300 Mass. 346 | Mass. | 1938
The plaintiffs are the executrices of the will of John Krauss, late of New Bedford. The two individual defendants are the president and treasurer and the only remaining living stockholders of the corporate defendant Kuechler Brothers, Incorporated. The object of the bill is to compel the defendants to transfer to the plaintiffs as individuals sixty-five shares of the stock in the defendant corporation which was owned by John Krauss at the time of his death or to pay for the stock in accordance with bylaw provisions requiring the corporation to take and to pay for the stock of a deceased shareholder.
For many years Krauss and the individual defendants Richard M. Kuechler and Best, together with Kurt R. Kuechler, now also deceased, had carried on the meat products business in New Bedford as partners. In 1927 the defendant corporation was formed and continued the business. The four former partners were the only officers and stockholders, each owning sixty-five shares. All worked in the business and received wages as they worked and also further sums as "salaries” in equal amounts as the proceeds of the business would permit. The business was successful.
On March 3, 1933, more than two years before the death of Krauss, at a stockholders' meeting at which all four of the stockholders, including Krauss, were present, a change was made in the by-laws of the corporation whereby it was provided that "At death of a stockholder his shares of common stock shall automatically become the property of the corporation by paying to the estate of the deceased a sum agreed upon by the remaining stockholders.” Krauss as clerk signed the record of this meeting. At the same meeting an agreement in writing entitled “Restriction on Transfer of Shares ” was signed by all four stockholders.
As to the contentions that Krauss was of unsound mind and that the defendants wrongfully conspired against him, it is enough to say that the master finds they were not proved. We cannot hold that the master’s conclusions were erroneous. They were founded upon unreported evidence and are not inconsistent with each other. MacLeod v. Davis, 290 Mass. 335, 338. This remains true even though the master finds that the defendants in estimating the worth of the corporation omitted or undervalued certain items “through oversight or inadvertence”; though they treated as uncollectible certain doubtful bills receivable which were later collected in the course of further trading, but only after new -unpaid bills of approximately the same amount had accrued; and though no item was included for good will. Both the defendants and the master may have thought that the earning power of such a corporation as this depended more upon the working capacity of its individual owners than upon assets which would be reflected in stock value. All of these facts taken together would not justify us in upsetting the master’s conclusions without having the evidence before us, nor ought they to lead us to infer bad faith in fixing the value of the shares in the absence of a finding to that effect.
There was no error in denying the plaintiffs’ motion to recommit. Recommittal for the purpose of reporting further subsidiary facts or evidence to test the correctness
As to questions of evidence, in so far as they have been argued, not enough appears to show error. The extent of cross-examination was largely within the discretion of the master. The fact that the master excluded one or two isolated questions on cross-examination which, so far as we can now see, might have been admitted does not show that the cross-examination was unduly limited, or that harm was done. If the plaintiffs thought they were aggrieved their remedy was by proceeding under Rule 90 of the Superior Court (1932) in the manner outlined in Pearson v. Mulloney, 289 Mass. 508, 512, 513.
Even if the purported new by-law of March 3, 1933, never took effect as a valid by-law, either because it amounted to an amendment to the agreement of association and was never "filed in the office of the state secretary” as required by G. L. (Ter. Ed.) c. 156, § 43, or for other causes, we see no reason why all the stockholders of a corporation cannot bind themselves to such a regulation by mutual agreement and estop themselves and their representatives thereafter to deny its validity. Brown v. Little, Brown & Co. (Inc.) 269 Mass. 102, 106 et seq. See Longyear v. Hardman, 219 Mass. 405; Cunningham v. Commissioner of Banks, 249 Mass. 401, 420; Mitchell v. Mitchell, Woodbury Co. 263 Mass. 160, 164. "It is settled that one may agree to sell his property at a price to be determined by another, and that he will be bound by the price so fixed, even though the party establishing it was interested, provided the interest was known, and no objection was made by the parties, and no fraud or bad faith is shown.” New England Trust Co. v. Abbott, 162 Mass. 148, 153. Doherty v. Phoenix Ins. Co. 224 Mass. 310, 315.
The order denying the plaintiffs’ motion to recommit and the interlocutory decree confirming the master’s report are affirmed. In the absence of a counterclaim the final decree ought not to have granted affirmative relief to the defendants by commanding the plaintiffs to deliver the certificate of stock to the defendant corporation. Andrews
Ordered accordingly.
