Galler v. Galler

203 N.E.2d 577 (1964)

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Nature of the Case

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Facts

Benjamin and Isadore Galler (D), brothers, were equal partners in the Galler Drug Company. In March 1954, Benjamin and D, on the advice of their accountant, decided to enter into an agreement for the financial protection of their immediate families and to assure their families, after the death of either brother, equal control of the corporation. While the agreement was in the process of preparation by an attorney Benjamin suffered a heart attack. He was again stricken in February 1955 and thereafter was unable to return to work. Between the execution of the agreement in July 1955, and Benjamin's death in December 1957, the agreement was not modified. Benjamin suffered a stroke late in July 1955, and on August 2, 1955, D and the accountant and a notary public brought to Benjamin for signature two powers of attorney which were retained by the accountant after Benjamin executed them with D as a witness. Emma (P), Benjamin's wife, did not read the powers and she never had them. One of the powers authorized the transfer of Benjamin's bank account to P and the other power enabled P to vote Benjamin's 104 shares. Benjamin executed an instrument creating a trust naming his wife as trustee. The trust covered, among other things, the 104 shares of Galler Drug Company stock and the stock certificates were endorsed by Benjamin and delivered to P. When P presented the certificates to Ds for transfer into her name as trustee, they sought to have P abandon the 1955 agreement or enter into some kind of a noninterference agreement as a price for the transfer of the shares. Shortly after Benjamin's death, P went to the office and demanded the terms of the 1955 agreement be carried out. Ds refused. During the last few years of Benjamin's life, both brothers drew an annual salary of $42,000. In 1957, 1958, and 1959 a $40,000 annual dividend was paid. P has received her proportionate share of the dividend. P brought a suit in equity, and the trial court ruled in her favor. The Appellate Court reversed. The Appellate Court found the 1955 agreement void because 'the undue duration, stated purpose and substantial disregard of the provisions of the Corporation Act outweigh any considerations which might call for divisibility' and held that 'the public policy of this state demands voiding this entire agreement.' P appealed.