Mott v. Vinton

281 A.2d 37, 129 Vt. 413, 1971 Vt. LEXIS 282
CourtSupreme Court of Vermont
DecidedJune 22, 1971
DocketNo. 134-69
StatusPublished
Cited by2 cases

This text of 281 A.2d 37 (Mott v. Vinton) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mott v. Vinton, 281 A.2d 37, 129 Vt. 413, 1971 Vt. LEXIS 282 (Vt. 1971).

Opinion

Shangraw, J.

This is a chancery action tried by the Court of Chancery, Caledonia County. Findings of fact were filed on August 5, 1969, and a decree later issued dismissing the plaintiffs’ bill of complaint as to all of the defendants. Plaintiffs timely filed a notice of appeal to this Court for review.

Frances C. Mott, and Howard S. Mott are mother and son. Frances died subsequent to the date that this action was brought. Plaintiff, Howard, is the duly appointed, qualified and acting administrator of his mother’s estate, and as such is a party plaintiff herein.

Sometime during the summer of 1960, the plaintiff, Howard, came to St. Johnsbury from Long Island, New York. Prior to his coming to St. Johnsbury he had been engaged in the sale and exchange of Chevrolet Motor vehicles, and from 1938 to 1951 was an active partner in a Chevrolet dealership. [415]*415Howard was familiar with the business methods of General Motors Corporation.

Soon after his arrival in Vermont he became interested in a Chevrolet dealer agency then owned by people by the name of Murphy. Following a period of negotiations with the Murphy owners, the plaintiffs acquired the Chevrolet agency. Its properties were heavily mortgaged and the owners in financial difficulty.

Upon acquisition of the Chevrolet agency properties from the Murphys, the plaintiffs organized a corporation under the name of Mott Chevrolet, Inc., and the title of said agency and its properties were transferred to this newly formed corporation.

Upon the organization of Mott Chevrolet, Inc., 450 shares of preferred stock, having a par value of $100 per share, were issued to the late Frances C. Mott, for which she contributed the sum of $45,000. Three hundred shares of common stock, having a par value of $100 per share were issued to the plaintiff, Howard.

On December 6, 1960, Mott Chevrolet, Inc., entered into a “Dealer-Selling Agreement” with the defendant Chevrolet Motor Division of defendant, General Motors Corporation. This agreement in part provided that no change in ownership, financial interests or active management of the Dealer shall be made without the prior written approval of Chevrolet.

From the outset the business of Mott Chevrolet, Inc., was under-capitalized and it had no cash for working capital. It had no bookkeeper and needed additional experienced salesmen. Its customer service was inadequate and the corporation was incompetently managed.

In the fall of 1961 the corporation was in financial straits and was faced with an advertised sheriff’s sale under a third mortgage which required payment of approximately $12,000 to satisfy the mortgage and forestall the sheriff’s sale. Following several conferences between plaintiff, Howard, and defendant, Drury L. Vinton, the latter advanced $12,000 to satisfy the sheriff sale demands. Later, Mr. Vinton advanced a further sum of $30,000 for working capital, making a total contribution by him to Mott Chevrolet, Inc., of $42,000.

The capital structure of the corporation was changed to give defendant, Vinton, majority control. Plaintiffs sur[416]*416rendered their stock and on January 8, 1962, the following new shares of common stock of Mott Chevrolet, Inc., were issued: 400 shares to Frances C. Mott; 403 shares to Howard S. Mott; one share each to Robert R. Wakefield and Howard S. Mott, Jr; and 806 shares to defendant, Drury L. Vinton.

Sometime during February, 1962, Mr. Vinton discovered that the entire sum of $42,000 he had made available to the corporation had been expended. There was no cash to pay the employees or other commitments of the corporation. The corporation was insolvent and was at the time he supplied the $42,000.

The contribution of $42,000 by Vinton to the corporation, the reorganization of the capital structure of the corporation and the issuance of a controlling interest of stock to Vinton was all done without the knowledge of, or authorization by, the defendant General Motors Corporation, contrary to the terms and provisions of the “Dealer Selling Agreement”.

As a result of a meeting of the directors of Mott Chevrolet, Inc., held during February, 1962, it was voted to suspend the payment of salaries to all officers, directors and management employees of the corporation. Howard left the corporation and sought employment in Newport, Vermont. Following his departure Howard did not again manage the corporation. Management of the corporation was assumed by defendant, Vinton.

By a writ dated August 8, 1963, the defendant, Vinton, instituted suit against the plaintiffs in Caledonia County Court demanding damages in the amount of $50,000 for falsely representing the financial condition and situation of Mott Chevrolet, Inc., for the purpose of inducing the plaintiff to invest in the corporation to his financial loss. This suit was later discontinued on January 18, 1967.

After Howard left the corporation in February, 1962, and went to Newport, he and the defendant, Vinton, attempted to negotiate their matters of difference concerning the corporation and their stockholdings therein. In October, 1963, they met at Barton, Vermont, where it was orally agreed that defendant, Vinton, would purchase Howard’s stock, and that of his mother, in Mott Chevrolet, Inc., for the sum of $19,000. It was also agreed that certain charges outstanding against the stock were to be discharged, and the above fraud suit was [417]*417to be discontinued. It was further agreed that this oral agreement would be reduced to writing and for this purpose a meeting was scheduled at the office of an attorney in St. Johnsbury.

Prior to these negotiations defendant Vinton had invested an additional $55,000 in said corporation and was anxious to secure a new so-called Chevrolet franchise. In the meantime the corporation was operating under the Mott franchise.

On November 4, 1963, Howard S. Mott, with his attorney Frank E. Wellersdieck, Jr., of New York, and defendant, Vinton, with his attorney, Arthur Graves, met in Mr. Graves’ office in St. Johnsbury, where further negotiations were had, and a document was prepared embodying the terms and conditions of the sale of Howard’s stock and that of his mother to defendant Vinton. This agreement was signed by plaintiff, Howard, on November 4, 1963, and subsequently by Frances C. Mott.

Plaintiff, Howard, at all times material was duly authorized to act for his mother Frances.

In December, 1963, Howard left Newport and returned to New York. He did not thereafter request, demand or attempt to return to the active management of the corporation or attempt to assume any control over it.

This agreement designated the plaintiffs, as sellers, Drury L. Vinton as buyer, and named the Howard National Bank and Trust Company as escrow agent. It, in part, referred to the 805 shares of stock of Mott Chevrolet, Inc., owned or controlled by the plaintiffs, which included 400 shares outstanding in the name of Frances C. Mott and represented by certificate No. 3. The agreement also listed liens and attachments on the stock outstanding in the name of Howard S. Mott.

Simultaneous with the delivery of an executed copy of the agreement, it was provided therein, that the buyer shall deposit with the escrow agent his check of $19,000 payable to the order of the escrow agent, and at the same time the sellers were to deposit with the escrow agent the above 805 shares of stock properly endorsed.

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Bluebook (online)
281 A.2d 37, 129 Vt. 413, 1971 Vt. LEXIS 282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mott-v-vinton-vt-1971.