On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Approved for Publication May 19, 1995.
Before Judges Michels, *fn1 Stern and Keefe. The opinion of the court was delivered by Stern, J.A.D.
The opinion of the court was delivered by: Stern
Plaintiff, a minority shareholder in defendant corporations, brought this action against defendants for wrongful termination of a lifetime employment contract (counts one and two), and to recover debts owed by the corporations to him (counts three and four). The first two counts were dismissed on summary judgment, and are not involved on this appeal. The complaint was subsequently amended to add six additional counts under N.J.S.A. 14A:12-7, after which defendants moved pursuant to N.J.S.A. 14A:12-7(8) to compel plaintiff to sell his interest as a minority shareholder in the corporations for fair market value. The motion was granted.
At a bench trial, the trial Judge found for plaintiff on counts three, four and seven of the amended complaint. She found the fair market value of plaintiff's stock in the Mandek Corporation (Mandek) to be $15,987.50 as of the date of the complaint, but reduced that figure by $15,100, the amount of unauthorized expenditures asserted in a counterclaim on which the Judge found for defendants. The resulting judgment rejecting count seven is not contested on this appeal.
The Judge also entered judgment for plaintiff in the amount of his loans to the corporations, as sought by plaintiff in counts three and four. The debts were determined to be $130,131 owed by Mandek and $35,625 by Complete Business Offices and Services Corporation (CBOS), a related company. Together with pre-judgment interest, judgment was entered against Mandek in the total amount of $169,642.76 and against CBOS in the total amount of $46,442.96. Respecting the debt obligation as embodied in the judgment on counts three and four, the judgment also provided that Mandek shall pay plaintiff $2,827.38 together with interest on the unpaid balance "each month for sixty (60) months with interest each month at the rate set forth in R. 4:42-11(a)(ii) on the unpaid balance until paid in full," and that CBOS shall pay $774.05 each month plus interest for a similar period, later amended to $182.61 due to a partial satisfaction.
Defendants argue that the trial court could not order repayment of the loans under N.J.S.A. 14A:12-7 because plaintiff did not bring an action under that statute, because it would be inequitable as the termination of plaintiff was based upon his misconduct, and because the loan obligation of the corporations to plaintiff and the individual defendants, who constitute the majority shareholders, was premised upon repayment when the corporations are financially able to make the repayment and satisfy the debts.
The parties made the following stipulation of facts for trial:
1. Mandek Corp. is a New Jersey corporation established by plaintiff Franklin Knecht in 1982 to operate an executive suite office business in Fort Lee, New Jersey. Mr. Knecht was initially the sole director and officer of Mandek Corp. and, with his wife, Marjorie, the owner of 100% of the capital stock.
2. During 1983, defendants Joseph Murphy and Russell Anderson each paid $150,000.00 to Mandek Corp. and each became the owner of 37 1/2% of the capital stock. A shareholders agreement (Exhibit J-16 in evid.) was executed by Messrs. Knecht, Anderson and Murphy dated January 4, 1983. The monies contributed by Murphy and Anderson were allocated on the financial statements of Mandek Corp. between common stock, $40,000 and long term shareholder debt of $110,000 each.
3. From January 1983 to June 1989, plaintiff Knecht served as President and Chief Operating Officer of Mandek Corp. pursuant to Exhibit J-16.
4. In February 1986, Messrs. Knecht, Murphy and Anderson formed another New Jersey corporation, Complete Business Offices and Services Corp. to operate a second executive suite office business on Route 17 in Upper Saddle River, New Jersey. Mr. Murphy and Mr. Anderson each own 37 1/2% of the capital stock and Mr. Knecht owns 25% of the capital stock of CBOS.
5. From February 1986 until June 1989, plaintiff Franklin Knecht also served as President and Chief ...