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Vale v. Atlantic Coast & Inland Corp.

Court of Chancery of Delaware

September 18, 1953

VALE
v.
ATLANTIC COAST & INLAND CORP. et al.

Suit by owner of one half of stock of corporation against owner of other half, and against corporation, for specific performance of agreement to give an option to buy or sell shares of stock which each individual party respectively owned, or for appointment of liquidating receiver. After commencement of action, individual defendant died and administrator was substituted. Defendant moved to dismiss, and plaintiff moved for judgment on pleadings or summary judgment. The Court of Chancery, Sussex County, Seitz, Chancellor, held, inter alia, that defendant's denial of any agreement of option, of material allegations relied upon by plaintiff as basis for appointment of receiver, and of facts which might give rise to an estoppel against defendant's repudiation of agreement gave rise to a dispute as to material questions of fact, which precluded summary judgment.

Motions denied.

Page 397

[34 Del.Ch. 51] Daniel J. Layton, Sr., Georgetown, and John W. Dickerson, Philadelphia, Pa., for plaintiff.

James M. Tunnell, Sr., of Tunnell & Tunnell, Georgetown, for defendants.

SEITZ, Chancellor.

The complaint seeks, alternatively, the specific performance of an agreement to give an option or the appointment of a liquidating receiver. This is the decision on the individual defendant's motion to dismiss and the plaintiff's motions for judgment on the pleadings or summary judgment.

Plaintiff, Ruby R. Vale, owns 250 shares of the stock of the defendant, Atlantic Coast and Inland Corporation. The other outstanding 250 shares were owned by the individual defendant, William P. [34 Del.Ch. 52] Short. Defendant, Short, died after the commencement of this action and his administrator has been substituted. However, reference to the ‘ defendant’ or to ‘ Short’ will embrace only the deceased unless otherwise indicated.

Defendant, Short, filed a motion to strike various parts of the amended complaint. A review of that motion discloses that in effect defendant has moved to strike the entire complaint. While some of the matters may be said to be properly the subject matter of a motion to strike, it was agreed at the oral argument that the motion should be treated as a motion to dismiss for failure to state a claim. I shall so treat it.

Plaintiff has filed a motion for judgment on the pleadings for the reasons that ‘ the defendant by his motion to strike admits the truth of the averments of the complaint and, in any event, is estopped from making denial of the facts'. Plaintiff also has filed a motion for summary judgment on the ground that he is entitled to judgment as a matter of law. In disposing of the various motions it first becomes necessary to set forth the pertinent allegations of the complaint.

The defendant corporation was formed to carry on a joint venture by plaintiff and defendant. At the time they incorporated the joint venture they agreed that neither, without the consent in writing of the other, would either sell or pledge his stock. They further agreed that neither would place of record any of the judgment notes payable to either and evidencing debts of the corporate defendant to them and that neither would, as an officer, carry on any negotiations for the sale or exchange of the land owned by the corporate defendant without notice to the other.

Prior to December 1947 defendant told plaintiff he was negotiating with the State of Delaware for the exchange of lands between the State and the corporate defendant. To aid this exchange defendant requested that the corporation execute separate deeds to each of them for the three parcels of land to be exchanged. Plaintiff agreed. While it is not clear, I assume the deeds were for different parcels. On December 22, 1947 two separate deeds were prepared for two of the parcels of land

Page 398

mentioned and were delivered to the defendant, [34 Del.Ch. 53] Short. These deeds were acknowledged but not notarized. It was agreed between plaintiff and defendant that they were not to be recorded until, and only if, the exchange of lands between the State and the corporate defendant had been mutually agreed upon plus certain other conditions. It was further agreed that both deeds were to be of no effect if the State should refuse to make the exchange.

During the period the defendant was negotiating the exchange, work on the three parcels of land was taking place under his supervision and payment therefor, both before and after the date the State refused to make any exchange, was made by the corporation with money loaned to the ...


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