Bloodworth v. Bloodworth, s. 25133
| Decision Date | 10 July 1969 |
| Docket Number | 25134,Nos. 25133,s. 25133 |
| Citation | 225 Ga. 379,169 S.E.2d 150 |
| Parties | G. Albert BLOODWORTH, Executor, et al. v. Margaret Ann BLOODWORTH, by Next Friend, et al. Margaret Ann BLOODWORTH, by Next Friend, et al. v. G. Albert BLOODWORTH, Executor, et al. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. (a) The issue as to jurisdiction of the defendant Sunrise Products, Inc., is deemed waived.
(b) The trial court erred in holding that the defendants Moore and Thomas were subject to its jurisdiction.
2. (a) The issue relating to striking from the defendants' answers the allegations
as to their offer to sell or purchase stock is deemed waived.
(b) As to estoppel, the trial court erred in granting the motions of the plaintiffs to strike the allegations of the defendants' answers as to the plaintiff widow's personally owned stock and as to that claimed by her and the children through the father's estate, but it was correct in granting such motions as to the children as beneficiaries of the trust.
3. The trial court correctly denied the plaintiffs' motion to strike portions of the defendants' answers relating to fairness of the sales agreement and its ratification.
4. The plaintiffs' motion for summary judgment was not meritorious.
5. The defendants' motions for summary judgment were also not meritorious.
6. Grant of the interlocutory injunction was not an abuse of discretion.
7. It was not erroneous to supersede the interlocutory injunction and to limit the defendants' liability to actual damages pending the appeal.
8. Conditioning denial of the defendants' objections to the plaintiffs' motion for discovery upon plaintiffs' paying the cost was not an abuse of discretion.
Maurice C. Thomas, Jones, Cork, Miller & Benton, Wallace Miller, Jr., Macon, for appellants.
G. Lee Dickens, Jr., Dickens & Hall, Milledgeville, for appellees.
This review involves rulings in a minority stockholders' suit complaining of sales of all of the corporation's products to a partnership.
The plaintiff Mrs. Florabelle C. Middlebrooks is the widow of J. Logan Bloodworth and has remarried. The other plaintiffs are their children.
Defendants are G. Albert Bloodworth and G. Ernest Bloodworth, brothers of the deceased J. Logan Bloodworth who are sued individually and as executors and trustees under his will and as trustees under a trust created by him; the partnership Cherokee Products Company; the corporation Sunrise Products, Inc.; and Jesse Gordon Moore and Maurice C. Thomas, successor executors and trustees under J. Logan Bloodworth's will.
The suit, filed in the Superior Court of Baldwin County, asserts that the sales complained of are for the personal gain of the two brothers and their mother, who comprise the partnership. The action seeks an accounting, damages and injunctive relief from the sales. It also seeks disqualification of the brothers as executors and trustees and disqualification of Moore and Thomas as successor executors and trustees.
The complaint, as amended, insofar as necessary to recite here, makes the allegations which follow.
The majority of the outstanding 1,250 shares of stock of Sunrise is owned by the two brothers, their mother, wives and children, and the remaining minority, 357 1/7 shares, is owned by the plaintiffs. The brothers, as executors and trustees under Logan's will and trust, control 238 1/7 shares of the plaintiffs' stock.
The Board of Directors since J. Logan Bloodworth's death on April 12, 1965, has been the two brothers Albert and Ernest, their mother, their wives and the plaintiff widow. Its officers since that date have been Albert, president; Ernest, vice president; and their mother, secretary and treasurer.
Sunrise, a Florida corporation, owns and operates a cannery at Fort Pierce, Florida. On April 12, 1965, it had in inventory a stated amount of tomatoes and beans which it had processed and canned, and from that date to June 30, 1967, it processed and canned additional specified quantities.
These products were sold to the partnership Cherokee in separate sales on open account, without interest, for a named price. Such sales were negotiated and consummated for Sunrise by Albert and Ernest and for Cherokee by the same persons. They fixed the consideration by adding 1% to the cost of production. Cherokee resold these goods to third persons for amounts unknown to the plaintiffs but believed to be for a profit of $500,000 to Cherokee.
At all times since April 12, 1965, Albert and Ernest have been two of the three partners of Cherokee. The plaintiffs are not partners therein.
Plaintiffs, on April 27, 1967, complained of these sales by letters to the directors and stockholders. On July 1, 1967, at meetings of the stockholders and of the directors, the plaintiff widow unsuccessfully sought adoption of resolutions changing this arrangement. Contrary resolutions continuing the cost plus 1% arrangement between Sunrise and Cherokee were adopted with all voting in favor except her.
Since then Sunrise has processed and canned additional products, the amounts being unknown to plaintiffs. These have been sold to Cherokee on open account without interest, such sales being negotiated and consummated for Sunrise and for Cherokee by Albert and Ernest for a consideration of cost plus 1%. They are being resold by Cherokee at a substantial profit over the amount it paid to Sunrise.
The defendants intend to continue selling to Cherokee in this manner unless restrained and enjoined.
As shown by the above facts, Sunrise refuses to enforce rights which may properly be asserted by it against Albert, Ernest and Cherokee.
The defendants have wilfully caused these sales to be made pursuant to a scheme to divert from Sunrise to Cherokee profits rightfully belonging to Sunrise, with the intent and effect of depriving plaintiffs of the part of such profits to which they are justly entitled due to the fact that the plaintiff widow and the estate and trust of J. Logan Bloodworth own 357 1/7 shares of the stock of Sunrise.
By reason of the foregoing facts Albert, Ernest and Cherokee owe Sunrise the total amount Cherokee has received from resales plus the fair market value of goods purchased by Cherokee from Sunrise since April 12, 1965, but not resold, less payments Cherokee has made to Sunrise on the purchase price. Albert, Ernest and Cherokee are also liable to Sunrise for interest on the above and are liable to Sunrise and to the plaintiffs for punitive damages and expenses of litigation.
Also, as shown by these facts, Albert and Ernest have exercised their fiduciary powers in furtherance of their own personal interest at the expense of the beneficiaries of the trust and will. For this reason they are not fit and proper persons to act as executors and trustees and are disqualified.
Jesse Gordon Moore, named in Logan's will as successor executor and trustee, is a resident of Jones County. He is an employee of Cherokee and a brother in law of Albert, has actively participated as Cherokee's agent in the sales complained of, is taking the side of Cherokee and its partners in the matters complained of, and is therefore disqualified from acting as executor and trustee.
Maurice C. Thomas, also named as successor executor and trustee, is a resident of Bibb County. He is the attorney for Albert, Ernest and Cherokee, has been actively representing them in the matters involved in this action, and is therefore disqualified.
The prayers sought, in substance, the following relief: interlocutory and permanent injunction prohibiting Sunrise from selling to Cherokee, Albert or Ernest, or any partnership or corporation in which they have any interest, and prohibiting them from purchasing from Sunrise; accounting by the defendants for all sales by Sunrise to Cherokee since April 12, 1965, and all payments by Cherokee to Sunrise on these purchases; accounting by Albert, Ernest and Cherokee of all sales by Cherokee of goods purchased from Sunrise since April 12, 1965, and of all goods bought from Sunrise since that date and not yet sold; removal of Albert and Ernest as executors and trustees as aforesaid and appointment of others; disqualification of Moore and Thomas as successor executors and trustees and appointment of others; monetary judgment in favor of Sunrise and the plaintiffs against Albert, Ernest and Cherokee for a named amount, or for actual and punitive damages, and expenses of litigation; judgment assessing against Sunrise, each of the plaintiffs, and the executors and trustees, in proportion to the amounts that each may recover in this action, all expenses of litigation which the plaintiffs may incur; and general relief.
Separate answers were filed to this complaint by Albert and Ernest individually and as executors and trustees, Sunrise, Cherokee, Moore and Thomas. All of the answers admitted allegations relating to identity of the parties, ownership of stock in Sunrise, its officers and directors, the general nature of its business and that of Cherokee, the will and trusts above referred to; and other matters not in dispute here. All such answers denied the essential allegations of the complaint, and averred that the arrangement and agreement providing for the sales complained of is fair, equitable and just.
The answers of all defendants except Moore and Thomas set forth the defense of estoppel by acquiescence of the plaintiffs in the continuing arrangement for the sales. Upon motion these averments as to estoppel were ordered stricken.
Also ordered stricken were the references in the answers of all defendants to their offer to sell their Sunrise stock to the plaintiffs and their offer to purchase from the plaintiffs their stock, and of their refusal.
The answers of Sunrise, Moore and Thomas contain jurisdictional defenses. Also, these defendants moved to dismiss the complaint for lack of jurisdiction as to them and moved for summary judgment based upon the same...
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