Haddad v. Electronic Production & Development, Inc.

BURKE, P. J.

Plaintiff was a director of defendant corporation and the corporation, desirous of expanding its operations, proposed to sell to the public 150,000 shares of its stock. Considering the value to the corporation of the continued service of its key personnel, the directors contemplated providing for the issuance of options to such directors to purchase additional shares of stock of the corporation for a minimal price for a limited period, provided they re.mained with the company.

[139]

Discussions and meetings were had regarding the pro.? posed issue of stock. Upon application the Commissioner of1 Corporations duly issued a permit to issue and sell such shares as a result of which a written option agreement dated May 1, 1960, was executed by plaintiff and defendant corporation entitling plaintiff to purchase 7,500 shares of 'stock at stated prices until December 31, 1962, provided plaintiff did not resign within a period of one year from the date of the option.

Plaintiff resigned as a director of defendant corporation on February 2, 1961. Thereafter, apparently, the stock of the-corporation increased in value in an amount that would represent a profit of $9,000 to plaintiff were he to have exercised his option. But his resignation operated to terminate his option. Plaintiff instituted these proceedings against defendant corporation alleging that an oral contract existed between the parties predating the written option agreement of May 1, 1960. In the action he seeks to reform the written option only with respect to the date of its execution, predating it as of August 3, 1959, the date he contends defendant corporation through its directors orally agreed to grant the options. If such were done his option could not be deemed affected by his resignation which took place more than one year after August 3, 1959. He also seeks declaratory relief. The court below granted defendant’s motion for summary judgment and judgment ivas entered from which plaintiff appeals.

Plaintiff raises the questions of the sufficiency of the affidavits in support of and in opposition to the motion for summary judgment, the nonapplicability of section 25009 of the Corporate Securities Law and his entitlement to a declaratory judgment. Defendant contends that the option agreement considered in this proceeding is subject to the provisions of the Corporate Securities Law of this state, and as a prerequisite to the validity of any such agreement a permit therefor must first issue from the Commissioner of Corporations'; that sufficiency of an affidavit in opposition to a motion for summary judgment is tested by the showing therein of a triable issue of fact, which is lacking here; that when a motion for summary judgment raises only an issue of law the court is bound to render a judgment-; and that an action for declaratory relief should be dismissed where no justiciable controversy exists.