Dacovich v. Canizas

• Decision Date: 02 July 1907
• Parties: DACOVICH ET AL. v. CANIZAS ET AL.
• Court: Alabama Supreme Court

44 So. 473

152 Ala. 287

DACOVICH ET AL. v. CANIZAS ET AL.

Supreme Court of Alabama

July 2, 1907

Appeal from Chancery Court, Mobile County; Thomas H. Smith Chancellor.

Suit by Manuel Canizas and others against Andrew Dacovich and others. From a decree for complainants, defendants appeal. Affirmed.

L. H. &amp E. W. Faith, for appellants.

Stevens & Lyons, for appellees.

SIMPSON J.

The bill in this case was filed by the appellees against the appellants, alleging that the complainant American Ice & Fuel Company was a corporation under the laws of Alabama; that after the corporation had been in operation about one year and was prospering, the directors agreed among themselves that they would purchase for the corporation all of the capital stock which could be purchased on advantageous terms with the funds of the company; and that they did so purchase various shares of stock (set out in the bill) amounting in all to 158 shares, leaving outstanding 292 shares- [44 So. 474] --and showing that the corporation is solvent, and that the shares of stock were worth largely more than the amounts for which they were purchased. The bill further averred that shortly before the 10th day of January, 1907, the day fixed for the annual meeting of the stockholders, Chiepolich (one of the directors and general manager) sold his stock to Canizas, another director, and that Andrew Dacovich (another director and secretary and treasurer) took from the treasury certificates evidencing 106 shares of the capital stock which had been purchased, and altered or filled in the indorsements thereon, so as to transfer them to his son, J P. Dacovich, and likewise took, altered, and transferred 9 additional shares to his other son, George H. Dacovich, making it appear that they were transferred on January 7, 1907; that the stubs from which said shares were taken had originally shown that they had been transferred to said company, but that said Dacovich had placed on each additional indorsements purporting to show that the transfer to said company was illegal, and that the shares had been transferred to his said two sons; that J. P. Dacovich attempted to transfer one of his shares to E. W. Faith, and that said Andrew Dacovich also changed the stock ledger so as to show said transfers; that this stock was sold for greatly less than its value, and that the complaining stockholders knew nothing of it till the annual meeting on January 10, 1907, when they protested against it; that all of this stock, added to what A. Dacovich and the Walshes had, would give them a majority of the stock, and would all have been voted at said meeting, but for the fact that the share transferred to Faith had not been transferred two days, in accordance with the by-laws; and that said A. Dacovich reported at said meeting that there remained still 43 shares of said purchased stock in the treasury, which he proposed to sell. The bill alleges that the complainants were and are satisfied with the purchase of said stock by the company, but that A. Dacovich had no authority to take the same from the treasury and transfer it as above described; that the consideration for said transfer was not more than half the value of said stock, and that the same was a fraud upon the company and the complaining stockholders; that said stockholders' meeting was adjourned, to meet on February 5, 1907, at which time all of said stock would be voted, making a majority of the stock, although the complaining stockholders own a majority of the stock that could be legally voted, leaving out said illegally transferred stock. The bill charges the defendants with entering into a conspiracy to thus illegally issue said stock, and get control of a majority of the stock, and defraud the other stockholders. The complainant American Ice & Fuel Company disclaims any right to the money received for the sale of its said stock without authority. The prayers of the bill are that said parties be enjoined from voting or exercising any other rights by virtue of said transfers of said stock; that said stock be required to be returned to the treasury and the money attempted to be paid therefor withdrawn from the treasury of the company; and for general relief. The answer admits the material allegations of the bill, to wit, the agreement between the directors, the purchase of the stock with the funds of the company, and the subsequent transfers, but denies that the stock was as valuable as stated in the bill, and states that some of the certificates so purchased were not indorsed to the corporation, but were merely indorsed in blank, and afterwards simply filled in when transferred to the sons of Dacovich. It also states that there was a secret agreement among the directors that the other stockholders were not to be informed of the fact that they were buying up the stock until they had purchased all of the remaining stock; that Canizas (who was one of the directors) bought the...