22 N.Y.S. 1033 | N.Y. Sup. Ct. | 1893
It appeared from the papers that in September, 1892, the Hydraulic Brake Company was organized under the laws of the state of New Jersey with a total capital stock of $5,000,000, which was to be issued for certain patents covering a railway train brake; and that prior to the month of November, 1892, the plaintiff was jointly interested with the defendants Montgomery, Powell, and Lande in said patents, which had been theretofore transferred by the patentee, one Guernsey, to said company. On the 16th of November, 1892, said Powell, Lande, Montgomery, and Williams entered into an agreement in respect to the disposition of the stock of the corporation when it should be issued, which agreement bears date the 2d of November, 1892, and is as follows:
“This agreement, made this second day of November, 1892, by and between John B. Powell, Bernard Lande, and Thos. J. Montgomery, all of the city of New York, and Fred Williams, of London, England, witnesseth: For and in consideration of one dollar paid by each of the parties hereto to each other, the receipt whereof is hereby respectively acknowledged, it is agreed as follows: That, of the capital stock of the Hydraulic Brake Company, one million ($1,000,000) dollars shall he put into the treasury of the company for working capital; four hundred and fifty thousand ($450,000) dollars shall be issued to Messrs. Montgomery and Powell, as trastees; four hundred thousand ($400,000) dollars to Messrs. Montgomery and Powell as trustees; one million and six thousand two hundred and fifty ($1,006,250) dollars to Thos. Montgomery; seven hundred and seventy live thousand ($775,000) dollars to John B. Powell; seven hundred and seventy five thousand ($775,000) - dollars to Bernard Lande; and five hundred and forty three thousand seven hundred and fifty ($543,750) dollars to Fred Williams. We also agree that the above certificates to Montgomery, Powell, Lande, and Williams shall be deposited in the Central Trust Company with a copy of this agreement, and shall not be withdrawn for the period of six months from ibis date, without the written consent of each and every party hereto, but with this proviso: that if sufficient treasury stock shall be sold to realize the sum of thirty thousand ($30,000) dollars in cash, then, and in that event, the stock which has been deposited in the Central Trust Company may be withdrawn by either of the parties, provided said party shall first notify the other parties hereto in ■writing, at least five days before said withdrawal.”
Attached to said instrument was this agreement:
“Eegardlng the notification clause of 5 days in the within agreement, I hereby agree that any notice served upon my attorney, George H. Pinney, Jr.,. No. 96 B’way, is binding upon me the same as if served upon myself.
“Fred Williams.”
Subsequent to the execution of said agreement there was issued to the said defendants Montgomery, Powell, and Lande the stock of said company which they were respectively entitled to receive in ac
The defendants admit the making of - the agreement in question, and some of the alleged objects of the agreement, and allege that, despite the efforts of all persons interested in said company, no sale could be made of any of said treasury stock; and that in December, 1892, -the difficulties of the company and its financial embarrassments became pressing, and were discussed by the defendants Montgomery, Powell, and Lande, and the defendant Montgomery informed them that he .was unable to obtain assistance from his friends unless he might own and control a majority of the stock, and that if an arrangement could be made whereby said Powell and Lande would sell to him out of their interests, whereby he might obtain a majority of the stock, he thought he could obtain the necesr sary assistance to pay the debts of the company; and that an agreement was reached whereby Powell and Lande agreed to sell sufficient of their stock to give him the control of the company, and the amount of shares belonging to Powell and Lande, together with the agreement of Montgomery to purchase, were deposited with the State Trust Company; and that, after this arrangement had been made, Montgomery obtained from his friends the assistance desired to relieve the company temporarily from its financial embarrassments. The defendants deny the concealment of the issue of stock, or that such issue of stock had anything to do with any fraudulent
The case of the plaintiff, as alleged in his complaint, seems to-be based upon assumptions as to the object and purpose of the agreement of November, 1892, which are not contained therein, and which form no part thereof. If it ivas the intention of these parties, by the deposit of these certificates in the Central Trust Company, to prevent any disposition of this stock by the parties owning the same for the period of six months, such an arrangement, if not void, as being contrary to the statute, is certainly uninforceable, as against public policy. Persons cannot agree to surrender the control and ownership of property belonging to them for a definite period, and enforce such an agreement in any court of justice; and, furthermore, it is urged that the object and purpose of the deposit of this stock was to prevent the defendant Montgomery from obtaining control of this corporation. It is not alleged that any such agreement was entered into between these parties, and it is not contained in the written instrument under consideration; and that such was not the understanding of the parties seems to be evident from the fact that the ownership of any number of' shares of stock of this corporation for this period of six months within the first year of its organization would give the defendant no greater control of the corporation than he had at the time of the execution of this agreement. There.was. no allegation that there was any election of trustees or directors, or that the ownership of this stock could be used for any purpose in reference to the conduct of .the business of the corporation. The claim that it was the-understanding of the parties that this deposit was to be made in order that these parties should be upon an equality in reference to this corporation seems, upon its face, to be absolutely incredible, in that no reason whatever is assigned why the parties owning the greater number of shares in this stock should surrender any advantage which such ownership could possibly give. It is admitted that the object of these parties was to prevent this stock from getting upon the market until some of the treasury stock might.
Some point seems to have been made upon the part of the plaintiff that no notice of the issue of this stock had been given to bim, and that his stock had not been deposited with the Central Trust Company. There is no obligation contained in the agreement to notify the plaintiff of the issue of the stock to him; nor is there any understanding upon the part .of the defendants to deposit his stock with the trust company. And the point that these various notices might have been given to the plaintiff through his attorney, because of the addendum to the agreement of November, 1892, is certainly not well taken, because if it had been necessary to give the plaintiff notice of any of these facts in order to have protected the defendants, and a notice had been given to his attorney, and the plaintiff had desired to repudiate that notice, he would have said at once, “I did not agree to accept notice in that way,” and he would have referred to the only agreement which he executed authorizing notice to be given to his attorney, and that is expressly limited to the notification clause of five days, which related to the authority' of any of the
The order should be affirmed, with costs. All concur.