Opinion ID: 1138826
Heading Depth: 1
Heading Rank: 8

Heading: obligation of mr. retzer to mrs. retzer

Text: Mr. Retzer does have substantial financial obligations to Mrs. Retzer, however, arising from her ownership of almost half of the shares of Retzer and Retzer, Inc. Courts look quite differently upon the respective duties existing between majority and minority shareholders in publicly held and close corporations. F. O'Neal, Oppression of Minority Shareholders, § 3.06 at 78 (1975); Comment, The Strict Good Faith Standard  Fiduciary Duties to Minority Shareholders in Close Corporations, 33 Mercer Law Review 595 (1982); Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578, 328 N.E.2d 505 (1975); Smith v. Atlantic Properties, Inc., 12 Mass. App. 201, 422 N.E.2d 798 (1981) (holding minority shareholders also have fiduciary duties to majority shareholders). Retzer and Retzer, Inc., is a very close close corporation, which has existed solely for the financial benefit of two people, the Retzers. This corporation has no other purpose except through legal ownership of five McDonald's restaurants to create wealth for and furnish income to Mr. Retzer and Mrs. Retzer. For almost two decades, and through Mr. Retzer's management, the corporation has indeed furnished them both with large incomes. Now, through ownership of ten more shares than she, Mr. Retzer has control of the management of Retzer and Retzer. As such, under well settled principles he has a fiduciary obligation to Mrs. Retzer in the management of her property, and imposed with a trustee's duty to preserve, protect and produce income from her corporate shares. See, Donahue, 328 N.E.2d at 512; Matter of Kemp & Beatley, Inc., 64 N.Y.2d 63, 484 N.Y.S.2d 799, 803, 473 N.E.2d 1173, 1177 (1984); Alaska Plastics, Inc. v. Coppock, 621 P.2d 270, 276 (Alaska 1980); Illinois Rockford Corp. v. Kulp, 41 Ill.2d 215, 222, 242 N.E.2d 228, 233 (1968); Zokoych v. Spalding, 36 Ill. App.3d 654, 671, 344 N.E.2d 805, 819 (1976); F. O'Neal and R. Thompson, O'Neal's Oppression of Minority Shareholders, § 7.17 (1985); Comment, supra, p. 27, at 593; 18 C.J.S. Corporations, § 327; 18A Am.Jur.2d § 764, p. 633. In fact, it has been held that he holds the same duty as a managing partner owes the other partner in the management of partnership affairs. Donahue, 328 N.E.2d at 512; Knaebel v. Heiner, 663 P.2d 551, 552 (Alaska 1983). See, Delaney v. Georgia-Pacific Corp., 278 Or. 305, 310, 564 P.2d 277, 281 (1977); Johns v. Caldwell, 601 S.W.2d 37, 41 (Tenn. App. 1980). Any relaxation of this solemn obligation will be at his peril. [5] He must manage the corporation prudently, and after paying necessary and reasonable expenses, and setting aside whatever is reasonably necessary for corporate reserves and equipment and facilities, pay her 49.8% of the net remaining. He will not be acting at arm's length, but as trustee over her shares. He must keep her currently, fully and accurately informed and abreast of his management, and under regular periodic accounting. While their interest as husband and wife was essentially identical, now they are adverse to each other. This will make his conduct as trustee that much more subject to close scrutiny by a chancery court. Just as it has authority to require a husband to pay his wife periodic and lump sum alimony from his property and estate, the chancery court clearly has authority to require a divorced husband to pay his wife whatever is due her in his management of her property. There was no manifest error in the chancellor's ordering Mr. Retzer to see that she received an income of $7,333.33 per month from Retzer and Retzer. This is neither a floor nor a ceiling, but from the present financial information an amount the chancellor considered reasonable. We find no occasion to reverse this amount. It will, of course, be subject to change, depending upon the economic welfare of the corporation. With the hostility existing between them, it would no doubt be preferable if somehow the property of Mr. and Mrs. Retzer were entirely separate, with neither depending on the other. Indeed, having imposed upon him the obligation of a trustee, the greater burden in this continued economic joinder may very well fall upon Mr. Retzer. The fact remains that at present they are siamese twins in Retzer and Retzer. If the burden becomes unduly oppressive for either, the chancery court is not without power to give relief, even to appointing a receivership for the corporation or dissolving it. Miss. Code Ann. § 79-4-14.32; § 79-4-14.30(2)(ii), (iv) (Supp. 1990); Balvik v. Sylvester, 411 N.W.2d 383 (N.D. 1987); 18 Am.Jur.2d § 767. We therefore affirm the amount of monthly income Mrs. Retzer is to receive, but amend the judgment to reflect this as an obligation of Mr. Retzer to see that she receives this sum from his management of the corporation. The error of the chancellor, as above noted, was in decreeing that Mr. Retzer pay Mrs. Retzer $88,000 per year, or $7,333.33 per month, as alimony. The chancellor, of course, recognized the difficulty of this holding, because in the same decree he held that any sum received by Mrs. Retzer from the corporation would correspondingly reduce his alimony obligation. Our holding should also be preferable to Mrs. Retzer as there will be no financial impediment to her remarrying.