Galler v. Galler

Benjamin and Isadore Galler were brothers and equal partners in the Galler Drug Company (GDC). In 1955, they executed an agreement to ensure that after the death of the one of the brothers, the immediate family of the deceased would maintain equal control of GDC. In 1956, Benjamin created a trust with his shares of GDC and named his wife, Emma (plaintiff), as trustee. Benjamin died in December 1957. Prior to Benjamin’s death, Isadore, Isadore’s wife, Rose, and Isadore’s son, Aaron (defendants) had decided that they were not going to honor the agreement. When Emma presented Benjamin’s stock certificates to the defendants to transfer the certificates into her name, the defendants tried to convince Emma to abandon the agreement. Emma refused but agreed to let Aaron become the president of GDC for one year without interference in exchange for Aaron reissuing Benjamin’s stock in Emma’s name. Subsequently, Emma demanded enforcement of the terms of the agreement guaranteeing her equal control, dividends each year, and a continuation of Benjamin’s salary. The defendants refused, and Emma brought suit. The lower court ruled that the agreement was void because “the undue duration, stated purpose and substantial disregard of the provisions of the Corporation Act outweigh any considerations which might call for divisibility” of the agreement. The court thus ruled that the public-policy implications of the agreement rendered it void. Emma appealed.