Ex parte Industrial Finance & Thrift Corp.

• Decision Date: 08 February 1951
• Docket Number: 3 Div. 577
• Citation: 51 So.2d 894,255 Ala. 464
• Parties: Ex parte INDUSTRIAL FINANCE & THRIFT CORP. , 582.
• Court: Alabama Supreme Court

Page 894

51 So.2d 894

255 Ala. 464

Ex parte INDUSTRIAL FINANCE & THRIFT CORP.

3 Div. 577, 582.

Supreme Court of Alabama.

Feb. 8, 1951.

Rehearing Denied April 26, 1951.

Walker Broach, Jr., of Meridian, Miss., and Fred S. Ball, Jr., of Montgomery, for petitioner.

Rushton, Stakely & Johnston, Jas. Garrett, Marion Rushton and Robt. B. Stewart, all of Montgomery, for respondent.

BROWN, Justice.

This is an original application by Industrial Finance & Thrift Corporation organized and existing under the laws of Louisiana with its principal office and place of business in the City of New Orleans, seeking mandamus to review an alleged erroneous decretal order of the Circuit Court of Montgomery County entered on July 20th, 1950, fixing the fee of the Special Master Paul Thomas for services rendered in the case of R. E. Seibels v. Industrial Finance & Thrift Corp., et al., terminated by final decree on June 7th, 1950. The directors of the named corporation, other than complainants, are and were nonresidents of this state. The basis of the decretal order fixing the compensation of Thomas was a provision in the agreement of settlement of the litigation in the Seibels' case. The order entered July 20th, 1950, fixed the fee at $4,000.00 in addition to the sum of $500.00 deposited by the parties in the Seibels' case, consisting of $250.00 each, as required by the decretal order of the court appointing said Special Master, which petitioner alleges was made over its protest.

The factual background of this application, as appears from the allegations of the petition, in brief is: The bill filed by Seibels in the Circuit Court of Montgomery County July 13, 1948 was a minority stockholder's bill charging the directors other than Seibels and Taber with fraud and mismanagement of the Montgomery Company; that the dealings between the Montgomery Company and the petitioner here with whom it had interlocking directors had been unfair to the Montgomery Company. The bill in the main sought to hold the nonresident directors to account for the alleged fraud and mismanagement of the Montgomery Company and to hold petitioner to account for alleged excessive profits made by it in its dealings with the Montgomery Company through said interlocking directors.

The persons made defendants to the minority stockholder's bill answered, denying the allegations of fraud and alleging that complainant, Seibels, and Taber, were active in the business of the Montgomery Company as directors with Seibels as President and Taber as the Secretary and Manager exercising active management of the business of the Montgomery Corporation; that they accepted benefits therefrom and, therefore, were estopped to assert that the business was fraudulent or mismanaged.

It is alleged that after the cause was at issue and the parties had been extensively interrogated showing that a matter of accounting was involved, the court appointed a Special Master to hear evidence and state the account between the Montgomery Company and the petitioner. A copy of said order is made an exhibit to the petition. The petition further alleges that the parties began taking testimony before the Special Master on March 3, 1950, and that said hearings were held on fifteen different days up to June 7, 1950, when a final decree approved by all the parties was rendered by the court by which the reference was withdrawn and the Special Master relieved of making a report. A copy of the final decree is attached as an exhibit.

The decretal order appointing the Master stated: The Special Master shall be entitled to reasonable compensation for his services to be taxed as a part of the costs of the cause and the complainants and the respondents each are required by the court to deposit with the Register of the court within ten days of this date $250.00 and such additional amounts as may be ordered by the court to be advanced from time to time to the Special Master on account of his compensation.

The final decree entered by the court is in the following words: 'This cause being submitted for final decree upon the pleadings and the evidence taken before the Special Master whose report has been waived by the parties, as noted by the Register, It is ordered, adjudged and decreed by the court that the individual respondents in this case are not guilty of any fraud, conspiracy or mismanagement in the management of Montgomery Loan & Finance Company, Inc. and that there was no unfairness in the business transactions between that corporation and the Industrial Finance & Thrift Corporation and that neither the complainant nor the intervenor are entitled to relief against the individual respondents nor is the Industrial Finance & Thrift Corporation guilty of doing business in Alabama in violation of the statutes requiring foreign corporations to qualify to do an intrastate business but as the two said corporations have, to some extent, had interlocking directors, the court has examined into the equities arising out of the business dealings and transactions between the two companies and finds that beginning with the organization of Montgomery Loan & Finance Company, Inc. in the early part of 1943 and during the balance of that year and also during subsequent years Industrial Finance & Thrift Corporation in buying or discounting commercial paper from Montgomery Loan & Finance Company, Inc., in large quantity and value was able to enjoy the benefits it derived from the large volume of business originated by Montgomery Loan & Finance Company, Inc. during the time the complainant and entervenor were actively managing the affairs of that company, and Industrial Finance & Thrift Corporation has been substantially enriched during said period of time as a direct result of the individual efforts and activity of the complainant and intervenor and they have an equitable claim against Industrial Finance & Thrift Corporation by reason of said facts and that company should be required to pay them a reasonable amount for each of the years in which their actively inured the benefit of Industrial Finance & Thrift Corporation. It is, therefore, ordered that:

'1. The complainant and intervenor have and recover of Industrial Finance & Thrift Corporation $6392.00 for the year 1943, $13, 328.00 for the year 1944, $11,662.00 for the year 1945, and $2618.00 for the year 1946, or a total of $34,000.00, for which let execution issue.

'2. The bill is dismissed with prejudice as to Dan M. White, W. R. Brunson, Thomas O. Crosby and Paul W. Gillaspy.

'3. The costs of the cause including the costs of the reference and the compensation of the Special Master, but not including any fees for the attorneys for complainant and intervenor or compensation for their accountants, are assessed against Industrial Finance & Thrift Corporation, for which let execution issue.

'4. All other relief prayed for either by complainant or intervenor is denied.

'5. Done this June 7, 1950. 'Walter B. Jones, Presiding Circuit Judge.' [Italics supplied.]

The petition further alleges that the petitioner is without adequate remedy to review said decretal order fixing the allowance to the Special Master and that it is grossly excessive for the reason that some of the testimony taken in minority stockholder's proceeding has never been transcribed and the reporter who took the stenographic notes has left the State of Alabama and now resides in the State of Texas, and that to present a complete record in said original cause the costs thereof would be prohibitive of such appeal because of the cost thereof.

On the presentation of said petition duly verified by oath, we granted a rule nisi addressed to the trial Judge to show cause why the writ of mandamus should not issue. We later issued a restraining order prohibiting the respondent from enforcing the order of July 20th, 1950 pending a hearing on the petition for mandamus.

The respondent Judge in response to the rule filed motion to strike the petition, demurred thereto and filed his return stating in substance the factual background of this proceeding as heretofore stated, and other facts as to the complicated issues and questions involved in the stockholder's bill, which fell within the scope of the Special Master's authority to examine under the decree of reference, and denied that the allowance made for his services was excessive or an abuse of the court's discretion. The return admits that the petitioner is a nonresident of the state and had not qualified to engage in business in Alabama. The answer also asserts that the petitioner has an adequate remedy to review the order complained of by appeal and alleges that the burden and costs of presentation of a full record to the Supreme Court does not render the remedy by appeal inadequate.

The petition for writ of prohibition was consolidated with mandamus proceedings and the case was argued and submitted on the part of the petitioner on its petition, the replication controverting the facts stated in the return and on evidence in support thereof, and on motion to strike the respondent's demurrer. The case was submitted on the part of the respondent on motion to strike the petition, the demurrer to the same and the answer and return to the rule nisi.

Petitioner's motion to strike the respondent's demurrer to the petition is rested on the ground, among others,--and the only ground argued,--that the demurrer was waived or withdrawn by filing the answer return before invoking a ruling on the demurrer. This point is not well taken. It has been the uniform practice in this court to permit pleadings to be so filed in cases such as this, without prejudice, in order to expedite submission on all points involved and give the court an opportunity to consider all questions presented on the record in consultation after the questions have been fully examined and opinion prepared thereon. That is not to say that the court in the exercise of its sound discretion may...