Appeal
from Superior Court, Marion County; Russell J. Ryan
Judge.
ROYSE
Chief Justice.
Appellant
brought this action against appellee for the recovery of
money paid by the Van Camp Products Company to appellee for
the redemption of the first preferred stock of said Company.
Appellee was the Registrar of said first preferred stock and
is charged with disbursing said money in violation of the
terms of the agreement under which it acted. The
interpretation of the terms of a certain contract between the
Van Camp Products Company and the Van Camp Packing Company is
the cause of dispute between the parties. (Except when used
in a quotation, for the sake of brevity, the Products Company
will hereinafter be referred to as the "Company",
and the Packing Company as the "Corporation".)
The
cause was tried on appellant's amended complaint in three
paragraphs and appellee's answer in eight paragraphs.
Each paragraph of appellant's amended complaint is based
on the same facts but upon different theories. In oral
argument, appellant stated he relied only on the second
paragraph of amended complaint. This paragraph of amended
complaint is very long and we deem it necessary to set out
only the substance of the allegations pertinent to a decision
of the questions here involved.
The
right and authority of appellant to institute the action is
averred. It is stated the Company and the Corporation entered
into a contract in reference to the first preferred stock of
the Company; that pursuant to the terms of said contract, and
as evidence of the rights of the holders of said first
preferred stock, the Company adopted and issued to each
holder of said stock a certificate which expressly provided
that said stock was issued subject to said contract and to
all rights, benefits, limitations and restrictions therein
contained, and the pertinent provisions, specifications (A)
to (J), both inclusive, are set out in full on said
certificate, which is made a part of the complaint. (The
stock certificate with these provisions will hereinafter be
set out in full.)
It is
further alleged that each year between 1913 and 1930, both
inclusive, the Company, in the performance of its contract,
paid to appellee in trust sums of money equal to 10% of its
net or surplus earnings and income, which said sums were to
be held and used by appellee as Trustee pursuant to the terms
of said contract. The specific sums which the Company paid to
appellee each year are set out in the complaint. It is then
charged that appellee, as such Trustee, each year failed to
give the notices by mail, required by said contract, within
thirty days after December 31st of the preceding year, and
each year failed to give any notice by publication; that in
the notices by mail which were given, appellee gave less than
sixty days' notice; that since 1914 the proceeds of said
payments of 10% of net or surplus earnings and income, or
substantial parts thereof, were paid in purported redemption
of the first preferred stock more than four months after the
end of the year in which the same were earned; that appellee,
at the end of the first four months of each year, failed to
cause the amount of such percentage of net or surplus
earnings and income paid to it by said Company to be paid
back to said Company to become surplus funds and assets of
said Company not subject to distribution on common stock, as
provided by said contract.
It is
further alleged that by the breaches of said trust the
Company and the owners of said first preferred stock have
been deprived of the sum of $349,351.10 and the use thereof,
and thereby damaged in the sum of $649,351.10.
Because
the provisions of the contract on the stock certificate are
so important to the determination of this case, we deem it
necessary to set them out in full. They are as follows:
"First Preferred Shares of
"Van Camp Products Company
"Indianapolis, Indiana
"Authorized $600,000. Shares $100 each
"Number Shares ----- -----
"Incorporated February 26, 1912, under the general laws
of the State of Indiana concerning the organization of
voluntary associations.
------------------
"Second Preferred Shares to the amount of $400,000.00
authorized and issued.
"Common Stock to the amount of $500,000.00 authorized
and issued.
"This certifies that ------ the holder of ----- shares
of the First Preferred Shares of the VanCamp Products Company
of Indianapolis, Indiana, of the par value of One Hundred
Dollars ($100.00) per share, fully paid, transferable only on
the books of the VanCamp Products Company, in accordance with
the By-laws and upon the surrender and cancellations of this
certificate.
"Said share ------- part of an issue of Six Hundred
Thousand Dollars ($600,000.00) of First Preferred Shares
divided into shares of One Hundred Dollars ($100.00) each
authorized by charter and created by resolution adopted by
the unanimous vote of the Board of Directors of said VanCamp
Products Company, at a special meeting properly and legally
convened and held upon the 26th day of February, A. D. 1912,
pursuant to prior authorization so to do by resolution
adopted by the unanimous vote of the holders of all of the
outstanding Common Stock of the VanCamp Products Company, at
a special meeting of the Stockholders of that corporation
properly and legally convened and held on said day. The
holder of this certificate is entitled to all the rights and
benefits conferred, and subject to all the restrictions and
limitations imposed, by an Act of the General Assembly of the
State of Indiana, approved February 28th, 1893, authorizing
and empowering manufacturing, mining and other companies then
or which might thereafter be organized and incorporated under
any law of that State, to issue shares of preferred stock and
prescribing the rights and liabilities of the holders
thereof, and the Acts amendatory and supplementary thereto,
and upon and subject to all the rights and benefits granted
and limitations and restrictions imposed by the terms and
provisions of a certain Selling Agreement between the VanCamp
Products Company and the VanCamp Packing Company, dated
February 26th, 1912. Under the terms of the resolution which
authorized the issue and created said First Preferred Shares,
the holder of this certificate is entitled to receive, and
the VanCamp Products Company is bound to pay to such holder,
at the office in the City of Indianapolis and State of
Indiana, of The Indiana Trust Company, Registrar of said
stock, on the first days of January, April, July and October
in each year, a quarterly sum or dividend of One and Three
Fourths per cent (1-3/4%) (and no more) out of the net
earnings of said Company, before any dividend is set aside or
paid on the Second Preferred Shares and/or on the Common
Stock of said VanCamp Products Company, and each said
quarterly sums or dividends is made cumulative. The whole of
said First Preferred Shares are subject to redemption at said
office of The Indiana Trust Company, on any dividend date,
prior to 1928 at One Hundred Fifteen Dollars ($115.00) per
share, and accrued dividends, subsequent to 1927 and prior to
1933, at One Hundred Ten Dollars ($110.00) per share, and
accrued dividends; and at any time subsequent to 1932 and
prior to the expiration of the corporate existence of said
Company, at One Hundred Five Dollars ($105.00) per share, and
accrued dividends, in each case upon sixty (60) days'
notice having first been given by mail and publication to
each registered holder of said First Preferred Shares at the
address appearing on the books of the Registrar aforesaid.
And no dividend shall accrue upon any shares which have
become subject to redemption from and after the redemption
day specified in the notice aforesaid and the deposit of the
money for their redemption at the office of said Registrar.
The VanCamp Products Company is required to set aside each
year after the payment of full dividends accumulated, at
least Ten Per Cent (10%) of the net or surplus earnings and
income of each fiscal year, beginning for the year 1912 with
the date of the organization of Company and ending December
31st, 1912, and beginning thereafter January First of each
and every year, as determined by the annual audit made by
auditors to be appointed by the Registrar, which sum is
to be applied for the period of four (4) months thereafter
and no more, to the purchase of said First Preferred Shares
outstanding, if and to the extent that the same can be
purchased at or below One Hundred Ten Dollars ($110.00) per
share and accrued dividends, after like notice by mail and by
publication in New York, Chicago, and Indianapolis. All
shares thus acquired shall be immediately delivered to the
Registrar for cancellation, and cancelled. Such notice shall
call for tenders of shares, and shall be mailed and first
published within thirty (30) days after the end of each
fiscal year, and if not sufficient are tendered to consume
the entire amount to be set aside and applied within said
three (3) months, the balance, or if no shares have been
purchased, the whole amount shall be deemed and taken as
surplus funds and assets of the Company, and shall not be
subject to distribution on Common Stock, after such mailing
and publication unless and until the total aggregate surplus
funds thus accumulated has reached an aggregate total equal
to the aggregate par value of First Preferred Shares issued
and then outstanding. All the rights
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