On appeal from the Superior Court, Chancery Division, whose opinion is reported at 18 N.J. Super. 171.
Eastwood, Goldmann and Francis. The opinion of the court was delivered by Eastwood, S.j.a.d.
Prior to February 1, 1944, plaintiff and William C. Fiedler, deceased, were engaged independently in the insurance business in Newark, New Jersey, and on that date they became associated in Fiedler Agency, Inc., a corporation owned by William C. Fiedler and engaged in the sale of insurance. Mr. Hollister thereafter undertook the management of the corporation and subsequently the name of the company was changed to Fiedler and Hollister, Inc.
On May 18, 1945, Fiedler and Hollister, Inc., Robinson G. Hollister and William C. Fiedler, entered into two written agreements, one providing for the employment of the individual parties and the terms thereof, the other an option agreement concerning the surviving member's right to purchase stock of the predeceasing member in their insurance corporation known as Fiedler and Hollister, Inc. It is this last-mentioned agreement about which the controversy has arisen.
William C. Fiedler died August 29, 1950. Thereafter the plaintiff gave timely notice to the defendant indicating his intention to exercise the option to purchase the decedent's stock as provided in the aforementioned agreement. After an audit had been made by the corporation's accountant from which plaintiff asserts it was determined that the shares of stock had no book value, plaintiff made no tender to the
defendant, but merely demanded the delivery of the shares of stock. Consequent upon a refusal, this action was instituted in the Chancery Division for the specific performance of the agreement, resulting in a judgment for the plaintiff. It is from this judgment that the defendant appeals.
The option agreement recites that the individuals, Fiedler and Hollister, are each the owner of 11 shares of capital stock of Fiedler and Hollister, Inc., and thereafter provides, inter alia:
"4. Upon the death of Fiedler or Hollister, the survivor of them, if still in the employ of the Company, shall have an option to purchase the shares of stock of the Company owned by the other upon the following terms and conditions:
(a) Such survivor shall give written notice of the exercise of this option within sixty (60) days of such death to the personal representative of the deceased party or, in the absence of such personal representative, to his next of kin.
(b) Within thirty (30) days of the giving of such notice as aforesaid, the survivor exercising the same shall tender to the legal representative of the deceased party, or, in the absence of such legal representative, to the next of kin of the deceased party, the book value of the shares of stock of the Company held by him, and shall agree to pay or cause to be paid to the lawful widow of such deceased party, if any there be, an amount equal to 25% of the net profits of the Company earned from and after the date of such death, determined after payment of all expenses, including all federal, state and local taxes, but before deducting therefrom the amount of any compensation payable by the Company to such surviving party, for the term of her natural life, or until the death of said surviving party, whichever shall first occur; and
(c) Thereupon, the surviving party shall acquire all the right, title and interest in the shares of stock of the Company held by the deceased party."
The defendant contends that the trial court erred in: (1) interpreting the option agreement in a manner that worked a forfeiture upon the defendant; (2) that "book value" under the agreement was meant to comprehend all assets of the corporation including the value of expiration and renewal books and records, which were not included as assets in plaintiff's audit; (3) ...