Brame v. Guarantee Finance Co. Inc

• Decision Date: 18 September 1924
• Citation: 124 S.E. 477
• Parties: BRAME . v. GUARANTEE FINANCE CO.,Inc., et al.
• Court: Virginia Supreme Court

124 S.E. 477

BRAME .

v.GUARANTEE FINANCE CO., Inc., et al.

Supreme Court of Appeals of Virginia.

Sept. 18, 1924.

Appeal from Law and Chancery Court of City of Roanoke.

Suit by S. R. Brame against the Guarantee Finance Company, Inc., and others. Decree of dismissal without prejudice, sustaining demurrer to complaint, and plaintiff appeals. Affirmed.

Byrd, Hopkins & O'Brien, of Roanoke, for appellant.

Hall, Wingfield & Apperson and Jackson & Henson, all of Roanoke, for appellees.

CAMPBELL, J. This is a bill in equity filed by appellant against the Guarantee Finance Company Inc., The Columbia Chemical Corporation, H. F. Henson, Jr., trustee for Finance Company, W. J. Henson, J. T. Bandy, T. J. Hughes, J. H. Dunkley, Bernard Mason, C. L. King, A. L. Loyd, trustee of the Guarantee Finance Company, Inc., in bankruptcy, and J. H. Carmichael.

The appellees have filed a motion of dismissal of this appeal, insisting that same was improvidently awarded.

They base their contention on two grounds:

First. "That the appellant did not comply with section 6339 of the Code of 1919, which provides that 'the person intending to apply for a transcript (of the record) shall notify the opposite party or his counsel, if either reside in this state, of his intention, and no clerk of any court shall make out and deliver such transcript unless it is made to appear that such notice was given.'"

Second. That the record is not certified according to law, in that the clerk has not duly authenticated the same nor certifiedthat the notice required was given the parties or their counsel.

While the notice usually appearing in a transcript of the record is not incorporated in the record before us, a notice duly served upon one of counsel for appellees has been filed with the court and is conclusive, as shown by the return thereon, that counsel were aware that the transcript would be applied for.

As to the second assignment, if it was the custom of the appellate court to lose itself in the realm of technicalities, the motion to dismiss should be sustained. The record comes here merely as a copy "Teste, " and not in the usual form in which records are required to be presented. It is the boast, however, of the courts of this jurisdiction that litigants are entitled to have their rights determined unfettered by the harsh rules of technical construction and application.

While the method here employed is not to be commended, we are of the opinion not to dismiss the appeal, but to proceed to a disposition of the cause upon the assignments of error as presented.

For a full discussion of the failure to comply with the statute, see Mears & Lewis v. Dexter, 86 Va. 828, 11 S. E. 538, and N. & W. Ry. Co. v. Dunnaway, 93 Va. 30, 24 S. E. 698.

The bill of complaint as amended, briefly stated, alleges that a charter was granted the Guarantee Finance Company, Inc., on the 11th day of January, 1921; that the principal business of this corporation was to sell the products of another corporation, namely, the Columbia Chemical Corporation, which had been incorporated in 1917, and was engaged mainly ip manufacturing syrup for "soft drink" purposes; that the principal office of each of said corporations was in the city of Roanoke; that on the 31st day of January, 1921, a meeting of Carmichael, Hughes, and others was held for the purpose of organizing the new corporation; that complainant attended this meeting and was induced by the promoters, organizers, officers, directors, who were J. T. Bandy, T. J. Hughes, J. H. Dunk-ley, J. H. Carmichael, and W. J. Henson, to subscribe the sum of $10,000 for 50 shares of stock of said corporation; that he paid the sum of $2,500 in cash and executed his notes for the residue; that he was induced to enter into this transaction by the misleading, untrue, and false representation of the directors aforesaid; that said individuals and directors withheld from complainant material information in regard to the affairs and condition of the Chemical Corporation as follows: That the Chemical Corporation had sold $300,000 of its capital stock, which sum, instead of going in full into the treasury of the corporation, not more than one-half of said sum had inured to the benefit of the corporation; that the said individuals were directors and officers in both corporations that in a loan transaction with the Taka Cola Company, W. J. Henson was negligent as an attorney, and caused a loss of $10,000, which he should be required to repay; that when the Chemical Corporation was organized a certain formula acquired by said individuals at an agreed price of $15,000 was accepted by them as directors of the Chemical Corporation, at a cost of $150,000, paid in stock; that the first $15,000 realized by sale of the Chemical Corporation stock transferred to them was devoted to paying the original price of the formula; that $85,000 realized subsequently from sale of said stock was divided among them while they were also directors of the Chemical Corporation; that they concealed and suppressed the fact that in February, 1920, J. T. Bandy agreed to pay W. O. Trainor, the holder of the patent rights of the formula, $6,000 for certain formula rights west of the Mississippi river; that said individuals were familiar with the financial condition of the Chemical Corporation; that at the meeting in January, 1922, complainant was elected a director and also treasurer of the Guarantee Finance Corporation, at an annual salary of $6,000 and expenses; that in June, 1921, complainant informed the directors of his withdrawal from the employ of the Finance Company and of his resignation as a director, and demanded a rescission of his stock subscription contract, including the return to him of the $2,500 cash payment thereon and his three notes each in the sum of $2,500, and likewise demanded the sum of $160 advanced by him toward traveling expenses, as well as the sum of $500 advanced for the purchase of a bottling plant in Norfolk, Va.; that he also demanded of the said directors of the Finance Company that they cancel the stock subscription contract, and also repay the $2,500 cash payment; that the resignations of complainant were accepted, and his employment closed in July, 1921; that thereafter the complainant pressed for a settlement of the rescission agreement; that this settlement was not made; that one of the directors, viz. J. H. Carmichael, entered into an agreement with complainant to restore the stock payment of $2,500, and to take up the three notes of $2,500 each; that said Carmichael executed his notes to complainant for the sum due; that Carmichael failed to pay said notes; that thereupon complainant threatened action on the Carmichael notes, whereupon W. J. Henson, J. H. Dunkley, J. T. Bandy, T. J. Hughes, and J. H. Carmichael individually promised complainant to take over the Carmichael notes and to assume in writing individual liability for the amount paid in cash by complainant originally and for the return of his three notes; that this said new contract included like promises to restore the $160 expense money and the $500 advanced for the purposes of the company; that the individuals named are also liableto complainant because it was their fraudulent representations that induced the purchase of the stock; that Dunkley, Henson, Bandy, and Carmichael have wholly refused to carry out their contract; that on April 30, 1921, the Bank of Pearisburg, Va., loaned to the Finance Company the sum of $10,000 at 60 days; that the collateral security deposited with, said note to the bank consisted of notes given by subscribers to the stock of the Finance Company, including one note of complainant's of $2,500, and which collateral totaled $19,000; that after frequent renewals of the note of the Finance Company, the bank demanded payment of said note; the same not being paid, the bank sold the collateral notes at private sale for the face value of the $10,000 note, less some few hundred dollars which had been paid as a curtail thereon; that the nominal purchaser was M. P. Farrier, who was acting for C. L. King, W. J. Henson, and Bernard Mason; that later King, Henson, and Mason returned said collateral notes to the bank; that the bank afterwards instituted suit on same; that the Finance Company borrowed various sums from the Mountain Trust Bank of Roanoke, putting up notes as collateral; that in default the collateral was sold and purchased by King, Henson, and Mason; that on July 1, 1922, the directors of the Finance Company authorized J. T. Bandy to execute a deed of general assignment of the effects of the company for the benefit of its creditors, naming H. F. Henson, Jr., as trustee; that the Chemical Corporation has been adjudged a bankrupt; that on the 14th day of October, 1922, the Guarantee Finance Company, Inc., was adjudged a bankrupt by the United States District Court for the Western District of Virginia, and on the 20th day of November, 1922, A. L. Loyd was appointed trustee of the bankrupt's estate. The prayer of the bill is as follows:

"In consideration of the premises, and forasmuch as your complainant is without a complete and adequate remedy, save in a court of equity where matters of this kind are only and properly cognizable, your complainant prays that:

"(a) The Columbia Chemical Corporation and ' the Guarantee Finance Company, Inc., both being corporations organized and doing business under the laws of Virginia; and H. F. Henson, Jr., trustee for said Guarantee Finance Company; and W. J. Henson, J. T. Bandy, T. H. Hughes, J. H. Dunkley, Bernard Mason, C. D. King, A. L. Loyd, trustee of the Guarantee Finance Company, Inc., in bankruptcy, and J. H. Carmichael, be made parties respondent to this bill, and be required to answer the same, though not under oath; answers under oath being hereby expressly waived.

"(b) The stock subscription contract between your complainant and the Guarantee Finance Company, Inc., be rescinded and the parties...