Williams v. Williams

Decision Date12 November 1981
Docket NumberNo. 1-581A165,1-581A165
PartiesMildred E. WILLIAMS, Executrix of the Estate of Paul E. Williams, Deceased, Individually and for and on Behalf of W & W, Inc., Appellant (Plaintiff Below), v. J. Howard WILLIAMS and W & W, Inc., Appellees (Defendants Below).
CourtIndiana Appellate Court

William P. Wooden, Dawn Sturwold, Wooden McLaughlin & Sterner, Michael M. Disler, Hillis & Disler, Indianapolis, for appellant.

Richard E. Aikman, Jr., John R. Kirkwood, Stewart, Irwin, Gilliom, Fuller & Meyer, Indianapolis, for appellees.

YOUNG, Judge.

Plaintiff-appellant Mildred Williams filed suit against defendant-appellee J. Howard Williams seeking injunctive relief. After a hearing, the trial court entered an order denying a preliminary injunction, from which Mildred appeals.

We affirm.

Prior to his death, Paul E. Williams owned fifty percent of the common stock of W & W, Inc. The remaining fifty percent of the common stock was and currently is owned by Howard. On July 22, 1976, Paul, Howard and W & W entered into a Buy and Sell Agreement. Among other things, the agreement provided:

1. That the holder of any of the common stock of the corporation may not transfer his or its shares or any portion thereof in the corporation known as W & W, INC., voluntarily or involuntarily, except pursuant to the terms of this agreement. Furthermore, upon the death of either of the natural parties to this agreement, it is the obligation of W & W, INC. to purchase all the shares of such deceased party as hereinafter provided; and furthermore, the surviving natural party in such event is granted a special power of attorney to vote such shares until the transfer thereof is completed and it is the intention herein that such special power of attorney or proxy for the purpose of voting such shares is to permit the surviving natural party to vote such shares instead of any heir, devisee, administrator, executor or personal representative of such deceased party during the interim period of time until such transfer of stock to the corporation has been completed.

Paul died on April 6, 1977, and Mildred was appointed personal representative. Paul's fifty percent of the W & W common stock came into the possession of Mildred as executrix of the decedent's estate. The first published notice to creditors appeared on April 21, 1977. On April 10, 1978, W & W filed a Petition for an Order Directing Executrix to Perform an Agreement in the Hamilton Circuit Court, where the estate was pending, seeking enforcement of the Buy and Sell Agreement. The action was venued to the Hancock Circuit Court which entered judgment for Mildred and against W & W.

On appeal, this Court affirmed the trial court. In re Estate of Williams, (1980) Ind.App., 398 N.E.2d 1368. In affirming the judgment, the First District held that enforcement of the Buy and Sell Agreement constituted a claim governed by Ind.Code 29-1-14-21 which "requires a person who claims an interest in the property in the possession of the personal representative to file a petition within five months after the first published notice (to creditors) if that person wishes to resolve the issue as a part of the estate proceeding." Estate of Williams, supra 398 N.E.2d at 1371. Since W & W did not file its petition within five months of the first published notice to creditors it could not litigate its interest in the stock as a part of the estate proceeding. However, this Court specifically held that the petition did not constitute a claim against the estate which, under Ind.Code 29-1-14-1, would have been barred if not filed within five months after the first published notice to creditors.

Since the death of Paul, Howard has exercised exclusive control over the affairs of the corporation and no annual or other meetings of shareholders have been held. Mildred filed a complaint seeking a mandatory injunction against Howard to require him to: (1) hold an annual meeting of the shareholders of W & W; (2) permit Mildred to examine the books and records of W & W; and (3) provide Mildred with copies of annual reports and monthly and quarterly financial statements for W & W. 1

After this action was venued to the Boone Superior Court, Howard sought and was granted leave to add W & W as an additional party defendant. The defendants then filed a counterclaim seeking performance of the Buy and Sell Agreement and possession of the W & W stock held by Mildred. Mildred moved for a preliminary injunction requiring Howard to call and hold an annual shareholders' meeting and to allow her to examine the books and records of W & W. Howard also sought a preliminary injunction to enjoin Mildred from transferring or otherwise disposing of the W & W stock in her possession. A consolidated hearing was held at which time certain facts were stipulated and exhibits were admitted into evidence. At the hearing, Mildred withdrew her request for an order permitting her to examine the books and records of W & W. The court denied Mildred's motion for a preliminary injunction and granted Howard's motion.

The only issue before us on this interlocutory appeal is whether the trial court erred in denying Mildred's motion for a preliminary injunction. The grant or denial of a preliminary injunction rests in the sound discretion of the trial court and our review is limited to a determination of whether the trial court's action constituted a clear abuse of discretion. Indiana State Department of Welfare v. Stagner, (1980) Ind.App., 410 N.E.2d 1348. In Stagner, the Court went on to say that:

Discretion to grant or deny preliminary injunctive relief is measured by several factors: (1) whether the plaintiff's remedies at law are inadequate thus causing irreparable harm pending the resolution of the substantive action if the injunction does not issue; (2) whether the plaintiff has demonstrated at least a reasonable likelihood of success at trial by establishing a prima facie case; (3) whether the threatened injury to the plaintiff outweighs the threatened harm the grant of the injunction may inflict on the defendant; (4) whether, by the grant of the preliminary injunction, the public interest would be disserved.

410 N.E.2d at 1353. In denying the preliminary injunction, the trial judge ruled that Mildred had not demonstrated that she would suffer irreparable harm if the injunction did not issue.

The plaintiff claims that the failure to hold a shareholders' meeting has violated her rights and that an injunction is the proper remedy for enforcement of those rights. Howard, however, claims that the Buy and Sell Agreement gives him an irrevocable proxy to vote the shares of stock held by Mildred. Plaintiff concedes that if Howard does hold a valid and enforceable irrevocable proxy the denial of a preliminary injunction would not cause her irreparable harm because she would not be able to vote the stock even if a meeting was held.

The first question is whether the proxy is valid. It must be in writing, and is invalid eleven months from the date of its execution unless a longer time is provided therein. Ind.Code 23-1-2-9(e). The proxy contained in the Buy and Sell Agreement complies with the terms of Ind. Code 23-1-2-9(e) because it is in writing and the grant of authority is for a period of time in excess of eleven months.

Secondly, we must determine if the proxy is irrevocable. A proxy is revocable unless coupled with an interest in the stock. State ex rel. Breger v. Rusche, (1942) 219 Ind. 559, 39 N.E.2d 433. That is, Howard must have an interest in the W & W stock that is the subject of the proxy. The defendants contend that the proxy is coupled with an interest in the stock. The interest they maintain is evidenced by the express terms of the Buy and Sell Agreement. The Buy and Sell Agreement, if enforceable, does give Howard sufficient interest in the stock to make the proxy irrevocable. 2 See Calumet Industries, Inc. v. MacClure, (N.D.Ill.1978) 464 F.Supp. 19; 5 W. Fletcher, Cyclopedia of the Law of Private Corporations § 2062 (rev. perm. ed. 1975). Mildred, however, contends that since the Buy and Sell Agreement is no...

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