Court Opinion

ID: 3426058
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:54:04.276129+00
Date Added: 2024-06-11T13:55:11.429361
License: Public Domain

DISSENTING OPINION.
I find myself unable to concur in the majority opinion herein. The contract involved in this case, the leading features of which are set forth in the principal opinion herein, simply presents, to my mind, a situation where certain named stockholders of a corporation turn over to certain named persons, two of whom are also stockholders in said corporation, their certificates of stock, under an agreement with such bailees that they, the said bailees, who in said contract are called "depositaries," shall have full control and management, for a specified time, of the affairs of said corporation, and for their services in that behalf should receive, out of the net earnings of the corporation, each the sum of $500 annually, the said bailees — agents, *Page 326 
for such they were — agreeing that, OUT OF THE NET EARNINGS of said corporation they would pay to each of said bailors so depositing their stock with them a certain specified rate of dividend on their said stock, out of the net earnings of said company. The agreement also provided that the bailees should give to each bailor a certificate, designated class "A," representing the face value of stock deposited, and should also issue certain certificates, designated as class "B," representing three and one-third times the face value of such stock, which last certificates were to be the property of the said two bailees who were stockholders in said company.
The agreement also provides for the creation, OUT OF THE SURPLUS EARNINGS of said corporation, of a redemption fund, out of which, at the end of the period named in said contract — 1936 — said stock so deposited is to be redeemed, or rather the class "A" certificates issued in lieu thereof were to be redeemed and cancelled, and that thereafter the said two bailees who are stockholders, shall be the sole owners of all the stock so deposited.
The writer of this opinion has read said contract, and reread it, but has been entirely unable to find anything therein obligating these said "depositaries," as they are called, to pay any money whatever, or to assume any liability under said contract, personal to themselves. The money earned by said corporation, after the payment of expenses of operation, was, in reality — so far as these bailees are concerned — the money of the stockholders; it belonged to them. The dividends to be paid to these stockholders, as per the terms of said agreement, were to be paid out of this money, IF EARNED; otherwise, nothing was due; the money to be set aside for the "redemption fund," out of surplus earnings, was also the money of the stockholders; they were to be paid off and their stock cancelled, by the payment to them of *Page 327 
their own money, if earned, otherwise the transaction failed because of a want of funds in the "redemption fund," denominated in said contract as "reserve fund," the bailees having assumed no personal obligation in that regard whatever, yet, if the business should prosper, they — two of them — should thereby become the owners of said stock. Not only this, but if, after the payment of the dividends specified and the final payment out of the said reserve fund of the face value of said stock, there yet remained a surplus of such net earnings, the said two depositaries were to have and receive, take as their own, all such surplus of net earnings.
To my mind, the said agreement is not only without any legal consideration to support it, but, to allow it to stand, would be to sanction the perpetration of a deliberate fraud upon the appellant, who has, according to the averments of the complaint, repudiated the same and demanded that her said stock be returned to her. As I view it, the judgment in this case should be reversed.