## Facts

- A closely held corporation owned and operated a restaurant; record shareholders were Skordas (40%), Exadaktilos (20%), and Malanos and Marlas (20% each).
- A 20% stock certificate was issued in Exadaktilos’s name for $20,000.
- Defendants asserted Skordas (plaintiff’s father-in-law) supplied the purchase funds and retained beneficial ownership, making Exadaktilos a nominal holder under a resulting-trust theory.
- Exadaktilos claimed he paid for the stock from personal savings and other funds; defendants challenged this with tax-return evidence inconsistent with the claimed ability to save $20,000.
- Skordas was financially able to assist family members and later advanced funds to Exadaktilos for restaurant improvements on an unsecured note, without demanding interest or repayment.
- After receiving the stock certificate, Exadaktilos co-signed and personally guaranteed a substantial bank loan for the corporation.
- Exadaktilos had no prior restaurant experience; the principals expected he would learn the business and later participate in management.
- Exadaktilos worked at the restaurant but repeatedly quit without notice, had conflicts with employees and the other principals, and was ultimately terminated.
- Corporate formalities were weak; decisions were made informally and regular meetings were not held.
- Exadaktilos sued for relief as an “oppressed shareholder” under N.J.S.A. 14A:12-7, including relief tied to his removal from employment and lack of management participation.

## Issues

1. Whether Exadaktilos was a true shareholder, or whether Skordas was the beneficial owner of the 20% shares under a resulting trust.
2. If Exadaktilos was a shareholder, whether defendants’ conduct constituted “oppression” under N.J.S.A. 14A:12-7 warranting equitable relief.

## Decision

- The court found Exadaktilos held legal title to the 20% stock and rejected the asserted resulting trust.
- The court denied oppressed-shareholder relief under N.J.S.A. 14A:12-7.
- The court concluded Exadaktilos’s termination and exclusion from management were attributable to unsatisfactory performance and his failure to meet the parties’ original expectations, not majority misconduct.

## Legal Principles

- A resulting trust in stock may arise when one person pays the purchase price and title is taken in another’s name, but only if the evidence shows an intent for the payor to retain beneficial ownership.
- In assessing claimed resulting trusts, a court considers intent, documentation (including whether title was reserved or security taken), the parties’ relationship, and later conduct consistent or inconsistent with ownership.
- In close corporations, “oppression” under N.J.S.A. 14A:12-7 centers on frustration of a minority shareholder’s reasonable expectations known at the time of investment (often including continued employment and participation in management).
- Termination of a shareholder-employee for legitimate business reasons, including poor performance, unreliability, or inability to work with others, does not by itself constitute shareholder oppression.
- Informal corporate governance, without proof of bad-faith conduct directed at the minority shareholder or a coercive squeeze-out, is insufficient to establish oppression.

## Conclusion

The court held that Exadaktilos was the legal owner of 20% of the corporation’s shares, but it found no “oppression” under N.J.S.A. 14A:12-7 because the majority’s actions reflected a legitimate response to his employment problems rather than an improper freeze-out of his shareholder interests.


Exadaktilos v. Cinnaminson Realty Co., 167 N.J. Super. 141, 400 A.2d 554 (N.J. Super. Ct. Law Div. 1979)