Lawrence v. Muter Co. ( 1948 )

KERNER, Circuit Judge

(dissenting).

I agree that a fiduciary relationship did not exist here. Nevertheless, this is not enough to reverse the judgment, because in itself it is not determinative of this court’s reversal. It is well settled that an appellate court cannot reverse a judgment if the judgment is right on the merits. Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 82 L.Ed. 224.

The controversial issue is the effect of the alleged release. The record in this case is voluminous and the evidence is conflicting. The court had the benefit of seeing and hearing the witnesses.

The court found that at the time that Muter told Lawrence that he was going to consolidate the activities of the Muter Company and General, he said to him, “to begin with he would issue to him 2,000 shares of The Muter Company stock and * * * would take care of plaintiff’s interests in General Manufacturing 'Company later” and that “Lawrence told Muter that he would put his financial interests in General * * * in- the hands of Muter.” The court further found that “there was no agreement or understanding between Lawrence and Muter then or at any time that the contract of May 27, 1938 was then fulfilled and completed by the delivery to-' Lawrence of 2,000 shares of Muter Company-stock”; that from 1939 until • May, 1944, Muter promised Lawrence on many occasions that he would fully account to him for his interest in General, and that Lawrence during this period was, in fact, misled and lulled by such promises into reliance upon Muter to fully account to him for his interest in General.

The court also found that on December 13, 1939, the date of consolidation of the corporations, the actual book value of each share of Muter Company was $1.1022 per share and that the book value of each share of General was $8.0757, and that the 2,000 shares of Muter -Company stock received by Lawrence as partial consideration for his 2,000 shares of stock of General was grossly inadequate.

Concerning the letter of June 29, 1943, the court found as a fact that the letter was prepared by Muter and that the transaction by which Muter obtained the letter from Lawrence was fraudulent in that Lawrence signed the letter in reliance upon Muter’s promise to fairly account to Lawrence after the war.

The contract of May 27, 1938, which was incorporated into the findings provided that Lawrence accept payment for his stock in General by “exchanging same for such stock or securities in said consolidated company * * * at the actual book value of such shares of stock of said General Manufacturing Company * *

From these findings the court concluded that in the event of consolidation of the corporations and the election of the parties to exchange Lawrence’s stock in General for stock in the Muter Company a reasonable interpretation of the contract is that Lawrence receive stock of the Muter Company based upon the relative actual book value of the stock of General to the actual book value of the stock of the Muter Company at the time of such consolidation; that both parties did so elect and agree; that plaintiff performed all conditions, promises and covenants required to be performed by him under the contract; that Muter failed to perform his' promises and breached his duty to plaintiff to the extent of 12,654 sharés of Muter Company stock, which under the contract Muter was required to issue to Lawrence and which he now holds in breach of his trust and in fraud of Lawrence.

I doubt that it would serve any useful purpose to detail the evidence relating to this issue. I believe it will be enough to say that I have examined the evidence and the testimony of all the witnesses heard, considered the inferences fairly to be drawn from all the evidence, and have reached the conclusion that Judge Igoe’s findings are supported by the evidence. That was enough. Hence the findings are not clearly erroneous. In this situation, they are inescapably binding on this court. They must stand undisturbed on appeal. Rule 52(a) Federal Rules of Civil Procedure, 28 U.S. C.A.

The judgment should be affirmed.