73 F.2d 789 | 5th Cir. | 1934
The appellant, the owner of shares of the common stock of Anniston Office Building Company, an Alabama corporation (herein referred to as the corporation), suing in behalf of himself, the corporation, and other owners of stock thereof, filed his bill in equity against the corporation and directors and officers thereof, alleging sundry acts of misconduct of named officers and directors of the corporation in violation of their duties to the corporation and its stockholders, whereby assets of tbe corporation were wasted and dissipated, and the foreclosure of the deed of trust securing first mortgage bonds of the corporation was wrongfully precipitated at a time when business and financial conditions were such that a sale of the mortgaged property of the corporation would not produce a larger sum than that of its first mortgage bonds, with the result that the corporation's stockholders lost their interest and estate in the corporate property and were damaged to the extent of $250,000; and the bill contained a prayer that the liability of directors and officers of the corporation for assets and property of the corporation wasted, misappropriated, and lost by reason of their breaches of trust be ascertained, and that the court by its decree enforce the collection and payment of the amount so ascertained and that that amount be distributed to those en
The following were the court’s stated conclusions of law:
“1. The management of the corporate affairs of the Anniston Office Building Company by the officers and directors, respondents in this cause, up to the time the property was taken over by the Trustee under the power contained in the deed of trust, to-wit, November 1, 1931, was regular and valid and complainant is not entitled to any relief from or on account of any of said actions,
“2. There is nothing that the officers and directors of said corporation, the respondents in said cause, did in the management of the affairs of said corporation, or failed to do in the management of said affairs during the period complained of in said bill which the court finds to have been irregular, improper or invalid, and it is therefore the opinion of this court that the management of said corporate affairs by the respondents, the receipt and disbursement of its corporate funds, and the efforts put forth to prevent foreclosure, were regular, proper and valid and that complainant is not entitled to any relief whatsoever.”
A principal charge contained in the bill was to the effect that during the year 1931, when the corporation had in cash a sum more than sufficient to pay the interest due on June 1, 1931, on its outstanding first mortgage bonds, the appellees Luther B. Liles, who was the president of the corporation and its executive manager, Charles A. Hamilton and W. F. Johnson, who were directors of the corporation, co-operated in representing to holders of first mortgage bonds of the corporation that the corporation was in worse financial condition than it really was, in buying for their own profit a considerable amount of first mortgage bonds for substantially less than the bonds were worth, in bringing about á default in the payment of interest due on June 1, 1931, and in precipitating a foreclosure of the deed of trust securing those bonds, though the corporation had an opportunity to secure an extension of ten years for the payment of its outstanding first mortgage bonds.
Evidence adduced in the trial Showed the following: The Anniston Office Building Company was organized in 1926 for the purpose of constructing, owning, and operating an office building in Anniston, Alá. In the purchase of a lot and the construction of the building thereon the corporation expended the proceeds of $225,000 of first mortgage bonds, which were payable serially over a period of years, of $35,000 of second mortgage bonds, and of $149,500 of common capital stock, that being the amount of the authorized issue of $160,000 of capital stock which was issued. Pursuant to a provision of the deed of trust securing the first mortgage bonds, the corporation, between June 1, 1930, and March 1, 1930, through Caldwell & Co., the underwriters of the corporation’s first mortgage bonds, deposited in the Bank of Tennessee the sum of $8,000, which was to be applied in paying to a named New York bank, which was the, agent of the trustee under the deed of trust securing the first mortgage bonds, principal, and interest on those bonds. The Bank of Tennessee failed in November, 1930, and because of other of its depositors having prior liens on its assets, the corporation lost the entire amount of said deposit. Current income of the corporation was .used in paying the interest due December 1, 1930, on its first mortgage bonds. On june 1, 1931, $6,000 in interest on the corporation’s first mortgage bonds and $12,000 in principal thereof became due. At that
It is not fairly open to question that the court’s findings of fact were supported by evidence and that its stated conclusions of law were devoid of error. The record contains nothing which properly can he given the effect of overcoming the presumption that the trial court’s findings from evidence are correct, especially when the evidence consisted principally of testimony orally given in the
The record does not show that evidence adduced required or fairly justified the conclusion that during the year 1931 the assets of the corporation were worth or likely to become worth enough to pay its debts, which then amounted to approximately $280,000, or that the exercise by the corporation’s officers and directors of the utmost diligence, good faith, and sound judgment in the conduct of its affairs could have resulted in its stock having any value. The appellant was not entitled to maintain the suit without showing that the stock of the corporation held by him had value, or would have had value but for acts or omissions of the appellees which are complained of. A holder of worthless stock of the corporation could not have been injured by the acts complained of. Darragh v. H. Wetter Mfg. Co. (C. C. A.) 78 F. 7; Williams v. Neville, 98 Miss. 268, 53 So. 594.
The record does not show that the decree appealed from was erroneous. That decree is affirmed.