*1 yеar 1932 it County and Rail the Assessment prepared has the Assessor appear to the Court that made Collector ready over to Tax to turn it Roll and county much state and required statute, in as as as and 1st, as and legally payable due and November taxes are prolonged may require question involved in this cause would be study public interests and and as the deliberation delivery the 1932 Assess- jeopardized holding up thе final decision Roll Tax Collector until the ment cause; this adjudged and considered, ordered
IT IS THEREFORE the Alternative Writ issued the Court that heretofore permit Tax direct the as to Assessor be so modified County certify ta deliver the Tax Collector Broward year 1932 county Roll for the Tax Assessment of said subject of this required by to the further orders statute appropriate proceedings. Court in Buford, C.J. Whitfield, Ellis, Terrell, Brown Davis, J.J., concur. Corporation Company, Under Orlando Florida, F. H. C. State of Thwing, De the Laws J. P. J. P. Miller, M. O. Overstreet; Holbrook; Witt Corporation Laws of Under the Holbrook Florida; Clarence E. C. Duck Brown; the State Yowell, Appellants, P. M. Robertson N. worth; L. Henry D. W. N. M. Stengle, Way; Frank Hale; Husband, A. by her P. B. Joined Michaels, Clara Mabel McCutcheon and Charles Michaels; B. Raymond Testament of the Last Will and McCutcheon George deceased, Appellees. D. McCutcheon, 674. 25, 1932.
Opinion filed November December rehearing denied Petition *2 Hays, Tilden <& Poe, Dickinson, W. H. <& and Dickinson Appellants; Solicitors for *3 é; Gaslwns, Davis, & and E. W. B. C. Solicitors
Crawford Appellees. by Commissioner . The bill in this case was filed Davis, minority stockholders, certain director, one of whom was a Orange in Coinpany, corporation, Orlando Groves in similarly their own in behalf of behalf and all other situated against company, corporation, stockholders said the said J. P. Company, Holbrоok and the officers and directors of Orange Company, said Orlando Groves so'me of whom were not stockholders therein. by shown Holbrook,
It is the bill that J. P. a non-stock holder, employed general and one F. E. Baxter were managers agents Orange and sales of the Orlando Groves Company they and charge that were Mve of company development the assets and the and sale 4,000 company, subject only acres land owned general supervision company. and sale of the Under the terms the contract and Holbrook Baxter were get cent, per profits company’s of the net from derived business, they lands, for the sale of and were to maintain company’s offices for the transaction of the business at expense, company pay their own but the to was for extra help company’s needed for business. Holbrook and drawing Baxter were each allowed a account of $300.00 against proportion of net per month, chargeable their terminated profits. was to continue until The contract parties to same. either of the Holbrook, alleged J. P. the Secre complaint
The bill Thwing, director, F. H. tary also and Treasurer, and whereby improper the funds President, conduct im properties used corporation and P. the J. Holbrook, and properly J. P. illegally the owner and Holbrook is which Holbrook money out large sums controller, having taken H,. Thwing F. treasury and the said o'f making profit securities, and having purchased certain company property had sold same; out of that Ninety-four Thousand and amount of Two Hundred No/100 Ninety-four Dollars, of ($294,000.00) No/100 balance, paid cash, ($94,000.00) was Dollars per yeаr, Dollars Fifty ($50,000.00) Thousand and No/100 abandoned 13th, 1931; Baxter beginning that December contract; Company Holbrook from the that drew large Company P. himself and the J. Holbrook amounts totalling approximately Sixty ($60, money, Thousand Dollars, improperly 000.00) the Directors had illegally P. J. P. authorized J. Holbrook and Holbrook Company Com from Orlando to.borrow *4 Ristig improperly pany; P. removed as that one J. was put place, N. and thаt notices P. director and Yowell meetings given were of Directors’ not Hale, one of the complainants. It is also shown but “little remains among notes, the the assets the Company, outside save sixty except and and wild lands about acres of improved o'range groves, disposed all of which be of without great expense, and that the cost and withdrawal of vast money company sums of from is unwarranted un and necessary, depletion wasting company’s and and temporary injunction prayed A was assets.” for restrain- ing the from making defendants further withdrawals of Orange Company, the funds of the and Orlando G-roVes any dealings property. temporary A from further in its injunction granted the Court. The was was waiving amended, answer. Defendants the oath to the filed answer moved Court for a dissolution of and injunction. bill and heard, upon The motion wаs duly answer, Holbrook, sworn latter the same was answer denied Court. The admits property Davenport the sale of the for Three Hundred ($300,000.00) Dollars, Thousand and and denies No/100 improper handling corpoTa conduct in finances tion, any improper part conduct oh the of the Board discharge P. Ristig Directors. sets out the of J. incompetency disloyalty, and the election of N. P. place Yowell in Ms and stеad. It shows that all dealings Thwing purpose securing were absolutely necessary funds for the use o'f the Orange Company, paying obliga Orlando Groves tions. The answer shows that Baxter sold his interest to J. P. Baxter, Holbrook the contract between Holbrook Orange and Orlando Groves and that the coha pany recognized operator then J. P. Holbrook as the sole contract, proceeded under thаt with him instead with Holbrook and Baxter. The answer further sets out P. P. Company that J. Holbrook and J. Holbrook advanced during years 1925, 1926 Orange to Orlando Company, something Fifty-five Groves over Thousand and ($55,000.00) Dollars, insolvency and denies of J. P. No/100 J. P. Company; Holbrook and Holbrook up it sets profits wipe any shows then accrued sufficient to out lia bility J. P. Company Holbrook and J. P. Holbrook Company. Orlando The answer admits an Company indеbtedness of J. P. Holbrook to the Orlando Orange Groves Company, filing at the time of bill, of *5 Seventy- Eighteen approximately Three Hundred Thousand ($18,379.00) nine and Dollars. 01/100 assigned (1) granting appellants The the have as error tem temporary injunction, (2) the granting the of of porary injunction (3) denial without the notice and injunction. the motion to dissolve the upon assignment up will error based We take first the injunction the the denial of the to dissolve the motion if the Court com- reason that we determine that should making no order, there should he mitted no error assignments passing upon other of error. reason for the In 53 Fla. 42 So. we held in White, Robbins vs. grant allegations the effect of a bill warrant that where posi ing temporary injunction, if the sworn answer tively upon com allegations bill denies ’ if con plainants equity, any, depends, and the answer also sustainеd, responsive sufficient, if to defeat tains averments injunction, injunction, a to dissolve the heard motion solely answer, the oath to on and sworn consent granted. bill, should be not waived the answer amended, of complaint, ease In the instant the bill deprive This, however, did not under waived answer oath. Such right under oath. answer the defendants used as a basis an order dis waiver alohe cannot be temporary injunctions the answer solving eases where allegations responsive bill and is otherwise denies merely af waiver an answer under oath thereto. The hearing. our on Under evidence fects the rules final Compiled 4970) (3178), General Laws of (Section Statute injunction upon dissolve an Florida, 1927), motion to right evidence, and party to introduce has the either according or continue order dissolve chancellor shall evidence, this Court has adhered weight ta the temporary in application on dissolve rule that affidavits, the chancellor must junction bill, answer Indian River governed weight the evidence. be *6 310 387, 10
Steamboat E. C. Tran. Co. 28 vs. Fla. 480, 200; 29 258; Moreno, So. A. R. 19 S. Sullivan vs. Fla. Cason, Baya 476, 870; City, Fuller v. 26 Fla. 7 vs. So. Lake 400; 458, 44 33 69 58 Ogden Baile, Fla. So. vs. Fla. 671. So.
On a injunction, motion to dissolve an the burden of proof is on & Pr., tbe defendant. 10 Enc. Pl.
If, in, after the answer there remains a reasonable сomes sufficiently equity as doubt to whether the the bill is negatived, injunction the Court continue to the Yonge hearing. McCormack, 368; 6 Fla. vs. vs. McKinne Dickinson, 34; Fla. 32 C. J. 416. injunction answer,
On motion to dissolve an on bill and equities bill, where sufficient in the Court stated only responsive will look to such as are facts the answer rely bill; respondent permitted will to the and a not be upon answer, new matter in not in re- avoidance upon sponse аllegations equities Yonge McCormack, 368; vs. 6 Fla. Indian bill are founded. supra; Co., River Steamboat Co. vs. E. C. Trans. 32 C. J. 421; 14 R. C. L. 468. by Henry
The bill in instant M. case was sworn to Way, Hale and W. D. and the answer was sworn J. P. Holbrook. allegations upon complainants which the
The rely denied, main, ex- are, for relief are not but answering pressly .impliedly, confessed defend- alleged wrong- justify ants, who endeavor to acts doing charged bill, explain In in the or tо them. the ab- justified denial, denying was sence of a Court temporary of defendants’ to dissolve the restrain- motion ing equities of order, unless the the bill are insufficient injunctive relief. an in- application here to dissolve rule that an
It is the brings up question junction bill and answer sufficient equities the bill are whether or not Co. justify (I. R. Steamboat the writ in the first instance neces supra). becomes Co., Trans. It therefore E. C. sary inquire us to the bill sеts folth sufficient whether grounds of such a writ. for the issuance
By by adopted Board Directors of the the of resolution is made Orange Company, copy of which Orlando Groves authority the P. Hol- part given “for J. bill, was Orange money Company from Orlando brook borrow the Company,” and versa. Groves vice by Orange that the Orlando Groves is shown the bill statutory power powers, had addition plant out, man- business, to brokeragе “to do a real estate groves own con- age, properties; and care for citrus said packing houses, all matters incident to duct other company an has lines business; that the said defendant 5,000 capital $500,000.00 divided into authorized stock of par $100.00; principal each of value that shares estate, corporation acquire was real business said consisting mostly land, clearing same, planting of wild improv- caring land, said fruit trees citrus roads, furn- ing hard same the co'nstruction selling the at an ishing water, and same advanced available ’’ price. only powers Generally corporation ex- can exercise incorporation implied pressly act conferred performance func- powers necessary of authorized is ultra vires a Furthermore, an tions. act scope powers beyond is and outside of the when it corporation without founders, is its when conferred any perform circumstances, or authority to it under Mickle, any 103 Fla. purpose. Randall Orange express the Orlando allegation is no There power, charter, under its to' lend Company no had Groves money, alleged may bnt from what it be inferred that it is was without power, except, be, such it an incident to the business it was authorized to trаnsact. improper
Another mismanage- instance of conduct and upon -by ment complainants relied for the issuance of the injunction, was the sale o'f certain securities of the Orlando Company President, to its Thwing.
In say: 14a C. J. the authors unqualified “Some the courts take the broad and view that a director cannot be allowed to make and take company contracts with the of which he is a director. Another view is that a contract between a per se, and its is officers not void but is voidable at option of provided representative, option within a exercised time under reasonable all Except power circumstances the case. for the which ratification this rule reserves to the stockholders essentially it is such the same as the rule holds absolutely against void, contract for under it as the will *8 corporation, time, within a reasonable exercises engagements given such force, no contractual how- open, they may fair, ever and honest be. The rule ob- taining majority jurisdictions in a is that a director may or corporation deal contract with the where he acts good corporation represented by in faith is a quorum of disinterested directors or independent other agents officers or authorized to contract for Such it. per contract is void not se voidable, not is it except for fraud, unfairness or for closely which it will be scru- equity.” tinized in 7 Se R. C. also L. 481-2. harmony This Court inis purchase with view that a director, agent officer property from the is void, not but is voidable at the option of showing and that the burden of validity contract, of such a honesty the fairness and of such a transaction with the director, is oh the officer or agent. Chipola Valley Realty Co. 94 Griffin, vs. So, Fla. 541. See 120; also 14a C. J. 7 R. L.C. 760. In this case there no contention that the sale merely up said securities should he It is set vitiated. mismanagement, one of acts of as a several basis soiight. relief charged is also that Holbrook dominated and con-
trolled the of Directors of the Orlando Board and that he drawn out of funds had large mоney permitted in sums far excess of the amount cohtraet, argued him if and it is here that this necessity had not been done there no would have been selling purchased by Thwing. the securities The contract fixing compensation amount of Holbrook’s how it paid profits” was to does not when “net be state corporation, of which Holbrook Baxter were to receive cent, fifty per ascertained, should be nor what is con- to be arriving profits.” in sidered at the “net In the absence agreement, of a definite we hold with the Texas Court of Appeals Civil profits, generally implies speaking, that net deducting what remains the conduct of a business after receipts expenses carrying from its total incurred in expenses on charged the business and that to such be upkeep, depreciation taxes, corpora- and interest on the debt, capital, tion’s but not interest as a any general rule, capital replaced loss in the stock must be earnings. estimating Corp. before Granite Dealers Faubion, (2nd) 737, in 76 A. S. W. cited L. R. 887. The cognizant shrinkage Court real estate values during period real estate securities Florida year 1925, after the we can see how the interest of stock- might prior suffer, Holbrook, holders to the ascer- *9 drаwing large profits, tainment net sums from the corporation strength on available cash of the the of his paper profits. may corporation of a “While not be in directors trustees, strict sense it well established the decisions they fiduciary occupy quasi relation cor- to the * * * * They poration required stockholders. are and its
314 accepting good faith, to act the utmost enterprise give they impliеdly to undertake to office judgment, care and
the benefit of their best solely interest controlling powers in the conferred exercise power corporation. with the Clothed the the corpora managing property the affairs of they persons hindrance, tion, as to third without let or equity corporation itself, agents, but as are its 456-7; 7 C. L. Chi R. them liable as trustees.” holds Co., 115 541. Valley Griffin, 1151, 94 R. vs. Fla. So. pola minority against “Equity protect a stockholder will of the trust which is breach of the directors conduct confided cannot assume to injurious stockholders, but to the in them and expediency.” pass upon questions Realty Co., City Co. vs. Hewitt Bank Farmers’ Trust 76 L. also 309, 177 N. E. A. R. See 62, 257 N. Y. C. L. 308. R. wrongfully with deal “If the officers of a stockholders, the latter injury property; its against corporation and maintain a misappropriation.” against relief such officеrs for R. C. L. 316. fiduciary char corporations, because of their
Officers good faith, and required with the utmost acter, to act are prop or they in or handle the funds are forbidden to deal advantage. Jackson erty their own 523; Chipola Dozier, 53 Cigar vs. Fla. ville Co. supra; Valley Realty Griffin, Luria Bank Co. vs. C. 175, 143 3 R. L. 465. Gables, 106 Fla. Sou. Coral equity, a final power of a court at is within inquire wrongfulness of the acts com- hearing, into' the goоd of the officers and into the faith plained of, and also directors. appellants, urged here behalf of that when
It is
managing
charged
of a
or
Board
directors
misappropriatioh
corporate
mismanagement
action,
unless com-
if taken
property,
exception
bring
an
themselves within
plaining stockholders
mismanagement
by showing that such
or mis-
to the rule
*10
appropriation
injury
corpоration,
will
result
to the
incidentally,
they
stockholder,
to
must further
and that
they
that
to
show
have exhausted all means at their hands
get
grievances
redress of
within the
without
results,
justify
in con-
show facts which
a Court
would
cluding
that an effort for redress within the
would be unavailing. This contention is sustained
many
numerous
country,
decisions in this
which
by appellants. Perhaps
leading
cited
case is Hawes
Contra
Co.,
Costa Water
where it is said: shareholder, permitted name, “Before the in his own is litigation usually
to institute conduct be- longs corporation, show, to the satis- he should court, faction of the within his the his all that he has exhausted the means obtain, corporation itself, to reach within the conformity grievances, redress or action in to He earnest, wishes. must make an not a simulated body effort, managing part, induce remedial action on their made and this must be apparent permits, court. If time or has permitted, show, directors, if with the he must he fails that he effort to obtain action has made an honest body, in he the stockholders as a the matter of which complains. case, And show if this is not he must done, done, where it not be it not reasonable could or was require it.” principle equity jurisprudence be a settled that open dissenting equity fo're court of will doors only stockholders, although they come, they must,- not themselves, others, on behalf of but also behalf all inquiry grievances into like those set out to an they redress, bill, must show there is no other road to they they that all reme do' not show this unless show within itself have been exhausted. dies (2nd) 976, 72 A. (Mo.), v. 30 W. Caldwell Eubanks S. L. R. and note. complainants requested show that
The does not *11 cor name proceedings directors to institute them they seek poration the relief to obtain request alleged..indicate that such selves, but the facts Dissenting any purpose. useful have served would not stockholders in their name sue own to enforce upon rights of the the di without demand they, rectors if interest or whether reason of hostile guilty participation wrongs complained o'f, cannot in the expected they suit, or, do, apparent be to institute if it is they litiga proper parties will not be the to conduct the 332; Baker, (Del.) 7 R. L. 141 Atl. tion. C. Sohland v. 693; Eubanks, supra. 58 A. L. R. Caldwell vs. showing case, in the Under made instant request that the directors sue themselves would have been too, fruitless. Then permit the Court would not directors litigation against conduct they themselves even if were willing to do so. Eubanks, Caldwell vs. supra. argued
it is that resort could have been had to the redress, stockholders for and that it should be shown that But this was done and that the stockholders refused to take starting action before proceeding. this In state, this provides law every that the business of shall managed by be a Board Directors who shall be chosen at meetings annual of the stockholders. Sections 6555 and 6557, Compiled General Laws of Moreover, Florida. if it power was within the of stockholders to take such matters directors, out of the emergency, hands cases оf it impossible would legal be to issue a for a stock call meeting holder ’s and have them act or refuse to take action any contemplated proceedings time for to be value complaining or to stockholders. judgment “"It is our that it has not been that the shown equity authorize bill withoht sufficient the chancellor temporary restraining to issue the order. said be appealed follows that the errors from should af- firmed and it is so ordered.
Per Curiam . The con- having record in this case been Court, foregoing prepared sidered opinion and the Chapter 14553, under Session, Acts of Extra adopted by the Cotirt opinion, as its it is considered ordered by the Court the decrees of lower Court be and hereby same affirmed.
Buford, C.J. Ellis, Brown Whitfield, Terrell, Davis, J.J., concur. *12 Light a corporation, Plaintiff Florida Power & n Error, Florida, State the relation i Hamel, J. J. Rose G. Thomas Malcolm her husband friend, and next J. Louis Hamel, Defendants in Error. 657. B.
Division Opinion filed November