155 So. 538 | Ala. | 1934
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *175 on the corporation and to pretend to absorb its losses at the expense of the discouraged or uninformed stockholders and to hold on to their offices and the salaries therefrom which otherwise would and should be discontinued. * * *
"That the respondent corporation has failed of the purposes for which it was organized and for that reason should be dissolved or the respondent cannot continue a profitable business for the reason that it is but a question of time when the annual charges and expenses will absorb the entire assets of the company and there is no reasonable probability of the increase of the assets or the income in excess of the current expenses. * * *
"That it would be futile and unavailing to apply to the directors of the corporation for relief, for that they are dominated and controlled by the officers who are interested in continuing the corporation for their own interest, and that all efforts heretofore made to present matters to the stockholders have been thwarted by the efforts of the corporation with the use of corporate funds to carry on misleading propaganda to defeat the securing of the dissolution.
"That complainants do not know the names of other stockholders and have not been able after due diligence to ascertain their names and the amount of their holdings."
The defendant interposed a demurrer to the bill, assigning among other grounds, the following:
"For that in so far as said complaint seeks to dissolve or liquidate the affairs of respondent corporation, the same is without equity. * * *
"For that the respondent corporation is subject to dissolution at the instance of the State of Alabama only.
"For there is a non-joinder of parties in this, that the Superintendent of Insurance is not made a party to said proceedings. * * *
"For that it affirmatively appears from the averments of said complaint that there are other stockholders not made parties to these proceedings; and no reason is averred why such stockholders are not made parties. * * *
"For that chapter 306 of the Code of 1923 abrogated the common law remedy of stockholders to apply for a receiver and seek dissolution as prayed for in the complaint herein."
Charles C. Greer, as superintendent of insurance of the state of Alabama, acting by and through the Attorney General, filed a petition to be allowed to intervene as a defendant, and filed demurrers to the bill, and the circuit court, over the complainants' objection, allowed such intervention, and the superintendent of insurance demurred to the bill on grounds, among others, as follows:
"For that section 8344 of the Code of 1923 vests in the Superintendent of Insurance of the State of Alabama, through the Attorney General of the State, the exclusive right to claim the relief prayed for in complainants' complaint.
"For that this court has no jurisdiction of the suit of complainants to award the relief prayed for in complainants' bill of complaint. * * *
"For that chapter 306 of the Code of 1923 abrogated the common law remedy of stockholders to apply for a receiver and seek a dissolution as prayed for in the complaint herein."
The cause being submitted for decree on the separate demurrers of the defendant corporation, and the superintendent of insurance, "and the Court being of the opinion that the right to institute and maintain a proceeding seeking the relief sought by complainants in their bill of complaint heretofore filed herein, vests and lies solely and exclusively in the Superintendent of Insurance, and that complainants as stockholders of the respondent corporation are accordingly without right to institute or maintain this suit," sustained the separate demurrers of the superintendent of insurance and the Bankers' Fire Marine Insurance Company, and dismissed the bill, and taxed the complainants with the costs.
This appeal is from the final decree, and the assignments of error question the soundness of the court's ruling on the petition of the superintendent of insurance to intervene, the rulings on the demurrers, and the dismissal of the bill.
While courts of equity, recognizing the principle that a majority of the stockholders have the right of control, will not, as a general rule, interfere to settle mere quarrels and differences of opinion among stockholders as to the management of the corporate affairs, yet, though the corporation is solvent, where the action of the majority amounts to a wanton or fraudulent destruction of the rights of the minority, the minority may invoke the aid of a court of equity to protect their interest in the trust, and restrain the offending trustee in possession from a wanton dissipation and waste of the corporate property. Fort Payne Furnace Co. v. Fort Payne Coal Iron Co.,
The bill in this case is not filed under article 12, chapter 274, of the Code, §§ 7063-7070, but, as observed in Decatur Land Co. v. Robinson,
Appellee concedes the soundness of these principles as applied to ordinary business corporations not affected with a public interest, but contends that they are not now applicable to domestic corporations organized under the laws of this state to engage in the business of insuring property against loss by fire or cyclone; that, as to such corporations, the state, in the exercise of its powers of visitation, inspection, and control, has, by the provisions of section 8344 of the Code of 1923, and related statutes, conferred on the state superintendent of insurance, the exclusive right to invoke the interposition of a court of equity in respect to the affairs of such corporations. That section of the Code provides that "If upon examination, the insurance commissioner is of opinion that any domestic insurance company is insolvent, or has exceededits powers, or has failed to comply with any provision of thelaw, or that its condition is such as to render its furtherproceedings hazardous to the public, or to its policy holders, he shall apply to a court of competent jurisdiction through the attorney-general of the state, to issue an injunction restraining it, in whole or in part, from further proceeding with its business, such court may, in its discretion, issue the injunction forthwith, or upon notice and hearing thereof, and after a full hearing of the matter, may dissolve or modify such injunction, or make it perpetual, and may make all orders and decrees needful in the premises, and may appoint agents or receivers to take possession of the property and effects of the company, and to settle its affairs subject to such rules and orders as the court may, from time to time, prescribe, according to the course or proceedings in equity." (Italics supplied.) Code 1923, § 8344.
It will be noted there is no express provision in this statute relative to the right or interest of stockholders, or that inhibits a stockholder from pursuing legal or equitable remedies to protect his private rights. The statute deals with the public interest, including the interest of policyholders, and as a general rule "to entitle the State to interfere to prevent ultra vires corporate acts, it seems that some injury to the public must be involved." Trust Co. of Georgia v. State,
If it had been the legislative intent to confer upon the superintendent of insurance, the exclusive right to invoke equitable intervention to dissolve insurance stock corporations that have failed of their purposes, we apprehend that it would have so expressly declared, as it did do in respect to "fraternal benefit societies" by section 25 of the act "For the Regulation and Control of Fraternal Benefit Societies," approved April 24, 1911 (Acts 1911, p. 700), now section 8498 of the Code.
We are not willing to extend the scope of section 8344 by construction, as has been done of similar statutes by some of the courts, notably Kentucky in Breckinridge v. Kentucky Central Life Accident Ins. Co. et al.,
While section 9485, new to the Code of 1923, providing for "intervention" by petition, is incorporated in chapter 330, article 11, dealing with pleading and practice in common-law actions, it has been incidentally treated as applicable to proceedings in equity as well as in actions at law, but declared to be merely "cumulative." Ex parte Ide (Ide v. Johnson) (Ala. Sup.)
The averment of the bill that "complainants do not know the names of other stockholders and have not been able, after due diligence, to ascertain their names and the amount of their holdings," is not sufficient, on demurrer, to relieve the complainants from making other stockholders, and especially the offending officers and agents, parties defendant. What makes them necessary parties is the fact that they are stockholders, or are participating in the dissipation and destruction of the corporation's assets, and the extent of their holdings is not important. Gettinger v. Heaney,
The judgment here is that the circuit court erred in allowing the intervention and in sustaining the demurrers of the intervener; that the court did not err in sustaining the demurrers of the original defendant on the ground of nonjoinder of parties, but error was committed in dismissing the bill. For the errors noted, the decree is reversed, and the cause is remanded.
Reversed and remanded.
ANDERSON, C. J., and THOMAS and KNIGHT, JJ., concur.
