Georgia Veneer & Package Co. v. Florida Nat. Bank

• Decision Date: 13 October 1944
• Docket Number: 14957,14964,14968.
• Citation: 32 S.E.2d 465,198 Ga. 591
• Court: Georgia Supreme Court
• Parties: GEORGIA VENEER & PACKAGE CO. et al. v. FLORIDA NAT. BANK et al. (two cases). FLORDIA NAT. BANK et al. v. GEORGIA VENEER & PACKAGE CO. et al.

32 S.E.2d 465

198 Ga. 591

GEORGIA VENEER & PACKAGE CO. et al. v. FLORIDA NAT. BANK et al. (two cases).

FLORDIA NAT. BANK et al. v. GEORGIA VENEER & PACKAGE CO. et al.

Nos. 14957, 14964, 14968.

Supreme Court of Georgia

October 13, 1944

Rehearing Denied Nov. 22, 1944.

Second Motion for Rehearing Denied Dec. 4, 1944.

Syllabus by the Court.

1. Where on demurrer an amendment to the defendants' answer seeking affirmative relief is stricken, and on motion of the defendants the court thereafter rendered a final judgment dismissing the case as moot, a bill of exceptions by the defendants excepting to the final judgment only to the extent that it was erroneous because of the antecedent error which entered into and controlled it, and on which antecedent ruling striking the defendants' amendment error is duly assigned, a motion by the defendants in error to dismiss the bill of exceptions and treat it as a cross-bill to a bill of exceptions subsequently brought to this court by them, and excepting to the final judgment of dismissal, must be denied.

2. It is essential that an action for damages for malicious use of civil process show (1) malice, (2) want of probable cause, and (3) termination of the proceedings in a judgment in favor of the defendant. Where, as here, it appears that numerous orders and judgments granting relief prayed for by the petitioners had been acquiesced in by the defendants and had become final, the court did not err in dismissing on demurrer the defendants' amendment seeking to recover damages and attorney's fees because of the alleged malicious use of civil process by the petitioners in filing and prosecuting the main action.

(a) In the absence of any motion to strike or general demurrer to the petition brought by minority stockholders of the defendant corporation, or insistence upon a jury trial on the issue made by the response to the rule to show cause why the prayers of the petition should not be granted, these orders and judgments, acquiesced in by the defendants, adversely conclude them on the question whether the petitioners have complied with the provisions of the Code, § 22-711.

3. Where, as here, the amendment of the petitioners alleged large savings to the stockholders of the defendant corporation in the sale of its assets under the supervision and control of the court as a result of the suit filed on behalf of themselves and others similarly situated to prevent an alleged sacrifice of its assets by a sale by its directors in fraud of the stockholders, and alleged expenses and counsel fees incurred in filing and prosecuting the case, it was error to sustain a demurrer to the amendment and strike the same and thereafter render judgment dismissing the entire case upon the ground that the questions involved had become moot.

The Florida National Bank of Jacksonville, a corporation, and Mrs. Frances C. Blake, as executors under the will of Jay G Carver, deceased, filed on August 10, 1943, an equitable petition against Georgia Veneer & Package Company, a corporation, and the following individuals who were alleged to be directors thereof: J. T. Whittle, Charles W. Stratton B. C. Tully, Glenn Robinson, and George G. Wells. The petition alleged that the petitioners were stockholders of the defendant corporation, which was engaged in the business of manufacturing and selling fruit and vegetable packages, furniture veneer, and other lumber products, that they owned 240 shares of the capital stock of the defendant corporation, and that they brought the suit on behalf of themselves and others similarly situated. The petition also alleged in substance the following: The defendant directors of the defendant corporation formulated a plan to sell the entire assets of the corporation to B. C. Tully, chairman of the board, for the grossly inadequate price of $265,500, which would net the stockholders $100 per share on 2,655 shares of outstanding stock, notwithstanding the fact that the corporation had $112,000 cash on hand and other assets consisting of the plant and timber lands and leases of the value of $400,000. The various steps taken by the defendants in furtherance of such plan included the creation of the office of chairman of the board of directors and the election of B. C. Tully to that office on December 10, 1942, whereby he, a resident of Memphis, Tennessee, and engaged in the lumber business in that city, was entrusted with virtually absolute control and direction of the affairs of the corporation. Within less than six months thereafter, on May 18, 1943, at a called meeting of the board of directors, Tully was directed to have the plant and other assets of the corporation appraised and to determine upon a method of disposing of said assets. No such appraisal was actually made, and the only method determined upon for disposing of the assets was a sale of the same to Tully at a price to net the stockholders $100 per share. Within a few weeks thereafter, on July 7, 1943, the stockholders were notified of a special stockholders' meeting to consider and act upon a proposal to be made for the surrender of the corporation's charter, its dissolution as a corporation and its liquidation. It was stated in a letter of the president, the defendant J. T. Whittle, which accompanied the notice to the stockholders, that the management had reached the decision to shut down operations on or before August 1st, and that the directors and management had been negotiating with B. C. Tully with a view of getting him to make an offer to the stockholders for the entire capital stock outstanding. This letter emphasized the problems and difficulties of management, but furnished no information as to the value of the assets of the corporation or as to the price at which it was intended that the assets should be sold to Tully. Two weeks later, the defendant Whittle sent an air-mail notice to the stockholders, reporting that only one proxy had been received and urging that the proxies of other stockholders be immediately signed and returned, as requested in the notice of July 7th. Thereafter, between that date and July 28th, the defendant Charles W. Stratton made a trip to Jacksonville, Florida, for the purpose of calling upon the Florida National Bank, one of the petitioners, and stated to W. H. Goodman, its vice president and trust officer, that it was the purpose of the directors to sell to Tully the entire assets of the corporation at a figure which would net the stockholders $100 per share, that is, for $265,500. Stratton stated that in his opinion this was a most desirable sale from the standpoint of the corporation and its stockholders. Goodman, as such vice president and trust officer, declined to sign the proxy for the Carver estate, and made an independent investigation which disclosed that there was $112,000 cash on hand which, deducted from the proposed selling price, was equivalent to selling the other assets of the corporation, of a value of approximately $400,000, for approximately $154,000, despite the fact that the corporation's timber alone was readily saleable in the market for a much greater sum, and that the officers and directors apparently had made no effort whatever to interest other purchasers in the property or to obtain competitive bids therefor or make or have made an independent appraisal of the property. Goodman determined to attend the meeting of te stockholders on July 28, 1943, and oppose the proposed liquidation in the manner stated and to urge the officers and directors to dispose of the assets in a manner more advantageous to the stockholders. He attended the meeting on July 28th and requested that the minutes of the meeting of the board of directors of May 18, 1943, and the stockholders' meeting of December 10, 1942, be read, which request was concurred in by other stockholders, but, at the suggestion of Stratton, these minutes were not read. Whittle then stated that the corporation could not operate except at a loss, and that the board of directors, somewhere around January 1, 1943, had directed Tully to investigate the question as to what should be done with the corporation and its assets, that he considered the corporation disorganized, competent foreman supervision gone, and that it should be liquidated to conserve the assets. Stratton then stated that Tully had offered to buy the entire assets of the corporation at a price to net $100 per share to the stockholders. Tully stated that he had not definitely made such an offer, but that he was prepared to make an offer on short notice. Stratton then offered a resolution contained in previously prepared minutes to the effect that the directors be authorized to dissolve the corporation and take any and all other action necessary or desirable to sell the assets, except the cash on hand, with authority to delegate such authority to an officer or officers or a committee thereof or to others.

The above resolution was objected to by the petitioners on the grounds: First, that such completely open authority was not appropriate, and the basis of the terms of sale should be specified; and, second, that the directors should make every effort to obtain competitive bids within the next thirty days and submit all offers to the stockholders for their ratification. These objections were incorporated in an amendment to the original resolution which was seconded by W. Worth Bean, Jr., a stockholder, but the amendment was defeated. Thereupon an amendment was submitted by said Bean, seconded by Charles Moulton Davis, another stockholder, to sell the assets of the corporation, except the cash, receivables and inventories, at not less than $100 per share net to the stockholders. This amendment was defeated by the same vote as the previous one. The Stratton...