Sutton v. Stacey Manufacturing Co.

17 Ohio N.P. (n.s.) 497
CourtCourt of Common Pleas of Ohio, Hamilton County
DecidedFebruary 15, 1915
StatusPublished

This text of 17 Ohio N.P. (n.s.) 497 (Sutton v. Stacey Manufacturing Co.) is published on Counsel Stack Legal Research, covering Court of Common Pleas of Ohio, Hamilton County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sutton v. Stacey Manufacturing Co., 17 Ohio N.P. (n.s.) 497 (Ohio Super. Ct. 1915).

Opinion

Geoghegan, J.

This is an action brought by the plaintiffs against the defendants, the Stacey Manufacturing Company and James E. Stacey, president of the said company, for the cancellation of an issue of seven hundred and fifty shares of stock of the said company to the said James E. Stacey, to compel the said James E. Stacey to deliver up the certificate for said shares, if the same has been delivered to him, or to enjoin its delivery if the same has not been delivered to him, and to compel him to repay any dividends he may have received on said stock, and for such other relief as may be justified under all the facts and circumstances of the case.

A brief resume of the salient facts brought forth in the evidence in this case is necessary so that a complete understanding may be had of the ultimate determination of the issues of this ease.

The Stacey Manufacturing Company has been in the business of manufacturing gas plants since 1855. Prior to 1880 it was a partnership; it was about that time converted into an Ohio corporation, having a capital stock of $150,000. The business was.originated by Henry Banshaw and George Stacey, who-were half brothers, and all of the stock of said corporation is now. [499]*499with the exception of a few shares held by employees and their representatives, in the possession of the descendants and relatives of the founders of the business.

James E. Stacey, the defendant herein, was elected president and general manager in July, 1901, and has been re-elected to that position annually since that,time, the election taking place in the month of April of each year since 1901. At various times during the period from 1901 to 1912 the salary of said Jamos E. Stacey was increased, and some time after his election as president and when his salary had been increased by various steps to $6,000 a year, he was by resolution allowed a bonus, which was computed by allowing a dividend upon his salary proportionate to the dividend declared-to the stockholders, and subsequently he was allowed a bonus in double the amount of said dividend.

Prior to the meeting of April, 1912, Mr. James E. Stacey made a proposition in writing to all.the stockholders to increase the capita] stock to $1,000,000, $100,000 of which was to be issued to him and a similar amount to others. It may be observed that at the time Mr. Stacey took hold of the company, in 1901, the surplus over and above the capital stock was $10,090, and immediately prior to the meeting of April, 1912, the surplus had been increased to approximately $600,000, and during all these years a dividend averaging forty-live per cent, upon the capital stock of $150,000 had been declared to the stockholders.

The complainants are members of the Sutton family. Mrs. Sophia Sutton is the daughter of George Stacey, one of the founders of the business, and the other plaintiffs are her daughters. They own aboirt twenty-two per cent, of the capital stock of the Stacey Manufacturing Company. When the proposition as to the increase of the capital stock was received by them they replied by telegram as follows:

“We have no objection to increase in capital stock, each stockholder to receive new issue in proportion to present holdings. But as to proposed new distribution, we should like to have plans .in detail before consenting to same. We incline to [500]*500profit sharing arrangement such as was made for present manager. ’ ’

This telegram was signed by James T. Sutton, who is the husband of Sophia Sutton.

No action was taken with reference to said proposition at the April meeting, but a committee was appointed to canvass the advisability of increasing the capital stock of the company and to report the same back to a special called meeting of the stockholders.

On June 12, 1912, notice of a meeting for July 15, 1912, was mailed to all the stockholders, and on July 15, 3912, the meeting was held. The plaintiffs at that meeting were represented by James Sutton, the son of Sophia Sutton and the brother of the other plaintiffs. After some discussion a motion was made to increase the capital stock of the company to $750,000. This motion was carried unanimously. James E. Stacey then requested some action on bis request for $75,000 of the capital stock to be allotted to him. This aroused considerable discussion in the meeting. Propositions were made to Mir. Stacey to increase his salary to $20,000 a year, but Mr. Stacey said that he wished to make some provision for himself and his family and that the increase of salary did not interest him and that if the stockholders did not accede to his proposition he would proceed to conclude other arrangements which he had already made. After some discussion, in which James Sutton took a prominent part, the following resolution was presented and passed:

“Whereas, The administration of the affairs of this company has been marked by extraordinary success, and
“Whereas, The report of the management indicates a probable continuation of such prosperity and enhancement of the value of the company’s holdings; and
“Whereas, The president and general manager has indicated a desire to make provision for himself and family, by acquiring stock in the company, in lieu of part of his present remuneration ;
“Therefore he it Resolved, That it is the sense of the stockholders of the Stacey Manufacturing Company, that provided the proposed increase of the capital stock to $750,000 be author[501]*501ized by the Secretary of State of Ohio, one-tenth (1-10) of the said capital stock, that is, 750 shares of same, be issued to James E. Stacey, president and general manager of the company, in lieu of salary bonus at present received by him, with the further understanding that there shall be no further increase of salaries to the president and general manager or the assistant manager, or stock bonus issued, until such time as it shall appear necessary to increase the capital stock to $1,500,000.”

This resolution appears upon the minutes to have been "carried without a dissenting vote.”

When said resolution was presented, James Sutton, the representative of the plaintiffs, stated that in so far as he personally was concerned he was in favor of the action taken, but that he felt his inability to vote the stock of his principals without consulting them and that therefore he declined to vote as for them.

Further proceedings ‘ were then had that day wherein the president and secretary were directed to prepare the necessary papers for the increase of the capital stock and to procure the proper certificate from the Secretary of State.

At a meeting of the board of directors, on December 2, 1912, $600,000 was transferred from the surplus and undivided profits account for the purpose of paying in full for the new stock to be thereafter issued, $75,000 to pay for 750 shares to be issued to J. E. Stacey, and $525,000 to pay for 5250 shares to be declared as a stock dividend of three hundred and fifty per cent, upon the old stock.

On January 20, 1913, the board of directors approved the issue of said stock to James E. Stacey and recited that the entire increase of stock was "fully paid for out of the surplus assets of said corporation set aside for said purpose.”

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Steel v. Smelting Co.
106 U.S. 447 (Supreme Court, 1882)
Gibbons v. Mahon
136 U.S. 549 (Supreme Court, 1890)
Stokes v. . Continental Trust Co.
78 N.E. 1090 (New York Court of Appeals, 1906)
Stockman v. Riverside Land & Irrigating Co.
28 P. 116 (California Supreme Court, 1883)
Lux v. Haggin
10 P. 674 (California Supreme Court, 1886)
Robinson v. Smith
3 Paige Ch. 222 (New York Court of Chancery, 1831)
Gray v. President of the Portland Bank
3 Mass. 364 (Massachusetts Supreme Judicial Court, 1807)
Dousman v. Wisconsin & Lake Superior Mining & Smelting Co.
40 Wis. 418 (Wisconsin Supreme Court, 1876)
Kock v. Block
29 Ohio St. 565 (Ohio Supreme Court, 1876)
Eidman v. Bowman
58 Ill. 444 (Illinois Supreme Court, 1871)
Brown v. DeYoung
47 N.E. 863 (Illinois Supreme Court, 1897)
State v. Minneapolis Mill Co.
2 N.W. 839 (Supreme Court of Minnesota, 1879)
Jones v. Morrison
16 N.W. 854 (Supreme Court of Minnesota, 1883)
Knapp v. Publishers George Knapp & Co.
29 S.W. 885 (Supreme Court of Missouri, 1895)
Coffinberry v. Sun Oil Co.
67 N.E. 1069 (Ohio Supreme Court, 1903)
Osborne v. Wisconsin Cent. R.
43 F. 824 (U.S. Circuit Court for the District of Western Wisconsin, 1890)
Liverpool & London & Globe Ins. v. Clunie
88 F. 160 (U.S. Circuit Court for the District of Northern California, 1898)

Cite This Page — Counsel Stack

Bluebook (online)
17 Ohio N.P. (n.s.) 497, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sutton-v-stacey-manufacturing-co-ohctcomplhamilt-1915.