Appeal from decree of Court of Common Pleas, Civil Division, of Allegheny County, Jan. T., 1970, No. 2021, in case of Ralph P. DeVries, James R. Handyside, Aztec Metals, Inc., and The Shenango Furnace Company, Inc. v. Robert C. Westgren.
Paul H. Titus, with him Frances O. Tennant, and Kaufman & Kaufman, for appellant.
James H. McConomy, with him Charles C. Cohen, and Reed, Smith, Shaw & McClay, for appellees.
Bell, C. J., Jones, Eagen, O'Brien, Roberts, Pomeroy and Barbieri, JJ. Opinion by Mr. Justice Jones. Mr. Justice Eagen dissents and would affirm decree of court below. Mr. Justice Pomeroy took no part in the decision of this case. Dissenting Opinion by Mr. Justice Barbieri.
Appellees brought an action in equity for specific performance to compel the appellant to offer his shares of stock in Aztec Metals, Inc., to appellees. After a hearing, the court below entered a decree nisi ordering appellant to offer his 360 shares at $60.00 per share. Along with the original exceptions filed by both sides, appellant filed an additional exception requesting that the appellees be ordered to purchase appellant's shares at $60.00 per share. The court below dismissed all exceptions and affirmed the decree nisi. This appeal followed.
Pursuant to a founders agreement, appellant and the appellees executed a stock purchase agreement which pertinently provided: "Upon the termination of employment with the Company of any Individual Shareholder for any reason whatsoever, except for reason of death of such Individual Shareholder, such Individual Shareholder shall offer all of his Common Stock in the manner, upon the terms and at the prices set forth hereafter." After reciting the time and manner of the required offer, the agreement established a formula for determining the price per share: "The price at which each share of Common Stock of the Company is to be offered for purchase . . . shall be an amount equal to the sum of (a) the Base Price per share [$60.00] plus (b) the amount, if any, of Accumulated Net Earnings Per Share . . . ." (Emphasis added) Notice of these restrictions was printed on each stock certificate.
It is apparent that this litigation was initiated by the termination of appellant's employment with Aztec
Metals, Inc. Due to the unambiguous language in the stock restriction allowing termination of employment "for any reason whatsoever," the propriety of appellant's discharge has no legal significance in the context of this appeal.
The point stressed by the appellees in the court below and not now contested concerned the price to be paid for each share. Since Aztec Metals, Inc., suffered a loss per share of $110.00, the appellees argued that appellant must transfer his stock for no consideration. Stated differently, appellees contended that the price formula requires that net loss be deducted from the base price per share in order to derive the offering price. We are in complete agreement with the adjudication of the court below that the price formula did not encompass any net loss deduction: "The words 'if any' in the context '. . . plus (b) the amount, if any, of accumulated net earnings . . .' can only mean if there is a plus of accumulated net earnings."
Once it was determined that the price per share would be $60.00, the appellees reversed their stance and stated they no longer wished to buy appellant's shares. Although the terms of the stock restriction do not force the remaining shareholders to acquire the stock and permit a departing shareholder to freely dispose of his stock if the remaining shareholders reject his offer or fail to accept his shares within a specified time, appellant contends that the appellees bound themselves to purchase his shares by filing a bill for specific performance which stated, inter alia, that the appellees stand "ready, willing and able to purchase all of [appellant's] shares in Aztec Metals, Inc."
The initial problem presented by this appeal stems from the fact that the stock purchase agreement technically does not create an option but rather a right of first ...