Graybar Electric Company v. Doley

273 F.2d 284, 1959 U.S. App. LEXIS 4644
CourtCourt of Appeals for the Fourth Circuit
DecidedDecember 23, 1959
Docket7978_1
StatusPublished
Cited by1 cases

This text of 273 F.2d 284 (Graybar Electric Company v. Doley) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Graybar Electric Company v. Doley, 273 F.2d 284, 1959 U.S. App. LEXIS 4644 (4th Cir. 1959).

Opinion

273 F.2d 284

GRAYBAR ELECTRIC COMPANY, Incorporated, Appellant,
v.
John DOLEY, Margaret S. Doley, C. Archer Smith (Stuart A. Smith), Margaret N. Smith and Bernard J. Carver, co-executors of the estate of Stuart A. Smith, deceased, Ralph T. Baker, C. K. Hutchens and Louis C. Purdey, Appellees.

No. 7978.

United States Court of Appeals Fourth Circuit.

Argued November 18, 1959.

Decided December 23, 1959.

COPYRIGHT MATERIAL OMITTED Israel Steingold and Meredith A. House, Richmond, Va. (W. Griffith Purcell, Richmond, Va., and Samuel A. Steingold, Norfolk, Va., on brief), for appellant.

G. William White, Jr., Richmond, Va., for appellees John Doley, et al.

Richard W. Hudgins, Warwick, Va. and William McL. Ferguson, Newport News, Va. (Ferguson, Yates & Stephens, Newport News, Va., on brief), for appellees C. K. Hutchens and Ralph T. Baker.

Before HAYNSWORTH and BOREMAN, Circuit Judges, and CHESNUT, District Judge.

CHESNUT, District Judge.

The principal question presented by the appeal in this case is whether a single creditor of a corporation which has gone through bankruptcy, has standing, after the discharge of the Trustee, to bring suit on a contract of stockholders to make loans of money to the corporation, in which the creditor was not named as beneficiary and when the creditor has participated in the bankruptcy proceedings by filing his claim therein and receiving a dividend thereon, but has not at any time filed a request therein to require the Trustee in bankruptcy to bring such a suit for the benefit of all creditors.

On August 14, 1957 Graybar Electric Company, Incorporated, a New York corporation, filed suit in the District Court of the United States for the Eastern District of Virginia, against seven individual defendants in this case, constituting the original stockholders (some of whom were also officers and directors) of the Eastern Broadcasting Corp., a Virginia corporation, to recover a balance of indebtedness due from Eastern to Graybar in the amount of $102,430.50, for television equipment sold and delivered. The basis for the suit was alleged to be a written agreement dated January 24, 1952 of the seven stockholders with each other to advance by loans to be repaid from earnings of the corporation, sums of money in varying amounts by each, in the total amount of about $275,000, if demanded by Eastern for its necessary financing. It was further alleged that the reason for the stockholders' agreement was the anticipated application by Eastern to the Federal Communications Commission for a permit to construct a television station and thereafter to obtain a license from the Commission for its operation. It was further alleged that, in accordance with arrangements, Eastern filed with its application a copy of the stockholders' agreement and individual financial statements from the several stockholders as to their respective individual financial ability; and that in due course the Commission granted the permit for construction and the station bought the necessary television equipment from Graybar and started and continued operations for some time, but the operations were not profitable and the station lost substantially large sums of money, and on October 28, 1955 three creditors filed an involuntary petition in bankruptcy against Eastern, and that in due course of bankruptcy administration the assets of the corporation were liquidated and dividends paid to secured and unsecured creditors, resulting in an unpaid balance due to Graybar in the amount mentioned.

The complaint further alleged that the liability of the seven defendants was predicated on their agreement of 1952 which was still unperformed and that those defendants who were officers and directors of the corporation had negligently failed to require the stockholders to pay their respective amounts to the corporation. It also alleged that the defendants were guilty of fraudulent conduct in making misrepresentations directly or indirectly to Graybar with respect to their agreement. But this charge of fraud was abandoned and need not be further considered.

Six of the defendants (one not having been summoned) separately answered the complaint denying generally any liability to the plaintiffs and some of them including more specifically defenses based on limitations or laches, estoppel, waiver, and contending that the stockholders' agreement was not intended to and did not authorize any suit against them by Graybar, and that no demand had ever been made upon them by the corporation or any authorized representative of the corporation to make advances by way of loans.

The parties prayed a jury trial; a jury was impanelled; all evidence which the plaintiff desired to offer was received and considered by the District Judge, the defendants not being called upon to offer any testimony on their behalf. At the conclusion of the taking of the evidence the District Judge announced that in his view of the case the question submitted was entirely one of law with no facts to be determined by the jury and thereupon the jury was discharged without objection. The plaintiff and the defendants respectively moved for a summary judgment. After consideration the District Judge wrote an opinion reviewing in substance the evidence that had been introduced by the plaintiff and concluded that whatever rights the plaintiff might originally have had under the stockholders' agreement had been lost by its laches and estoppel. Thereupon summary judgment was entered in favor of the defendants, from which this appeal has resulted.

While the record is an extensive one including many exhibits and much testimony thought by the parties to have significant relevance to the defenses of laches and estoppel, we find it unnecessary to discuss those matters in detail because in the view we take of the case the plaintiff, not a party to the agreement and not named as a beneficiary and not intended by the parties to be a beneficiary from the nature of the agreement, did not have the standing to bring directly a suit on that contract against the defendants who were the only parties thereto; and in any event treating the agreement as a possible asset of the corporation, it could be realized upon only by Eastern which was the direct beneficiary or by its Trustee in bankruptcy as its legal representative.

We think it sufficient to state succinctly the relevant and controlling facts appearing in the record which are not disputed. In 1951 Eastern was operating a radio broadcasting station at Newport News, Virginia. It had net assets of about $56,500. It desired to broaden its activities by adding television to radio. To do this it was necessary to apply to the Federal Communications Commission for a permit to equip the station for television. This application was made on April 8, 1952. In it Eastern specified that R.C.A. equipment would be used but later the kind of equipment as allowed by the Commission was changed to F.T.L. The permit to construct the television station was first issued by the Commission on February 4, 1953 and modified July 22, 1953. On June 15, 1953 Graybar sold F.T.L. equipment to Eastern for $135,529 under a conventional conditional contract of sale, to be paid for in installments, the last maturing November 15, 1956. The station began operations in October 1953.

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273 F.2d 284, 1959 U.S. App. LEXIS 4644, Counsel Stack Legal Research, https://law.counselstack.com/opinion/graybar-electric-company-v-doley-ca4-1959.