Essex Universal Corp. v. Yates

305 F.2d 572 (1962)

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Nature of the Case

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Facts

Yates (D), a resident of California, was president and chairman of the board of directors of Republic Picture Corp., which at the time relevant to this suit had 2,004,190 shares of common stock outstanding. In August 1957, Essex Universal Corp. (P), learned of the possibility of purchasing from D an interest in Republic. Negotiations proceeded and on August 28 D and one Harris, the president of P signed a contract in which P agreed to buy, and D agreed to sell or cause to be sold at least 500,000 and not more than 600,000 shares of Republic stock at a price of $8 per share. Three dollars per share was to be paid at closing on September 18, 1957, and the remainder in twenty-four equal monthly payments beginning January 31, 1958. The shares were to be transferred at the closing, but D was to retain the certificates as security for full payment. In addition, the contract provided that D will deliver to P the resignations of the majority of the board of directors and D will hold a special meeting at which simultaneously with the acceptance of the directors' resignations will cause nominees of P to be elected as directors of Republic in place of resigned directors. At the closing date, P tendered bank drafts and cashier's check totaling $1,698,690 which was the 37 1/2 % of total price of $4,529,784 due at this time. Although P was ready to close the deal, D at the advice of his lawyer rejected the tender as unsatisfactory and said that there can be no deal. P began this action in N.Y. Supreme Court, and it was removed to the district court on count of diversity of citizenship. P seeks damages of $2,700,000.