Enter. Printing & Publ'g Co. v. Craig

• Decision Date: 21 April 1922
• Docket Number: No. 10837.,10837.
• Citation: 135 N.E. 189
• Court: Indiana Appellate Court
• Parties: ENTERPRISE PRINTING & PUBLISHING CO. v. CRAIG et al.

135 N.E. 189

ENTERPRISE PRINTING & PUBLISHING CO.

v.CRAIG et al.

No. 10837.^*

Appellate Court of Indiana, Division No. 2.

April 21, 1922.

Appeal from Circuit Court, Hamilton County; Ernest E. Cloe, Judge.

Action by Will H. Craig against the Enterprise Printing & Publishing Company, Edward E. Neal, and Charles S. Neal. From the judgment rendered, the first-named defendant appeals, and the last two named defendants assign cross-error. Affirmed.

Fred E. Hines, Christian & Christian, and Ralph H. Waltz, all of Noblesville, and Matson, Kane & Ross, of Indianapolis, for appellant.

Thomas E. Kane, Cassius M. Gentry, and Frank S. Campbell, all of Noblesville, and Joseph & Abrams, of Indianapolis, for appellees.

NICHOLS, J.

This was an action by appellee Craig against appellant for the appointment of a receiver, and against appellees Neal and Neal for an accounting in favor of appellant and judgment in favor of appellant corporation for the amount found due it. There was a trial by the court and special findings and conclusions of law in favor of appellee Craig, upon which judgment was rendered, decreeing the appointment of a receiver to take charge of the property involved, to manage and conduct the business until the property could be sold, and to sell the property and divide the proceeds among the stockholders in proportion to the amount of stock held by each. It was further adjudged that appellees Neal and Neal should pay into the funds of appellant company $1,332.45; Edward E. Neal, $4,877.35, and Charles S. Neal, $4,807.26, and failing so to do, the receiver was ordered and directed to deduct such amount from the proportion of the proceeds of the property belonging to them, and each of them. Judgment was rendered in favor of appellant company and of appellee Craig, respectively, for costs against appellees Neal and Neal. Appellant has assigned as error the court's action in overruling its demurrer to the complaint, in overruling its motion for a new trial, and in the court's respective conclusions of law. Appellees Neal and Neal have assigned as cross-errors the court's action in overruling their respective motions for a new trial and in the court's respective conclusions of law.

It is not necessary to set out the averments of the complaint, as the material facts therein averred are set out in the special findings of fact, which are, in substance, so far as here involved, that appellant was a corporation with a capital stock of $10,000, organized for the purpose of publishing and selling newspapers and other publications, and of conducting business incidental thereto, in the city of Noblesville, Ind. Its affairs were to be conducted by three directors, to be elected annually from among the stockholders. It was provided in the by-laws that the directors should elect, appoint, or remove at pleasure, without previous notice, the officers, agents, and employees of the corporation, prescribe their duties, fix their compensation, and conduct, manage, and control the business affairs of the corporation, and declare dividends to be paid out of the surplus funds when in the opinion of the directors the net profits would warrant such payment.

Immediately after the incorporation aforesaid appellant commenced the business of publishing a paper, the same being managed and operated by appellees Neal and Neal. At said time appellee Craig was publishing a newspaper known as the Noblesville Ledger in said city. About June, 1, 1914, appellant, by its managers, Neal and Neal, who were the owners of a majority of the stock in appelant company, and appellee Craig, entered into a mutual agreement in writing, whereby it was agreed that the two papers be merged into the one. These articles, so far as here involved, are in substance that, for the purpose of making a combination effective June 1, 1914, of said newpapers, the parties agreed that the capital stock of appellant company should be changed from $10,000 preferred stock and $15,000 common stock to $25,000 common stock, of which amount $15,000 should be set over to Craig and $10,000 to the Neals, the paper thereafter being known as the Noblesville Daily Ledger and Enterprise and the Hamilton Counly Ledger, and to be published by appellant company. It was agreed that until April, 1916, appellees should be the directors, Edgar E. Neal being the the president and Charles S. Neal the secretary and Wm. Craig the treasurer. It was further agreed that the management of the plant should be in the Neals, and that each should be allowed a salary of $1,000 a year, payable at the end of each month. Craig was to act in an advisory capacity, but not to be in active service, and he was to be paid no salary. He was to be allowed the use of his desk and private room when he so desired. Transportation on the traction line, tickets to theaters and shows, and other perquisites and courtesies were to be divided half and half between the Neals and Craig. Craig agreed to give the Neals an option on $3,000 of the stock at par until April, 1916, in amounts of not less than $500 at a time. Pursuant to the agreement the stock was increased to $25,000, the newspapers were merged, the assets of Craig connected with the publication of the paper were transferred and assigned to appellant, and thereupon $15,000 of the common stock was issued to him and $10,000 to the Neals. Prior to said consolidation, the directors of appellant had been the Neals and Irene D. Railsback. After the merger, Mrs. Railsback resigned, and Craig was chosen to fill the vacancy to serve her unexpired term. Craig continued to own the $15,000 common stock, and the Neals and Mrs. Railsback, who was the daughter of said Edward E. Neal, the remainder until September 19, 1915, when, pursuant to an agreement, the Neals caused to be purchased from Craig $3,000 of the stock, and thereafter Craig owned 480 shares and the Neals and Mrs. Railsback and her husband owned 520 shares. After June 1, 1914, none of the stock of appellant was sold or held by any one except Craig and the Neals and Mrs. Railsback and her husband, until the husband sold his stock to Grace M. Neal, who was the wife of appellee Charles S. Neal. Thereafter the stock was owned as follows:

+-----------------------------------------------+
                ¦Name.             ¦Number of Shares.¦Par Value.¦
                +------------------+-----------------+----------¦
                ¦Will H. Craig     ¦480              ¦$12,000 00¦
                +------------------+-----------------+----------¦
                ¦Edward E. Neal    ¦299              ¦7,475 00  ¦
                +------------------+-----------------+----------¦
                ¦Charles S. Neal   ¦180              ¦4,500 00  ¦
                +------------------+-----------------+----------¦
                ¦Grace M. Neal     ¦40               ¦1,000 00  ¦
                +------------------+-----------------+----------¦
                ¦Irene D. Railsback¦1                ¦25 00     ¦
                +------------------+-----------------+----------¦
                ¦Total             ¦1,000            ¦$25,000 00¦
                +-----------------------------------------------+
                

At the annual meeting of the stockholders April 13, 1915, appellees were elected as a board of directors to serve for one year, Edward E. Neal as president, Charles S. Neal as secretary, and Craig as treasurer. The Neals from the execution of the contract worked for appellant as president and secretary and as editor and manager, respectively receiving for their services $1,000 as stipulated in the contract. They continued so to serve until the annual meeting April 11, 1916, when the Neals and Mrs. Railsback were elected as the directors, at which time appellee Craig moved to substitute his name for that of Mrs. Railsback as director, and insisted upon his election as such director, but Mrs. Railsback was elected in his place. Edward E. Neal was chosen president and Charles S. Neal as secretary treasurer. Ever since that date, the Neals and Mrs. Railsback have been elected as the directors and as the officers as aforesaid from year to year. Mrs. Railsback never attended any of the meetings of the board after Jannary, 1918, lived and resided in the city of Boston, Mass., and had never attended any of the stockholder's meetings. Said stockholders, other than Craig, after April 11, 1916, assumed the full control of the property and business affairs of appellant company, managed the same to the exclusion of Craig, and refused to give him any information with reference to the financial conditions of appellant company, except that he was handed what purported to be a statement of the financial conditions of appellant at the annual meeting of the stockholders.

After finding that on April 11, 1916, the Neals usurped the full control and management of appellant company, to the entire exclusion of Craig, and voted to themselves successive and excessive increases in their respective salaries, the court thereafter in a series of more than 30 findings, covering about 20 pages of appellant's brief, finds in detail the acts of malfeasance of the Neals. Nothing can be gained by setting them out here. We do not need to comment upon them, for the court, after its detailed statement of their conduct of affairs, gives a résumé, by way of ultimate facts substantially as follows:

Appellees Neal and Neal, as president and secretary treasurer of said corporation, have managed the affairs thereof so that the books do not show what salaries have been paid to them as officers, and do not show that they ever reimbursed said corporation for moneys paid out of its funds for their own private use. That they have wrongfully, fraudulently, and unlawfully appropriated to themselves salaries in excess of their services in the total sum of $6,950. That they have wrongfully and unlawfully appropriated from the funds of said corporation for their joint use, the sum of $932.45, and have wrongfully, fraudulently, and unlawfully converted to their own use mileage tickets of the Union Traction Company of Indiana, in the sum of $400, which was the property of the corporation. That...