*1 578 Supreme
trict. The Court of INTER-CONTINENTAL CORPORATION elec this statute mean that an construed al., Appellants, et duly be held bonds tion could to revoke voted, v. when authorized issued change in showed that later conditions MOODY, Appellee. Robert L. unnecessary pro spend their would be No. 14611. Dis Independent Huntsville School ceeds. Appeals Court of Civil of Texas. McAdams, 546, Tex. trict v. 221 S.W.2d Sup.1949. Houston. 15, Dec. 1966. statute
From these decisions and this I for the Rehearing that an election called 26, conclude Jan. 1967. Denied purpose issuance authorizing 16, Rehearing Denied Second Feb. 1967. levy bonds and the of a tax illegal thereof is the School void where
Board, expedient a contract with voters, attempts to determine also propositions voted
one or the other of the adopted
on would be declared adopted propositions
other not where both The against.
received more votes for than author-
effect of such action would be the and the
ization of the issuance bonds simultane-
revocation of the same bonds later
ously showing of a and without
change in conditions. representations voters made to the ascertaining the method of result election, delegation together with Board the discretion voters,
of Trustees to the was calculated voting propositions affect on both The elec
and the result election. by, con but was
tion was authorized illegal to, pertinent
trary and is statutes Dodds, Stephens 243 S.W.
and void. v. 1922; City of
710, Tex.Civ.App., Amarillo McCraw, 127,113S.W.
Houston v. 131Tex. 1938; 1215, Mesquite Dist.
2d Ind. School 242 Gross,
v. 123 Tex. S.W.2d School Thompson Elmo Ind.
(1934); v.
Dist., Tex.Civ.App., Waco 269 S.W.
1925. judgment
I would reverse the voiding judgment court and render
trial respectfully According, I
the election. dissent.
voice this
Thompson, Coe, Irons, Cousins & Ver- Emory White, Jr., Dallas, non Coe L. appellant
for Corp. Inter-Continental Hicks, appel- F. Houston, Warren lant-intervenor Martin Richardson. J. Alexander,
Phipps, Smith & Chas. B. Galveston, Herz, Jr., Irwin M. Smith for appellee. Rehearing
On Motion BELL, Chief Justice. original opinion down De- handed
Our 15, the fol- cember 1966 is withdrawn and opinion lowing is substituted as Court. summary judg- appeal is an from a
This appellee against appellant, ment in favor of re- Corporation, granting Inter-Continental covery July dated promissory $80,000.00. principal in the amount Inter- in the name of The note executed president, Corporation by its Continental secretary. Shively, by its attested S. J. judgment, includ- The total amount fee, attorney’s interest and an ing accrued $98,721.33. The Richardson, in In- a stockholder Martín J. Intervenor, herein called ter-Continental, July, the suit to en- action occurred in and the note sought who to intervene in ground year. to 1st due in join of the note on the National was one transaction that the note was an ultra vires 1961, appellant, or May, Sometime given it was in satisfaction of because appellant, president of who was personal Shively, the obligation of S. J. the stock purchasing became interested president right Inter-Continental. Company Insurance Life of National Ar- to intervene was asserted virtue N.L.A., America, a South herein called ticle B(l) subd. of the Business Cor- appears that sev- corporation. Dakota court, Act, poration V.A.T.S. The considered organizations insurance eral appellee, motion of the intervention. struck appellee, but decid- purchase, including such Shively talked to against ed it. Appellee’s petition the usual was in form knowing that purchase, about He promissory one to recover on a note. *4 fa- investigation was through Moody pleading response filed no Inter-Con- in to the structure of N.L.A. Wheth- miliar with tinental’s first amended answer. Shively Moody proposal brought er to appears Shively, It that Mr. who had S. Shively Moody obtain J. or went to first many been in the insurance business for by the the information is not made clear years, organized Company the Insurance record, Shively Moody gave he testifies A., Americas, of The I. herein called C. concerning knowledge the benefit of his in 1959or It was a Panamanian cor- 1960. occurred is not N.L.A. when this Just poration authority to write all with broad event, any from In in or- clear the record. forms of insurance in and to invest securi- purchase, as der to finance the insofar a ties. He was the owner of all the stock concerned, Moody down-payment was except qualifying for what he refers to as $650,000.00 agreed a for to make loan of shares. It any never wrote insurance days $150,- 60 interest. The other at 5% policies. did, however, shortly its after 000.00 for initial was borrow- formation, begin to invest in stock of other ed from Associ- International Construction companies. insurance investment The first ates, herein called International Associates. was in of the stock of Texas Reserve Too, $50,000.00. Moody wanted, addition, in 30% Company, Life Insurance called herein Tex- Shively agreed this. There seems some Reserve, and in of the stock of question Shively per- as to whether acted 51% appellant, Corporation. Inter-Continental sonally borrowing the and then in Appellant’s single asset lending appellant point it to because at one 20% stock Texas Reserve. While we have Shively point testifed he did at another figures, used purchases round these two he he acting testified was at all times for actually gave I.C.A. control over Texas appellant. Reserve because the Texas Reserve stock 1, 1961, May On 31 or the Board June thus slightly obtained amounted to more appellant passed a The resolu- resolution. than Title to stock of Re- 50%. Shively, tion authorized as the act and serve appellant and of was taken in the corporation, purchase deed of the from name of I.C.A. option Gibraltar Life its interest in an purchase To finance the purchase of this stock stock of that it N.L.A. held with $700,000.00came Shively from persons. Shively I.C.A. and some It gave broad personally $1,000,000.00 borrowed from the pur- to work out the terms of the Dallas, First National Bank of herein called including authority chase to make the down- National, 1st and then loaned it I.C.A. payment promissory and to execute His loan to I.C.A. pledge notes, was secured pledges, assignments collateral or of stock in appellant Texas Reserve and necessary. para- other instruments One Shively pledged then this stock and graph specifically Shively authorized that of I.C.A. 1st National. president This trans- acting for the to bor- that of I.C.A.
row from himself as an individual were with 1st National as down-pay- security, money necessary rights appellant to make the as were the empowered fix the in- pur- He in the stock of that was being ment. N.L.A. Moody Secondly, and other of his note. chased. had the terest rate terms note of Too, purchase 5, 1961, he was authorized to effect and second lien on the stock June of Too, appellant appellant Life for from Gibraltar and Texas Reserve. $2,500,000.00 that it the obligation shares of stock N.L.A. owned. there was by appellant purchase owed for the au- Board appellant’s On June Third, Shively, stock N.L.A. for either appellant Shively act of thorized appellant, agreed himself I.C.A., Shively, individ- corporation, Moody $50,000.00 making $650,- ob- joint several ually, into a to enter indefinitely 000.00 loan because of stated $650,- borrowing purpose ligation Moody services Shively rendered when to execute 000.00 acquisition became interested in the of N. inter- 60-day non-negotiable note with 5% L.A. nothing There is stage at this Too, pledge Shively was est. authorized writing showing conclusively this option to interest obligation or Shively’s whether it was the stock purchase N.L.A. and stock appellant’s obligation. any- Nor is there by appellant from Gibral- purchased N.L.A. thing in the corporate minutes about this pledge tar. was authorized to $50,000.00,or authority create it unless *5 appellant secure all of to general credit found in the language broad of the resolu- by above contracts created indebtedness agreement tions we have noticed. The sign necessary all instruments. and to testimony rests in the Moody Shively of and 1961, president there is Shively of and testimony conflict in the On June to whether individually, agreement by executed the such appellant and was made Moody Shively $650,000.00non-negotiable individually appel- note or as the act of lant. security of stock the shares pledged and held in the appellant and
of Reserve Texas appears It had a handsome that N.L.A. that the The note recited name of I.C.A. Shively planned sell cash reserve and 1st as collateral by held National stock was the Texas stock owned I.C.A. Reserve $1,- Shively obligation securing an of Moody pay and thus and N.L.A. be able to 050,000.00 payable or before that was ap- testimony it Shively’s July In This he do 1961. others. unable to because was 5, 1961, ex- appellant pears that on of of adverse action officials South June $805,000.00, its note to him for ecuted releasing Dakota certain securities appear in the rec- though the does not purchase N.L.A. The of the stock in N. ord. consummated, actually subject to L.A. was payment deferred above stated. When $800,000.00 pay- cash to the In addition Shively personal obligation of to 1st pur- made, deferred ment due, Moody’s National was and note was stock, amounted price for N.L.A. chase then, due, Shively pay. He was unable to $2,500,000.00. interest It was due with according testimony in the record from use equal annual installments. We two though Shively Moody, and none of varying slightly figures because these round time appellants’ up to this reflect records parts in different amounts are used it, Moody see about further went to record. Moody financing. interested. could, is, thought, have Shively testified he he of fact recital The result of above but was refinanced the loan at 1st National Shively individually owed 1st first, $650,000.00 do he incurred unable to this and $1,050,000.00which National Moody Shively suggested also. trans- purchase stock in Reserve and at 1st National ferring stock and his indebtedness all such appellant and and 583 March, 1963, did though lose his interest Bank the South- refinancing it at the reacquired through he later other re- finally be- agreed It was west Houston. interest, Shively financing. reacquiring After his Shively Moody that tween Shively through later lost his fore- $1,300,000.00 interest borrow the Bank of would at closure, deposition though at time of his Moody give said the Southwest and would he appel- he testified owned stock of of the some bank a “take out” letter. The effect .Shively, lant. over when all of resolutions obligate Moody letter was to to take gave passed, president were was a paid the loan if it director and was not also appellant him right Moody present take it want- voted. over. Too, $100,000.00 I.C.A., wholly company, ed for this letter. owned When Shive- ly Moody appellant’s previous $50,000.00, just mentioned owned over stock 50% they just said deal. balance was make it one owned $50,000.00 None of this been other stockholders. The December res- paid. August, Shively This all occurred in 1962. olution recited that discussed sev- Shively At eral personally unpaid obligations the time 1st in- owed $1,055,000.00. purchased National This went curred when it the stock of N.L. amount to that bank A. in and the securities 1961. was then resolved that the held 1st recognized National sent Board including of the certain debts were Bank $100,000.00 Moody appellee, Southwest. knew of this. and it was stated explained testified financing debts were situation incurred N.L,A. to him. purchase stock. of- The ficers authorized were to execute notes record, When we examine the it becomes to evidence debts and the directors very confusing as to the exact disposition previously ratified *6 $210,000.00 that appellant. Moody $100,000.00 went to an- In note to for was executed place other it paid though was stated Moody They the note is not in was evidence. $650,000.00. $150,- it Shively, Also is that stated that also reflect later out his of personal funds, 000.00 went paid $20,000.00 to International and the Associates. just enough $80,000.00 There was not to note sued on borrowed here for was pay all given of company this. possible Of course it is in renewal of $245,000.00 passed original just through the note mentioned. appellant hands of financing and additional wish to that from time time note to was pay obtained to obligations. the other Shively great advanced a his amount of personal Nowhere corporations, funds to the record do we find a his related note Shively appellant Moody appellant, including though or are unable to we $100,000.00,though of testimony to determine the that went to is amounts there December, that such given a was each. The note resolution of but we appellant $42,- unable to debt him signed determine whether it recites a of to of was by Shively, expenditures appellant 873.38 advances made or both. first for and thing appellant concerning by by operation we in the find him of action taken appellant $2,805,000.00previ- specific any with to a note of reference to addition ously Shively. this note Moody, given indebtedness of it to than to What other told, $805,000.00 $650,000.00, represented but loan of we are not the resolution passed by appellant previously of it be that alluded to the Board of on Decem- could 5, 1961, when, Shively ber where testified that on 1962. This was at time a June amount, shows, appellant gave for this Shively danger him its note record was in record, conceivably, losing appellant of under for his interest and his Moody companies He he and Inter- through other first borrowed from foreclosure. stockholder, notice, appellee national Associates and turn he loaned which of had therefore, appellant. It, to the note is unenforceable. pleads urged illegality, being in effect it The pleading appellant of involved on the corporate se use funds it was malum in to appellee’s hearing of the motion for sum- pay personal debt of an officer. to mary judgment orig- was its first amended answer, inal pled which its defenses. answer, except in his reply In to this It, denial, up general to a addition set appellee summary judgment, motion the following defenses: motion pleading. In his filed further no among summary judgment appellee, upon 1. That given sued was necessary notice at this not to matters by Shively Moody Moody get to in order to point, pled appellants’ assertion give the take out letter to Bank of a matter law ultra vires was as Shively the Southwest enable borrow 2.04, A pled Subd. tenable. He then Article $1,300,000.00 pay personal debt of Act. Business $1,055,000.00 Shively in at the the amount of here, both appellee relies In brief 1st National. In this was connection 2.04. Article A B of said Subdivisions alleged that the National debt 1st $1,300,000.00 paid out the remain- Appellant that Article contends $243,000.00 ing personal used for the the “limited A, merely abolished Subd. Shively wholly benefit of or one of his of a power capacity” theory relating corporations appellant owned received theory courts corporation under which alleged no direct It also the above benefit. corporation has a some states hold $50,- recited evidence about the power capacity an act no do agreed 000.00 when statute its charter or some authorized Moody. was borrowed from authority beyond the charter act position defense of Its is that the is void. 2. That the then officers and directors completely abolished ultra vires is not appellant authority were without theory that away the act with does cause the note to be issued for the has everyone corporation with dealing appellant, benefit go which did not author- limits of notice constructive but was for the benefit of either sole However, it ity in the charter. contained corporation an officer agency are says principles of the usual appellant, other than and that may suc- applicable knowledge full of the circumstances. This enter cessfully assert want *7 plea in effect is a of ultra vires. has party a transaction if the other into 3. beyond That the the note was without a valid con- notice that the act is actual being sideration possession contravention of Article of authority, charter or is in 1348, Ann.Tex.Civ.St., place inquiry Vernon’s which of facts that him on cognizant said was and the note is that authority. Appellee’s was contention wholly Appellee, corpo- alleged, by void. it is was Article 2.04 the defense abolishes at cognizant all material times of facts ration ultra vires. of by is reason of which he deemed to have might it be the view that We are known the officers directors were reasonably from testified inferred facts without execute the note. $650,000.00was original that the loan used,
4. “illegal” individually, While is not in turn Shively the term made who it is alleged Shively by of the recited facts that appellant reason loaned that Moody the given individually pay was for services ren- agreed solely contrary dered part $50,000.00. inference or in an officer A Too, appellant may benefit of another be think might or the also made. we corporation inferred, reasonably was the we think which sole be fact
585 is far Moody- so been abolished compelled, that is when inference letter he concerned. agreed give to and “take-out” be used to $1,055,000.00was to
knew
Shively at
pay
personal obligation of
contention and
overrule this
We
known
He must have
1st National.
available
hold that such defense
money must
except for
corporation.
him and
be obtained elsewhere to
$150,000.00.
Associates its
International
A Texas Busi
Article
subd. of
was
While there is evidence that
that the
Corporation Act makes clear
ness
used
to be
specifically told the
capacity”
corporation shall
“lack
benefit,
appellant’s
other
than
any
defense
not be the basis of
claim or
so
must have
evidence is such that he
equity.
any
law in
The “want
suit at
except
possible sum of
known
for the
capacity” theory
in some states
followed
however,
here,
$95,000.00.
that we
noteWe
beyond
any act
led to the conclusion that
any
record that
are unable to
tell
While
powers
the charter
void.
appel-
$1,300,000.00
directly to
went
Texas,
Texas
actually
when the
the law in
refinancing
appear
lant.
does
Corporation
passed, was
Act was
Business
effected
the Bank of the
at
Southwest
void,
and not
that such acts were voidable
probably prevented
1st
foreclosure
cases
expressions in
Texas
there were
some
National.
National
Foreclosure
1st
Texas followed
that such acts were void.
taking
would have had the effect not
Hildebrand,
capacity theory.
general
Shively’s
all
companies
interest in all his
Brimble,
132;
Corporations, Section
n
mentioned,
appellant’s
we have
but also
Business
Ultra
under The Texas
Vires
stock
there
owned
I.C.A. and thus
Act,
Corporation
Texas Law Review
40
gone
purchaser appellant’s
have
677,
that Sub
680.
are of
view
Appellee
interest in the stock of N.L.A.
A
remove
division
was intended to
urges that the latter fact shows a direct
theory.
capacity”
vestige of
“want of
appellant.
benefit
Appellee
plead
did not
Trotti,
Existing Corpora
See
An
Should
estoppel. We think an inference can be
Discussion,
Adopt
tion
the Act—Panel
drawn that
no
received
direct
3A,
Institute,
Proceedings, T.B.C.A.
Vol.
benefit, certainly at least from the note
456,
Statutes,
Vernon’s Annotated Texas
sued on.
Donsky, 43
following
case notes:
Patton,
43
Texas Law Review
The moving party in a motion Texas Law Review 796.
for summary judgment has the burden of
involving a
find
we
only Texas cases
showing there is
genuine dispute
no
toas
adoption
since
ultra vires
discussion of
any material issue of fact and all doubts
Act
Business
of the Texas
as to
existence of such are resolved
Steel
Omni
Corp. of Texas v.
Empire Steel
against the
Penn,
movant. Gulbenkian v.
e.,
ref.,
r.n.
(CCA),
Corp.,
378 S.W.2d
151 Tex.
tions are in the articles of in- performance only in a act suit corporation, but act, that such convey- under the re- shareholder then ance or was, transfer is, beyond or certain strictions stated. also attaches scope purpose purposes corpo- consequences beyond to acts expressed in its articles authority. It allows a suit rate incorporation inconsistent with representative corporation, or authorized expressed such authority, limitations of it, shareholder, against *9 offend- of or a the may be it author- ing and directors. Then asserted: officers Richardson, the shareholder against of Martin by Attorney the izes a suit General J. intervenor. who refer to as we will corporation. the in interven- petition filed his Intervenor An 2.04 will that analysis of demonstrate seeking corporation against tion really all classes protection it affords to He the enjoin payment to note. the Any protection. entitled to shareholder performance right enjoin to remedy, equitably entitled to asserted this his if has B(l). the subd. performance act under said Article relief, through enjoin a suit to as petition in same particular corporation The was substance the act. The or ap- answer of representatives the amended its or shareholder have first corpora- pellant alleged the remedy by suing di- their officers and that was the tion execute the party dealing authority third with the lacked to rectors. The personal the corporation protected payment the extent that which given is to was compensation any obligation he is loss one of his other entitled except damage, profits, corporations where a share- no direct benefit and that alleged injunction. by appellant. holder is entitled The was He received He public is vested protected by appellee. the knowledge of such facts Attorney General, if Moody, the which we have alleged injury that to himself and statutory noticed. The result is a broad issued, loss injunction the suffer no dealing corpora- scheme with acts of the except anticipated profits. beyond that authority.
tion its Appellee petition moved strike adopted by intervention reference By remedy specified giving a grounds allegations appellee therefor persons corporation and not including previously Op- had made in his “Plea in itself, against except offending of position to Motion for Leave Intervene” directors, legislative ficer or we find the stockholder, filed by another C. C. Carson. preclude corporation intent Carson, health, not to for reasons decided pleading This ultra vires a defense. pursue attempt do not to intervene. We gives stability construction relative com find plea appellee. in the record this mercial transactions and at the same time However, take we it from recitals in protects really protection. those entitled to court’s order the intervention striking The act nowhere contains intimation Richardson and in of appellee’s statements that the doctrine of constructive no counsel found in facts on the statement of tice is view abolished. We are hearing of motion to strike the inter- corpora ultra defense of vires asserting vention that was tion in a party suit other acting really Richardson was not for him- though transaction is unavailable even self but for the were there party had actual notice of the want equities By supplemental no in his favor. Brimble, authority. Ultra Vires See transcript appellee filed shows he a motion under The Texas Business summary judgment against intervenor. Act, 677, 688-690. court, was not acted but if The of an officer’s debt ultra granted, been it would have been error illegal. vires Texas it is Whit under the record.
ten, Republic Trustee v. National Bank of a hearing court held on the motion Dallas, 415 (Tex.Sup.). 397 S.W.2d strike, testimony at which given. points urged by appellant corpo- Other It was shown intervenor the owner though specifically ration discussed of 19.38shares of stock. are overruled. Inter- Coe, attorney representing Mr. Continental, hearing testified on proceed
We now to discuss the action of testi- He motion strike intervention. striking the trial court the intervention *10 prepared fied represented Big Development that he D would intervene. Mr. Coe Corporation petition Car- Big D was intervene and sent it to Mr. time to time. to percent owner of slightly more than 50 son. of the stock of After Inter-Continental. appears Carson had It that after Mr. by appellee, this suit was filed Mr. Coe was . petition it had signed the been sent to employed represent Inter-Continental. Hicks, attorney Mr. for the intervenor In briefing the law Mr. Coe came Richardson, de- Mr. Carson and his doctor conclusion that the individual stockholders health, not, he cided should because of his might rights have some that were different pursue matter Mr. Barfield further. corporation, from the though this had not then, Coe, talking Mr. obtained without passed been the courts. He told Mr. agreement inter- from Mr. Richardson to Childre, D. A. principal one of the stock- Barfield, he would vene. Mr. told Mr. Coe D, holders one Big officers of copy had petition that intervention uncertainty this in the law suggested Carson, Rich- been drawn for Mr. Mr. have might D, this make wise for Big a stock- it, mail sign Barfield ardson and Mr. holder in Inter-Continental, to intervene. Mr. attorney. got Mr. Barfield Childre, Mr. reasons, without stating his Hicks’ name Mr. Coe. and address from told Mr. heCoe rather DBig had not be an intervenor. quote We now Mr. Coe’s testi- Richard- Hicks, attorney for Mr. Mr. mony as to what Mr. Childre said to him. mo- hearing son, also testified in the Mr. Childre I get said: “Could not some- not know He testified he did tion to strike. one to find a stockholder who would be suf- Mr. Mr. talked to Carson and had never ficiently interested to become an inter- intervention petition Richardson. The venor ?” “Certainly, Mr. Coe then said: Hicks to Mr. Mr. mailed Carson was if do, that is you what want to that is all Mr. this from Mr. office. Previous Coe’s right.” telephone Hicks Coe had called Mr. any engagement him he had and asked if interpret mean that Mr. this to hearing attending a prevent that would Childre, Big an officer in D which was 16th 10th or either the had been set on majority stockholder in Inter-Continen- be- week This about a of November. tal, going try get other stock- some in inter- petition filed the fore Mr. Hicks holder to intervene. Mr. At a later time vention Carson. Mr. Coe then testified that Mr. Ed Bar- Hicks’ personally came to Mr. Barfield field, who worked for the Great Southwest in Intervention brought office and “Plea Company, Life Insurance someone Richardson, signed and sworn of Mr. * * him, went over a list of the stockholders. sworn it was petition shows DBig voting of such also owned control pub- notary to Mr. Richardson before company. insurance Mr. Barfield was County. Hicks had lic Mr. in Jefferson president company vice the insurance He under- Mr. before. never met Barfield but Mr. Coe was not certain as to Big whether with stood Mr. Barfield was connected he was a D. Mr. Bar- Big stockholder in D. field knew Mr. Carson found to who was con- hearing, testified Shively, Mr. this
be a stockholder Inter-Continental. execution cerning surrounding facts Mr. went to Carson and Barfield see Mr. have what we the note. was substance agreed Mr. Bar- Carson Mr. intervene. previously stated. Mr. field called Mr. and told him that Coe plea dismissing agreed that Mr. Carson The court its order intervene agreed Develop- not take action Big Barfield had D found that Richardson did but was ment harm- in behalf of himself would hold Carson intervene minority to make expenses sought less from the suit. Carson stockholder out as latter plea by then called him he Inter-Continental and Mr. Coe told *11 given statute was Intervenor employ Richardson’s arrangements to made cor challenge right against the the to maintain a suit the Appellee does attorney. an ul poration enjoin performance of Rich- the represent attorney to authority of the could, situa tra act. He in the instant vires intervenor court also found ardson. The tion, him initiated the said entitling have suit. While equitable facts shown no may B(l) Subdivision states the shareholder to intervene. enjoin proceeding doing the of an act in a inwas the court are the view that We against pro corporation, goes it on to the inter- dismissing the and striking error in may, parties vide that to the the court if all „ vention. parties proceeding, contract are en to the join performance equitable if he deems (1)B authorizes Article subd. loss, may damages apart and allow enjoin an act aside a stockholder to or set profits, pr parties. corporation all ultra if corporation of the that is vires this, It would that the seem to us effect the parties parties to to the transaction are suit, where shareholder is to initiates proceeding suit and court deems parties parties, make indispensable the other expressly equitable. The does not statute because no en judgment could effective be However, right deal intervene. with the tered pres shareholder without the 60, Procedure Rule Texas Rules of Civil Where, here, ence parties. of all a such governs party to generally right of a shareholder given states a of action cause rule and the doctrine intervene. Under the him by way and law asserts it of inter existing passage before the intervention vention in pending par a suit between rule, right to inter party of the has the ties joined who must be if the shareholder is such if the intervenor’s interest vene suit, initiates the feel his we intervention that if had never been action should not be stricken. Rather should there commenced, brought it and he had first be hearing merits, appropri under plaintiff, sole entitled he would have been could, course, ate pleadings, which en part recover to the of at least extent compass rights a decision intervenor’s or, the relief if had been sought; action by way of summary judgment. a motion for brought against to de him he would be able The soundness of above is demonstrated recovery part. interest feat at least in His if we what the result would be if the may v. legal equitable. King either be corporation is sued and judgment is ren Olds, 65; 12 Pool v. San 71 Tex. S.W. against dered it and there is a shareholder ford, 621, 633; 52 Tex. Mussina v. Gold pursue statutory remedy. who wishes to thwaite, McDonald, 125, 126; 34 Texas Tex. be judgment against There would a solemn 3.47; Practice, Tex.Jur.2d, 44 Civil Sec. yet plaintiffs it and the v. Corp. Sec. 40. See also Pratt-Hewit Oil in judgment enjoin would have to be sued et 122 52 64 al., Hewit Tex. S.W.2d (Com.App.), opinion adopted. use of the judgment if had not been satis say least, fied. To an there would be is are not unaware there Also, awkward situation. be there would court a broad discretion vested in the trial necessity of another suit. One reason determining an whether intervention interventions favored a mul is to avoid not, however, should be stricken. is tiplicity suits. That a shareholder should subject unbridled exercise is one its permitted be intervene such a case review for If the intervenor meets abuse. this maintained two Texas writers will the test and intervention above stated the subject. Brimble, un See Ultra Vires greatly complicate the exces the case Act, der Texas The Business issues, multiplication sive and to ef Review, 677,693; Trotti, Texas Law in fectively protect the intervenor’s interest Adopt An Existing Corporation Should essential, it abuse almost is an tervention is Discussion, Proceedings, intervention. Act—Panel of discretion to strike the 3A, amounts, average Institute, stockholder small Corporation Act Business n in- hardly expected keep himself Ann.Tex.Stat., be pp. can 455-456. Vernon’s except for corporate operations
formed of Hicks testimony rep- of Mr. by corporate him afforded Under information testimony con- Coe, is all them. which those associated with Mr. resentatives or leading to particular the circumstances case be facts cerning might There in some *12 Richardson, the reason- trial by agency Mr. so that in a establishing such an intervention Mr. that is be reached be entitled to would not able conclusion on the merits he Inter-Continental, who However, Coe, attorney for the sought. whether the the relief Big D represented agent matters the is in fact but the in some other stockholder stockhold- and its trial Development corporation is to be determined at a D. Childre, Mr. called ers, and Thad that under all facts D. A. on the merits. noteWe about established, him information gave agency such is A. Childre shown here no sug- against really Inter-Continental they the suit but show action Richardson it the statutes light rep- D gested instigation Big through in the its that at the stockholder, D, Big for a fuller might be wise resentatives. do not know what a D, for reasons Though Big In development to intervene. of the facts will show. intervene, then unstated, it preferred not to think it material to show this connection we to ob- through Mr. Barfield paying attorney’s efforts Hicks’ fee. began who is Mr. First may required though to intervene. tain another stockholder He be to disclose this Carson, to be held who was may required Mr. it he obtained not be that he show the litigation stock- expense of free amount. of this was told Big D. Mr. Coe holder facts, If on trial the trier of the on evi- petition intervention. prepared the in probative force, dence of that Rich- finds any fee that could be drawn The inference agent ardson is but the of Inter-Continen- D, paid by be charged Big would
to be tal, then he would not be entitled to the expressly nothing shows though the record sought. relief If not intervenor is found Too, it be inferred regard. in this could Inter-Continental, agent be the mere was contacting Mr. Hicks Mr. Coe that then he will be to the relief stated entitled conclusions are acting Big D. Such below. reasonably to certainly compelled are prevailed Then Mr. Barfield be inferred. The court in order in- striking its the intervene, him had Richardson to on Mr. equitable tervention stated there were no Hicks. petition, it sign the and took to Mr. facts or in- entitling reasons Richardson to Hicks, coun- question is raised that Mr. No tervene. intervenor, not authorized sel for for Mr. Richardson. file the intervention petition It would seem that the in inter- Rule See T.R.C.P. vention, action, having stated a cause of question the as whether fact he may it Upon the above evidence equities such enable him to relief the stock intervening the that well be concluded sought is a matter to be determined in a interest at acting his own holder merits, hearing through on the de- either a is, stockholder, Big urging of another termination trier of the facts where The mere Corporation. Development D or, dispute, material facts motion are on may representative fact that a summary no judgment where there is suggested of the suit and given notice have genuine issue of material fact. to in might be wise for stockholder statute question what the arises as to such stockholder not make
tervene does may enjoin court when it states the means practical corporation. As a agent of the if he deems performance act so today corporate stock is matter when equitable. proceeding varying persons in widely held different held Inter-Conti- appellee though we this case even of the view We are successfully defend on initially nental could a fact if determined might ground transaction sued on Shively indi that the $650,000.00 was loaned the cor- rights pay be ultra vires. Had Shively agreed to vidually and poration alone been involved Shively loaned and then However, judgment. Inter-Continental, then court have been entitled in- of an $50,- rights we have a case where of this enjoin the collection should If in tervening stockholder involved. represented unpaid portion 000.00 or the trial the merits it is determined however, on If, fact said note. is entitled inter- the facts the stockholder appellant, the directly to the loan was prin- relief, because some in accordance with the relief is not venor entitled orig- ciples opinion in our we set out $50,000.00 would obligation to rehearing, appellee will be appel inal motion for powers of beyond charter not be against corpora- judgment entitled to a lant. *13 note, tion, amount of the not for full $50,000.00, the other which As to only that the stockholder but extent in initial together with held entitled relief. This be note, pri incurred cluded in said corpora- right is not because of a in the per marily wholly if to refinance tion, rights of but because of the the stock- obligation Shively at 1st National. sonal holder. portion
If obtain that was Motion overruled. went ed at Bank of The Southwest appellant, directly pay obligation an entitled to relief
intervenor would be $50,000.00. That portion
portion be on a basis determined proportion that the amount used obligation bears to $1,300,000.00. If none
total loan Ea and W. N. Wood, F. A. EALAND d/b/a used, money was then intervenor will so Lumber Appellant, land-Wood Company, sought as to the be entitled to the relief v. $50,000.00. second SANTA FE RAIL COLORADO & GULF, WAY COMPANY, Appellee. conformity granted relief is If above, have stated there No. 6854. with what we ap- damage will be or loss suffered no Appeals Texas. Court Civil pellee except be interest. Interest would Beaumont. by Ar profits which not allowable Feb. 1967. Cor B(l), Texas Business ticle subd. poration Act. Behearing 1967. Denied Feb. and re- will be reversed whole case manded, tried in accordance with to be holding.
our
Appellee’s rehearing motion is over-
ruled. Rehearing Second Motion for
On trial judgment of
We reversed against Inter-Continental in favor
court notes issued to the $245,000.00 remaining loan. creditors. named place In one it is stated went appellant. depositions In place another appellant’s it is stated reflect that