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Worley v. Dunkle

Decided: December 14, 1948.


On final hearing.

Jayne, J.s.c.


[2 NJSuper Page 163] At the trial of this action I was constrained to remark that I regarded it to be lamentable that this widow and her step-daughter, the principals in this litigation, should permit personal antagonisms to overcast that intelligent conciliatory prudence which is undoubtedly native to both and thereby possibly to jeopardize the continuance of an industrial enterprise so successfully conducted and developed over a span of years by the late Bayard L. Dunkle.

It was in 1906 that Mr. Dunkle caused the incorporation in New Jersey of the National Porcelain Company to engage in the manufacture of pottery, porcelain, and tile. In July 1943 the corporate name of the company was changed to National Ceramic Company, by which it is now known. The business operations continue under the management of Mr. Joseph A. Schermerhorn, who has been associated with the company since 1929.

On March 5, 1947, Mr. Dunkle, while sojourning with his wife in Florida, died testate, possessed, inter alia , of 1551 shares of the common stock of the corporation, of a total of slightly less than 2000 shares issued and outstanding. By his will he nominated his widow and the Broad Street National Bank of Trenton as the representatives of his estate. The plaintiff is the daughter of the decedent by a former marriage, a stockholder of the company, and a life beneficiary of a portion of the income to be derived from a testamentary trust established by the decedent, the corpus of which consists of the common stock held by him.

Tersely stated, the subject in controversy is introduced by the charge of the plaintiff in a bill (subsequently amended) filed on April 12, 1948, in the Court of Chancery, that since the death of her father, Mr. Dunkle, the defendant Mae K. Dunkle, widow of the decedent, has profitably contrived to acquire for her personal use excessive sums of money from the funds of the corporation under the ostensible guise of salary to which she has not been lawfully or reasonably entitled. The plaintiff implores this court to investigate. Cf. Riddle v. Mary A. Riddle Co. , 142 N.J. Eq. 147, 59 A.2d 599.

It is perhaps well to interject here the information that the plaintiff's complaint against the executors and the counter-claims against the plaintiff were voluntarily dismissed and withdrawn respectively at the trial. The corporation properly assumes a neutral position. Slutzker v. Rieber , 132 N.J. Eq. 412, 28 A.2d 528.

A summarized narrative of the major factual circumstances will, I trust, reveal the basis, under applicable principles of law and equity, of my final judgment.

Although Mr. Dunkle, died, as I have said, in Florida on March 5, 1947, Mrs. Dunkle immediately returned to Trenton and on Saturday, March 8, 1947, she invited Mr. Schermerhorn, the general manager of the company, Miss Hunt, an office employee of secretarial ability, and the plaintiff to assemble at her home at a stated time on the following day, Sunday, March 9, 1947. Thus congregated Mrs. Dunkle announced that in accordance with her interpretation of the wishes of her late husband, she would temporarily clench the offices previously occupied by him of president and treasurer of the corporation at an annual salary of $12,000. The nail was hit on the head, and one can easily envision the speechless servility of those who were present, then unaware of the testamentary desires of Mr. Dunkle, and sense their submission to the representations of Mrs. Dunkle so authoritatively expressed.

Mrs. Dunkle circumspectly contemplated the propriety of having some memorial of the action thus taken embodied in the minutes of the activities of the corporation. This she directed Mr. Schermerhorn to accomplish with the aid of Miss Hunt, Her directions were obeyed and a conformable note was inserted in the minute book, but upon reflection Mrs. Dunkle apprehended that perhaps the action taken on a Sunday might not be lawful, and she requested that the entry in the minutes be amended to relate to a meeting purported to have been held on Saturday, March 8, 1947. Again her request was respected. On March 10, 1947, Mrs. Dunkle achieved her first opportunity to examine her husband's will, and upon ascertaining that her husband had failed to make any immediately available cash bequest to her, she instructed Miss Hunt again to amend the notes to indicate an official approval on March 8, 1947, of her salary at the sum of $24,000 per annum. The surviving note indicates that the latter action was taken at a meeting held on March 10, 1948.

There is demonstrable evidence that four and perhaps five testimonials relating to the purported election of Mrs. Dunkle as president and treasurer of the company and to the amount of her annual ...

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