Air Movers of America, Inc. v. State Nat. Bank of Alabama

• Decision Date: 03 October 1974
• Citation: 302 So.2d 517,293 Ala. 312
• Parties: AIR MOVERS OF AMERICA, INC., a corp., et al. v. STATE NATIONAL BANK OF ALABAMA, a National Banking Ass'n, etc. SC 244.
• Court: Alabama Supreme Court

Page 517

302 So.2d 517

293 Ala. 312

AIR MOVERS OF AMERICA, INC., a corp., et al. v. STATE NATIONAL BANK OF ALABAMA, a National Banking Ass'n, etc.

SC 244.

Supreme Court of Alabama.

Oct. 3, 1974.

Bell, Richardson, Clearly, McLain & Tucker, Stapp & Spencer, and James H. Porter, Huntsville, for appellants.

Lanier, Shaver & Herring and John M. Heacock, Jr., Huntsville, for appellee.

COLEMAN, Justice.

Certain of the respondents appeal from the final decree rendered by the circuit court, in equity, in an interpleader suit.

Complainant is State National Bank of Alabama, a national banking association having places of business in Huntsville. Complainant will sometimes be referred to as the Bank.

The respondents are two corporations and twelve natural persons. One corporate respondent is Air Movers of America, Inc., an Alabama corporation, having its principal place of business in Huntsville. Air Movers will sometimes be referred to as Air Movers or as the corporation. Prior to the filing of the bill of interpleader, the corporation maintained a checking account with the Bank.

The other respondent corporation is International Van Lines, Inc., having its principal place of business in Huntsville.

The twelve respondents, who are natural persons, are separated into two groups by reason of their opposing claims with respect to control of the corporation and the right to the money in the corporation's checking account.

Respondents Webb, Thomas, Mash, Nevels, Youngblood, and Morris are one of the groups. At some time they were, or allegedly were, directors of the corporation. They may be referred to hereinafter as the Mash group.

Thomas testified that he, at one time, filed a suit for 'them' and agreed to represent 'them as attorney for the corporation.' He testified further he did instruct Mash that he, Thomas, did not wish to be a director of the corporation; that he never attended any meeting of the corporation; and that he withdrew as attorney for the corporation and for Mash. The final decree recites that Thomas has filed a written disclaimer to the funds on deposit in this cause.

At some time or times, four members of the Mash group were, or allegedly were, officers of the corporation, respectively, as follows: Mash, President; Youngblood, Vice President; Webb, Secretary-Treasurer, and Nevels, Assistant-Secretary.

The other six natural persons, who are respondents, are appellants Hill, Stapp, Gaskin, Pollak, Osburn, and Hembree, all of whom were, or allegedly were, at some time or times directors or officers of the corporation.

At pages 773 and 774 of the transcript, the minutes of a joint meeting of stockholders and directors of the corporation state that appellants Hill, Stapp, Pollak, Osburn, and Hembree, and also respondents Mash and Webb, were stockholders. It may be that other respondents also were stockholders.

The corporation was organized October 1, 1968, by filing articles of incorporation in the office of the Judge of the Probate Court in Huntsville. The objects for which the corporation was formed are stated to be to pack, move, ship, and forward packages, merchandise, furniture, and any and all commodities, for hire, and to carry on any and all lawful business in connection therewith. The objects of the corporation are described in further detail on three transcript pages.

The three incorporators were also shown to be officers and directors of the corporation, to wit: Mash, President; Hill, Vice President; and Hembree, Secretary-Treasurer.

Capital stock is stated to be 800,000 shares of common stock of the par value of ten cents per share. Mash subscribed for 398,000 shares, and Hill and Hembree each subscribed for 1,000 shares. Respondents' Exhibit 20 appears to be the original of a stock certificate, dated October 1, 1968, certifying that Mash is the owner of 398,000 shares of the capital stock of Air Movers of Marica, Inc. The certificate is signed by Mash, President, and Hembree, Secretary-Treasurer. On the back of the certificate is the transfer form which is signed 'Clyde Mash.' The blanks in the transfer form are not filled in and the form bears no date.

It appears that the corporation proceeded to carry on its business with profitable results. Respondents' Exhibit 12 contains an operating statement for the period October 1, 1968--November 30, 1968, which shows sales amounting to $16,387.85, and net income after taxes of $2,328.84.

The record indicates that additional people bought stock. The operators and stockholders decided to 'go public' and take steps necessary to qualify and register so that the capital stock of the corporation could be sold to the general public.

The record indicates that Mash was sole owner of respondent International Van Lines, Inc., and that he had paid, or agreed to pay, for some part or all of his stock in Air Movers by conveying to Air Movers certain equipment and vehicles owned by International Van Lines. The valuation of the equipment and vehicles conveyed or to be conveyed is not clear.

The payment, or proposed payment, for stock by Mash, by conveying the equipment and vehicles, presented a problem in qualifying Air Movers to 'go public.' It appears that a proposal was made whereby Air Movers would lend Mash enough money to pay cash for his stock in lieu of the equipment and vehicles of International Van Lines. It further appears that the proposed loan by Air Movers also presented a problem in the process of qualifying Air Movers to go public. The details of the various proposals are not entirely clear.

In any event, it appears that the operators of Air Movers were making an effort to 'go public' and employed an underwriter to accomplish that objective.

Certain exhibits are in evidence which are pertinent to the purpose of the corporation in the matter of going public and are also pertinent to the specific occurrences which preceded the filing of the bill of interpleader by the Bank. Some of these exhibits are copies, or alleged copies, of minutes of meetings of stockholders and directors of the corporation, bank account signature cards, and resolutions adopted at the meetings referred to.

Exhibit 1 (Tr. 247), attached to the deposition of Mash, is a copy of the minutes of a specially called joint meeting of stockholders and directors of the corporation on February 26, 1969, in Huntsville. The minutes recite that Mash, president of the corporation, requested that Stapp preside. Stockholders present and absent, and the number of shares owned by each, are listed. The list shows Mash as owning 74,000 shares. The minutes recite that: 'Mr. Stapp announced that the primary purpose of the meeting was to authorize a loan from the corporation to Mr. Clyde Mash in the amount of $90,000 . . .' approved by the underwriter, '. . . to permit Mr. Mash to subscribe to the additional shares of capital stock previously contemplated in exchange for the transfer of certain equipment . . .' from Mash to the corporation. Stapp pointed out that the transfer of assets in exchange for the capital stock appeared to raise numerous problems with respect to registration of stock with the Securities and Exchange Commission. Upon motion unaimously adopted, the $90,000.00 loan to Mash was approved, to be secured by mortgage on the entire 74,000 shares belonging to Mash. Other matters were considered.

Attached to the minutes is a waiver of notice and ratification of the acts at the joint meeting on February 26, 1969. The waiver is dated March 12, 1969, and bears the purported signatures of Mash and seven other persons.

In his deposition, Mash testified that the minutes are not correct as showing that he owned only 74,000 shares; that no one ever saw the minutes of the corporation; that minutes most of the time were taken by Stapp and Hembree; that for months meetings were held, they were never drawn up; that additional minutes have been drawn up and he never saw them; that meetings were just called and not held at any regular time; there are additional minutes he has never seen which he cannot verify; that he can verify the waiver of notice '. . . which at each meeting we sign those.' He testified that he owned 398,000 shares; that reorganization was going to take place, and until it did he owned 398,000 shares, but '. . . nothing was ever consummated in the corporation.'

Complainant's Exhibit 12 (Tr. 686) is purportedly a copy of the minutes of a specially called meeting of the board of directors on March 12, 1969. The minutes recite, among other things, that at the request of Mash, president of corporation, Stapp, attorney for corporation, presided; that Hembree, secretary-treasurer, read 'the minutes of the last meeting,' (no date), which were approved by unanimous vote; and that Stapp pointed out that at a called meeting on February 26, 1969, the corporation had been authorized to extend a loan to Mash '. . . to enable him to complete the acquisition of his capital stock in the corporation.'

Complainant's Exhibit 8 (Tr. 679) purports to be a copy of the minutes of a meeting of the Board of Directors of the corporation on April 22, 1969. Mash made motion to dispense with reading of minutes 'of the previous meeting,' and motion was unanimously passed. Mash stated that he had talked with attorneys in New York and Washington and was of opinion that '. . . we can purchase outright, Air World Forwards' as soon as 'we' have divested ourselves of all interlocking holdings and stocks in other transportation companies and air lines. Stapp disagreed, read from F.A.A.Code, and stated he will file petition to C.A.B. for authority to purchase Air World Forwarders.

Stapp stated '. . . we need to clarify who are the beneficial owners of' the corporation before we can go ahead with our S.E.C. filing. Stapp offered a resolution which provided that the Board of Directors appoint a three-man committee composed of Dr. Patel, Osburn, and Hembree to review the activies of the...