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Equitable Trust Co. v. Gallagher

Court of Chancery of Delaware, New Castle County

March 9, 1953

EQUITABLE TRUST CO.
v.
GALLAGHER.

Suit was brought for accounting for shares of corporate stock or value thereof. The Court of Chancery, Bramhall, Vice-Chancellor, held that evidence was insufficient to establish that agreement, which had been destroyed by defendant, was a contract based on valid consideration requiring transfer in fee to plaintiff of shares of stock.

Order for defendant.

Complaint for accounting for certain shares of corporate stock, or, in the alternative, the value thereof.

H. Albert Young and Stephen E. Hamilton, Jr., Wilmington, for plaintiff.

Joseph Donald Craven and Frank J. Miller, Wilmington, for defendant.

Page 471

BRAMHALL, Vice-Chancellor.

Equitable Trust Company, a corporation of the State of Delaware, Executor under the Last Will and Testament of Margaret C. Kane, deceased, filed a complaint in this court, asking that defendant account for certain shares of corporate stock, or, in the alternative, for the value thereof. The case was tried before Chancellor Harrington, who dismissed the complaint [33 Del.Ch. 436] in an opinion found in 31 Del.Ch. 88, 67 A.2d 50. Upon appeal to the supreme court the order of Chancellor Harrington was affirmed in an opinion found in 77 A.2d 548. Upon motion for re-argument the supreme court awarded a new trial but ordered that the re-trial be limited to the question ‘ whether the trust agreement of 1946 is a contract based upon valid consideration requiring the transfer in fee to the decedent's personal representatives of 19 shares of the stock of Union Park Motors, Inc.’ A complete statement of the facts will be found in the opinion of the supreme court and in the opinion of Chancellor Harrington above referred to.

On May 7, 1952, counsel for plaintiff and defendant filed with this court a written stipulation, reading, in part, as follows:

‘ It is further stipulated by the attorneys for the respective parties herein that the court shall decide the case on the basis of the pleadings, depositions, testimony, opinions of the supreme court and the briefs filed pursuant to the above brief schedule.’

The mandate of the supreme court limited the scope of the new trial to the single question: Is the trust agreement of 1946 enforceable as a contract between the parties? Since my determination of this question must be bottomed upon the record of the previous trial, I conclude that I am bound by the findings of fact of Chancellor Harrington as set forth in his opinion and found by the supreme court to have been warranted.

It was found by the Chancellor from the record, and it was not disputed, that the trust agreement of 1946 was destroyed by the defendant. Without discussing in detail the testimony relative to this destruction, it is sufficient to say here that Chancellor Harrington held ‘ when a party to an instrument deliberately destroys it, the natural inference is that its provisions are against his interest. [Citations of authorities.] Under such circumstances, more liberality will usually be indulged in when considering the sufficiency of the proof of its provisions than in the case of a lost instrument.’ [ 31 Del.Ch. 88, 67 A.2d 53.]

Two witnesses were called by the plaintiff to testify as to the destroyed agreement, William H. Kane, father of the deceased, and Eleanor M. Kane, a sister. According to the opinion of Chancellor [33 Del.Ch. 437] Harrington, the witness William H. Kane testified that the instrument, after referring to another stock certificate which is not important here, provided:

‘ After long years of faithful service and devotion to Union Park Motors and Hugh F. Gallagher, its president, Margaret C. Kane is given 19 shares of Union Park Motors capital stock fee simple. In the event of Margaret C. Kane's death, her executors or heirs shall sell back Margaret C. Kane's stock to the Union Park Motors or to J. Harry Gallagher, Hugh F. Gallagher, Jr., Donald J. Gallagher at a price set by the president of the Equitable Trust. No individual (meaning the boys, I judge, his sons) shall receive more than 5 shares.’

Chancellor Harrington further found that this witness repeated that the agreement provided that the deceased ‘ is given’ 19 shares of Union Park Motors stock in fee simple and that upon the death of Margaret C. Kane, her ‘ executors or heirs' should ‘ sell back’ the 19 shares of stock to Union Park Motors, Inc., J. Harry Gallagher, Hugh F. Gallagher, Jr., and Donald J. Gallagher (sons of defendant), at a price set by the president of the Equitable ...


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