Deveny v. Hart Coal Co.
| Decision Date | 25 February 1908 |
| Court | West Virginia Supreme Court |
| Parties | Deveny v. Hart Coal Company, et al. |
1. Equity Jurisdiction Fra u d.
Equity always has jurisdiction when fraud is well charged against the defendant, (p. 657.)
2. CoKFORATiONS Suits by Stockholders When Maintainable.
Syllabus, point 1, Rathbonev. Gas Co., 31 W. Va. 798, approved and applied, (p. 658.)
Appeal from Circuit Court, Marion County.
Action by Thomas A. Deveny and others against the Hart Coal Company and others. Decree for plaintiffs, and defendants James F. Cook and others appeal.
Reversed. Remanded.
W. S. Haymond, Harry Shaw, U. N. Arnett, Jr., and H. M. Russell, for appellants.
W. S. Meredith, C. Powell, G. M. Alexander, and Edward A. Brannon, for appellees Hart Coal Co., Deveny and others. Malcolm Jackson, for appellees Brooks' administrators.
At the June Rules, 1903, of the circuit court of Marion county Thomas A. Deveny, John McCool, John W. Irvin, John R. Bennett, John J. McCool, Robert Talbot, S. C. Brown, John F. Somerville, A. T. B. Soraerville, liobert L. Somerville and David Victor filed their bill of complaint against the Hart Coal Company, a corporation, James F. Cook, John P. Hart, Joseph Hart, Peter Hart, George X. Hart, E. P. Wise, James L. Erwin, James L. Getting, Margaret Carney, A. A. Carney, Rush Miller, H. F. Neff, Glenn F. Barnes, W. E. Echols, Isham Keith, H. S. Falconer, J. P. Alkire, James Peacock, Frank Schneider, Ella Horan, B. C. Fitzhugh, John Jenkins, H. C. Brooks, Frances J. Brooks, and Herbert C. Brooks, administratrix and administrator of William B. Brooks, deceased, alleging that the said Hart Coal Company was organized for the purpose of mining, shipping and selling coal and purchasing coal lands and other real estate, operating the same and for other purposes; that the plaintiffs and the defendants, other than the defendant Hart Coal Company, were all stockholders of said corporation, setting out the number of shares owned by each of the said stockholders, said shares being of the par value of $100, and that the authorized capital stock of said corporation wyas $250,000 or 2, 500 shares, the number of shares held by the said stockholders when the bill was filed being 1834 shares of the capital stock, of which the defendant James F. Cook owned 381 shares and John P. Hart 338 shares; that the certificate of incorporation was issued on the 13th day of March, 1902; that the stocholders waived notice of first meeting and on the 18th day of March, 1902, they held a meeting organizing a corporation, adopting by-laws, and electing seven directors, namely, William B. Brooks, James F. Cook, S. C. Brown, John P. Hart, Isham Keith, W. E. Echols and II. S. Falconer; that at said stockholders meeting the stock then subscribed was 410 shares and had been paid for in full; $41,-000 had been paid in according to the minutes of said meeting and was then held in part by the following stockholders: William B. Brooks, 125 shares; James F. Cook, 100 shares; S. C. Brown, 50shares; John P. Hart, 75shares; II. S. Falconer, 15 shares; Isham Keith, 15 shares; J. P. Alkire, 15 shares. That at a meeting of the said stockholders held on the 21st of March, 1902, they directed that 90 additional shares be sold at not less than par which were afterwards sold, 30 shares to Thomas A. Deveny, 50 shares to John McCool and 10 shares to-, which increased the capital stock to $50,000; that the stockholders, on the 13th of May, 1902, passed a resolution to increase the capital stock to 2, 500 shares which was certified to the Secretary of State and the increase authorized; that about the time of said authorization of said increase said William B.Brooks, then a director and president of the said corporation. James E. Cook, then a director and manager thereof, and John P. Hart, then a director and secretary and treasurer of the corporation sold 1334 additional shares of said stock at par and collected the full amount thereof, to-wit, $133,500; that on and before the 13th day of May, 1902, the paid up stock of the corporation was $183,400 all owned as thereinbefore set forth. That the said first meeting held on the 18th of March, 1902, James F. Cook stated to the meeting that he had negotiated for and purchased for said company a coal field plant situated at Wee Gee, Belmont county, Ohio, that he had agreed to pay and had paid to one D. W. Cooper, therefor the sum of $40,000 and also reported that he had paid the said $40,000 out of money turned over to him for stock taken in the said corporation and that he had caused a deed for said property to be executed to and in the name of the said company by the said Cooper; that said stockholders meeting accepted and ratified said purchase and directed the same to be reported to the board of directors of the company, said directors to take such action as might be necessary to ratify and approve the purchase; when a meeting of the board of directors on the same day ratified and approved the said purchase and ordered the deed for said property recorded, a copy of which deed was filed as an exhibit with the bill. The bill further alleged that the said Cook, Brooks and Hart, proceeding to act for and on behalf of said corporation, purchased.the said property from the said Cooper and paid him therefor the sum of $25,000; that the said Cook, Brooks and Hart conspired and confederated together to cheat and defraud said corporation and in pursuance of such conspiracy caused the said Cooper, who only received $25,000 for the property, to have it falsely written and inserted in the deed that the same was in consideration of $40,000 and caused said Cooper to falsely and fraudulently, for the benefit of said Cook, Brooks and Hart, acknowledge the receipt of said $40,000 in the deed. That said Cook, Brooks and Hart, acting as officers and trustees of the said corporation, fraudulently received $40,000 of the money of the corporation falsely representing and pretending that it was for the purchase of the said coal property and paid Cooper the $25,000 of the $40,000 and appropriated to their own use the $15,000.
That on the 14th day of May, 1902, the said Cook, Brooks and. Hart, again acting as the directors and officers and as such trustees of said corporation and the other stockholders thereof, purchased from Owen Meehan a property known as the Franklin Coal Mines and its equipments for the price of $100,000; that said purchase was made by said Cook, Brooks and Hart through one James F. Anderson, who was then an attorney and agent for the said Owen Meehan; that Cook, Brooks and Hart conspired and confederated together to cheat and defraud the corporation and the other stockholders and in pursuance of said conspiracj^ caused and procured said Meehan to convey said property to his said attorney, Anderson, for the consideration of $100,000, paid and satisfied as thereinafter set forth, and caused and procured said Anderson immediately and as one act to convey said property to the said Hart Coal Company a copy of said deeds from Meehan to Anderson and from Anderson to the company were tiled as exhibits with the bill. That said Cook, Brooks and Hart paid to Meehan for said property, with the money of said corporation, the sum of $55,000 cash and caused said Anderson (with the promise to said Anderson and Meehan that said corporation would assume the payment thereof) to execute to said Meehan two notes calling for $22,500 each due in six and twelve months respectively from the 15th clay of May, 1902; and further caused said Anderson to secure the payment of said notes by executing a mortgage on said property on the day the deeds were executed as a part of the. same act and transaction. That said Cook, Brooks and Hart, in pursuance of said conspiracy to cheat and defraud the corporation and the stockholders, caused and procured Anderson to execute said deed to said corporation and to have it recited and written in said deed falsely and fraudulently that said "corporation" (meaning the deed, I presume) was made "for the consideration of one hundred and forty thousand dollars ($140,000.00,) received to our full satisfaction of the Hart Coal Company;" and on behalf of said corporation did assume or caused said corporation to assume the pay--merit of said two notes. That no money whatever was paid to said Anderson for the conveyance of said property to said corporation; that the only money or thing-of value the said Cook, Brooks and Hart paid or caused to be paid and passed for the said corporation for said property was $55,000 of the money of said corporation to said Meehan and. the assumption of the payment of the two notes, said money and notes aggregating $100,000, the whole consideration paid for said property. That said Cook, Brooks and Hart falsely and fraudulently represented unto the other stockholders and agents of said corporation that they paid...
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