A.D. Smith & Sons, Inc. v. Securities Co. of America

• Decision Date: 16 November 1916
• Docket Number: 6 Div. 339
• Citation: A.D. Smith & Sons, Inc. v. Securities Co. of America, 73 So. 892, 198 Ala. 493 (Ala. 1916)
• Parties: A.D. SMITH & SONS, Inc., et al. v. SECURITIES CO. OF AMERICA.
• Court: Alabama Supreme Court

73 So. 892

198 Ala. 493

A.D. SMITH & SONS, Inc., et al. v. SECURITIES CO. OF AMERICA.

6 Div. 339

Supreme Court of Alabama

November 16, 1916

On Application for Rehearing, Jan. 18, 1917

Appeal from Chancery Court, Jefferson County; A.H. Benners Chancellor.

Suit by the Securities Company of America against A.D. Smith & Sons Incorporated, and others. From decree for plaintiff defendants appeal. Affirmed.

Forney Johnston, W.R.C. Cocke, and Fred Fite, all of Birmingham, for appellants.

Beddow & Oberdorfer, of Birmingham, for appellee.

MAYFIELD J.

The bill was filed for specific performance of a sale, or contract of sale, of all the capital stock of the appellant corporation to the appellee corporation, and for other relief, under general prayer for that purpose.

The entire capital stock of appellant corporation was owned by A.D. Smith, and his two sons, A.L. and M.D. Smith, who also constituted the officers and governing body of the corporation. The corporation was formed to conduct, and carried on, the business of insurance brokerage. The capital stock was divided into 220 shares of the par value of $100 each.

On the 12th of April, 1912, the stockholders entered into a contract of sale of all the capital stock to appellee, another insurance corporation, for the consideration of $9,000 worth of stock in appellee corporation and $18,000 in cash or certificates of deposit in solvent banks.

The bill alleged that the contract of sale was subsequently modified by mutual consent to the extent that $3,000 of the $18,000 should be paid in cash, and the remainder thereof settled by the execution and delivery by the purchaser of its three notes for $5,000 each, due successively August 1, 1912 October 1, 1912, and December 1, 1912; that as so modified, the contract of sale was fully executed by appellee corporation, but that appellants, as stockholders, failed and refused to deliver the 220 shares of the capital stock so purchased, but held the same, together with all dividends earned and rights accruing to the rightful holders of such stock, alleged to aggregate many thousands of dollars.

The bill also alleged that the appellants, as individuals, by virtue of the sale, became stockholders, officers, and agents of appellee corporation, and so acted for a year or more, and as such officers published prospectuses and advertisements of appellee corporation, holding it out as owning the capital stock of appellant corporation, that appellee's stock was sold on the faith of such advertisements, and that, after thus acting for more than a year, appellants now attempt to repudiate the sale and refuse to deliver the aforesaid 220 shares of appellant corporation stock to appellee corporation. In addition to specific performance, the bill sought an accounting to ascertain the dividends due on or to the capital stock since the date of the sale, together with other profits received by appellants, praying a decree for such amounts so ascertained.

Demurer being overruled to the bill, defendants answered, denying many of the material allegations of the bill, alleging failure to pay the notes, and even denying the agreement to receive the notes in lieu of the $18,000 first agreed to be paid.

A hearing was had on the bill, answer, and much evidence offered by all parties, on which hearing the chancellor denied the relief as to specific performance, but ordered an accounting as prayed; and from this decree appellants prosecute this appeal.

It is insisted that, as the relief by specific performance was denied, no relief as for an accounting could or should have been awarded. We cannot accede to this insistence. A trust relation is shown to have subsisted between the parties, and an accounting was therefore not only proper, but necessary in order that justice and equity could be meted out to all the parties, and complete relief given. Equity having properly acquired jurisdiction, it would continue the exercise of it in order to do complete and full equity among the parties. The facts, which are undisputed, showed a proper case for an accounting in equity--which is all that has so far been done....