Court Opinion

ID: 6462691
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:49:42.253486+00
Date Added: 2024-06-11T15:52:10.423946
License: Public Domain

Kantrowitz, J.
(concurring in part and dissenting in part). It cannot be gainsaid that the equitable powers of a judge are not unlimited. Placing a plaintiff in an even better position than if she had not been wronged, and economically punishing the defendant, is an improper exercise, in my view, of those considerable powers. What is particularly troubling here is that the majority does not have to go as far as it does, in effect creating new law, to achieve the result it desires.
The majority notes that there are no appellate court decisions ordering the purchase of a minority stockholder’s shares.1 That alone should give us pause prior to venturing onto uncharted waters, especially when other equitable options are potentially, if not readily, available, e.g., naming Mary Brodie as a director, officer or employee if she so desired; awarding her damages for having been deprived of a sought-after position in the past; awarding her a share of the company’s fife insurance proceeds that it collected upon her husband’s death2; if dividends were wrongfully withheld by, or excessive salary was paid to, the appellants, awarding Brodie her fair share of those monies.
*389Ordering the purchase of stock contravenes the governing documents of the corporation that provide for stock transfer. The bottom line is that the corporation is not required to purchase the shares. While it surely would have been preferable for the appellants to have followed the procedure set forth, ultimately, even if they had, they still had the clear option of refusing the purchase, which is what they did here. They thus exercised a right given them under the corporate structure. The court’s decision compels them to do what they are not obligated to and, more concerning, at a price far in excess of the actual value of the stock.3
While I agree with various aspects of the well-written majority opinion, I cannot agree with its remedy — ordering the repurchase of the shares — thus punishing the appellants, which, I fear, will now needlessly open the floodgates in this area of the law.

In support of its position, the majority relies upon Donahue v. Rodd Electrotype Co., 367 Mass. 578, 603 (1975). That case, however, is readily distinguishable. Donahue holds that if a company repurchases its stock from a majority stockholder, it must also offer the same option at the same price to a minority one. As this was not done, the Supreme Judicial Court suggested two alternative solutions for the company: either rescind the deal with the majority stockholder or offer the minority the same deal it offered the majority.

Malden had taken out “key man insurance” in the amount of $100,000, payable to the company on the death of each of the three shareholders, Walter S. Brodie, David J. Barbuto, and Robert J. Jordan. The judge found that such money was not earmarked for repurchase. On Walter Brodie’s death in 1997, Malden deposited the $100,000, into Malden’s brokerage account. It is unclear what became of that money and who benefited from it.

“We deem a close corporation to be typified by: . . . (2) no ready market for the corporate stock . . . .” Donahue v. Rodd Electrotype Co., 367 Mass. at 586.