Witte v. Beverly Lakes Inv. Co.

• Decision Date: 26 August 1986
• Docket Number: No. WD,WD
• Citation: 715 S.W.2d 286
• Parties: Virginia F. WITTE, Appellant, v. BEVERLY LAKES INVESTMENT COMPANY and Social Target and Hunting Club, Respondents. 37153.
• Court: Missouri Court of Appeals

Page 286

715 S.W.2d 286

Virginia F. WITTE, Appellant, v. BEVERLY LAKES INVESTMENT COMPANY and Social Target and Hunting Club, Respondents.

No. WD 37153.

Missouri Court of Appeals Western District.

Aug. 26, 1986.

Solbert M. Wasserstrom, Wasserstrom & Wasserstrom, Kansas City, for appellant.

John J. McFadden, Jr., Kodas, Reed & McFadden, Kansas City, for respondents.

Before PRITCHARD, P.J., SHANGLER, J., and MARTIN, Special Judge.

SHANGLER, Judge.

This is an action for declaratory judgment to determine the rights of Virginia Witte to a share of stock in the Beverly Lakes Investment Company. The share of stock, certificate number 55, was owned by the former husband of Virginia Witte until the marriage was dissolved, when that "ownership interest" was set over to her by court decree. The company refuses to transfer the share of stock on its books to her name, and Witte sues for a declaration that she is legal owner of that share, and for an order that the company issue a certificate to her for that share. At the trial, the principals entered a stipulation of facts, and a motion and cross-motion for summary judgment ensued. The case was submitted on the stipulation, as well as answers to discovery, affidavits and exhibits of the principals. The court determined that no genuine issue as to any material fact subsisted, denied the motion of the plaintiff Witte, and granted the motion of the defendant Beverly Lakes Investment Company.

The litigants accede that no genuine issue as to any material fact subsists between them, and that any right to judgment is a matter of law.

Originally, the Social Target and Hunting Club was the organization which owned and conducted all operations at Beverly Lakes. In year 1932, the Club adopted new articles of association which vested Beverly Lakes Investment Company, as a separate corporation, with title to the real estate and personal property owned by the Club at Beverly Lakes, but retained to the Club the hunting, fishing and recreational functions. Each member of the Club received one share of stock in the Investment Company, and the Investment Company took title to all of the property of the Club. Thus, the Club and Investment Company operated as a joint enterprise composed of identical members. In order to maintain that identity, the sale, assignment or transfer of any share of stock in the Investment company was restricted to a member of the Club--as the legend on the face of the certificates of stock issued by the Investment Company declares. That declaration appears in the Club articles of association, as well, endorsed by all the members--and to which any new member was required to subscribe.

At the outset, members of the Club [later also shareholders of the Investment Company] by mutual agreement selected sites upon which each member who chose to do so might erect a house. The cost of the house was the sole obligation of the respective member, as was its maintenance. The member furnished the house as desired and maintained insurance on the structure and contents. No member, however, "owns" a house at Beverly Lake--rather, the Investment Company holds the title to all real estate. If a member died or transferred membership while alive, the successor to that share of stock, according to usage and practice, took over possession and use of the house occupied by the decedent or transferor. In no instance has a member or the heir or transferee of a member ever been forced to give up possession and use of the house occupied by the member or family. If a house was damaged or destroyed by casualty, the member was free to restore the house, from insurance proceeds or otherwise. While a member occupies a house, the member and family enjoy the exclusive right of use and occupancy. The use and occupancy of each house is an incident of membership, and each membership is subject to the articles and bylaws of the Investment Company.

The share of stock in litigation, then, is one share of the Investment Company--certificate number 55. Virginia Witte seeks to be declared the legal owner of this share, and an order that the Investment Company enter her name as such on its books, and thereby gain all the rights and privileges which appertain to that ownership.

Virginia Witte has visited Beverly Lake since 1960, when her father, Dr. Feist, purchased a share in the Investment Company, joined the Club and succeeded to the right to occupy the house of the prior owner of that share. In year 1962, Dr. Butcher, her then husband, also acquired a share in the Investment Company, joined the Club, and succeeded to the right to occupy the residence of the prior owner of that share. Dr. Butcher was accepted as a member of the Club and subscribed to its articles of association. Those articles contained numerous restrictions upon transfers of membership in the Club and upon transfers or assignments of stock in the Investment Company. The replicas of those restrictions also appear in the revised bylaws of the Club, the revised bylaws of the Investment Company, and on the face of the stock certificates of the Investment Company. In quiddity, those provisions restrict the sale, transfer or assignment of Investment Company stock to a member of the Club, and subjected an application to membership in the Club to rejection by the vote of three or more members of the Club. A separate section of the Club bylaws and of the Club articles of association define the method of the transfer of the shares of a member who dies, resigns, or is expelled from the Club. There is no provision, however, for the transfer of the share of a member under the order of a court in a dissolution case.

Dr. Butcher and wife Virginia [Witte] furnished and occupied the house, and when it was destroyed by fire in 1966, they rebuilt on the same foundation. They separated in 1972, underwent dissolution, and were granted a decree in 1974. The decree set over to Virginia Witte from the marital assets the "Ownership Interest in Beverly Lakes Club" (Beverly Lakes Investment Corporation) ¹ Virginia Witte gave prompt notice of the decree to the Investment Company, and concurrently named her father as proxy to vote that share at the 1974 annual meeting. Thereupon, the Investment Company secretary-treasurer, McCrath, noted Virginia Witte on the books of the corporation as holder of certificate number 55 but informed her that because of "the restrictive nature of the stock"--[the requirement that a shareholder in the Investment Company must also have been accepted as a member of the Club]--he was unable to reissue the certificate in her name.

The appeal of the dissolution decree was concluded in favor of the wife in 1977, and Dr. Butcher endorsed a stock certificate number 55 to Virginia, who promptly began occupancy of the house at the Lakes. Virginia married Stephen Witte later in 1977, and they undertook to restore the premises, then in poor condition. They installed new floors in the kitchen and bedroom, as well as new tiles in the bathrooms, painted the outside of the structure and added a sun-deck. The Investment company, at the request of the Witte counsel, commenced to forward the utility bills to the Wittes, who have paid them regularly since. They have also paid the insurance premiums on the house regularly since. They have continued the rehabilitation and use of the house on the Lakes since, although sporadically at times. Stephen Witte applied for membership in the Club in 1978, but was rejected by a vote of the shareholders. Then, at the 1979 annual meeting of the Investment Company, Virginia Witte tendered a check for $25 inscribed with the legend "transfer fee." A letter by secretary-treasurer McCrath returned the remittance with the explanation that a fee is due when the share is reissued upon a transfer of membership, and "not just a transfer between parties." The letter then concluded: "None of the other women involved paid, nor were asked to pay any fee and I don't think you should either." The affidavit of McCrath later explained that the remittance was returned to Virginia Witte because under § VII of the Club revised bylaws, a transfer of membership was only upon written application and none accompanied the check.

Virginia Witte has been allowed occupancy of the house at the Lakes since 1977, but not the vote or the other usual incidents enjoyed by the membership of the Club and shareholders of the Investment Company. Thus, the action was commenced to declare those rights and to order that a certificate issue to her to succeed to the share owned by the former husband. In an attempt to resolve the pendent litigation, counsel agreed that Virginia Witte submit a formal application for transfer of membership. The application for membership ² and fee were transmitted through counsel to the Club, and was rejected by a vote of the membership. That vote of exclusion from membership in the Club, the Club and Investment Company insist, preclude her eligibility to own a share in the Investment Company. They invoke the articles of association, the by-laws of the Club and of the Investment Company, and the declaration on the face of the stock certificates issued by the Investment Company [here, certificate number 55], all which restrict the transfer of any such share to a member of the Club.

The articles of association of the Social Target and Hunting Club--a document every member subscribes--indeed does declare

Eighth:

[t]he sale, assignment or transfer of said shares of stock in said holding corporation [Beverly Lakes Investment Company] and each of them shall be and by this agreement are restricted to active and duly chosen members of the Social Target and Hunting Club. [emphasis added]

The revised bylaws of the Social Target and Hunting Club then define the procedures for the investment of an active membership [and hence eligibility to hold a share in the Investment Company], of a participating membership [and...