Bateh v. Brown

• Citation: 271 So.2d 830,289 Ala. 695
• Parties: Joseph A. BATEH v. Richard Hail BROWN et al. SC 7.
• Decision Date: 16 November 1972
• Court: Supreme Court of Alabama

Page 830

271 So.2d 830

289 Ala. 695

Joseph A. BATEH v. Richard Hail BROWN et al.

SC 7.

Supreme Court of Alabama.

Nov. 16, 1972.

Rehearing Denied Feb. 1, 1973.

William M. Acker, Jr., and Ferris S. Ritchey, Jr., Birmingham, for appellant.

Richard Hail Brown, pro se and Sadler, Sadler, Sullivan & Sharp, Birmingham, for appellees.

MERRILL, Justice.

This is an appeal from a decree in a suit which sought the dissolution and the liquidation of a corporation, the appointment of a receiver and a distribution of the assets after payment of the expenses and obligations of the corporation.

On May 6, 1971, Joseph A. Bateh, appellant, filed a bill of complaint seeking dissolution of a corporation known as BBC Investment Company (hereinafter referred to as BBC) pursuant to the provisions of Tit. 10, § 21(78--79), Code of Alabama 1940, as amended. Bateh named BBC and Richard Hail Brown as respondents. Bateh alleged that he and Brown each owned 50% Of the capital stock of BBC; that Brown, as president of BBC, had failed to call stockholders' and directors' meetings as required by the charter and by-laws; that Bateh had finally forced a stockholders' and directors' meeting himself, at which Bateh offered 13 different resolutions, all of which dealt with matters crucial to the business and all of which died for lack of a second, with no further business being transacted at the meeting; that Brown dominated the management and treated the corporation as his private domain and excluded Bateh from the business and from all information, and refused Bateh access to the books and records; that Brown caused Bateh's wife, Azizah Bateh, not to be paid on a loan which she had made to BBC, and although BBC had no reason not to pay her, that Brown had caused an appearance to be filed by BBC in a suit filed by Mrs. Bateh to collect on the said loan; that BBC was a deadlocked corporation with the two equal stockholders being in a complete and irreconcilable conflict as to the courses of action to be taken; that Brown had acted and was acting oppressively and illegally; that BBC owned certain property consisting primarily of motels which could not be partitioned or equitably divided and which should be sold for a division of the proceeds in a corporate dissolution; that appointment of liquidating receiver is necessary; and that the employment of solicitors by Bateh were necessary and that the solicitors are entitled to a reasonable solicitors' fee from the proceeds of any sale of corporate assets. On the basis of these allegations, Bateh then prayed that BBC be dissolved; that a liquidating receiver be appointed; that the properties of the croporation be sold either at public or private sale; that the liabilities or obligations of the corporation first be paid, and that any balance be distributed to the stockholders after an accounting between them. The bill of complaint was verified by Bateh's sworn affidavit.

More than thirty days after the bill was served on BBC and on Brown, and no responsive pleadings have been filed, Bateh moved for decrees pro confesso and decrees pro confesso were entered against both respondents by the register on June 10, 1971. On June 15, 1971, BBC and Brown filed a purported answer to the bill, admitting some averments and denying others, but agreeing that a dissolution of BBC was desirable. Brown, who is a licensed attorney, appeared for himself and for BBC.

On June 21, 1971, Brown, pro se and as solicitor for BBC, filed a petition to set aside the decrees pro confesso on the grounds of inadvertence and misunderstanding.

On July 7, 1971, the trial court entered an order having to do with a report which one Charles C. Morton has filed in a separate case (S.C.8) as a proposed final decree. 289 Ala. 699, 271 So.2d 833. Morton was court-appointed manager at the time of B-D Development Company, a partnership-in-dissolution, a separate entity from BBC, but owned equally by Bateh and Brown.

On August 30, 1971, the sworn testimony of Bateh and of Ferris S. Ritchey, Jr., his attorney, was taken before a duly appointed commissioner, and the said testimony, together with certain exhibits, were introduced into evidence. This evidence generally supported the allegations of the bill.

On August 30, 1971, the only note of testimony ever filed in the cause was filed by Bateh, submitting the case for final decree on the bill of complaint, the decrees pro confesso, and the testimony of Bateh and Ritchey, together with the exhibits attached thereto. On August 30, 1971, the trial court, in a minute entry, took the case under submission.

On August 31, 1971, the trial court entered a lengthy and complicated decree dealing not only with the affairs of B-D Development Company, the partnership and the case involved in S.C.8, but also with the affairs of the corporation which is the subject of the instant suit. The decree is discussed more fully in S.C.8, but it is sufficient here to say that the trial court divided the corporate property 'in kind' between Bateh and Brown.

But the final decree contained no finding or determination as to the size of the assets and liabilities of BBC and made no finding or determination as to the mortgage or lien balances on the properties distributed. There is nothing in the decree to show whether or not, if a division 'in kind' was permissible, that it was equal as between each 50% Stockholder. There was no finding or determination that the property could be equitably divided 'in kind' or partitioned. Finally, the final decree did not set aside or alter the decrees pro confesso which had been entered...