Abney Mills v. Tri-State Motor Transit Co., TRI-STATE

• Decision Date: 23 July 1965
• Docket Number: TRI-STATE,No. 281,281
• Citation: 265 N.C. 61,143 S.E.2d 235
• Court: North Carolina Supreme Court
• Parties: ABNEY MILLS, a Corporation, v.MOTOR TRANSIT COMPANY, a Corporation, and North Carolina National Bank, a Corporation.

Page 235

143 S.E.2d 235

265 N.C. 61

ABNEY MILLS, a Corporation, v. TRI-STATE MOTOR TRANSIT COMPANY, a Corporation, and North Carolina National Bank, a Corporation.

No. 281.

Supreme Court of North Carolina.

July 23, 1965.

Ervin, Horack, Snepp & McCartha, by Frank W. Snepp, Jr., Charlotte, for plaintiff appellant.

Blakeney, Alexander & Machen, by Ernest W. Machen, Jr., Charlotte, for defendant appellee, Tri-State Motor Transit Co.; Linde, Thomson, Van Dyke, Fairchild & Langworthy, Kansas City, Mo., of counsel.

PARKER, Justice.

Plaintiff requested Judge Walker in writing to make certain findings of fact and conclusions of law. It assigns as error the judge's refusal to make the fifth finding of fact requested by it, which reads:

'5. On or about September 28, 1960, the defendant, Tri-State Motor Transit Company, through its duly authorized agent, to-wit: its President, assumed complete management and control of Kilgo Motor Freight, Inc., and through its said agent, entered into and remained within the State of North Carolina for this purpose until on or about May 1, 1961, pursuant to the contract referred to, and under authority of the Interstate Commerce Commission. The said defendant continued to exercise complete management and control of Kilgo Motor Freight, Inc. until on or about May 1, 1961, when said defendant withdrew from such management and control, and refused to consummate the stock purchase from the plaintiff and other stockholders of Kilgo pursuant to the said contract.'

It also assigns as error the judge's refusal to make the following conclusions of law as requested by it:

'1. The defendant, Tri-State Motor Transit Company, was transacting business in the State of North Carolina, during the period of September 28, 1960, until on or about May 1, 1961, without first procuring a certificate of authority so to do from the Secretary of State.

'2. The breach of contract alleged by the plaintiff in this action arose out of such business.

'3. The Court has jurisdiction over the person of the defendant, Tri-State Motor Transit Company.'

Plaintiff also assigns as errors Judge Walker's third, fourth, and fifth findings and conclusions, and his order dismissing its action, and taxing it with the costs.

Defendant's evidence shows these uncontradicted facts:

Tri-State, a Delaware corporation with its principal place of business in Joplin, Missouri, is a common carrier of freight by motor vehicles with operating rights from the Interstate Commerce Commission through approximately ten central and southwestern states. Its major business is a common carrier of explosives and dangerous items in interstate commerce. It has never been domesticated in North Carolina, and has never obtained authority to do business in this State. It had no direct connection with motor lines in North Carolina, operated no road equipment in this State, and had no employees in this State prior to 1960.

Feeling a need, or at least a desire, for increase of its business, in order to diversify the products it was permitted to haul, and to expand its operations and build up its revenue, it in the spring of 1960 became interested in acquiring control of Kilgo Motor Freight, Inc., a North Carolina corporation with offices in Charlotte, North Carolina, and in Greenville and Greer, South Carolina, which was a common arrier of general commodities by motor vehicles with operating rights from the Interstate Commerce Commission over routes extending from South Carolina to New York, and westward to Pittsburgh, Pennsylvania, and Dayton, Ohio. Kilgo did not operate in any area covered by Tri-State. Their lines did not connect, and there was no traffic flow between them.

Prior to 1960 plaintiff and other persons or corporations on South Carolina acquired controlling interest in Kilgo, their total purchases of Kilgo capital stock having reached 210 shares out of its 368 shares outstanding, or 57% of all its shares outstanding. Mr. Paul L. Andrews of Nashville, Tennessee and of Greenville, South Carolina, president of Kilgo, owned the remaining 43% of all its shares outstanding.

In the spring or early summer of 1960 George F. Boyd, president and general manager of Tri-State, had a conference in Greenville, South Carolina, with Paul L. Andrews, president of Kilgo, in respect to Tri-State's acquisition of a controlling interest in the capital stock of Kilgo. Andrews arranged a series of meetings between Boyd and others representing Tri-State and plaintiff and the other persons or corporations owning 57% of all the Kilgo stock outstanding for the purchase of their controlling stock ownership. On 17 August 1960 Tri-State entered into a contract with Benjamin O. Johnson of Spartanburg, South Carolina, who was acting as attorney for plaintiff and the other persons or corporations owning 57% of all the Kilgo stock outstanding, by the terms of which the owners of the 57% of all the Kilgo stock outstanding agreed to sell to Tri-State, and Tri-State agreed to purchase from them, their 57% ownership of all stock outstanding of Kilgo at a price of $231,000. This contract provides, inter alia, that 'all parties of this agreement understand that the purchase herein contemplated is in all respects subject to prior approval by the ICC.' It also provides in part: 'It is agreed that as soon as the same can reasonably be accomplished the parties will file an appropriate application (or applications) with the ICC (and other governmental agencies having jurisdiction) for authority to consummate the transaction herein proposed and for temporary control pursuant to the management contract made a part hereof.' This contract also provides as follows:

'11. TEMPORARY MANAGEMENT CONTROL: In connection with the application to ICC under Section 210a (b) of the ICC Act as provided upon Paragraph 7 above, it is further agreed as follows:

'(a) That for a period of 180 days commencing with approval hereof by the ICC and continuing for such additional periods as said ICC may authorize, Sellers grant to Buyer, and Buyer accepts the management of the operation of Kilgo.

'(b) The authority to so manage Kilgo shall include but not be confined to the payment and collection of accounts, the hiring and firing of employees, the purchase, lease and sale of motor carrier equipment, and the general supervision of Kilgo's business, it being intended that for all practical intent and purposes Buyer shall be substituted for Kilgo's Board of Directors in the management and control of Kilgo's business affairs including the specific right to execute checks, notes and commercial instruments in the name of Kilgo.

'(c) Buyer will arrange for sufficient funds to enable Kilgo to effectively prosecute its business activities in an efficient and profitable manner. Buyer is specifically granted the sole and exclusive right to determine the extent to which it shall trade, sell, purchase and lease equipment as in its opinion is for Kilgo's best interests.

'(d) Buyer agrees that during the period this temporary management control remains effective it will not permit the net deficit of Kilgo to increase by more than $100,000 in excess of the net deficit existing as of the close of business or the date Buyer so assumes management control. In computing any such net deficit of Kilgo, usual and applicable accounting principles and procedures shall be followed. If said net deficit should increase by more than $100,000 and if this agreement shall not be consummated, then said additional deficit over and above said $100,000 as adjusted shall be paid by Buyer to Kilgo.

'(e) It is further agreed that in consideration of the stock purchase hereinbefore set forth, Buyer shall receive no compensation for its services hereunder, except that it may charge to Kilgo the actual out of pocket travel expenses its management may incur in performing their duties in connection with Kilgo.'

This contract was signed as follows:

'BY: (s) BENJAMIN O. JOHNSON

Attorney for Sellers.

TRI-STATE MOTOR TRANSIT COMPANY

(Formerly Westport Properties Corporation).

BY: (s) GEORGE F. BOYD

President and Treasurer.'

Beneath the signature of George F. Boyd on this contract appears the following:

'I, the undersigned Paul L. Andrews, being the owner of the remaining 158 shares of the outstanding stock of Kilgo Motor Freight, Inc., covered by the foregoing agreement, do hereby consent to and concur in the foregoing agreement.

(s) PAUL L. ANDREWS'

This contract was negotiated, drafted, and executed in Johnson's office in Spartanburg, South Carolina.

In this contract the parties agreed in order to facilitate the transfer of the 210 shares of Kilgo stock owned by plaintiff and the other persons or corporations, designated as the sellers, to Tri-State that an escrow arrangement will be established with the American Commercial Bank of Charlotte, North Carolina, subsequently merged into the North Carolina National Bank, as escrow agent for the parties to the contract. This escrow arrangement provided as follows:

'The Sellers will deposit with the Escrow Agent their certificates for the 210 shares duly endorsed for transfer with necessary stock powers attached. The escrow arrangement shall make provision for delivery of said shares to Buyer on full and final payment of the purchase price to the Escrow Agent. The Buyer will forthwith deposit with the Escrow Agent the amount of $25,000 in cash or U. S. Government securities of equal amount having a maturity of not greater than one year from date of this agreement. The Buyer's deposit shall be applied to the payment of the first installment of the purchase price due on the closing date. In event of final denial of approval of this agreement by ICC, then the escrowed deposits shall be returned to the respective parties.'

An escrow arrangement as specified in the contract was executed by the parties on the same day the contract was executed by them.

On 25 August 1960...