary, except as hereinafter specified, do all other work in connection with plant, and devote his entire time to the management and promotion of business established as above to the exclusion of all other business, in consideration of which services he is to receive a monthly salary of two hundred and fifty ($250.00) dollars, payable on the last day of each month during continuance of this agreement.

The manager further agrees that all bottles produced under his supervision shall be of first-class merchantable quality, equal in all respects to bottles submitted as examples by Emerson Drug Company, with usual allowance for defective ware, and that same shall be produced as cheaply as could be done with like facilities by any one.

At the expiration of the above period, if the services of the manager have been satisfactory to the corporation, this contract shall be continued for an additional term of one or more years at the same salary as above, and it is further agreed that on August 31, 1908, in the consideration of the proper fulfillment of his duties as manager, the corporation shall transfer to the manager forty (40) shares of the capital stock of the Maryland Glass Corporation, such shares to be paid for by him out of the dividends of the said Glass Corporation on said forty shares in which the manager shall share from date of transfer. As security for payment of such shares the manager shall give his promissory note payable on demand with above stock as collateral which shall be released in full on complete payment for aforesaid stock, and the manager agrees further, should he at any time cease to be in the services of the corporation, then that corporation is hereby given an option of thirty days on stock in his possession at par value.

The corporation reserves the right to select its own bookkeeper and timekeeper, whose duties shall consist in making up all pay rolls, checking up all accounts, and shipping and receiving all goods to and from factory, and also the right to reject any skilled or unskilled labor, the employment of which on account of color, race, or any other reason may in the opinion of the president of the corporation be unnecessary or prejudicial to the working interests of the corporation. All skilled labor to consist of union men in good standing. All goods are to be purchased at main office, requisition for same being made by manager.

The corporation agrees to purchase first-class material such as is required to make glass of a nature similar to that used by the Emerson Drug Company at present time.

Should either of the contracting parties desire, at the expiration of time herein specified, to cancel this agreement, same can be done by giving sixty days' notice in writing.

The appointment of applicants to positions, other than that of blowing, shall be subject to approval of president, as shall also all salaries and wages not fixed by the union."

By three indorsements entered upon the contract made during the existence of the Maryland Glass Corporation of New Jersey the salary of Mr. Williams, the manager, was increased. By the first memorandum, dated September 13, 1910, his salary was increased to $300 per month; by the second, dated August 5, 1912, to $333.33 1/3 per month; and by the third, dated 30th of March, 1914, to $375 per month. On August 31, 1908, in pursuance of the contract forty shares of the capital stock of the Maryland Glass Corporation of New Jersey were transferred to J. Harry Williams. At that time the whole capital stock of the corporation had been issued, and these 40 shares were taken from the holdings of Isaac E. Emerson. Mr. Williams then delivered to Mr. Parker Cook, as agent for Isaac E. Emerson, the following promissory note:

"$4,000. Baltimore, Md., August 31, 1908.

On demand after date, I promise to pay to the order of Isaac E. Emerson four thousand dollars and have deposited as collateral forty shares of Maryland Glass Corporation stock.

J. H. Williams."

At the same time he indorsed in blank the certificate of stock, and delivered it to Mr. Cook, who put the certificate with the note as collateral security. The note and certificate were kept together in a vault of the Emerson Drug Company in a drawer marked with the name of Isaac E. Emerson. The corporation was very successful, and paid large dividends. Mr. Williams received three checks for $1,000 each, dated respectively September 3, 1910, November 19, 1910, and July 17, 1911, as dividends on his stock. These checks were indorsed by him to the order of Isaac E. Emerson, and the note was credited with the amount of each check. There remained due on the note the sum of $1,000, which Mr. Emerson never demanded, although other dividends were paid to Mr. Williams on the stock which he was permitted to use as he saw fit.

In December, 1914, the officers of the Maryland Glass Corporation of New Jersey determined to incorporate under the Laws of Maryland, and a few days prior to December 31, 1914, the Maryland Glass Corporation of Maryland was incorporated under the laws of this state. The amount of its capital stock was the same as the New Jersey corporation, and its officers were the same, and for all practical purposes it was identical with the New Jersey company. On December 31, 1914, the Maryland Glass Corporation of New Jersey submitted to the Maryland Glass Corporation, incorporated under the laws of Maryland, the following proposition:

"The undersigned does hereby offer to sell, assign, and transfer to your company the following described property, to wit: All the real estate, buildings, improvements, machinery plant, tools, implements, and chattels of every kind, and all of the book accounts, cash on hand, good will, contracts and all other

...