Court Opinion

ID: 5305894
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:28:42.832001+00
Date Added: 2024-06-11T08:29:08.620976
License: Public Domain

Finch, J. (dissenting).
The parties themselves have expressly provided how the stock shall be valued, and we are not at liberty to make a new contract for them based upon the assumption that ordinarily in a partnership the share of a partner dying or withdrawing is valued as of the date of such event. According to the terms of the contract the plaintiff is entitled to judgment. The 6th clause of the agreement provides that upon the death or withdrawal of the party of the first part (Hatzel) from the corporation, his stock in the company shall be offered for sale to the defendants at a price to be fixed as “ hereinafter set forth,” being the 8th clause of the agreement, and that the parties of the second part (the defendants herein) shall have ten days after the making of this offer within which to accept the same, and one year thereafter to complete the purchase of the stock. It is true that the death is the event, which determines that, the defendants may exercise *558their option, but the death does not also mark the time for fixing the sales price, as that is expressly named in the contract as the date when the offer is made. The defendants under the contract are given the right to put the plaintiff in default and to compel an offer to be made to sell the stock, by signifying their exercise of the option and making a tender to pay for the stock, or defendants can wait until the offer is made voluntarily by the plaintiff. If the defendants wait for the offer to be made they are given ten days thereafter within which to make up their minds whether to accept or reject, and one year within which to pay therefor. Interest also is to run only from the date of the offer. The contract also provides “ In case the parties of the second part shall neglect or refuse to accept said offer, as above provided, then the party of the first part shall be released from any other provisions of said contract restricting the sale by him of his said stock in said company of Hatzel & Buehler, Inc.” Thus the rights of the parties as written by the contract are all to be determined as of a date to be fixed by-the exercise by the defendants of the option to buy the stock, which is named in the contract as the date of the making of the offer. If this is not the construction of the contract, then one party (the plaintiff) is bound and the other parties (the defendants) are free. If, as the defendants contend, the offer was ipso facto made as of the death of Katzel, then the defendants should have indicated their acceptance of the offer and have made their tender, which would have fixed the price of the stock as of that time within ten days of Hatzel’s death or at the least within ten days of June 20, 1928, whón the executors were appointed. It is not reasonable that the defendants should stand by and wait for the offer of plaintiff and be free during this time to exercise their option or not and then claim that the stock should be valued at a period long prior to the exercise of their option. Furthermore, if the offer to sell determines the commencement date of the accrual of interest, does not the same offer determine the date for the valuation of Hatzel’s interest in the corporation? Why the “ offer ” in one instance and not in the other, when the contract uses the same phraseology as to both? From a consideration of these facts it is apparent that the offer to sell is not an idle formality but the indispensable act looking towards the acceptance or rejection by the defendants of their option to buy, essentially to fix the rights of the parties and the privileges accorded to the defendants.
The contract further expressly provides how the price of the stock is to be fixed. If the contract had provided that the stock should be valued as of the date of the death or withdrawal, or had *559been silent on the subject, a different situation obviously would have existed. Instead the contract provided in paragraph 8 that the price to be paid should be the par value of the stock, plus such proportion of the undivided profits of the company to which the stock would be entitled “ if dividends were declared in the year in which said stock was offered for sale.” Had the intention of the parties been otherwise, the language of the contract would have been read if dividends were declared in the year in which John C. Hatzel died or withdrew from the company. This provision of the contract thus covers the sales price and fixes the sum to be paid, namely, the par value of the stock (which is unchangeable), plus the share of undivided profits in the year in which the offer to sell the stock is made.
This construction of the agreement also seems to accord with what is most fair and reasonable as between the parties, for it prevents the defendants from speculating in the stock at the expense of the plaintiff, particularly during the time it takes for a representative of the deceased to be appointed and also if there should be a contest of the will, which would cause delay. Thus, when the stock is earning money, as in the case at bar, the defendants by this construction are prevented from obtaining this large increment of value without paying for it. Where in the agreement is to be found the authority for the unjust and inequitable position that the plaintiff, as executor, is not entitled to any share of the undivided profits earned on decedent’s investment between the date of the death of Hatzel on May 25, 1928, and the date of the acceptance by defendants of the offer on November 13, 1928, when the defendants any time subsequent to the death could have compelled the making of the offer by signifying their intention to exercise their option? If the contention of the defendants is correct, then is the plaintiff penalized and without any discoverable reason made to lose its share (amounting to $26,293.86) of the increase of the undivided profits of the corporation for the six months between the date of the death of the decedent and the acceptance of the offer of sale.
Plaintiff is entitled to judgment in accordance with the submission.
McAvoy, J., concurs.
Judgment directed in accordance with the prayer of the defend ants. Settle order on notice.