De Bardeleben v. Bessemer Land & Improvement Co.

• Decision Date: 21 July 1904
• Citation: 140 Ala. 621,37 So. 511
• Court: Alabama Supreme Court
• Parties: DE BARDELEBEN v. BESSEMER LAND & IMPROVEMENT CO.

37 So. 511

140 Ala. 621

DE BARDELEBEN v. BESSEMER LAND & IMPROVEMENT CO.

Supreme Court of Alabama

July 21, 1904

Appeal from Chancery Court, Jefferson County; John C. Carmichael Chancellor.

Suit by H. F. De Bardeleben against the Bessemer Land & Improvement Company. From a decree overruling a motion to dissolve an injunction for want of equity in a cross-bill filed by defendant, plaintiff appeals. Affirmed.

The original bill was filed by H. F. De Bardeleben against the Bessemer Land & Improvement Company. It alleged that, after the expenditure of much time and money in prospecting complainant located a valuable coal property, and leased the same for 20 years, there being two leases covering the property, both being taken in the name of De Bardeleben and the Bessemer Land & Improvement Company; that these leases each contained stipulations binding the lessees to pay a certain amount as minimum royalty; that shortly after the execution of the leases De Bardeleben and the Bessemer Land &amp Improvement Company took possession of the lands therein and opened coal mines thereon, the expenses incident thereto being borne by the Bessemer Company; that, at about the time said mine was opened up so as to yield an output for market De Bardeleben, who had been president of the company, severed his connection with the company; that at this time he was financially embarrassed, and was unable to pay any of the expenses of running said mine, and paid no further attention thereto; that the Bessemer Company has continued in the active operation of the mines up to the filing of the bill and has mined and sold large quantities of coal, no part of the proceeds of which have been paid to complainant; that complainant has demanded an accounting, and his share of the proceeds of the sales of coal from said lands, to be paid to him after deducting proper expenses incident to the mining and selling of said coal; that the Bessemer Company has refused to account for the sales of coal; that the Bessemer Company has expended large sums of money in mining and selling the coal, and that complainant's share of such expenditure should be charged to him, and his share of the proceeds of the sales of coal, after deducting such expenses, should be paid to him. One of the leases was made on the 11th of March, 1895, with the Alabama Mineral Land Company, and the other lease was made on the 15th of May, 1895, with C. G. Smith and others. Copies of both leases are attached to complainant's bill.

The Bessemer Company demurred to complainant's bill, and also filed an answer and cross-bill, the substance of which is as follows: The Bessemer Company admitted that complainant executed the two leases, both being taken in his own name and in the name of the Bessemer Company as lessees. The cross-bill denied that De Bardeleben had spent any of his own money in prospecting for coal on the leased lands, and alleged that said leases had been acquired in the following manner: That on and prior to the 18th of June, 1894, De Bardeleben was the president of the Bessemer Company, but that up to that date his duties as president had been practically nominal; that on the 18th of June, 1894, at a meeting of the board of directors of the Bessemer Company, De Bardeleben, who was a large stockholder and president of the company agreed with the company to accept a salary of $5,000 the consideration of which was that he should devote his time and energies to the management of the company's business; that, after making this arrangement, De Bardeleben conceived the idea of acquiring for the company large coal mining properties; that, pursuant to this purpose, in the winter of 1894-95 De Bardeleben spent practically all of his time in the coal fields of Alabama, investigating on behalf of the said Bessemer Company for coal lands that he thought might be profitably acquired and worked; that in the course of these investigations he found coal, apparently satisfactory, on the lands embraced in the two leases set out in the original bill; that, when he found there was coal on these bodies of land, he spent a large amount of the company's money in prospecting and exploiting this coal; that in the exploitation on these lands he employed several assistants and a large number of laborers, and the salaries and wages of this force and all of the expenses of the investigation were under De Bardeleben's direction, as president, and were charged to and paid by the Bessemer Company; that De Bardeleben made trips to New York and other points to secure the leases of said lands, and collected from the company money to defray the expenses of all these trips. The cross-bill further alleges that after De Bardeleben had devoted all of his time and energies as president, and spent thousands of dollars of its money in the exploitation and acquisition of the lands embraced in the two leases, it became his duty to have taken said leases solely for the benefit of the Bessemer Company. The cross-bill then avers at this time De Bardeleben was in the absolute and entire control of the business of the Bessemer Company, subject only to the supervision of its board of directors; that nearly or quite a majority of its directors were residents of South Carolina, and that meetings of the directors were usually held not more than once or twice a year; that De Bardeleben was supposed to report to these meetings, but that, except for such instructions as might be given him by the directors' meetings, he absolutely dominated the affairs of the company; that no meetings of the directors were held from the 21st of November, 1894, to the 21st of May, 1895, but that prior to the execution of the two leases in question, and during the time when De Bardeleben was spending the company's money in exploiting the coal on the leased lands, he discussed with various directors of the company the work he was doing in exploiting these lands preparatory to acquiring them by lease, and expatiated to these directors on the profits which the company would realize from the mining operations on these lands, obtaining the acquiescence and approval of these individual directors in the outlay he was making for the company, and the efforts he was making to acquire these lands on behalf of the company; that at none of these conferences did De Bardeleben ever suggest any intention of acquiring any individual interest in these lands; that the insertion by De Bardeleben of his name in said leases was without the consent or knowledge of defendant, and was a fraud on his part and a breach of his fiduciary obligations; that the leased lands were distant from the railroad, necessitating...