For affirmance: Chief Justice Vanderbilt and Justices Case Heher, Wachenfeld, Burling and Ackerson. For reversal: None.
The decree under review will be affirmed for the reasons expressed in the opinion of Vice Chancellor Egan in the court below.
On appeal from a decree of the former Court of Chancery, advised by Vice Chancellor Egan who filed the following opinion. "A receiver is sought for the defendant company on two grounds: (1) insolvency; and (2) mismanagement.
"The defendant is a land company and its principal asset consists of a tract of land, a portion of which was conveyed to the George Washington Memorial Park Cemetery Association; the remainder of the tract is retained. Exhibit D-3, which is a balance sheet prepared by the accountant for the defendant, refutes the complainants' allegation that the defendant is insolvent. The exhibit clearly demonstrates that the defendant corporation is not insolvent. It owes nothing except Federal taxes and a small real estate tax for 1946.
"The complainants hold 1250 shares of common stock, which at its par value of one mill per share, represents 12 1/2 cents investment. The defendant has unimproved land adjacent to the George Washington Memorial Park Cemetery Association at Paramus, New Jersey, which has unquestionably appreciated in value through the development by the cemetery association of the adjoining land. The defendant company's assets amount to $91,376.58; its liabilities appear to be $38,148.99 (exclusive of capital).
"The defendant company has a claim for land conveyed to the George Washington Memorial Park Cemetery Association. The latter company instituted proceedings against this defendant in which hearings have been held and concluded, but no decision has yet been rendered by the court with respect to the validity and worth of the claim against the cemetery association.
"Under the evidence presented by the complainants herein I feel there can be no finding of mismanagement. The officers of the company, DeGeeter and Meagher controlled the defendant corporation. Meagher is regarded as a professional promoter of cemetery projects. His efforts to a large extent brought about the creation of the defendant corporation and the organization of the cemetery association aforesaid, which was evidently considered an adjunct of the defendant corporation. Frank DeGeeter provided practically all of the moneys necessary for the purchase of the defendant's lands, and for obtaining a license from the Borough of Paramus for the establishment of the cemetery. In fact, with one exception, he was the only person who put money into the cemetery development.
"It may be observed that if the Meagher plan of operation of the cemetery had prevailed, it would not have reached the excellent proportions it now maintains. DeGeeter labored to build the cemetery, and through his efforts and financial backing it stands out as one of the finest of its kind in the Metropolitan district.
"The complainant, Realty Affairs, Inc., was controlled and practically owned by one Winans, who contributed no money whatever to the defendant corporation. The bill filed herein was verified by Winans and Walter S. Wright, Jr. While this case was being heard in court, Winans and Wright were both present but neither took the stand to justify the allegations of the bill. The defendant's counsel contends that they are closely related in business affairs with Meagher, and that he is the man who really is the complainant. However, the complainant maintains that Meagher and DeGeeter were syphoning off money in equal amounts for the individual benefit of each. It is argued they intended through the lot selling scheme to the cemetery, to effect a large financial scoop. This argument falls when it is considered that from 1939 to 1942 Frank DeGeeter received only a total of $9,234.00; his brother Julius, $3,647.00; and George Meagher, $7,097.00. Nevertheless, those salaries were disallowed by the government and the defendant corporation holds a claim against these three officers for the total of $19,979 (Exhibit D-3). The annual salaries of $36,000.00, $36,000.00, and $24,000.00, claimed by these officers, under a resolution, were never received by them. Their salaries over and above the sum received, seem to be bookkeeping items chiefly for tax purposes. However, the Income Tax Department refused to allow either Meagher or DeGeeter any salary.
"The complainant alleges that in 1939 Meagher and DeGeeter intended to divide the profits equally between them. However, if that were the intended purpose, it was never effected. See the opinion of this court in the case of George Washington Memorial Park Cemetery Association v. Memorial Development Co., 139 N.J. Eq. 280, 51 A. 2 d 221; and also Id., 139 N.J. Eq. 219, 50 A. 2 d 837, affirmed 140 N.J. Eq. 181, 53 A. 2 d 182.
"This proceeding is one of several related suits which were all litigated in this court. DeGeeter in the involved litigation has endeavored to have the money he invested in the defendant company and the cemetery association paid back with interest plus compensation for his achievement.
"Winans who controlled the complainant corporation is allegedly the dummy for Meagher. He was elected trustee of the cemetery association allegedly to represent Meagher's interests in that organization. He was Meagher's choice for trustee. Winans' stock in the defendant corporation came from Meagher, as did the stock of Wright, the other shareholder, for services rendered Meagher. Wright got 250 shares of the stock from Meagher and Winans got 500 shares from the same source. An additional 500 shares out of Meagher's allotment were turned over to Frank DeGeeter as trustee. Meagher called upon DeGeeter to deliver the stock which he held as trustee. He turned it over to Winans at Meagher's direction; hence the 1250 shares of stock out of the 10,000 shares of the defendant corporation are held by Winans and Wright.
"I feel that Winans, Wright, and the complainant corporation are in laches. Winans and his associate Wright had knowledge of the contractual relationship between DeGeeter and Meagher in 1939; and if the defendant's affairs were mismanaged over the period, they had knowledge of it; but notwithstanding, they failed to act promptly. Certainly, they, or the complainant corporation, ...