The "oppressed shareholder" is a litigant newly created by Legislative amendment to the New Jersey Corporation Act. See N.J.S.A. 14A:12-7. Plaintiff Leonidas Exadaktilos, claims to be one. He alleges that he purchased a 20% interest in defendant corporation, which owns and operates a restaurant. The corporation has three other stockholders, the respective owners of 20%, 20% and 40% of its stock. George Skordas holds the 40% interest. That a stock certificate representing 20% of the corporation's outstanding shares was issued to plaintiff at a cost of $20,000 is undisputed, but defendants allege that the stock was actually paid for by defendant Skordas, plaintiff's father-in-law. As a consequence, it is said that the stock is subject to a resulting trust. Since plaintiff seeks to qualify for the relief afforded "oppressed" shareholders, resolution of the dispute concerning ownership necessarily precedes an evaluation of the merits of this claim.
Plaintiff traced the money he used to purchase the stock to several sources. Five thousand dollars, saved from wages
earned by working on ships, accompanied plaintiff when he entered this country. Upon marrying Skordas' daughter in 1969, cash wedding gifts in the amount of $3,800 were received and set aside. During that same year he saved $100 a week from his wages, a total of $5,200. In 1970 his income increased and he was able to save $7,800 from his wages. In 1969 and 1970 he sold a truck for $1,200, saving all the proceeds as well as $1,800 awarded to his wife because of her involvement in an accident. Plaintiff testified that after 1970 he was unable to save money because his wife had a child and stopped working. All of these monies reportedly were kept in a box in plaintiff's closet because he did not trust banks. His savings totalled $24,000, more than enough to enable him to advance the $20,000 necessary to purchase the stock.
On cross-examination plaintiff's income tax returns were introduced into evidence. The 1969 return reflected an income for both him and his wife of $8,695, with $5,620.90 representing his wife's earnings. A saving of $5,200 in that year would have left only $3,495.10 available for living expenses. The only wages listed for plaintiff was the year's total of $286 paid by a painter for whom plaintiff had worked. This return contradicted plaintiff's testimony that he had earned $120 to $135 a week as a painter, plus $45 to $60 a week by working in a diner during that year. The 1970 return showed total earnings of $8,619.31 of which his wife accounted for $6,210.47. Had plaintiff saved $7,800 that year, the family would have had $819.31 left for living expenses. Plaintiff said that he made over $180 a week as a partner with his brother in a painting business during that year. The partnership information return showed only $1,480 paid to him. Plaintiff did not produce any records to support his claim of receiving over $180 a week. Nor did his brother, who testified as to other matters, verify this statement. Finally, no income tax return disclosed the sale of a truck for $1,200. Plaintiff explained these discrepancies by claiming that the tax returns were "wrong," that he depended
on his wife to prepare them or have them prepared, and that he was not aware that he had to report all of his income for federal tax purposes.
Plaintiff admitted he had not declared his possession of $5,000 when he entered this country. The $1,800 saved from his wife's accident was reflected in a check to her actually totalling $1,942.47. The check was dated March 16, 1973. The $20,000 in cash advanced for the stock was paid prior to December 1972; the accident monies could not have been available to plaintiff at that time.
Plaintiff justified the risky arrangement of keeping money in a closet on the ground that he did not trust banks. It developed, however, that he had several bank accounts. Although he claimed that the accounts were used merely to establish credit, they also were used to accumulate savings.
On cross-examination plaintiff said the monies saved in the closet amounted to exactly $20,000. On redirect he amended this testimony and said the amount may have varied either way by about $200. Each of these statements stand in contradiction to his testimony on direct examination.
Skordas, on the other hand, had substantial monies and was plaintiff's father-in-law at the time of the stock transaction. No testimony indicated any rift between them at the time the stock was purchased. The opportunity to make an investment in the restaurant was provided to plaintiff by Skordas. He defended his son-in-law from criticism by other principals of the corporation. After the restaurant had been purchased, improvements were made, the cost being borne in part by the corporation's principals and in part with borrowed money. Skordas loaned his son-in-law $20,000 to cover his share of the improvements, taking an unsecured promissory note as payment for the loan. These facts demonstrate that Skordas was interested in plaintiff's welfare and generous in making money available on an informal basis.
The only person present at the time plaintiff supposedly gave the $20,000 in cash to his father-in-law, according to plaintiff's testimony, was his wife. She was not produced as
a witness to this transaction or to any other relevant fact, although she was available since she was, in fact, in the courtroom during most of the trial. Apparently, she was not deposed. These circumstances may be explained by the fact that plaintiff and his wife were then involved in divorce proceedings so that she may have been a hostile witness, but this was not shown. It was revealed in the course of the trial that she had certain relevant records, not subpoenaed by plaintiff, which may not have been privileged. See Evid. R. 28. These matters damage plaintiff's credibility. Skordas' credibility is also tarnished; he, too, failed to produce his daughter as a witness.
Plaintiff's testimony is so riddled with contradictions and qualifications as to lead to the conclusions that he is not a credible witness, that he did not have $20,000, and that he did not pay for the stock. Consequently, it must be Skordas alone who advanced money from his adequate funds to purchase the stock. These findings, however, do not carry the day for defendants. Legal title to the stock resides in plaintiff and his claim of "oppression" ...