In the Matter of a ) April 20, l988
Mail Dispute Between: )
)
)
ARTHUR W. DOTY )
)
and )
)
LARRY STURGILL & )
ANDREA STURGILL ) P.S. Docket No. MD-4
The Regional Counsel for the Western Region, United States Postal Service, forwarded this matter for decision pursuant to Domestic Mail Manual 153.72 and 39 C.F.R. Part 965 (52 Fed. Reg. 29012, August 5, 1987). Disputants Arthur Doty and Andrea Sturgill both claim to be the president of Shimco Industries, Inc., and, as such, entitled to receive the mail of that company and certain allegedly related companies addressed to P. O. Box 73004, Houston, TX 77273-3004; P. O. Box 370666, El Paso, TX 79937-0666; and P. O. Box 371170, El Paso, TX 79937-1170. The other companies are Seal Check Technology Co., Horizon Shim Systems, and Blacksmith Tool Co. Andrea Sturgill has requested that all mail addressed to the above post office boxes be forwarded to Shimco Industries, Inc., P. O. Box 6255, Auburn, CA 95604-6255. Both disputants filed written submissions, and the Sturgills filed a reply to Doty's submission.
Thereafter, the Administrative Law Judge issued an Initial Decision on February 3, 1988, in which he held that a pending California court proceeding would resolve the issues herein and that the Postal Service should not also decide such issues under the circumstances. No appeal was filed. After reviewing the Initial Decision on his own motion, the Judicial Officer remanded this matter to the Administrative Law Judge for determination of the undecided issues. Thereafter, each party filed a submittal with additional evidence and the Sturgills replied to Doty's submittal.
1. On June 1, 1986, Arthur Doty and Frank Sturgill each owned 50% of the shares of stock in Shimco Industries, Inc. ("Shimco"). On that date, Arthur Doty was elected president, vice-president and director of Shimco. Frank Sturgill was elected secretary, treasurer, and chairman of the board of directors. Shimco had been incorporated by Mr. Sturgill.
2. Shimco has conducted its business in Houston and El Paso, Texas, and Auburn, California. Shimco's mail has been addressed to P. O. Box 73004, Houston, TX 77273. Some Shimco mail has also been addressed to P. O. Box 371170 and P. O. Box 370666, El Paso, TX 79937.
3. By an agreement effective January 1, 1986, Doty sold a portion of Blacksmith Tool Company to Shimco, including the right to
use the "Blacksmith" name and most of the assets. Excluded from the sale were "all assets having to do with the manufacture, production, marketing, and sale of the 'bleeder cleaner'." Doty also retained the right to use the "Blacksmith" name for purposes of the bleeder cleaner business. Mail directed to Blacksmith Tool Company presently is addressed to P. O. Box 370666, El Paso, TX 79937-0666, and P. O. Box 73004, Houston, TX 77273-3004.
4. On January 1, 1987, Shimco created Horizon Shim Systems as a division to market Shimco's products. Mail to this entity is addressed to P. O. Box 371170, El Paso, TX 79937-1170.
5. Seal Check Technology Co. ("Seal Check") was founded by Doty. Although certain expenses were paid by Shimco (the record contains receipts amounting to about $1000), no documents have been introduced showing any colorable claim to ownership of Seal Check by Shimco. Accordingly, any order issued herein will not interfere with the delivery of mail addressed to Seal Check. Mail for this entity is currently addressed to P. O. Box 371170 and P. O. Box 370666, El Paso, TX 79937.
6. On June 1, 1987, "proposed" minutes were drafted for purported directors' and shareholders' meetings of that date. The minutes noted that Arthur Doty was re-elected president, vice-president and director of Shimco. The minutes were signed by Larry Sturgill but not by Doty. The minutes represented a proposal that was never adopted by the parties.
7. According to a Complaint filed by Shimco in California Superior Court on December 1, 1987, against Doty and his wife, Doty served in the capacity of president of Shimco until about July 24, 1987 at which point he "resigned." This is disputed by Doty, who still claims to be the president of Shimco. The complaint alleges that Doty breached a 1985 noncompetition agreement with Shimco by unfairly competing with the company, "stealing" Shimco assets and customers, and diverting receivables to his own use. The noncompetition agreement provides that a breach by Doty will result in his automatic resignation of any position as director or officer of the corporation.
8. The evidence establishes that Doty unfairly competed with Shimco in violation of the above agreement. In view of this breach, Doty is deemed to have automatically resigned all of his positions with the company.
9. Thereafter, Sturgill, as the sole remaining director, held a board of directors' meeting on July 24, 1987, at which it was decided that Doty had automatically resigned and forfeited his interest and ownership in Shimco. Also, Doty was fired, in part, for breaching the agreement. His termination was also justified by his misappropriation of Shimco assets and receivables. The Bylaws provide that an officer may be removed, either with or without cause, by the Board of Directors at any time (Article IV, 3). Also, the Chairman of the Board of Directors has the power to
resolve shareholder and director impasses (Bylaws, Art. II, 6, Art. III, 1a; Minutes of Actions of Incorporator, p. 7). Thus, even if Doty had been permitted to attend the directors' meeting and vote for his retention as president, he still would have been removed since Sturgill had the tie-breaking vote on the board.1/
10. On the same date the board of directors filled the vacancy on the board created by Doty's removal by appointing Andrea Sturgill as a director. The Board then appointed Andrea Sturgill president of Shimco.
11. Doty now claims that Larry Sturgill breached the non-competition agreement before October 1986 by failing to be responsible for manufacturing and by divulging confidential information. First, the agreement did not provide for automatic resignation for failure to perform the manufacturing duties. Second, although Sturgill was responsible for manufacturing in the 1985 agreement (Exh. D to Doty's March 18, 1988 submission), Doty assumed that responsibility in the 1986 agreement (Attachment to Spees' Nov. 12, 1987 submittal). In any event, Doty never initiated any official corporate action to attempt to remove Sturgill as chairman. On the other hand, Doty was removed from office as
president in accordance with the procedures set forth in the bylaws of the corporation.
Section 153.51 of the Domestic Mail Manual provides that where disagreement arises among corporate officers and others connected with a company, mail addressed to the corporation is delivered in accordance with the order of the president of the corporation. In the instant case, disputant Doty was ousted from his position as president by the Shimco board of directors. Thereafter, Andrea Sturgill was duly elected president. Accordingly, with the exceptions noted above, all Shimco mail should be delivered in accordance with the order of Andrea Sturgill.
It has also been resolved that a portion of Blacksmith Tool Company is now owned by Shimco. However, since there was no intention of selling the "bleeder cleaner" part of the business, any mail addressed to Blacksmith Tool Company which, on its face clearly pertains to the bleeder cleaner business, should continue to be delivered to Doty.
Accordingly, all mail addressed to Shimco Industries, Inc., Horizon Shim Systems, and Blacksmith Tool Company (unless the address indicates that it is specifically related to the bleeder cleaner business) at the above-mentioned post office boxes in Houston and El Paso, Texas, is to be forwarded to P. O. Box 6255,
Auburn, CA 95604, in accordance with the order of Shimco's president, Andrea Sturgill.
All mail addressed to Shimco Industries, Inc., Horizon Shim Systems, and Blacksmith Tool Company (unless the address indicates that it is related to the bleeder cleaner business) at P. O. Box 73004, Houston, TX 77273-3004; P. O. Box 370666, El Paso, TX 79937-0666; and P. O. Box 371170, El Paso, TX 79937-1170 shall be forwarded to P. O. Box 6255, Auburn, CA 95604-6255 in accordance with the order of the corporate president, Andrea Sturgill.
Randolph D. Mason Administrative Law Judge
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