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Winans v. Asbury Park National Bank and Trust Co.

Decided: April 27, 1951.

JAMES D. WINANS, PLAINTIFF,
v.
ASBURY PARK NATIONAL BANK AND TRUST COMPANY, &C., ET AL., DEFENDANTS. ASBURY PARK NATIONAL BANK AND TRUST COMPANY, AS EXECUTOR, &C., PLAINTIFF, V. JOSEPHINE V. WINANS, INDIVIDUALLY AND AS EXECUTRIX, &C., ET AL., DEFENDANTS



Freund, J.s.c.

Freund

These two consolidated actions involve 1,552 shares of the common capital stock of C.G. Winans Company, owned by the estate of William Winans, deceased. The first suit by James D. Winans was brought to enforce the sale of the stock to him pursuant to the terms of an agreement with his uncle, the decedent, dated December 20, 1934, referred to as the 1934 agreement, or in the alternative under an agreement between them dated April 27, 1943, referred to as the 1943 agreement. The second suit by the Asbury Park National Bank & Trust Company, one of the executors under the last will and testament of William Winans, seeks instructions regarding the disposition of the stock held in the estate.

C.G. Winans Company was incorporated under the laws of New Jersey in 1905, being the successor to a partnership known as Coulter and Winans, which had been engaged in business since the 1890's. Carlton G. Winans, father of the plaintiff, James D. Winans, and older brother of William Winans, had been a member of the firm, and he and William were original stockholders, directors and officers of the corporation. Upon the death of Carlton G. Winans in 1925, William became the active head of the corporation and continued as such until his death on February 3, 1949. The plaintiff, James D. Winans, inherited some stock from his father, was elected a director of the corporation in 1926, and became actively associated with the company in 1930. William Winans was a bachelor, and a relationship of mutual trust and confidence existed between him and his nephew, James. From 1934 until 1943, several agreements were entered into between them, the purport of which was that James vested in his uncle, William, full voting rights on his shares, and William granted James the right to acquire his shares of stock after his death. Evidently, William planned that James should succeed him in the management and control of the corporation.

The last agreement was executed on April 27, 1943. It was clearly the intention of the parties that it should supersede the original agreement of December 20, 1934. Both James D. Winans and the defendants in his suit claim that the 1943 agreement is ineffective, but for different reasons. James D. Winans claims that it is invalid being in contravention of R.S. 14:10-10, in that it granted to William Winans a voting trust with respect to James' stock for a period beyond the statutory maximum of ten years, and that by reason thereof the 1934 agreement is revived. The defendants, however, urge that the 1943 agreement is valid, but that the plaintiff has forfeited his rights thereunder because of his default in performance.

The plaintiff, James D. Winans, can rely only upon the 1943 agreement, which superseded all prior contracts. Implementing it, William Winans on April 30, 1947, executed his last will and testament, and incorporated it by reference. The 1934 agreement, in so far as the stock of William was concerned, gave James an option to buy upon William's death. The price was to be the actual value, including good will, to be agreed upon or determined by the president of a Newark banking institution. The 1943 agreement effected two changes in the 1934 agreement, viz.: there was to be a sale of the stock by the estate to James rather than an option in James to buy, and the price was to be the book value, without allowance for good will. Thus, the parties to the agreements were the same, and the subject matter was the same. The terms being inconsistent, the prior agreement was superseded by the latter. The general rule is that an executed contract which covers the whole subject matter embraced in a prior one between the same parties rescinds the prior agreement. Long v. Hartwell , 34 N.J.L. 116 (Sup. Ct. 1870); Curtiss-Warner Corp. v. Thirkettle , 99 N.J. Eq. 806 (Ch. 1926), affirmed 101 N.J. Eq. 279 (E. & A. 1927); Montclair Distributing Co. v. Arnold Bakers, Inc. , 1 N.J. Super. 568 (Ch. Div. 1948).

In the 1943 contract James granted to his uncle, William,

for life the right to vote his shares of stock. It provided as follows:

"11. Voting Rights. From and after the execution and delivery of this contract and during and throughout the lifetime of 'vendor' (William), the 'vendor' shall have, exercise and enjoy full 'voting rights' under and in relation to the 'vendee's' (James') stock; * * *"

"* * * and 'vendee' hereby agreed that he will not grant, convey, transfer or pledge all or any part of the 'vendee's stock' at any time during the life time of the 'vendor' in such manner as to defeat or impair the 'voting rights' hereby granted to 'vendor.'" (Paragraph 9.)

The plaintiff argues that the foregoing provision is invalid, not only because R.S. 14:10-10 prohibits vesting of voting rights for a period exceeding ten years, but also because the agreement did not provide for the transfer of the stock to a voting trustee, but merely for the bare transfer ...


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