On December 7, 1944, Charles Rosencrans died a resident of Monmouth County, New Jersey. The 19th clause of his will dated July 10, 1944, provides:
"NINETEENTH: I devise and bequeath the remaining one-half of my Estate, consisting of both real and personal property, wherever the same may be situated or located, and which is not specifically disposed of herein, including all stock owned by me in the Monmouth Plumbing Supply Co. Inc., a Florida Corporation, other than the twenty (20) shares, herein bequeathed outright unto my good friend, WILLIAM M. FRY, unto LEE ROSENCRANS and WILLIAM M. FRY, in Trust, nevertheless, on the following conditions, to wit:
That the income therefrom shall be paid to my beloved wife, LEE ROSENCRANS, until her death, at which time the said Trust shall terminate and cease and the principal of the trust estate created by this paragraph Number Nineteenth, shall be paid over, transferred and delivered absolutely and free from further trust, unto my beloved
nephews, Arthur Rosencrans and Harry Rosencrans, share and share alike; provided, however, that my said nephews Arthur and Harry Rosencrans, shall not sell, hypothecate or otherwise dispose or encumber such stock of the Monmouth Plumbing Supply Co., Inc., a Florida Corporation, for a period of Five (5) years after the death of my wife, Lee, during which said period of Five (5) years, and also during the existence of said Trust, I do hereby give unto my friend, William M. Fry, the right to purchase any or all of said stock at its par value of $25.00 per share, and further, that my said nephews, Arthur and Harry Rosencrans, shall at no time after said period of Five years after the death of my said wife, Lee, sell any portion of said stock, without first offering the same for sale to the said William M. Fry, at its par value of $25.00 per share."
The present litigation arises out of the right given to William M. Fry to purchase the shares of stock.
Monmouth Plumbing Supply Co., Inc., is a corporation of the State of Florida, there engaged in the plumbing supply business.
As of the time of his death the testator owned 3,045 shares of its corporate stock, out of a total of 6,661 shares outstanding. As the 19th clause of the will indicates, Rosencrans bequeathed 20 shares to Fry and accordingly the option related to the balance of 3,025.
Mrs. Rosencrans was named and qualified in New Jersey as executrix. She and Fry qualified in New Jersey as trustees under the 19th clause, but the trustees never received from the executrix the assets which were to constitute the corpus of the trust. Subsequently, at Mrs. Rosencrans' request, Fry qualified as ancillary executor in Florida. The shares of stock were transferred to him as ancillary executor and were so held until Fry, upon request made during the pendency of this litigation, retransferred the shares to the executrix.
In 1946, Fry expressed to Mrs. Rosencrans his desire to buy the shares, but for reasons later mentioned he refrained from exercising the option. In January 1949 he elected to exercise the option, and because Mrs. Rosencrans denied that he had a right to purchase during her lifetime, Fry on January 20, 1949, instituted a suit in Florida praying that
he as ancillary executor sell the shares to himself individually for $25 per share, as provided in the will. That action precipitated the present suit. Mrs. Rosencrans, individually and as trustee, filed a complaint in our Superior Court on February 7, 1949, alleging that the situs of the trust is in New Jersey, that the trust and its assets are not within the jurisdiction of Florida, and that Fry's asserted right involved a construction of the will. She prayed for a restraint forbidding Fry to prosecute the Florida suit or from proceeding anywhere other than in New Jersey. Fry consented to the restraint and filed an answer and counterclaim in this cause, seeking a construction of the will and a judgment determining his right to buy the shares at the stated figure.
On December 29, 1949, Mrs. Rosencrans filed a petition in this cause for leave to add herself in her capacity as executrix and to include a second count requiring Fry to make discovery and to account as ancillary executor and to turn over the shares of stock to the executrix. Fry immediately transferred 3,025 shares, as stated above. An order was entered approving of that transfer, permitting Fry to account as ancillary executor in Florida, permitting the filing of an amended complaint containing the additional count already described, and also admitting as parties plaintiff the decedent's nephews, Arthur and Harry Rosencrans, the remaindermen named in the 19th clause.
On March 10, 1950, it was ordered that the action "be partially heard * * * on the sole question whether the defendant has a present right to buy the shares." That hearing was held on May 9, 1950 before Judge Rogers who at conclusion of the hearing decided that Fry had a present right to buy the shares. Because of Judge Rogers' illness, a judgment upon his conclusions, signed by Judge Francis, was not entered until May 18, 1951.
On May 29, 1950, following Judge Rogers' oral determination, the defendant filed his answer to the amended complaint and a counterclaim setting forth the determination of his right to buy and praying that it be also adjudged that he
is entitled to all dividends declared upon the shares since January 20, 1949, the date of the commencement of the Florida action.
In the period which intervened between the oral determination of May 9, 1950, and judgment of May 18, 1951, the situation was complicated by the certain events, which I shall now describe together with the preliminary factual developments connected therewith.
Following the decedent's death, the board of directors consisted of Mrs. Rosencrans, Fry, and a Mr. Wherry, an employee of the company. On February 16, 1950, at Mrs. Rosencrans' request, the remaindermen Arthur and Harry Rosencrans were elected to the board of directors together with the three prior directors. Thus the Rosencrans' interests acquired control of the board. On January 18, 1951, at a meeting of the board, as to which apparently neither Arthur nor Harry Rosencrans had notice, a $4 cash dividend was voted. On February 15, 1951, which of course was after the delivery of Judge Rogers' conclusions but before the entry of the judgment therein on May 18, 1951, another meeting of the board was held at which, over the negative vote of Fry and Wherry, it was resolved:
(1) That a dividend of $10 per share (apparently in addition to the $4 dividend voted on January 18, 1951) be paid to holders of record as of February 15, 1951;
(2) That a stock dividend of 50% be paid to holders of record as of February 15, 1951;
(3) That the authorized capital stock of the company be increased from $250,000 to $1,000,000, and declaring a further stock dividend of 300%, issuable to the holders of record as of February 15, 1951, upon the completion of the amendatory proceedings.
On February 19, 1951, Fry obtained a temporary restraining order from the Florida court enjoining the payment of the dividends purportedly declared on February 15, 1951. On February 21, 1951, plaintiffs in this case gave notice of ...