No. 915 April Term, 1977, Appeal from the Order of January 25, 1977 and the Order of June 17, 1977 of the Court of Common Pleas of Allegheny County, Civil Division, at No. 4019 October Term, 1973 - In Equity.
James C. Larrimer, with him Dougherty, Larrimer & Lee, Pittsburgh, for appellant.
Leo P. Hajdukiewicz, Pittsburgh, for appellees.
Jacobs, President Judge, and Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. The decision in this case was made prior to the retirement of Hoffman, J. Hester, J., did not participate in the consideration or decision of this case.
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Appellant contends that the chancellor erred in refusing to grant her the following relief: (1) reinstatement as an employee in appellee corporation until such time as the individual appellees purchase her stock at book value, (2) reimbursement for all employment-related benefits lost as a result of her impermissible firing, (3) specific performance of appellees' obligation to purchase her stock at book value, and (4) dissolution and liquidation of appellee corporation. We affirm the order of the lower court dismissing appellant's exceptions and entering a final decree.
While the instant case is factually quite complicated, the parties do not dispute the essential chronology of events. On April 30, 1959, John O'Farrell, Sr., John O'Farrell, Jr., and John M. Cuddyre, Sr., and John M. Cuddyre, Jr. formed appellee Steel City Piping Company (hereinafter Steel City) in order to conduct their plumbing, heating and air conditioning business. On May 1, 1959, these parties, owners of all Steel City shares signed an agreement designed to restrict each signator's ability to dispose of his stock. In pertinent part, the agreement provided that if John O'Farrell, Sr. predeceased his son, John O'Farrell, Jr. would have an option to purchase his father's shares at book value within a period of thirty days following the appointment of a legal representative. If John O'Farrell, Jr. failed to exercise this option, the agreement accorded John M. Cuddyre, Sr. and/or John M. Cuddyre, Jr. a similar option. Moreover, the agreement provided that if the shares of John O'Farrell, Sr. passed to his widow, appellant Anna O'Farrell, by operation of law, Anna O'Farrell agreed that the option provisions specified in the agreement would be effective and
[ 266 Pa. Super. Page 224]
exercisable against her. Anna O'Farrell signed this agreement.*fn1
In August, 1967, John O'Farrell, Sr. died. At the time of his death, O'Farrell owned 315 shares of stock, John M. Cuddyre, Jr., owned 450 shares,*fn2 and John O'Farrell, Jr. owned 135 shares. The decedent's 315 shares passed to his widow by operation of law. Neither her son nor John M. Cuddyre, Jr. exercised the option available under the 1959 buy-sell agreement to purchase her shares. Instead, John M. Cuddyre, Jr., John O'Farrell, Jr., and appellant executed a new buy-sell agreement on September 22, 1967. This agreement rescinded all rights of interested parties under the 1959 agreement and provided, in pertinent part:
"2. In any event where the value of the stock shall become a matter of importance in connection with any transfer hereunder, it is agreed that the book value of said stock shall be used to determine the value thereof. . . .
"3. It is agreed that restrictions are being imposed upon the transfer of said stock so as to prohibit their transfer to persons other than those designated herein, and further to afford maximum benefits to the surviving spouse of a deceased party.
"In addition, said restrictions are designed to perpetuate the ownership of said stock in certain parties designated herein.
"4. In the case of Anna O'Farrell, it is agreed that she shall be permitted to retain the interest of her deceased husband, John O'Farrell, Sr., which title vested in her exclusively by operation of law, by virtue of said stock having been held as tenants by the entireties, for a period not to exceed Five (5) years from the date of this agreement.
"During such time, Anna O'Farrell shall be entitled to participate fully in the distribution ...