F.T. Gunther Grocery Co. v. Hazel

• Decision Date: 12 March 1918
• Citation: 201 S.W. 336,179 Ky. 775
• Parties: F. T. GUNTHER GROCERY CO. v. HAZEL. [a1]
• Court: Kentucky Court of Appeals

201 S.W. 336

179 Ky. 775

F. T. GUNTHER GROCERY CO. v. HAZEL. ^[a1]

Court of Appeals of Kentucky.

March 12, 1918

Appeal from Circuit Court, Daviess County.

Action by the F. T. Gunther Grocery Company against W. S. Hazel. From the judgment, plaintiff appeals. Judgment reversed, and cause remanded with directions to enter judgment for defendant.

E. B Anderson, of Owensboro, for appellant.

Birkhead & Wilson and Ben D. Ringo, all of Owensboro, for appellee.

CLARKE J.

The appellant is a corporation, doing a wholesale grocery business in the city of Owensboro, and from October, 1902 until July, 1907, the appellee, W. S. Hazel, was its president and in complete control of the business. In August 1910, three years after he had severed his connection with the corporation, it filed this action at law against him seeking to recover numerous amounts which it was alleged he owed the corporation, growing out of various transactions with and for the corporation during the time he was its president. He answered, denying liability for most of the items set up in the petition, and filed a counterclaim for a large amount, covering numerous other transactions had with and for the corporation while he was its president. It is manifest that, though the action had been begun at law, it was in reality, and was so recognized by both parties, a suit for a settlement by the corporation against its president, covering many and intricate transactions during a period of about five years; and, by agreement, the action was transferred to the equity docket and referred to the master for an accounting. Much proof was taken by depositions, and the master filed his report covering every item claimed by either party against the other, which, upon balancing, showed plaintiff was indebted to the defendant in the sum of $2,441.63, with interest from May 1, 1916. Both parties filed exceptions to the report and, upon final hearing, the chancellor overruled the exceptions of both parties and rendered judgment in conformance with the master's report. From that judgment, the plaintiff has appealed.

The correctness of the master's findings with reference to numerous items is contested here by appellant, but upon a careful examination of all the evidence relative thereto we find that the report is fully sustained by the evidence, except as to two items which were involved in a single transaction. As it would extend this opinion to an unreasonable length and serve no useful purpose to do so, we shall not review the testimony with reference to such contested items, as we approve the findings of the master, but shall confine ourselves to a consideration of the items as to which we think he was in error. These items are: The claim of plaintiff against defendant for contribution to an attorney's fee, paid by plaintiff for legal services rendered in connection with a settlement with Mrs. Maggie Brodie and members of her family, who were the owners of $10,000 of the preferred stock, and $1,000 or the common stock in the corporation; and the claim of defendant against plaintiff for $2,000, growing out of the same transaction.

The $10,000 of preferred stock was issued to the Brodies on October 27, 1902. This stock by its terms provided for dividends at the rate of 6 per centum per annum, payable semi-annually; for its redemption by the corporation at any time, at its option, after two years from the date of the company's organization, which was March 22, 1901; that the owner might demand its redemption at any time after six years from the date of incorporation; and it was further provided that, upon redemption, the company would pay to the owner the par value of the stock, with 6 per centum interest from its date. The company had not paid any dividends upon either its preferred or common stock; and the Brodies, in the exercise of their right to demand a redemption, after March 22, 1907, were demanding of the company, and threatening suit to enforce, a redemption of the preferred stock owned by them. On October 22, 1902, appellee had purchased some common stock in the corporation from Mrs. Brodie and executed to her his note for $2,000 in payment therefor, and she had sued him to enforce the collection of the note, and he was resisting payment upon the ground that he had been overreached in the purchase of the stock, upon account of which he asserted a counterclaim for $2,400 damages. On May 8, 1907, a compromise was effected between the Brodies, on the one side, and plaintiff and defendant, upon the other side, in which all claims asserted by or against the Brodies were settled. In this settlement, the appellee represented not only himself, but also the corporation as its president. This settlement was reduced to writing, and is as follows:

"This agreement made and entered into this the 18th day of May, 1907, between Mrs. Maggie Brodie, Robert Brodie, A. J. Brodie and E. T. Franks, of the one part, and the F. T. Gunther Grocery Company and W. S. Hazel, of the other part, all of Owensboro, Kentucky, witnesseth: That whereas, the said Mrs. Maggie Brodie now has a suit pending in the Daviess circuit court against W. S. Hazel for the recovery of the sum of two thousand dollars ($2,000.00) with interest thereon; and whereas, the notes are secured by thirty shares of the common stock of the F. T. Gunther Grocery Company transferred as collateral by said Hazel; and whereas, in said action said W. S. Hazel has filed an answer pleading a counterclaim growing out of an alleged deficiency in the value of certain stocks purchased by said defendant from said plaintiff in the F. T. Gunther Grocery Company; and whereas, the said Mrs. Brodie, E. T. Franks, Robert Brodie and A. J. Brodie hold certain dividend checks against the F. T. Gunther Grocery Company which have been protested for nonpayment and as follows: One in favor of Robert Brodie, dated October 22, 1902, for $184.00, another in favor of Mrs. Maggie Brodie, dated October 22, 1902, for $175.00, one in favor of E. T. Franks, of the same date, for $40.00, and one in favor of A. J. Brodie, of the same date, for $40.00; and whereas, the said E. T. Franks owns ten shares of the par value of one hundred dollars per share of the common stock of the F. T. Gunther Grocery Company, and the said Mrs. Maggie Brodie owns eighty shares of the preferred stock of the F. T. Gunther Grocery Company of the par value of one hundred dollars per share and the said Robert Brodie owns ten shares of the par value of one hundred dollars per share of the preferred stock of the said grocery company, and the said A. J. Brodie owns ten shares of said preferred stock in said company of the par value of one hundred dollars per share; and whereas, no dividends have been paid on any of said preferred or common stock and there is a controversy pending between said parties concerning the validity of a portion of said stock and as to whether dividends have been earned thereon; and whereas, all the parties hereto desire to settle said controversy and every disputed question connected with said stock, notes, dividend checks and counterclaim filed by said Hazel in said action, and have agreed to settle same upon the terms and conditions hereinafter stated:

Now therefore, the said Mrs. Maggie Brodie, Robert Brodie, and A. J. Brodie have this day surrendered to the said F. T. Gunther Grocery Company the said ten thousand dollars of preferred stock, it being understood that they are not to be held responsible in any event for said stock or dividends claimed to be due thereon, and said Mrs. Brodie, said Robert Brodie, said A. J. Brodie and said E. T. Franks have surrendered and delivered to said company said dividend checks hereinbefore set out and the notes and collateral stock declared on in said equity action in favor of Mrs. Brodie against said Hazel, and the said E. T. Franks has this day transferred and assigned without recourse on him said ten shares of the common stock of said company to said W. S. Hazel, all of which is in consideration of the sum of fourteen thousand dollars ($14,000.00)...