Court Opinion

ID: 5315169
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:08:04.883858+00
Date Added: 2024-06-11T08:29:15.986237
License: Public Domain

The true meaning of the agree pent of March 18, 1916, must be gleaned from the entire contract. The relation of the parties, the surrounding circumstances and the apparent purpose to be accomplished come into play. (Atwater & Co. v. Panama R. R. Co., 246 N. Y. 519, 524.) During the husband’s life he was obligated to pay to the wife for her support ¡ and maintenance the sum of $15,000 per annum. For his failure to make such payments, a judgment could be rendered against him. The 1,250 shares of stock in G. Schirmer, Inc., of which he was *633president, Were transferred to defendant trustee, who was invested with legal title for the wife’s protection. These shares were security for performance by Mr. Schirmer of his engagement. He was entitled to receive the dividends only so long as he performed that obligation.
Upon his death, however, the situation was altered. The agreement to pay the annual sum was not binding on his estate. The primary obligation to secure which the shares had been transferred and delivered to defendant ceased. The shares were no longer held as security for the performance of Mr. Schirmer’s obligation under the contract, but as Mrs. Schirmer’s sole means of support. She (and defendant in her behalf) had to look solely to the dividends which might be declared upon the shares of stock. If no dividends were declared in the discretion of the board of directors, she would receive nothing for her support. The entire purpose of the agreement might thus be defeated. Yet we are told that her trustee whose duty it was to protect her interests cannot enter, or be heard at, a stockholders’ meeting but must deliver his proxy to plaintiffs who might conclude to defer dividends to the enrichment of the corporation and the ultimate enhancement of the value of the shares which upon her death pass to and become part of the corpus of the trust established for the benefit of plaintiffs’ cestuis.
Under such circumstances where under the statute (Stock Corp. Law, § 47) the voting power resides in defendant as the registered owner of the shares holding legal title thereto, the agreement may not be accorded a meaning which might thwart its dominant purpose, unless there is clear and convincing warrant in its language requiring that conclusion. It is significant that where property belonging to Mr. Schirmer is to pass to his estate or assigns, appropriate words are employed. The excess of dividends above $15,000 per annum and the ultimate ownership of the shares go by explicit provision to his “ executors, administrators, successors in interest, or assigns.” Not so, however, the voting power. That was to be his; as I view it, a personal right, to lend him aid in controlling the policy of the corporation to the end that he might derive therefrom dividends which he could use in paying Ms annual obligation to his wife. TMs right lasted only as long as he lived and was obligated to make these payments. Like the power to appoint Leonard's successor as trustee for Ms wife given to Mr. ScMrmer by the immediately following sentence of the agreement, it was personal to him. No words of succession are employed in either sentence. The agreement does not give the right to any one else. If such had been intended, appropriate language could readily have been inserted by the draftsman of this carefully prepared *634agreement providing for the delivery of the proxy to his personal representatives or to testamentary trustees after his death. This omission is noteworthy. Delivery of the proxy during the life of the trust was conditioned upon the continued existence >f the particular individual who was to receive it and who alone Was given the right to exercise it. Upon his death, therefore, the ' roting rights must, under the statute, belong to defendant sh.areh.ol ler.
Judgment should be directed in favor of defendant.
Judgment directed in favor of plaintiffs, without costs to sither party as against the other. Settle order on notice.