Alderman v. Alderman

• Decision Date: 05 October 1935
• Docket Number: 14143.
• Parties: ALDERMAN et al. v. ALDERMAN et al.
• Court: South Carolina Supreme Court

181 S.E. 897

178 S.C. 9

ALDERMAN et al. v. ALDERMAN et al.

No. 14143.

Supreme Court of South Carolina

October 5, 1935

Appeal from Common Pleas Circuit Court of Clarendon County; M. M Mann, Judge.

Suit by Martha P. Alderman and others against R. J. Alderman and others. During the pendency of the action, R. J. Alderman died, and Ben Geer Alderman, as executor of the will of R. J Alderman, was substituted as defendant for the deceased. From an adverse decree and from an order settling the case on appeal, plaintiffs appeal.

Decree affirmed, and appeal from order settling the case on appeal considered abandoned.

Epps & Epps, of Sumter, and Robinson & Robinson, of Columbia, for appellants.

A. C Hinds, of Kingstree, T. H. Stukes, of Manning, and L. D. Lide, of Marion, for respondents.

BAKER Justice.

Some time prior to the death of D. W. Alderman, Sr., who owned practically all of the stock of D. W. Alderman & Sons Company and Alcolu Railroad Company, South Carolina corporations, which stock comprised substantially his entire property, he divided his holdings or stock equally amongst his six children, R. J. Alderman, Paul R. Alderman, Mrs. Mary Lula Shaw, Miss Martha Alderman, Mrs. Mozelle A. Rice, and D. W. Alderman, Jr. There is some question as to when D. W. Alderman Jr., came into possession of his stock, but it is immaterial for the purpose of deciding the issues involved in this case.

Following the death in September, 1921, of D. W. Alderman, Sr., it was found that he owned a few scattered tracts of land in his individual name and some bank and warehouse stock, and all of his six children, who were his sole heirs and distributees at law, joined in a deed conveying such real estate to D. W. Alderman & Sons Company and joined in and transferred the bank and warehouse stock to the same corporation.

For a number of years prior to the death of their father, R. J. Alderman and Paul R. Alderman had the active management, under his general supervision, of both Alcolu Railroad Company and D. W. Alderman & Sons Company, the latter named corporation being one of the largest lumber manufacturing plants in South Carolina and having extensive timber holdings.

It is a universally known fact to lumbermen that the operation of a sawmill and lumber plant, small or large, is a business in which one can lose heavily unless well managed. Indeed, this is so well recognized that it has become an adage among lumbermen, "Never to wish an enemy in torment but wish such enemy owned a sawmill."

Realizing, no doubt, that the success of the corporations, especially D. W. Alderman & Sons Company, depended upon the management, D. W. Alderman, Sr., requested that upon his death R. J. and Paul R. Alderman should be continued in the active management and control of the corporations in order that his well-known polices would be continued, and therefore, in deference to the wishes of the said D. W. Alderman, Sr., and having little if any experience with the operation and management of the business of said corporations, Mrs. Rice, Mrs. Shaw, Miss Martha Alderman, and D. W. Alderman, Jr., severally executed trust deeds or contracts conveying their stock in trust in the said corporations to the said R. J. and Paul R. Alderman. All of said instruments conveying their stock were of like tenor and purport, the following being a copy of the trust deed or contract signed by Miss Martha Alderman, and the acceptance of the trust signed by R. J. and Paul R. Alderman:

"State of South Carolina,

County of Clarendon.

Whereas, on the 25th day of March, 1918, there was issued to me and in my name, by the Alcolu Railroad Company, a corporation duly created and existing by and under the laws of the State of South Carolina, Stock Certificate No. 29 for thirty-three and one-third (33 1/3) shares of the capital stock of said corporation of the par value of Five Hundred ($500.00) Dollars per share, as will more fully appear by reference to said certificate; and

Whereas, on said date there was also issued to me and in my name, by D. W. Alderman & Sons Company, a corporation duly created and existing by and under the laws of the State of South Carolina, the following certificates of its capital stock, to wit, No. 60 for two (2) shares, No. 61 for two (2) shares, No. 62 for three (3) shares, No. 63 for three (3) shares, No. 64 for eight (8) shares, No. 65 for eight (8) shares, No. 66 for eight (8) shares, No. 67 for eight (8) shares, and No. 68 for eight (8) shares, aggregating in all fifty (50) shares of the capital stock of the said D. W. Alderman & Sons Company of the par value of Five Hundred ($500.00) Dollars per share, as will more fully appear by reference to said certificates; and

Whereas, I reside in the City of Sumter in the State of South Carolina, and do not expect again to permanently reside at Alcolu, South Carolina, where the principal place of business of said companies is located and for that reason it will not be convenient for me to attend the meetings of the stockholders of said corporation which would probably result in inconvenience, hindrance and embarrassment to the management of said companies in failing to have represented in their stockholders meeting a majority of the stock; and

Whereas, by reason of my unfamiliarity with the conduct, operation and management of the business and affairs of said corporations, it would be necessary for me, if I resided at Alcolu, to have some competent person to represent me at meetings of said stockholders; and

Whereas, my brothers, Robert J. Alderman and Paul R. Alderman, for the past ten or twelve years, have had the active management and control of the business of said corporations and are thoroughly capable and competent to successfully manage and control the same; and

Whereas, the value of my said stock depends upon the continued successful management of said corporations; and

Whereas, the said Robert J. Alderman and Paul R. Alderman, on account of their experience and ability, are better qualified than anyone else to continue the successful management of said corporations; and

Whereas, the said Robert J. Alderman and Paul R. Alderman have agreed as long as it may be deemed advisable, by the vote of a majority of the whole stock of said corporations, respectively, to continue the operation of their respective businesses, if said Trustees, or the survivor, so long live; and

Whereas, the said Robert J. Alderman and Paul R. Alderman by reason of their ability, experience and familiarity with the said business can more capably represent me and better promote and protect my interest in said business than any other person; and

Whereas, the said Robert J. Alderman and Paul R. Alderman are also stockholders and largely interested in said corporations, and, therefore, the advancement of my interest therein would operate to their advantage, and vice versa; and

Whereas, the appointment by me of some person unacquainted with the affairs of said corporations may result in giving rise to disputes and differences which would work to the detriment of the interest of all concerned.

Now, therefore, know all men by these presents, That I, Martha P. Alderman, for and in consideration of the foregoing premises and also in consideration of the sum of Five and no/100 ($5.00) Dollars to me in hand paid by the said Robert J. Alderman and Paul R. Alderman, at and before the sealing of these presents, the receipt of which is hereby acknowledged, have conveyed, transferred, assigned and delivered and by these presents do convey, transfer, assign and deliver unto the said Robert J. Alderman and Paul R. Alderman:

All and singular the Stock Certificates hereinabove mentioned, described and referred to, issued to me, and in my name, by the said Alcolu Railroad Company and D. W. Alderman & Sons Company.

To have and to hold the said Stock Certificates unto the said Robert J. Alderman and Paul R. Alderman, or the survivor of them; in trust, nevertheless, for the uses and purposes, upon the terms and with the powers following and none other, that is to say:

1. To hold, keep and retain the actual and exclusive possession and custody of said certificates or the certificates which may be issued in lieu thereof in the name of 'Robert J. Alderman and Paul R. Alderman, Trustees for Martha P. Alderman' during their lives or the life of the survivor unless the said corporations, or either of them are, or is, sooner liquidated and dissolved: in which event, to surrender to said corporations, or either of them, for cancellation such of said certificates as may be subject to surrender and cancellation by liquidation and dissolution.

2. At such time as they may see fit and if they deem it advisable, to have all of said certificates duly transferred on the books of said corporations to "Robert J. Alderman and Paul R. Alderman, Trustees for Martha P. Alderman.'

3. During the time said Certificates are in their possession and custody as aforesaid, or such possession and custody of the survivor, to vote said stock (a) in all elections for directors of said corporations, (b) upon all questions and matters relating to the conduct of the business of said corporations upon which the vote of stockholders may be required or deemed proper, (c) upon all resolutions which may be submitted with reference to the sale of the real or personal property of said corporations, or either of them, in whole or in part, and the use, disposition or distribution of the proceeds of such sale or sales, (d) upon all resolutions in connection with the liquidation of said corporations or either of them, and (e) in and upon any and all other matters, things, questions, motions or resolutions which may occur, arise, or be made or...