Ault & Wiborg Co. of Canada, Limited v. Carson Carbon Co.

• Decision Date: 04 March 1935
• Docket Number: 32639
• Citation: 181 La. 681,160 So. 298
• Parties: AULT & WIBORG CO. OF CANADA, Limited, v. CARSON CARBON CO. et al
• Court: Louisiana Supreme Court

160 So. 298

181 La. 681

AULT & WIBORG CO. OF CANADA, Limited, v. CARSON CARBON CO. et al

No. 32639

Supreme Court of Louisiana

March 4, 1935

Appeal from Fourth District Court, Parish of Ouachita; David I Garrett, Judge.

Action by the Ault & Wiborg Company of Canada, Limited, against the Carson Carbon Company and another. From a judgment dismissal plaintiff appeals.

Affirmed.

Sholars & Gunby, of Monroe, for appellant.

McHenry Montgomery, Lamkin & Lamkin and Charles Titche, all of Monroe, for appellees.

OPINION

ROGERS, Justice.

Plaintiff's suit against the United Carbon Company was dismissed on an exception of no right or cause of action, and plaintiff has appealed from the judgment.

The suit was against the Carson Carbon Company and the United Carbon Company for money advanced to the Carson Carbon Company and for an accounting for the value of certain stock owned by the plaintiff company in the Carson Carbon Company.

The facts alleged in the petition are as follows:

In February, 1923, the Ault & Wiborg Company of Canada and the Ault & Wiborg Company of Ohio, which were engaged in the manufacture of printing inks, organized under the laws of Ohio another corporation known as the Carson Carbon Company, each of the incorporating companies owning 50 per cent. of the capital stock in the new corporation.

In order to provide the funds with which to purchase land in Morehouse parish, in this state, and to erect and operate a plant thereon for the manufacture of carbon black, a material used in the manufacture of printing inks, the two Ault & Wiborg companies advanced from time to time equal amounts of money to the Carson Carbon Company. On June 30, 1930, the Carson Carbon Company owed $ 49,194.23 to each of its creditors for such advances.

In May, 1928, the Ault & Wiborg Company of Ohio sold its one-half interest in the Carson Carbon Company to the International Printing Ink Corporation; and in July, 1930, the latter corporation sold the one-half interest which it had acquired in the Carson Carbon Company to the United Carbon Company. The selection of the officers and directors and the control and management of the Carson Carbon Company was first in the Ault & Wiborg Company of Ohio, then in the International Printing Ink Corporation, and later in the United Carbon Company. The Ault & Wiborg Company of Canada never exercised any supervision over the Carson Carbon Company, nor took any part in the management of its business.

On October 19, 1928, the Carson Carbon Company entered into a contract with Moody & Seagraves to purchase 2,500,000 cubic feet of gas per day at 3 cents per 1,000 cubic feet. And in December, 1929, the Carson Carbon Company entered into a contract with the United Carbon Company by which the United Carbon Company agreed to deliver to the Carson Carbon Company a maximum of 2,500,000 feet of gas per day at 2 3/4 cents per 1,000 feet. In June 1930, the Carson Carbon Company secured a modification of its contract with Moody & Seagraves, whereby the quantity of gas called for thereon was reduced to 1,000,000 cubic feet per day.

Immediately after July 1, 1930, and until July 31, 1931, the Carson Carbon Company used more than 2,500,000 cubic feet of gas per day from the wells of the United Carbon Company, and not more than 1,000,000 cubic feet of gas per day from the wells of Moody & Seagraves. In payment for the gas which it sold, the United Carbon Company accepted the entire output of carbon black, valued at more than $ 27,000, of the Carson Carbon Company. On July 18, 1931, the Carson Carbon Company became insolvent and closed its plant.

In August, 1931, the United Gas Public Service Company (the successor to Moody & Seagraves) sued the Carson Carbon Company for breach of contract, and by way of compromise obtained a judgment for $ 1,862.82. This judgment was subsequently assigned for its face value to the United Carbon Company.

Plaintiff alleges that the sale of its interest in the Carson Carbon Company by the Ault & Wiborg Company of Ohio to the International Printing Ink Corporation, and the sale by the latter company of the interest thus acquired to the United Carbon Company, were made without its knowledge or consent. That as a part of the agreement of the sale by the International Printing Ink Corporation to the United Carbon Company, the International Printing Ink Corporation, which at the time was the only customer for its entire output of the Carson Carbon Company, agreed to purchase all the carbon black required for its needs from the United Carbon Company, which agreement was entered into in violation of plaintiff's rights and with the intent to injure and defraud plaintiff.

The substantial grounds of plaintiff's action appear to be set forth in article 15 of the petition, reading as follows, viz.:

"As the result of the actions of said The Carson Carbon Company, hereinbefore stated, all of which were entered into and carried on by collusion and conspiracy with said The United Carbon Company, in deceiving said Moody & Seagraves, and/or its successor, as to the terms and status of the alleged contract between the said The Carson Carbon Company and said The United Carbon Company, and in breaching and failing to perform the said contract between said The Carson Carbon Company and Moody & Seagraves, and in closing down its said plant after having purchased gas from said The United Carbon Company, in violation of the rights of said Moody & Seagraves, and/or The United Gas Public Service Company as its successor, and in so making payment for gas purchased from said The United Carbon Company, by turning over to it its entire output of carbon black, which was accepted by said The United Carbon Company with full knowledge of the facts herein stated regarding the contract of said The Carson Carbon Company with Moody & Seagraves; said The Carson Carbon Company, which on June 30, 1930, had net current assets in excess of $ 23,000.00 and a surplus account of $ 2,700.00, on July 31, 1931 had reduced its net current assets to approximately $ 3,000.00, and its surplus account to a deficit in excess of $ 44,000.00, or a net loss in excess of $ 67,000.00; and said The United Carbon Company had received from said The Carson Carbon Company in carbon black, being the entire output of the Carson Carbon Company for said period, more than $ 27,000.00; with the result that said The United Carbon Company suffered no loss by reason of its ownership of half the stock of said The Carson Carbon Company, but, on the contrary, realized a profit in excess of $ 4,000.00, whereas petitioner, being the other half owner of the stock of said The Carson Carbon Company, suffered a loss equivalent to the value of one-half the property and assets of said The Carson Carbon Company, plus its said obligation in the sum of $ 49,194.23."

And in article 18 of its petition, plaintiff sums up its complaint against the defendants as follows, viz.: "Said the Carson Carbon Company on June 30, 1930, and prior thereto, was a solvent operating concern which would have, as petitioner believes, been able to pay off in full its obligations in the sum of $ 49,194.23 to both said the United Carbon Company and to petitioner, and its capital stock had and would have had a substantial value in an amount which petitioner is unable to state. The result, intended and effected, of the acts of said the Carson Carbon Company as a corporation, its officers, agents and employees acting in its behalf, and of said the United Carbon Company, is to render said debts of said the Carson Carbon Company to petitioner uncollectible and worthless, and to deprive said stock of said the Carson Company owned by petitioner of any value whatever."

The petition discloses that the suit is by one stockholder against the other stockholder of a corporation for injuries suffered by the corporation itself from the alleged wrongdoing or negligence of its officers,...