Opinion ID: 6295
Heading Depth: 2
Heading Rank: 1

Heading: The Nichols Agreements

Text: In November 1962, Turner had a document prepared (the 1962 agreement) which provided for the issuance of 10 shares, or 5%, of Nichols' stock to Conkling, and 10 shares each to two other minority shareholders, Carmen St. Clair (St. Clair) and J.B. Millican (Millican). The 1962 agreement also provided that Turner and Eaton would each receive 85 shares, or 42.5%, of the Nichols stock. The price set forth in the document for the stock was $1,000 per share. Conkling, St. Clair, and Millican were each to give a $10,000 one-year note for his shares, and the document provided that Nichols would hold his shares until the notes were paid. Each of the parties executed the 1962 agreement. Both Conkling and Turner testified that all parties agreed not to follow this agreement after it was executed. In fact, Turner and Eaton were apparently successful in obtaining financing after the 1962 agreement was executed, and purportedly paid only $500, rather than $85,000, for their shares. Conkling also claims that, several days after Turner presented this document, Turner gave 2 Conkling his stock certificate for 10 shares, telling him that he was receiving the stock for services Conkling had previously performed for Nichols and that he would not have to pay the $10,000 note unless Nichols failed. Defendants stipulated that, according to Nichols' records, Conkling was issued 10 shares of Nichols' stock on November 15, 1962. Six months later, in May 1963, Nichols redeemed Eaton's 85 shares at Turner's direction. According to Conkling, Turner engaged in questionable practices related to his negotiations with Eaton, including ordering the reporting of profits on certain Nichols jobs to be delayed and instructing Conkling to withhold a number of profitable jobs from Nichols' financial statement. Turner also allegedly misrepresented to Eaton the value of Nichols' equipment in order to avoid paying him a greater amount for redemption of his stock. Conkling alleged that the redemption of Eaton's stock increased his proportionate ownership of Nichols from 5% to 8.69565%. In June 1963, Turner directed his lawyer to prepare another document (the 1963 agreement) which recited that Turner owned 100% of Nichols. This agreement set forth the terms for Conkling and the other minority shareholders to purchase an 8% interest in Nichols. The document also contained a right of first refusal and specific formula for redemption of any Nichols' stock; however, that provision was subsequently deleted by agreement in August of 1966. Without telling Conkling anything beyond the contents of the document, Turner stood over Conkling as Conkling read and signed 3 the document. Conkling argues that, as a result of Turner's concealment and misrepresentations, Conkling relinquished his 8.69565% interest and purchased an 8% interest in Nichols.