Citizens' Lumber Co. v. Elias
| Decision Date | 02 July 1930 |
| Docket Number | 604. |
| Parties | CITIZENS' LUMBER CO. v. ELIAS. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Buncombe County; Michael Schenck, Judge.
Action by the Citizens' Lumber Company against Don S. Elias. From a judgment for defendant, plaintiff appeals.
Affirmed.
Corporation held to have ratified contract for purchase of stock of other corporation and guarantee in connection therewith.
This is an action, first, to have a contract entered into by and between the president and general manager of the plaintiff corporation and the defendant, for the purchase from the defendant of certain shares of the common stock of another corporation, for and in behalf of the plaintiff, adjudged void, and of no binding force or effect in so far as the plaintiff is concerned, for that said contract was not authorized by its board of directors, or by its stockholders second, to have certain paper writings executed in the name of the plaintiff corporation by its president, and attested by its secretary, purporting to bind the plaintiff by its guarantee that certain certificates for preferred stock, of the par value of $200,000, issued to defendant by the corporation, whose common stock had been purchased for and transferred to the plaintiff, pursuant to the provisions of said void contract, would be redeemed by said corporation, in cash, at par, and on a fixed date, ordered surrendered and canceled, for that the execution of said paperwritings in its name by its president was not authorized by the board of directors, or by the stockholders of plaintiff corporation and, third, to recover of the defendant the sum of $50,000 paid to defendant out of the funds of the plaintiff by its President, pursuant to the terms of said void contract.
The facts admitted in the pleadings or shown by the evidence offered at the trial, are as follows:
On or about November 1, 1925, Walter P. Taylor, at said date, and for several years prior thereto, the president and general manager of the plaintiff corporation, after negotiations which were known to the members of its board of directors and to its stockholders, purchased from the defendant, Don S. Elias, for the plaintiff, three hundred shares of the common stock of the Southern Steel & Cement Company, a corporation organized under the laws of this state, and caused the certificates for said shares of stock to be duly transferred to the plaintiff. In payment of said shares of stock, the said Walter P. Taylor, as president and general manager of the plaintiff corporation, caused its check for $50,000 to be drawn and delivered to the defendant. This check was duly paid by the bank on which it was drawn, and charged to the account of plaintiff by said bank. The said Walter P. Taylor, as president and general manager of the plaintiff corporation, further caused certificates for 2,000 shares of the preferred stock of plaintiff corporation, of the par value of $200,000, to be issued and delivered to the defendant, with the guarantee of plaintiff that it would redeem said certificates in cash, at par, on November 1, 1930, upon tender of same by defendant to the plaintiff. As the result of said contract of purchase, defendant sold and delivered to plaintiff corporation three hundred shares of the common stock of the Southern Steel & Cement Company, receiving therefor as aforesaid the sum of $250,000. Certificates for said shares of stock were duly transferred to plaintiff, and dividends thereafter declared by the Southern Steel & Cement Company out of its earnings were paid to the plaintiff as the owner of said shares of stock.
After said purchase had been completed, pursuant to an agreement in writing thereafter executed in the name of the plaintiff corporation, by Walter P. Taylor, as its president, and attested by D. G. Devinish, as its secretary, with its corporate seal attached, the defendant surrendered the certificates for 2,000 shares of the preferred stock of plaintiff corporation theretofore issued to him, and accepted in lieu thereof certificates for 2,000 shares of the preferred stock of the Southern Steel & Cement Company of the par value of $200,000. Pursuant to said agreement there was attached to each of said certificates a paper-writing executed in the name of the plaintiff corporation by Walter P. Taylor, its president, and attested by D. G. Devenish, its secretary, in words as follows:
Plaintiff is a corporation organized in 1912 under the laws of this state, with its principal office and place of business in Buncombe county. During the year 1925, and for several years prior thereto, plaintiff was and had been engaged in the business of buying, selling, and dealing in building materials and supplies of all kinds, as it was authorized to do by its certificate of incorporation. It was authorized by its certificate of incorporation, not only to engage in said business, but also to purchase the business of any person, firm, or corporation engaged in the same business. Prior to 1925, under this authority, plaintiff had purchased and operated the business of other corporations and thereby earned and paid in dividends to its stockholders large sums of money. Such purchases had been made by the said Walter P. Taylor, as president and general manager of the plaintiff corporation.
During the year 1925, and for several years prior thereto, Walter P. Taylor was and had been the president and general manager of the plaintiff corporation. Its business had grown in volume and prospered under his management, and its stockholders and board of directors had intrusted to him the full control and management of said business. They had implicit confidence in his business judgment, and relied upon the same without question. He was the owner of a large number of the shares of the common stock of plaintiff, and by reason of such ownership, as well as by reason of his official relations to the plaintiff, was interested in its success.
During the year 1925, and for several years prior thereto, the Southern Steel & Cement Company, a corporation organized under the laws of this state, with its principal office and place of business in the city of Asheville in Buncombe county, was and had been engaged in the business of buying, selling, and dealing in building materials and supplies of all kinds. It was a competitor in business of the plaintiff. The defendant, Don S. Elias, was the principal stockholder of said Southern Steel & Cement Company, and, as such, controlled its business. Walter P. Taylor purchased his stock, as well as the stock of another stockholder, for and in behalf of the plaintiff, and after such purchase the business of the said Southern Steel & Cement Company was conducted in the interest of the plaintiff, as the owner of its common stock.
Neither the purchase of defendant's stock in the Southern Steel & Cement Company, nor the guarantee of the redemption of its preferred stock, by the paper writings attached to the certificates issued to defendant, was authorized by resolutions adopted by the board of directors or by the stockholders of plaintiff corporation. The members of the said board of directors, who were the owners of practically all the common stock of the plaintiff corporation, were advised by Walter P. Taylor of the negotiations between him as its president and general manager, and the defendant for the purchase of the shares of the common stock of the Southern Steel & Cement Company owned by the defendant, and knew that said purchase had been made, and that said stock had been acquired and was owned by plaintiff. No objection was made by the said directors and stockholders to the purchase of said stock at any meeting of said board of directors or of said stockholders, or at any other time, until a special meeting held at the office of the plaintiff, on September 24, 1928. Shortly before said meeting, members of the said board of directors learned for the first time that Walter P. Taylor, as president of the plaintiff corporation, in addition to the payment to defenda...
To continue reading
Request your trial
-
Tuttle v. Junior Bldg. Corp.
...has no power to bind the corporation by contract in material matters without express authority from the directors or stockholders. Lumber Co. v. Elias, supra; 2 Fletcher, Corporations, 440, sec. 557. 'The president of a corporation has no implied or inherent authority, merely by virtue of h......
-
Aydlett v. Major & Loomis Co.
... ... Mill Co., 157 N.C. 302, 73 S.E. 93; Morris v ... Basnight, 179 N.C. 298, 102 S.E. 389; Citizens ... Lumber Co. v. Elias, 199 N.C. 103, 154 S.E. 54; ... Warren v. Littleton Orange Crush Bottling ... ...
-
Warren v. Littleton Orange Crush Bottling Co., Inc.
... ... void, and, for this position it cites Bank v. Lumber ... Co., 116 N.C. 828, 21 S.E. 948. In that case it was ... shown that the meeting was held at an ... resolution of the board of directors expressly authorizing ... the contracts. Citizens' Lumber Co. v. Elias, ... 199 N.C. 103, 154 S.E. 54. Upon the undisputed evidence we ... are of ... ...
-
Brinson v. Mill Supply Co.
... ... 19 C.J.S., Corporations, pp. 488 and 500, §§ ... 1015 and 1020. See, also, Citizens Lbr. Co. v ... Elias, 199 N.C. 103, 154 S.E. 54, Morris v ... Basnight, 179 N.C. 298, 102 S.E ... ...