The opinion of the court was delivered by: PRATT
This matter is before the Court on cross motions for summary judgment. Plaintiff seeks judgment against defendant Answering Service, Inc. (Answering) or, alternatively, against defendant Thomas J. Egan, the Executor of the Estate of Paul J. Rohrich, for fraud and negligence in the transfer of certain overissued Answering stock. Plaintiff further seeks judgment against Answering for breach of contract arising out of the same stock transaction; for an order of this Court requiring Answering to issue to plaintiff a valid certificate for ten (10) shares of its capital stock; and for an accounting for all dividends paid on said stock since October 9, 1961.
Defendant Egan, executor of the Estate of Paul J. Rohrich, who died on December 7, 1975, seeks summary disposition alleging that plaintiff's claims are barred by the applicable statutes of limitations and the doctrine of laches; that the alleged transfer of the stock to plaintiff constituted an attempted testamentary disposition and is void under the Statute of Wills; and that plaintiff did not provide sufficient consideration to enable him to maintain the action.
Defendants Answering, Richard v. McNamara, and Francis J. Bowman seek summary judgment alleging, inter alia, that plaintiff is estopped to assert the validity of the stock certificate at issue. These final three defendants have also filed a counterclaim to have the stock certificate in plaintiff's possession cancelled and returned to the corporation. Defendant Answering has filed a cross-claim against the Rohrich estate for indemnification for any of the plaintiff's claims.
In 1953, plaintiff was employed by one Wesley Steele as Director of Sales Promotion of Answering, Inc.,
a wholly owned subsidiary of the defendant corporation.
Plaintiff was continuously employed by both these corporations in various capacities from 1953 until his resignation in November of 1964.
On October 9, 1961, plaintiff received a certificate representing ten (10) shares of Answering stock. This certificate was given to plaintiff by Rohrich in the presence of Steele as a bonus for his past services. Upon the certificate appear the signatures of Wesley J. Steele, President, and Paul J. Rohrich, Secretary/Treasurer. The physical genuineness and authenticity of the certificate is not in dispute.
Plaintiff believed this stock to have no value until the deaths of Rohrich and Steele. Rohrich and Steele did not, at the time the certificate was given to plaintiff or at any later date, indicate to plaintiff the market value of the stock. However, plaintiff asserts that his acquaintance, Mr. Best, told him on the day the stock was tendered to plaintiff by Rohrich and Steele, that Rohrich told Best the stock was to be valued at $40,000. This value is, however, not reflected in the affidavit of Mr. Best which is a part of the record herein.
Shortly after Rohrich's death, plaintiff contacted the defendant corporation to ascertain the value of and to redeem the stock. Plaintiff was informed that the stock which he had received was issued in excess of the number of shares permitted to be issued by Answering's Articles of Incorporation and hence was overissued and void. Answering then requested that plaintiff return the certificate so that it might be cancelled. Plaintiff refused to comply and this action ensued.
I. Plaintiff's Claims are Barred by the Statute of Limitations.
As a threshold matter, this Court must determine whether plaintiff is barred from bringing this action by the applicable statute of limitations or by the doctrine of laches. We conclude that each cause of action proposed by plaintiff is so barred for the reasons hereinafter set forth.
In diversity actions, absent a federal statute of limitations, the applicability of a forum's statute of limitations depends upon the nature of the right to be enforced and the available remedies. Cassell v. Taylor, 100 U.S. App. D.C. 153, 243 F.2d 259, 261 (1957). If the action is one at law, the courts have construed congressional silence as implying a "federal policy to adopt the local law of limitation." Holmberg v. Armbrecht, 327 U.S. 392, 395, 90 L. Ed. 743, 66 S. Ct. 582 (1946).
However, "where the equity jurisdiction is exclusive, and is not exercised in aid or support of a legal right, state statutes of limitations barring actions at law are inapplicable * * * [and] the federal court * * * applies the doctrine of laches as controlling." ...