142 Ala. 520 | Ala. | 1904
Lead Opinion
While the deeds sought to be can-celled purport to have been authorized by a resolution passed at a meeting in Mobile in the year 1891, it is an undisputed fact, that they were made under and pursuant to a resolution of a bare quorum of directors, at a meeting held at Flint, Michigan in the year' 1896. The evidence also discloses the fact, that at said meeting, the presence of and the participation therein by the respondent, Gass, was necessary to constitute a quorum and to give it legal vitality, and that the vote of Gass secured the passage of the resolution.
The directors of a corporation, are the trustees and managing partners, and the stockholders are the cestui que trust, and have a joint interest in all of the property and effects of the corporation. — Robinson v. Smith, 3 Paige, 222, 232; Cunningham v. Pell, 5 Ib. 607; Slee v. Bloom, 19 Johns 479.
“ ‘If this is the relation, then the rules of law applicable to purchasers ‘by agents and trustees, apply to the purchase in question. There is a manifest impropriety in allowing the same person”to act as the agent of the seller aind to become himself the buyer. There may be, in all such cases, a conflict- between the duty and interest. Acting for the best interests of the corporation, his
“ ‘Now the purchase of property by an agent or trustee, or by any person acting in a fiduciary capacity, is not void áb origine and absolutely. It is voidable only. It is made subject to the right of the principle or beneficiary, in a reasonable time, to say that he is not satisfied with it. It is valid in equity as well as law, unless the parties interested repudiate it, or complain of it; and these may set it aside without showing either fraud or injury. — Bank of old Dominion v. Dubuque Railroad Co., 8 Iowa 227; Davoue v. Fanning, 2 Johns, Ch. 252; Bostwick v. Atkins, 3 Comst. 53, 60; 1 Parsons Cont. 75, 76 and case, in note; 1 Lead* Cases in Eq. 167; MacGregor v. Gardner, 14 Iowa 326, 335.
“ As the principal or panic: interested may confirm the sale, a mere stranger cannot make the objection, that the trustee was the purchaser; or that the sale was irregular. The remedy belongs only ‘to persons who had an interest in the property before the sale, and no other person can apply to set aside' the saléis — Corey v. Wadsworth, 118 Ala. 507, 508; Hawley v. Cramer, 4 Cow. 717, 744; Edmondson, v. Welsh, 27 Ala. 578; Foster v. Goree, 5 Id. 428; Hannah v. Carrington, 18 Ark. 85; Herbert v. Henrick, 16 Ala. 581; Greenleaf v. Queen, 1 Pet. 138; 5 Barr, 97; Wightman v. Doe, 24 Miss. 675.
The directors of a corporation are its agents. Their position implies that confidence is reposed in them. Tfie duties which a director assumes to the corporation and the stockholders thereof, disqualifies him from binding the corporation in a transaction in which he is already interested. — O’Connor Mining & Mfg. Co. v. Coosa Furnace Co., 88 Ala. 630.
In the case at bar, we find the respondent Gass, not
We do not think the complainant is estopped from avoiding these conveyances so far as they pertain to the undisposed of lots. The fact that the houses were erected in view of one of the main streets of Mobile, where some of the directors and stockholders may have seen them, or that Gass told Chaudron, (one of the directors) that some of the lots had been conveyed to him, or that the deeds-were recorded in a county where a minority of'the stockholders, including Gass, resided, Avas not sufficient to charge the company or stockholders with such notice as would bind them by way of estoppel.
We are familiar with the Avell established rule, that,. a corporation may ratify directly or by implication un- • authorized acts of the directors or agents. And that there can be no partial ratification. The acceptance of the fruits of an unauthorized act compels an acceptance of the hardships. But the evidence does not establish any v facts from which a ratification can be implied. On the other hand, we find Cook, (one of the directors) repudiating the matter. Just as soon as Platt informed him of the execution of the fourth deed, Cook and Whitehead repaired to Mobile Avithin a short time after the execution of said fourth deed and at once, instigated investigation, reorganized the directory and took speedy steps to inspect the records and books of the company, Avhich liad been under the exclusive control and in the possession of Gass since the meeting at Flint. An effort Avas .made at the first meeting to get the books. At the second meeting an attorney Avas appointed to investigate the acts of the said Gass and report to the company. At the third meeting, possibly after the attornev had reported, Ave. find the directors repudiating and disaffirming the conveyances of the said Gass, except as to the part he had soicl to innocent purchasers, and lot 18, upon which he had made valuable improvements, and authorized the at
The chancellor erred in holding that the pleas were sufficient and in dismissing the bill.
Reversed and remanded.
Rehearing
ON REHEARING.
Counsel for respondent contends that the opinion in this case, while sound in law is based upon a theory foreign to the one advanced by -the bill of complaint. It is true the bill by its averments and in .the prayer for specific relief, seeks to have the deeds declared void db initio. The bill however, sets out facts which have been established and which are sufficient to enable the- complainant to void the deeds upon its timely election. The resolution could not have been passed without the vote of and participation of the defendant in the meeting. The bill also avers in paragraph six that the respondent “in utter violation of his trust as a director of said company and' as secretary and treasurer thereof and in disregard of his fiduciary relationship procured said conveyances.”
The bill by its averments shows that the transaction was voidable and the relief can be had under the general prayer. “Under a prayer for general relief a party cannot recover a claim distinct from that demanded by the bill.” But while the complainant may not be entitled to the relief specifically prayed for, he may under a general prayer, obtain any other specific relief consist
I-Iere avc have a bill seeking to cancel deeds, upon the primary idea that they are void, with the aver meets of facts sufficient to enable the complainant to cancel them because voidable, "with a prayer for general relief. The cancellation of the deeds because voidable instead of void Avould not be inconsistent with the case made by the hill or distinct from the relief demanded by the bill. The bill, hoAvever, -fails to offer to do equity as to lot 18 as there is no offer to compensate respondent for the improAreanents. Besides, the resolution repudiating the transaction, omitted the lots sold and lot 18 and, instructed the attorney to commence proceedings for the recovery of said real estate (meaning all but that excepted and which exception contained lot 18). As a rule the bringing of a suit implies prima facie the authority of the attorney, but this resolution oAercomes the prima facie authority of the attorney to sue for this lot 18, and in the absence of any other proof, Ave must hold that the bill Avas not authorized as to lot 3 8.
The rehearing is denied but the opinion is modified to the extent of holding that the complainant is not entitled to relief as to said lot 18, and is entitled to a cancellation of the conveyances as to the unimproved lots, or'to so much thereof as Avas not conveyed to a bona fide purchaser before this bill was filed.
The decree of the chancellor is reversed and the cause is remanded in order that he may render a decree in conformity with this opinion.
Reversed and remanded, and rehearing denied.