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Specht v. Eastwood-Nealley Corp.

Decided: March 10, 1953.

HARRY G. SPECHT, PLAINTIFF-RESPONDENT, AND OTHERS, PLAINTIFFS,
v.
EASTWOOD-NEALLEY CORPORATION, THE NATIONAL STATE BANK OF NEWARK, AS TRUSTEE, ETC., AND CALVIN H. NEALLEY, DEFENDANTS-APPELLANTS, AND OTHERS, DEFENDANTS



Eastwood, Jayne and Francis. The opinion of the court was delivered by Jayne, J.A.D.

Jayne

While this appeal implicates only the propriety of a denial of a motion to dissolve a pendente lite restraining order, it seems to require a comprehensive consideration of all of the allegations contained in the four counts of the complaint which, viewed in its entirety, reveal the intrinsicalities of the plaintiff's alleged cause of action.

The complaint, fortified by a conventional verification and addressed to the Chancery Division of this court discloses that all of the individual parties to the suit are stockholders of Eastwood-Nealley Corporation, incorporated in New Jersey. During the period from 1935 to 1942 all of the 1,000 shares of the capital stock of the corporation were owned in approximately equal proportions by one Landon Carter, who died in 1941, by the defendant Calvin H. Nealley, and by the plaintiff Harry G. Specht. In 1942 Nealley and Specht acquired all of the stock.

The registered holders of stock at present are Nealley 502 shares, Specht 254 shares, his wife Lily Specht 100 shares,

his son Harry M. Specht 100 shares, John G. MacKechnie and Nelson Webb each 20 shares, Harry J. Brady, Noah Bass, Andrew MacKechnie, and Ralph E. Lum, Jr. each one share. It is averred that the beneficial ownership of the stock registered in the names of Bass, Andrew MacKechnie, and Lum remains in Nealley.

Since 1935 Nealley has been president and a director; Specht officiated until March 11, 1952 in the capacities of vice-president, director, and general manager. On November 1, 1935 the company issued its first mortgage bonds in accordance with the terms of a trust indenture in which The National State Bank of Newark, N.J., is the trustee. There are now 155 of those bonds of the face value of $1,000 each outstanding, of which Nealley is the owner of 145 and the plaintiff Harry G. Specht the owner of ten.

Since the restraint pendente lite to which the appellants object relates to the disposition of the outstanding bonds, the terms of an agreement entered into on April 22, 1943 by Nealley, therein designated as the "Grantor," and the plaintiff Harry G. Specht as "Grantee," become particularly relevant. Nealley was at that time the owner of 180 of the bonds. The terms of the agreement are here quoted:

"NOW THEREFORE, the Grantor hereby agrees to sell, transfer and deliver to the Grantee and the Grantee agrees to purchase and pay for one of said bonds at the purchase price of eighty per cent (80%) of the face amount or par value thereof during each and every calendar year, respectively, in which or in any part of which both of the parties hereto shall be living, beginning with the calendar year 1943 and ending with the year during which one or both of the parties hereto shall die.

The Grantee, for himself and his executors and administrators, covenants and agrees to and with the Grantor that at no time during the life of the Grantor will the Grantee, his executors or administrators, sell or otherwise dispose of any of said bonds purchased by the Grantee as hereinabove provided without having first offered them for sale to and re-purchase by the Grantor at the aforesaid purchase price of eighty per cent (80%) of the face amount and par value thereof.

The Grantor, in consideration of the premises and of the sum of One Dollar ($1.00) to him in hand paid by the Grantee at or before the ensealing and delivery of these presents and of the foregoing

covenant and agreement of the Grantee, does hereby, for himself, his heirs, legatees, devisees, executor or administrator, give and grant to the Grantee the right to purchase, for and at the purchase price of seventy per cent (70%) of the face amount and par value thereof, all (but not less than all) of the said bonds which shall not have been purchased by the Grantee as hereinabove provided prior to the death of the Grantor, the Grantee to purchase fifty per cent (50%) of said bonds during the first year after the date of the Grantor's death and the remaining fifty per cent (50%) of said bonds during the second year after the date of the Grantor's death, and such option may be exercised whether said bonds are in the possession of the Grantor's heirs, legatee, devisee, executor or administrator; ...


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