Davis Bluff Land & Timber Co. v. Cooper

• Decision Date: 23 April 1931
• Docket Number: 785,6 Div. 748
• Parties: DAVIS BLUFF LAND & TIMBER CO. ET AL. v. COOPER.
• Court: Alabama Supreme Court

134 So. 639

223 Ala. 137

DAVIS BLUFF LAND & TIMBER CO. ET AL. v. COOPER.

6 Div. 748, 785

Supreme Court of Alabama

April 23, 1931

Rehearing Denied May 28, 1931.

Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.

Bill in equity by W. H. Cooper against the Davis Bluff Land & Timber Company, Jonas Schwab, and Leah Schwab. From the decree respondents appeal, and complainant cross-appeals.

Reversed and remanded on main appeal; affirmed on cross-appeal.

Benners Burr, McKamy & Forman, of Birmingham, for appellants.

Stokely Scrivner, Dominick & Smith, of Birmingham, and Jesse F. Hogan, of Mobile, for appellee.

GARDNER J.

The bill was filed by W. H. Cooper seeking dissolution and distribution of the assets of the corporation Davis Bluff Land & Timber Company (hereinafter referred to as the corporation), and an accounting on the part of defendant Jonas Schwab. So far as concerned the corporation, no objection was interposed and it was dissolved by the decree, and the lands belonging thereto ordered sold.

The real controversy in this litigation relates to the matter of accounting between Cooper and Schwab, as to which the register reported (which was duly confirmed by the chancellor) a large indebtedness due by Schwab to Cooper. Numerous exceptions to this report were filed by Schwab, and some few by Cooper, all of which were overruled. The record is voluminous, and a consideration of each of these exceptions would require a detailed discussion of the evidence (which was submitted on depositions) and extend this opinion to undue length. Suffice it to say that each exception has been duly considered, and it may be understood that as to those not here treated the court is of the opinion they were not well taken.

It clearly appears, both from the averments of the bill and the proof, that the corporation was formed solely for the purpose of making a purchase and resale of what is referred to as the Woods Bluff timber property, and did not function otherwise and was not intended so to do. Schwab had known T. E. Brent, a timber agent, a number of years, and Brent first brought this timber to his notice; it appearing afterwards that Brent and Cooper were interested in the matter of commissions in the sale thereof. Cooper lived in Mobile and Schwab had not met him previously. Omitting details, for all practical purposes the corporation consisted of these three, Schwab owning one-half the shares, Brent and Cooper one-fourth each. The preliminary agreement and part payment on the property occurred in September, 1917, and the corporation was organized the following December.

The bill alleges, and the proof shows, that this transaction resulted in a gross profit of $17,500, but from which-as to net profits-certain expenses allowed by the register's report are to be deducted. Neither Brent nor Cooper, it appears, had funds or credit with which to consummate the purchase, and they looked to Schwab to furnish the cash required. This he did, and we find that Cooper's interest in the corporation was pledged as security for his part of such advancement. As to Brent, his interest was sold to Schwab on December 5, 1918, and needs no further consideration further than to here state our conclusion, that Schwab purchased such interest with his own funds and that the corporation has no cause for complaint concerning the same.

It was largely, if not entirely, through the efforts of Schwab, a sale of this property was effected to Anders Brothers in February, 1918. Subsequently Anders Brothers became financially unable to complete the purchase, and a resale effected with the Patterson-Edy Company, but at a reduced price. But prior to this time, and in September, 1918, Cooper began to importune Schwab to advance the necessary funds for the purchase of the Whiteside timber, representing that a resale at a good profit was already assured. After much correspondence between them, Schwab consented, and advanced to Cooper $3,000. But the purchase was not then consummated, and Cooper used $2,500 in the purchase of another tract for himself, and the balance for his personal use. However Schwab may have viewed the matter later, we think it clear that a diversion by Cooper of this sum to other purposes was not expected or to be anticipated, but we are persuaded Schwab had reason to understand, if for any reason this particular purchase should not be consummated, that the sum advanced would be returned. As security for this sum Cooper pledged his interest in the corporation.

The original agreement was for a division of the profits one-half each. At the time of this advance and correspondence Schwab was in New York, and only learned of the use of the funds for other purposes upon his return. The Whiteside timber was at last purchased in March, 1919. Schwab met Cooper in Mobile and insisted upon a different division of profits before he would agree to finance the transaction, stating-according to Cooper's testimony-that he could not get all the money himself, but would have his son-in-law, Elson, advance $5,000, and the profits to be divided one-third each. It was so agreed and contract to that effect drawn and signed by the parties, their attorneys participating therein. The timber was resold and a good profit realized. The parties again met, reached an agreement as to the expense account of each and a distribution of the remainder pursuant to the former contract of one-third each, and expressly stated that "the parties hereto mutually release each other from all liability under said trust agreement, and all matters growing out of the same." This settlement agreement was likewise prepared by the attorneys of the respective p...