Wilkes v. Springside Nursing Home, Inc.

370 Mass.842, 353 N.E.2d 657 (Mass. 1976)

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Nature of the Case

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Facts

In 1951, P acquired an option to purchase a building. P had a reputation locally for profitable dealings in real estate. Riche, P's acquaintance, learned of the option and interested Quinn and Pipking. The four men met and decided to participate jointly in the purchase of the building. They decided to operate a nursing home. P's attorney advised him that if they were to operate the business as planned, they would be liable for any debts incurred by the partnership and by each other. Thus, they formed a corporation. Each invested $1,000 and got ten shares of $100 par value stock in Corporation. It was understood that each would be a director and each would participate actively in the management and decision making involved in operating the corporation. Also, it was understood that if resources permitted, each would receive money from the corporation in equal amounts as long as each assumed an active and ongoing responsibility for carrying a portion of the burdens necessary to operate the business. By 1955, the return to each reached a $100 a week. In 1959, Pipking sold his shares to O'Connor, who was at that time a president of a bank. He was elected a director, but never held an office nor was assigned any specific responsibility. In 1965 the stockholders decided to sell a portion of the property to Quinn who, also possessed an interest in another corporation which desired to open a rest home on the property. P convinced others to sell at the higher price. After that, the relationship between the two deteriorated. In January of 1967, P gave notice of his intention to sell his shares based on an appraisal of their value. On a February meeting, the board established salaries of the officers and employees. Quinn's salary was increased, but Riche and O'Conner's were not. P did not receive anything. In March, he was not reelected as a director, nor was he reelected as an officer of the corporation. He was further informed that neither his services no his presence at the nursing home was wanted. The lower court referred the suit to a master. The Master's report was confirmed, a judgment was entered dismissing P's action on the merits, and Massachusetts Supreme Court granted appellate review. P argued that he should recover in alternative damages for the breached partnership agreement and damages sustained because of D breaching their fiduciary duty to him. We reverse so much of the judgment as dismisses P's complaint and order the entry of a judgment substantially granting the relief sought by P under the second alternative set forth above.