Bungalow Gas Co. v. Swanson

• Decision Date: 20 October 1936
• Docket Number: 8144.
• Parties: BUNGALOW GAS CO. et al. v. SWANSON et al.
• Court: West Virginia Supreme Court

188 S.E. 235

117 W.Va. 763

BUNGALOW GAS CO. et al. v. SWANSON et al.

No. 8144.

Supreme Court of Appeals of West Virginia.

October 20, 1936

Submitted September 23, 1936.

Syllabus by the Court.

1. An action at law will not be enjoined except where a court of chancery ma y afford a more adequate and perfect remedy.

2. An injunction will be dissolved on motion without demurrer or answer where the bill is insufficient.

3. Where an injunction is wholly dissolved, the bill may be dismissed if it contains no ground for equity jurisdiction.

Appeal from Circuit Court, Lincoln County.

Suit by the Bungalow Gas Company and others against John H. Swanson and others. Judgment for defendants, and plaintiffs appeal.

Affirmed.

Lilly & Lilly, of Charleston, and Jacob D. Smith, of Hamlin, for appellants.

Russell W. Morris, of Huntington, for appellees.

LITZ Judge.

The object of this suit is to enjoin an action at law for the recovery of money on contract and rescind the contract upon which the action is predicated. Fraud in the procurement of the contract is charged as the basis for relief. Plaintiffs appeal from a decree entered upon motion of defendants Frank Martin and John Swanson dissolving a temporary injunction and dismissing the bill.

The bill. alleges, substantially, that plaintiff, Bungalow Gas Company, is a corporation organized "mainly" for the purpose of drilling and operating a gas well on land in the city of Huntington, Cabell county, W. Va., under an oil and gas lease with the owner thereof; that in July, 1933, the company completed a large producing gas well on the property the production of which it is selling to West Virginia Gas Corporation at the price of 10 cents per thousand cubic feet that the individual plaintiffs and defendants John H Swanson, Frank Martin, A. A. Lilly and his daughter, Mrs John A. Wade, are the stockholders of the corporation; that defendants Swanson, Lilly, and Martin, and two other stockholders comprise the board of directors thereof; that Lilly and Mrs. Wade own 49 per cent. of the stock, and they, Swanson, and Martin own the controlling interest; that in September, 1933, defendants Swanson and Martin began the drilling of a gas well on land in the city of Huntington, which they had leased from the owner thereof, for the exploration and production of gas thereon, about 1,500 feet from the Bungalow Gas Company well; that in December, following, before completing the well, they approached Lilly, proposing to sell their rights in the leasehold to the Bungalow Company for the actual cost of the well; that they represented to Lilly that they had interviewed all of the other stockholders but one concerning the matter, and that all of the stockholders they had approached were willing and anxious for the company to purchase the property; that because of such representation by Swanson and Martin, Lilly finally consented to the purchase by the company, with the understanding and agreement, however, that Swanson and Martin would repay him and Mrs. Wade the proportionate cost of drilling the well (but no part of the casing or other equipment) which would be borne by the stock of Lilly and Mrs. Wade in the company; that in consideration whereof Lilly agreed to pay Swanson and Martin one-half of the net profit as stockholders of the company; that at a meeting of the stockholders, January 10, 1934, the plaintiff stockholders vigorously objected to the purchase from Swanson and Martin; that at a meeting of stockholders, April 1, 1934, plaintiff stockholders, after again protesting the purchase, tentatively agreed thereto upon Swanson and Martin consenting to eliminate from the cost of the well two items amounting to $393.78; that the private understanding between Swanson, Martin, and Lilly, which the bill alleges was a fraud upon the rights of the other stockholders, was not disclosed to them at the time they tentatively agreed to the purchase by the company; that the company has paid unnamed amounts on the purchase price of the leasehold; and that defendants Swanson and Martin have instituted an action against the company to recover the balance. The bill impliedly alleges the completion of the well and sale of gas therefrom by the company, and prays that the action be enjoined; that the well be sold and the proceeds therefrom and dividends to Swanson and Martin, as stockholders of the company, be applied in repayment of the money paid by it to Swanson and Martin on the purchase price of the leasehold.

The bill does not allege that the company made a bad bargain in purchasing the leasehold from Swanson and Martin, or that the other stockholders were influenced or induced by Lilly to consent to the purchase thereof, or that the alleged...