Canadian Country Club v. Johnson

• Decision Date: 10 April 1915
• Docket Number: (No. 753.)
• Citation: 176 S.W. 835
• Parties: CANADIAN COUNTRY CLUB et al. v. JOHNSON et al.
• Court: Texas Court of Appeals

176 S.W. 835

CANADIAN COUNTRY CLUB et al. v. JOHNSON et al.

(No. 753.)

Court of Civil Appeals of Texas. Amarillo.

April 10, 1915.

On Motion for Rehearing, May 22, 1915.

Appeal from District Court, Hemphill County; F. P. Greever, Judge.

Action by J. F. Johnson and another against the Canadian Country Club and others. From a judgment for plaintiffs, defendants appeal. Affirmed.

H. E. Hoover and Fisher & Palmer, all of Canadian, for appellants. Frank Willis, of Canadian, for appellees.

HUFF, C. J.

J. F. Johnson and E. H. Brainard brought suit against the Canadian Country Club, a corporation, J. C. Studer, W. H. Hopkins, Harlan Hopkins, R. H. Stone, B. F. Tepe, W. D. Fisher, J. S. Hood, G. W. Arrington, C. M. Frogge, H. E. Hoover, D. B. Hoover, W. B. Johnson, and Geo. Gerlach. It is alleged that the Canadian Country Club was incorporated under the laws of the state of Texas, and W. H. Hopkins was the president, John H. Jones, S. L. McDonald, W. B. Johnson, J. S. Hood, J. A. Chambers, and W. H. Hopkins were its directors. It is alleged that John H. Jones died about two years previous to the filing of the suit, and that S. L. McDonald and J. A. Chambers transferred all their interest in the club to the plaintiff J. F. Johnson. The club was incorporated on the 11th day of June, 1909, with a capital stock of $7,400, divided into 37 shares of $200 each, which were fully paid up and nonassessable; that the assets of the club then and at the time of the suit consisted of a half section of land in Hemphill county, purchased from George A. Simpson and wife, June 26, 1909; that part of the consideration for the purchase of the land was a note, payable to George A. Simpson, for $2,500, dated June 26, 1909, and due June 26, 1910, and secured by a vendor's lien on the land in question, and that on the 4th day of February, 1913, was transferred by writing which had been duly recorded in Hemphill county, Tex., to J. C. Studer, W. H. Hopkins, Harlan Hopkins, R. H. Stone, B. F. Tepe, W. D. Fisher, J. S. Hood, G. W. Arrington, C. M. Frogge, H. E. Hoover, D. B. Hoover, W. B. Johnson, and George Gerlach; that although its rents were amply sufficient to pay the franchise tax due the state of Texas, the directors, managers and officers of said corporation wholly failed and refused to pay the tax, so that on the 2d day of July, 1913, said club forfeited its said corporate existence, and in law said act created a dissolution of said corporation; that the vendor's lien on the land is unreleased, and that there are no funds, or at least insufficient funds, belonging to the club to pay off the note and interest; that although the plaintiffs are named alone as plaintiffs, they have permission and are suing for the benefit of all the stockholders of the club, except the defendants, naming J. A. Chambers, A. V. McQuiddy, W. A. Johnson, Sam Isaacs, and the estate of John H. Jones, deceased, Geo. F. Caylor, and others whose names, it is alleged, are unnecessary to mention in the petition. They allege that plaintiffs are all stockholders for whom they sue and were and are still the owners of an interest in the land and improvements thereon by reason of the fact that they subscribed for, paid, and still hold an interest and shares of stock in the corporation; that upon the dissolution and forfeiture of the corporation, it became the duty of the president and directors before named to settle the affairs of the corporation and divide the money and property among the stockholders after paying the debts as provided in article 682 (1206, R. C. S.). It is alleged that the club, having failed to pay its franchise tax and failed in its ability to pay off the note above mentioned, is therefore insolvent, and that the property and improvements are in such condition that the stockholders of the corporation cannot use, maintain, and enjoy the property and improvements as was originally contemplated when said corporation was organized. They allege their willingness at all times to do equity, and that they have communicated to the holders of the vendor's lien notes, as well as all members of the corporation, such desire; that they at all times were willing, and are now willing, to surrender their interest and stock upon the payment to them of the amount they placed in the corporation, without interest, and are further willing to tender into court the principal and interest due on the note whenever the same is transferred to them, and they further ask, in the event such amount is accepted by the court, that an order be entered foreclosing the vendor's lien as it existed on June 26, 1909, and still exists, and that the property be sold and the proceeds be applied to the payment of the note, and the overplus arising therefrom be divided among the different stockholders as their interest may appear. They allege that the lands and improvements belonging to the corporation are of value in excess of the amount due upon said note, and that when it is sold that there will be a considerable sum of money in excess of the amount due upon the note, which ought to be distributed among the stockholders as their interests appear; that there is no means by which they can secure the value of their equity in said premises unless the court orders the property sold. It is alleged that the last meeting of the corporation, by a unanimous vote of the members of the corporation, ordered the property to be sold to satisfy the indebtedness, setting out the minutes of the meeting, which provides that the bank be requested to institute a suit to foreclose, and that the property be sold under the order of the court. It is further alleged that the owners and holders of the note have entered into possession of the premises and are attempting to hold the same on account of their ownership of said note, and that they have refused to carry out the order of the corporation and cause the property to be sold and the proceeds applied to the payment of their debt and the overplus divided among the stockholders, and, that they have likewise refused to foreclose their vendor's lien and cause the property to be sold in order that the value of the equity which the plaintiffs and those whom they represent could be secured for them so that a necessity for the action upon the part of the court exists to cause a sale of the premises in order that the equity of redemption in said property can be paid to those whom the evidence in this case will show are entitled to it. It is alleged that the club has failed to bring any character of suit, and is now in such condition that it cannot maintain such suit, and that the present directors, with full knowledge of such conditions, have failed to discharge their duty as before alleged. It is further alleged, inasmuch as the property is now owned by various subscribers to stock in the corporation, which is delinquent, and there is no authorized manager of same, they ask that a receiver be appointed to take charge of the property during the pendency of the suit, and perform such acts in such case as the court may direct. They further ask that if for any or all reasons alleged the court should not decree the property before described to be sold, then they ask that it be partitioned among the different subscribers to the stock of the club; that commissioners be appointed as the law directs. The general prayer is that the lien be foreclosed and the property sold; that a receiver be appointed to take charge of the property under the direction of the court during the pendency of the suit, and pray that such order of sale issue for said land and the improvements, for the reason that the said directors and president required to sell the property and divide the proceeds among the stockholders after paying the debts have failed to do so, and pray, in the alternative, if it is not sold under the order of the court, then for partition, etc.

Appellants answered by general and special exceptions, some 15 in number, by general and special answers, which at this time will not be set out. The case was tried before the court without a jury, and there are no findings of fact in the record made and filed by the trial court.

The court, by his judgment, overruled the general and special exceptions of the appellants. The court rendered judgment, finding as a matter of fact that there is an equity of redemption over and above the amount of the vendor's lien note described in the petition, together with the interest thereon, and that a receiver ought to be appointed to sell said property to pay said indebtedness and distribute the proceeds. He thereupon, by his judgment, appointed J. L. Jennings as receiver of the land, directing him to sell the land at public or private sale to the highest bidder for cash, to pay the note with interest to the parties named in plaintiff's petition as owning the note, to pay the costs of the officers of the court incurred in prosecuting and in defense, including the cost of receivership and sale, and the surplus to be returned by the receiver into court, to be distributed by order of the court, as the court shall direct, among the stockholders of the Canadian Country Club, as shall be deemed just and equitable by the court; the order requiring a bond to be executed by the receiver, etc. From this judgment the 13 appellees, together with the club, appeal to this court.

The several exceptions which were presented and overruled by the trial court, whose action thereon is presented in this court by several assignments of error, present the general question of the right of the appellees to maintain and prosecute the action for receiver. We do not deem it necessary to take up each assignment and consider it separately, but shall address ourselves to the right to bring and maintain the suit by appellees.

A well-recognized exception to the rule which requires suit to be instituted by the corporation, and that the stockholder shall first request the...