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Wilmington Trust Co. v. Pennsylvania Co.

Supreme Court of Delaware

June 13, 1961

WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under the Will of George P. McNear, Jr., Deceased (which, with J. Russel Coulter, Trustee under the Will of George P. McNear, Jr., Deceased, was named as a defendant below), Defendant below, Appellant,
v.
PENNSYLVANIA COMPANY, a corporation of the Commonwealth of Pennsylvania, Plaintiff below, Appellee, and Elizabeth M. McNEAR, et al., Third Party Defendants below, Appellees. PENNSYLVANIA COMPANY, a corporation of the Commonwealth of Pennsylvania, Plaintiff below, Appellant,
v.
WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, and J. Russel Coulter, Trustees under the Will of George P. McNear, Jr., Deceased, Defendants below, Appellees,
v.
Elizabeth M. McNEAR, John W. McNear et al., Third Party Defendants below, Appellees. J. Russel COULTER, Trustee under the Will of George P. McNear, Jr., Deceased, (who, with Wilmington Trust Company, a Delaware corporation, Trustee under the Will of George P. McNear, Jr., Deceased, was named as a defendant below), Defendant below, Appellant,
v.
PENNSYLVANIA COMPANY, a corporation of the Commonwealth of Pennsylvania, Plaintiff below, Appellee, and Elizabeth M. McNEAR, John W. McNear et al., Third Party Defendants below, Appellees.

Page 64

Aaron Finger, of Richards, Layton & Finger, Wilmington, for appellant and cross-appellee, Wilmington Trust Company.

John J. Morris, Jr., of Morris, James, Hitchens & Williams, Wilmington, for appellant and cross-appellee, Pennsylvania Company.

Samuel R. Russell of Morford, Young & Conaway, Wilmington, and Philip W. Tone of Thompson, Raymond, Mayer, Jenner & Bloomstein, Chicago, Ill., for J. Russel Coulter, appellant and cross-appellee.

Clair John Killoran of Killoran & Van Brunt, Wilmington, and Richard J. Flynn of Sidley, Austin, Burgess & Smith, Chicago, Ill., for Elizabeth M. McNear, et al., appellees.

SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.

SOUTHERLAND, Chief Justice.

The main issue made below, and sought to be presented here, is the enforceability as a binding contract of a letter-agreement between the Pennsylvania Company and the Trustees under the Will of George P. McNear, Jr.

[40 Del.Ch. 4] Because of our disposition of the appeals upon this point, a very brief statement of the facts will suffice.

Upon the death in 1947 of George P. McNear, Jr., Wilmington Trust Company and Guy A. Gladson, of Chicago, qualified as trustees of certain trusts under his will. Gladson resigned in 1956 and was succeeded by J. Russel Coulter, one of the defendants below.

Among the assets of the trust estate were 73,800 shares of stock of the Toledo, Peoria & Western Railroad Company--about 82% of the 90,000 outstanding shares.

For some time prior to April 15, 1955, the trustees had engaged in negotiations with several railroad companies looking to a sale of these shares. These efforts culminated on that date in a proposal by Pennsylvania Company (a subsidiary of the Pennsylvania Railroad) that it would buy 26% of the outstanding stock of Toledo, Peoria & Western Railroad Company, at $100 a share, and a like proposal by the Atchison, Topeka and Santa Fe Railway Company that it also would buy 26% of the stock at the same price. Each of these proposals was embodied in a letter and was accepted by the trustees.

The letter embodying Pennsylvania's of fer is as follows:

'Pennsylvania Company

April 15, 1955

Wilmington Trust Company and Guy A. Gladson

Trustees under the Will of George P. McNear, Jr.

Wilmington, Del.

Gentlemen:

This letter is to confirm the understanding we have reached with you in connection with the stock of the Toledo, Peoria & Western Railroad Company.

Page 65

We desire to purchase 23,400 shares of the stock representing 26% of the total outstanding, at a price of $100. per share, no commissions being involved on either side. This offer [40 Del.Ch. 5] is subject to formal approval by our Board of Directors and such approval, if any, as may be necessary from the Inter-State Commerce Commission. It is our understanding that the Company will continue to be operated as an independent organization. It is understood that all necessary details to implement this will be worked out by our respective Counsel.

If this meets with your approval, will you kindly indicate your acceptance on the attached carbon.

Very truly yours,

/s/ David C. ...


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