Carney v. Maas

Urner, J., delivered the opinion of the Court. The decree under review in this case enjoined perpetually the foreclosure of a mortgage and directed its release. Appeals from the decree were entered both by the mortgagee and'by the 'trustee appointed'to make the sale which the mortgage authorized. The mortgagee is Henry L. Maas; a building contractor, and the mortgagors are his son, E. Leonard Maas, and the latter’s wife.

A loan of $5,000 from the father to- thei son is secured By the mortgage-, .which was executed -o-n April 13th,’ 1926. Leonard Maas and his .brother Bernard were employed by their father iu his .business on a salary, and commission basis, of -compensation for a number of years prior t'o'192-9.-. .-In the early part of-that year the business was incorporated; The capital stock- of the -corporation* consisted 'of"5’0Q sháres of-no- par'value. - The principal' incorporate;"'Hénry' L. Maas,' retained '198' of the shares, .and' to.'each of his sons;'Leonard and'Bernard, one share was allotted. Hénry L.'Maas became president of the corporation, Bernard Maas its vice-president and treasurer, and Leonard Ma.as its secretary. The three stockholders and officers were also the directors -of the corporation.

A written agreement, info--, which they, entered on February 27th, .1.929, referred to the recent incorporation of the business under the name of “Henry L. Maas & Sons, Inc.,” and stated the wish of Henry L. Maas, in, recognition .p-f-the services of his- sons, Bernard and-Leonard, in building, up., and extending,.the ²⁵¹ business, to provide that they should own it 'in corporate form after his death. Provision to that end was-made, by the agreement, subject to the qualification that, if either of the sons should die or voluntarily sever his connection with the company during the father’s'lifetime, the rights and interests which the agreement conferred upon the son so. retiring or dying should cease to exist, and that if Henry L. Maas should at any time-' or for any reason desire either of his sons to retire from the business, the one so- requested should promptly resign from his connection with the company and, upon the payment of $10,000 to him by Henry L. Maas, should forfeit his. interest under the agreement, and in the corporate stock and enterprise. The weekly salaries paid the officers of the corporation W'ere $100 to Henry L. Maas as president, $75 to Bernard Maas as. vice-president and treasurer, and $85 to Leonard Maas as. secretary. In addition, each was tó receive a. share of the net profits, the proportion for each being ten per cent, originally, but later increased to twenty, arid finally to- thirty per cent.

As against profits anticipated in. 1931, from construction contracts in course of performance, there was a provision made for the future payment of $10,000 to each of the officers in addition to his regular salary. A demand note to each of them for that amount, without interest, was executed by the corporation under date of September 27tli, 1931, but all three of the notes were kept in the president’s custody. On February 8th, 1932, Leonard Maas withdrew from the corporation and subsequently