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Hungerford & Terry Inc. v. Geschwindt

Decided: January 20, 1953.

HUNGERFORD & TERRY, INC., ET ALS., PLAINTIFFS,
v.
HARRIS D. GESCHWINDT, ET ALS., DEFENDANTS



Haneman, J.s.c.

Haneman

The complaint seeks a construction of the amendment to the certificate of incorporation of Hungerford & Terry, a corporation of the State of Delaware. The trustee plaintiffs as well seek instruction as to the action they should take in connection with a proposed or suggested additional amendment to said certificate of incorporation. The relief sought is brought under both the general equity powers of this court and under the Declaratory Judgment Act, R.S. 2:26-66 et seq.

The plaintiffs include said corporation and Churchill Hungerford, Jr., and First Camden National Bank & Trust Company, the latter two being trustees under deeds of trust of Churchill Hungerford, Sr., and Elizabeth M. Hungerford, and the will of the former. The trustees hold shares of Classes A and B stock, hereinafter more particularly referred to, in said trusts. Churchill Hungerford, Jr., in addition

to being a trustee of the three trusts, is also a beneficiary thereof, and he is also the owner of Class B stock.

Simply stated, the plaintiffs allege that there is an ambiguity in the instrument, since the apparent provisions of paragraph (b) are inconsistent with the actual intent as exhibited by the balance of the lettered paragraphs, i.e. , that although paragraph (b) would seem to give the holders of Class A stock a preferential right to be paid $375 per share upon liquidation, out of all of the assets of the corporation, the balance of the paragraphs express the true intent, namely, that the Class A stockholders are limited in their preference to a participation in the assets acquired prior to June 1, 1928.

By way of defense, in addition to urging a particular construction, the defendants, inter alia , raise the following, which will solely be considered in the light of the conclusions hereinafter set forth.

1. The questions here raised are moot, since they involve a speculative state of facts, and there is no justiciable controversy.

2. This court has no jurisdiction, since the question involves the internal affairs of a foreign corporation.

The facts in connection herewith are as follows:

Hungerford & Terry, Inc. was incorporated under the laws of the State of Delaware on May 7, 1909. On July 18, 1928, and prior thereto, Churchill Hungerford, Sr. and his wife Elizabeth M. Hungerford were the actual owners of the entire authorized capital stock, of the par value of $100 per share, although some qualifying shares were not registered in their names, the former owning 185 shares and the latter owning 815 shares. The $100,000 of capital had been fully paid by them. For the years from 1909 to 1928 the said Hungerford, Sr. had been the prime mover in said corporation, and to all intents and purposes was the corporation. As a matter of fact, he was, in the language of the testimony, the "boss" until his death. That the business had been successfully conducted during the years prior to 1928 is

evidenced by the book value of the stock just prior to the litigated amendment, which was then computed at $375 per share on the following valuations:

Par value of the existing stock $100.00

Surplus on the books as of 5/31/28 per share of 227.07

The stock and bonds owned by the corporation

had a market value 5/31/28 in excess of book

value per share of 33.15

It was expected that profits on orders received

prior to 5/31/28 but processed after that date

would be per share 14.78

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Totaling ...


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