Elliott v. Sibley

• Decision Date: 08 June 1893
• Citation: 101 Ala. 344,13 So. 500
• Parties: ELLIOTT v. SIBLEY ET AL.
• Court: Alabama Supreme Court

13 So. 500

101 Ala. 344

ELLIOTT v. SIBLEY ET AL.

Supreme Court of Alabama

June 8, 1893

Appeal from chancery court, Cherokee county; S. K. McSpadden Chancellor.

Bill by J. M. Elliott against William C. Sibley, as president of the Round Mountain Coal & Iron Company, and J. W. Davis, J. M Clarke, and Charles H. Phinize, to have defendant Sibley enjoined from selling certain shares of stock alleged to be owned by the complainant, and also to have the other defendants removed from their offices, as directors of the Round Mountain Coal & Iron Company. From an order dissolving the injunction, and sustaining certain grounds of demurrer interposed to the bill of complaint, complainant appeals. Affirmed.

The motion to dissolve the injunction was based on the denials to the answer. The demurrers interposed to the bill of complaint, which were sustained by the court, were the following: (3) The Round Mountain Coal & Iron Company is a necessary party complainant or defendant. (4 and 12) Said bill does not aver a readiness or willingness on the part of complainant to pay what may be due to said corporation. (7) The proceeding to sell the stock is not without authority of law, because no authority or order by any of the board of direction is necessary for said sale. (8) The account for improvements claimed by complainant in his bill is not the proper charge against said respondents. (9) Said account does not present matters that are the proper subject for adjustment and cognizance by a court of equity, against respondents. (13) The bill does not tender, or give sufficient excuse for not tendering, what may be found to be due said corporation by the complainant. (15) Said bill is null, in that it seeks to enjoin the sale of stock, and at the same time to remove certain persons, alleged to be improper members of the board of directors. (17) There is a misjoinder of parties, in that William C. Sibley, the rightful president, is joined with those alleged to be spurious members of the board of directors. (18) There is a misjoinder of causes of action, in that the bill seeks to enjoin the sale of stock, and, at the same time, to remove from office certain directors.

Carden & Bilbro and Dortch & Martin, for appellant.

J. L Burnett, for appellees.

COLEMAN J.

The object of the present bill was to enjoin Sibley, the president of the Round Mountain Coal & Iron Company, a corporation, from selling certain shares of stock belonging to complainant, Elliott, and also to have removed from office certain persons claiming to be directors of said corporation. The bill avers that Sibley advanced to complainant $500 in money, for which complainant executed his note, to be expended by complainant in the adjustment of a lawsuit in which the corporation was interested, and 50 shares of stock were placed in the hands of Sibley as collateral for the advance of the money; that the $500 were expended according to agreement, and afterwards Sibley transferred the note and shares to the corporation. The bill also avers that the corporation claimed an indebtedness from complainant, on a rental contract, of over $3,000, and, to pay this alleged indebtedness, Sibley, the president, was proceeding to sell complainant's shares of stock, but that, in fact, on a settlement of accounts, there would be a balance due complainant, over and above the rental indebtedness, of more that $4,000. A temporary injunction issued, upon the filing of the bill. Respondents moved to dismiss the bill for want of equity, demurred to the bill, assigning various grounds of demurrer, and, upon the denials of the answer, moved to dissolve the injunction. At the hearing, the motion to dismiss the bill for the want of equity was denied. Several grounds of demurrer were held to be good, and the injunction was dissolved. From the rulings of the court dissolving the injunction, and sustaining certain grounds of demurrer, the complainant appealed.

It requires neither argument nor citation to show that where a bill is filed to enjoin the sale of stock of a shareholder to satisfy an indebtedness due the corporation, upon the grounds that the debt is not due or has been paid, or that the corporation is indebted to the shareholder in an amount exceeding that claimed to be due the corporation, and which prays for a statement of account, the corporation itself is an indispensable party. It is also elementary that in such a bill, mutual indebtedness existing, the complainant should offer to do equity; should aver a readiness to pay whatever may be found due from him upon the statement of the account. It may be that, to authorize a suit for an unpaid subscription for stock, there should be some action on the part of the directors, as was declared in Moses v Tompkins, 84 Ala. 613, 4 South. Rep. 763, though this would depend...