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Masin v. National Box & Lumber Co.

Decided: January 21, 1952.

LOUIS B. MASIN, PLAINTIFF,
v.
NATIONAL BOX & LUMBER COMPANY, INC., A CORPORATION, ET ALS., DEFENDANTS. LOUIS B. MASIN, PLAINTIFF, V. SYLVIA GRAY, ET ALS., DEFENDANTS



Stein, J.s.c.

Stein

An appeal having been taken from an order appointing receiver for the National Box & Lumber Company, Inc., this memorandum is now prepared.

Charles Lefkowitz, who died on July 24, 1949, left him surviving Fannie Lefkowitz, two daughters, Josephine Masin and Sylvia Gray, and four minor grandchildren -- two of each daughter. Josephine Masin is plaintiff's wife.

Some years ago Lefkowitz founded the National Box & Lumber Company, Inc., hereinafter referred to as "National," which is said to have assets of over $400,000. All or most of the business real estate occupied by National belongs to Jefferson Terminal Corporation, another Lefkowitz corporation, hereinafter referred to as "Jefferson." The stockholders of Jefferson are Mrs. Lefkowitz, her two daughters and the plaintiff.

The plaintiff has been connected with National for about 22 years, and since the death of Lefkowitz has been its president. When Sylvia Lefkowitz married Moe Gray, he came into National's business.

Over the years Lefkowitz and his wife had disposed, either by sale or gift, of stockholdings in National to the Masin and Gray families. Each son-in-law became the owner of shares; each daughter received shares and each grandchild received shares.

Even in Lefkowitz' lifetime there was strife, envy and ill-feeling in his family. This became aggravated when Moe Gray died in October, 1948. Lefkowitz wanted National to buy out the Gray stock interests at book value -- about $400 a share. A barrier to this was a stockholders' agreement dated June 25, 1941, which provided that if any stockholder wanted to sell his stock, he first had to offer it to the other stockholders, and then to the corporation, at par -- $100 per share. According to the proofs, the plaintiff was willing to cancel the stockholders' agreement if a satisfactory sale could be worked out, but his wife, Josephine Masin, refused. He testified that he was told by counsel, who acted in the matter, that Mrs. Gray had originally signed a cancellation

of the stockholders' agreement but later revoked her act. The question whether or not there was a cancellation of the 1941 stockholders' agreement and if so, the circumstances and conditions surrounding it, is an issue which will have to be decided on final hearing. One thing is clear: There was no sale of the stock to the corporation.

The strife in the family became more intensified after Lefkowitz' death in July, 1949. The plaintiff and his wife were then already separated. (It has been stated that a matrimonial action is now pending in the Matrimonial Division of this court.) In an effort to maintain some harmony in the family so that the business of National would not suffer, the stockholders appointed Isadore Eisenstein as voting trustee for six months. Mrs. Masin and Mrs. Gray extended this voting trust for five years, but the plaintiff refused to join in. The dissension continued with the result that on July 7, 1950, the stockholders adopted a resolution providing for the liquidation of the business and appointing Eisenstein as liquidating trustee. He undertook the trust. Shortly thereafter, Eisenstein was elected executive vice-president of both Jefferson and National and he also became a director of both. Eisenstein apparently made no effort to liquidate the business in accordance with the stockholders' resolution.

With Eisenstein's entry into the businesses of these companies, the troubles of this family deepened. Eisenstein has been convicted of the crime of false swearing and sentenced to pay a fine of $1,000 and to stand committed until the fine is paid. He has also been convicted, with others, of a conspiracy to bribe public officials of the City of Newark and sentenced to a term of between two and three years in State Prison. That case is on appeal. The proofs thus far show that Eisenstein has misappropriated about $20,000 from Jefferson. For some of these misappropriations he has been indicted by the Essex County grand jury and is awaiting trial. The criminal nature of these abstractions is indicated by the

devious methods used by him. A few instances ...


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