135 Ky. 677 | Ky. Ct. App. | 1909
Opinion of the Court by
Affirming.
■ The Fulton Electric Light & Power Company was • organized in the year 1899, under the general corporation laws of the state of Kentucky, with an authorized capital stock of $30,000, divided into shares of the par value of $100 each, and was authorized under
The condition of affairs between the two factions, who are appellants and appellees here, is an anomalous one. Each owns an equal number of shares of the capital stock, and yet, by reason of the fact that L. W. Graham is president and authorized to cast the deciding vote where there is a tie, he is enabled to entirely monopolize the management of the corporation and to exclude the appellees from any participation therein. Prior to his election as president, the board of directors consisted of seven stockholders; but after his election he proceeded to have the number reduced to five, and this enabled him, out of the bosom, of his own family, to put in a sufficient num
One of the items relied upon by the appellees to establish the fraud of L. ~W. Graham was that his books showed that he gave two cheeks for payment of two car loads of coal from the Crabtree Coal Company, although it appeared that he only purchased one car load from that company, and he was able to make no satisfactory statement with regard to who got the money represented by the second cheek. This was a comparatively small matter, and, standing by itself, might be allowed to go unchallenged; but when we find, as appears from the testimony of Miss Tate, the bookkeeper of his own selection, that he constantly collected bills due the corporation and appropriated the money to his own use, and would make settlements not oftener than once or twice a month, and then she simply took his word for the amount he owed +be corporation, and entered the items in accordance with his dictation, we are forced to conclude that his conduct was recklessly unbusinesslike, if not fraudulent. It also appears that three or four pages of the daybook were torn out, thus making it impossible for anyone to know what items were concealed by the destruction of the leaves upon which they had been entered.
The appellees further point out, and this was admitted by Miss Tate, that at Graham’s dictation she liad entered an item of $473 on the labor account, and some time afterward, by his direction, she erased this item and entered an item of $5 in its place. This Graham explained by saying that the $473 was in large part for lawyer’s fees he had to pay for litigation which had been imposed upon him by appellees, and he thought at first this should be charged to the
Appellees point out that L. W. Graham and his wife originally owned 75 shares each of the corporate stock, and they charge that, in order to make his brother-in-law and sister-in-law eligible as officers of the corporation, he and his wife transferred to them each 5 shares of the stock, and for the purchase money took the notes of the vendees, with the stock as collateral security; and there -is testimony in the record tending to sustain the charge that this was done so as to make it p'ossible that the family could control the affairs of the corporation. Now, under this situation of affairs, .what is the duty of the court with reference to the final disposition of the corporate property? It is conceded at the outset that the courts are without jurisdiction to take from a majority of the stockholders the management of a corporation simply because they are not successfully operating it; that is, that they are not operating it so as to make money. The general rule is, as stated by counsel for appellants, that the courts will not interfere with the management of. a majority, unless there is actual fraud, or- such a wasting of the corporate property as practically amounts to fraud. Therefore it is not necessary to review any of the authorities cited by counsel for appellants on this subject. The case discussed in
We think this record shows that the corporation, prior to the time Graham obtained control, had been managed with economy and success, and that since he has had control it has been managed in a very unbusinesslike and wasteful manner, and that a continuation of his management will inevitably residt disastrously to the corporate property; that it is to the interest of all the stockholders that the corporation should be dissolved and the property sold, in order that it may be purchased by -one faction or the other, and thus restore a harmony in the management which it is evident never can be obtained while the situation
We are strengthened in the opinion we have reached by the fact that we are concurring in the conclusion of facts arrived at by the learned circuit judge. He was on the ground. He, perhaps, knew' all the parties, their position in society, their credibility as witnesses, and his opinion should not be lightly set aside, but, on the contrary, should be upheld and maintained,unless the appellate court is firmly of the opinion that his conclusion is contrary to the weight of the evidence, which is not true in the case before us, as we have expressed above.
In conclusion, believing, as we do, that it is for the substantial interest of all parties concerned that the judgment of the circuit court should be affirmed, it is so ordered.