Ex parte City Sales Co.

• Decision Date: 14 June 1956
• Docket Number: 5 Div. 596
• Citation: 88 So.2d 668,264 Ala. 637
• Parties: Ex parte CITY SALES COMPANY.
• Court: Alabama Supreme Court

Page 668

88 So.2d 668

264 Ala. 637

Ex parte CITY SALES COMPANY.

5 Div. 596.

Supreme Court of Alabama.

June 14, 1956.

Rehearing Denied July 26, 1956.

Walker & Walker, Opelika, for petitioner.

L. J. Tyner, Opelika, for respondent.

SPANN, Justice.

This is a petition for writ of mandamus to be directed to the respondent, Honorable Will O. Walton, Associate Judge of the Fifth Judicial Circuit. Petitioner contends that the respondent should be required to vacate an order which he issued in the case of G. H. Wright, plaintiff, v. City Sales Company, a corporation, defendant, requiring petitioner, defendant below, to answer more fully certain numbered interrogatories propounded to him by the plaintiff below in accordance with the provisions of Title 7, Section 477 et seq., Code of 1940.

Plaintiff sued defendant in detinue to recover certain cigarette vending machines. It appears that the instrument on which the plaintiff based his title to the property sued for was a combination note and mortgage. In its answer, the defendant contends that the plaintiff is claiming title to the property sued for under a mortgage and avers that plaintiff's alleged mortgage debt is without consideration. The defendant also avers in its answer that it is not indebted to the plaintiff on the alleged mortgage debt. The defendant answered plaintiff's interrogatory No. 12 as follows:

'12. No. It is a fact that a paper purporting to be such a combination note and mortgage referred to in interrogatory 12 was made on April 10, 1953. However, the defendant is advised by its attorneys that such paper is not a valid note or mortgage.'

The defendant thereby takes the position that the mortgage, which is the basis of the plaintiff's title to and right to possession of the property sued for, is invalid; and the respondent, the court below, contends that the defendant's position is based upon the theory that said mortgage did not have a resolution of the board of directors of the corporation authorizing execution of the mortgage.

The attention of the court below was called to the proposition of law stated in Copeland v. Swiss Cleaners, Inc., 255 Ala. 519, 52 So.2d 223, 228, where it was said:

'* * * when a note is executed on behalf of the corporation by the who is the sole or controlling owner and the alter ego of the corporation, the note is binding on the corporation as between the parties to it, though as to creditors of the corporation it may not stand up if such owner is not in fact an officer of the corporation and it was done without express corporate authority. * * *'

In view of defendant's answer to the complaint and its answers to the interrogatories and the attention brought to bear on the foregoing proposition of law, it is evident that the plaintiff below must prove in order to sustain the validity of the alleged mortgage and note, in the absence of formal corporate authority, that the persons who executed said mortgage and note for the corporation held such a controlling interest as to be its alter ego. The respondent, the court below, ordered the petitioner to answer more fully the following numbered interrogatories: 3(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) and (l); 4(a) and (b); 9; 10; 11; 12; 13; 14; 15; 16 and 21(b).

Interrogatory 3 is as follows:

'3. (a) Who were the original stockholders of City Sales Company? (b) How many shares of stock did each of the original stockholders subscribe and pay for? (c) Was the stock of par value or non par value? (d) If the stock was of par value, what was the par value per share? (e) Attach to your answers to these interrogatories a copy of the stock certificate stubs showing all stock issued by the corporation, City Sales Company, since its organization, and showing all transfers of any of said stock on the books of the corporation. (f) Who were the stockholders of City Sales Company on October 31, 1952, and how many shares of stock were in the name of each of the stockholders on that date? (g) Who were the stockholders of City Sales Company on November 22, 1952, and how many shares of stock were in the name of each of the stockholders on that date? (h) Who were the stockholders of City Sales Company at the time of filing of the suit in this cause and how many shares of stock were in the name of each of said stockholders on that date? (i) Is it not a fact that the stock records of City Sales Company show the issuance of stock of the corporation only to C. C. Markle, Mrs. Adine H. Markle and Mrs. Margaret A. Harris? (j) Is is not a fact that the stock records of City Sales Company show that up to the time of the filing of the suit in this cause that C. C. Markle, Mrs. Adine H. Markle and Mrs. Margaret A. Harris were the only stockholders of record on the books of said corporation? (k) Is it not a fact that the stock records of City Sales Company at the time of the filing of the suit in this cause show the outstanding stock of the said corporation to be as follows:

'C. C. Markle 47 shares

'Mrs. Adine H. Markle 50 shares

'Mrs. Margaret A. Harris 3 shares

'(l) If your answer to the next preceding interrogatory is in the negative, then state the names of the owners or subscribers of stock in City Sales Company from the time of the organization of said corporation up to the time of the filing of the suit in this cause, showing the number of shares at any time issued in the name of, or held by any of said stockholders, giving the stock certificate numbers and the date of issuance of each of said stock certificates.'

Petitioner's answer is as follows:

'3. The defendant objects to an answering this interrogatory and to each subsection thereof on the grounds that the answers to these questions would be immaterial, irrelevant and incompetent testimony in this cause and would shed no light upon the ownership or right to possession of the vending machines described in the complaint in this cause. Without waiving this objection, affiant states that the certificate of incorporation of City Sales Company, on record in the office of the Judge of Probate of Lee County, Alabama, in Corporation Record 390, at page 1 et seq., shows that C. C. Markle, Adine H. Markle, and Mrs. Margaret A. Harris were the original stockholders of said corporation and that the stock of said corporation was of par value of $20.00 a share.'

Petitioner contends that subsections (a) and (b) have already been answered, since these matters were on record in the certificate of incorporation of City Sales Company. We think petitioner should be required to answer these subsections, (a) and (b), more fully, because defendant is asked direct questions and has failed to furnish full and complete answers thereto. Plaintiff inquires as to who were the original stockholders in the defendant corporation and how many shares of stock each one of them subscribed and paid for. Petitioner answered that the certificate of incorporation, which was a matter of public record, showed C. C. Markle, Mrs. Adine H. Markle and Mrs. Margaret A. Harris were the original stockholders and that the stock of the corporation was of the par value of $20. The latter part of the answer was not requested in either subsection (a) or (b) and merely stating what the certificate of incorporation shows is not a full and complete answer to subsections (a) and (b).

We think that all of the subsections of interrogatory 3 when taken together are clearly relevant to the issue of the validity of the alleged mortgage and note in that the answers thereto, if responsive, will furnish facts material to the establishment of the validity of the alleged mortgage and note, i. e., whether or not the persons who signed the instrument were at the time of the execution of the instrument the alter ego of the corporation.

Petitioner further contends that it...