Carver v. Fitzsimmons

SHINN, J.,

pro tem.

Plaintiff appeals from a judgment of nonsuit in an action brought on a claim against the Estate of Fitzsimmons, which claim arose out of the following transaction:

On March 11, 1931, plaintiff advanced to Fitzsimmons the sum of $25,000 under written agreement which provided that the money should be used to acquire the capital stock of a corporation to be organized in the state of Oregon for the purpose of installing and operating a chain of grocery stores in the states of Oregon and Washington. The agreement provided that Fitzsimmons would cause a corporation to be organized "with a capital of 5,000 shares of stock without par value; that $25,000 would be paid to the corporation in return for 2,050 shares, of which 50 shares were to go to employees and the remainder to Carver, one-half thereof to belong to him and one-half to be held subject to the right of Fitzsimmons to acquire the same in the following manner: that for each $2,500 earned by the corporation and set aside as surplus, Fitzsimmons should have the right to delivery of 100 shares of the stock held by Carter until he had acquired 1,000 shares by reason of the fact that the surplus of the corporation had reached a total of $25,000, whereupon Carver and Fitzsimmons would each own 1,000 shares of

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stock. It was also agreed that the contracting parties would use their best efforts to see that the corporation earned and declared specified quarterly dividends, and that neither of the parties should be paid any salary or other compensation for services until the surplus of the corporation amounted to $25,000. The agreement provided as follows:

“It is the intent and purpose of the parties hereto that the management and control of said corporation be in the hands of second party and that second party operate, manage and control the business of the corporation to the best interests of both parties hereto, ... and further provided as follows : “If on April 1st, 1932, the profit and loss statement of the corporation shall not disclose net earnings for the previous six months’ period equal to at least two (2) quarterly dividends as hereinbefore provided, or 'if, during any succeeding six months’ period said profit and loss statement shall not disclose earnings equal to two (2) such quarterly dividends, it is agreed that the business of said corporation shall be liquidated as soon as practicable, unless the parties hereto mutually consent to the continuance thereof. If said corporation shall liquidate its business within three (3) years from date hereof and first party shall not have realized an amount equal to the principal sum invested by him, plus interest thereon at the rate of 7% per annum from October 1st, 1931, to the date of receipt by him of his proportion, on final distribution, of the assets of said corporation, second party shall bear and pay to first party one-half the difference between said principal sum invested ($25,000), plus interest thereon as aforesaid, and the aggregate amount which first party shall receive from said corporation in the form of dividends, or upon liquidation. ’ ’