Flint River Pecan Co. v. Fry
| Decision Date | 12 January 1929 |
| Docket Number | 5413.,No. 5403,5403 |
| Citation | 29 F.2d 457 |
| Parties | FLINT RIVER PECAN CO. et al. v. FRY et al. FRY et al. v. FLINT RIVER PECAN CO. et al. |
| Court | U.S. Court of Appeals — Fifth Circuit |
In No. 5403:
Geo. S. Jones, of Macon, Ga. (Bennet & Peacock, of Albany, Ga., and Jones, Jones & Johnston, of Macon, Ga., on the brief), for appellants.
Howell Cobb, J. R. Pottle, I. J. Hofmayer, and Leonard Farkas, all of Albany, Ga. (Milner & Farkas and Pottle & Hofmayer, all of Albany, Ga., on the brief), for appellees.
In No. 5413:
Howell Cobb, J. R. Pottle, I. J. Hofmayer, Leonard Farkas, and Thos. H. Milner, all of Albany, Ga. (Milner & Farkas and Pottle & Hofmayer, all of Albany, Ga., on the brief), for appellants.
Geo. S. Jones, of Macon, Ga., R. P. Marks and Harry T. Gray, both of Jacksonville, Fla., and Sam S. Bennet, of Albany, Ga. (Richard P. Marks and Harry T. Gray, of Marks, Marks & Holt, both of Jacksonville, Fla., Bennet & Peacock, of Albany, Ga., and Jones, Jones & Johnston, of Macon, Ga., on the brief), for appellees.
Before WALKER and BRYAN, Circuit Judges, and DAWKINS, District Judge.
These two cases involve appeals from a judgment in which the court below sustained in part and otherwise overruled exceptions to the master's report upon an accounting of the affairs of the Flint River Pecan Company.
The record presents a great volume of pleading and evidence, but the matter was thoroughly covered by the master in his findings of fact and conclusions of law, so that the really important issues have been greatly narrowed. The suit was originally brought by W. W. Fry, a citizen of California, who alleged the ownership of 40 shares of stock in the Flint River Pecan Company, a Georgia corporation, on behalf of himself and such other stockholders as might desire to join therein. He made the Pecan Company, the officers thereof, and certain other individuals parties defendant, as well as the Title & Trust Company of Florida, trustee under a bond mortgage executed by the defendant corporation. Petitioner alleged numerous acts of mismanagement, fraud, etc., on the part of the defendants, prayed for the appointment of a receiver; that the defendants be required to account for and surrender to said receiver all moneys and property of the Pecan Company which they had improperly received, or that a decree be entered against them for the value thereof; that the deed of trust to the Title & Trust Company be canceled as a cloud upon the title of the defendant company's property; that certain stock alleged to have been fraudulently and fictitiously issued, be ordered surrendered and canceled; and that, if the deed of trust were found to be valid, the holders of the bonds be ordered to intervene and set up their respective rights to the proceeds arising from the sale of the mortgaged property. Afterwards some 41 other stockholders intervened and joined petitioner in his demands against the defendants.
Defendants denied the allegations of fraud and mismanagement, but pleaded laches and ratification by the directors and a majority of the stockholders to many of the matters complained of. Defendant Trust Company by cross-bill alleged a proper execution of the mortgage, the issuance of the bonds, the default of the Pecan Company, and asked for foreclosure, as well as other appropriate relief.
As before stated, the master made a report embracing elaborate findings of fact and conclusions of law, as to which exceptions were filed by both sides, but the lower court approved the whole, except as to two points, to wit: (1) The amount of salaries allowed the officers and managers of the company during the period of their administration; and (2) as to the disallowance of profit to Foy & Shemwell upon the sale of certain property to the Pecan Company, both of which claims were allowed in full. All other exceptions by each side were overruled.
We shall dispose of the appeal No. 5403 first. This record presents only two specifications of error, to wit: (1) The sustaining by the court of the master's finding that the property turned into the corporation for its stock by Foy & Shemwell and Dermott S. Shemwell was overvalued to the amount of $124,866.61; and (2) the holding that plaintiffs were entitled to a decree for the value of the stock or that it should be surrendered for cancellation, notwithstanding the delays, estoppel, and ratification pleaded by defendants.
We are convinced that the proof amply sustains the finding that the property exchanged for stock by defendants was not worth the sum claimed for it by the amount mentioned, and that the decree ordering them to pay therefor, unless it was surrendered for cancellation within the delays allowed by the judgment, was properly entered. The circumstances shown by this record do not warrant the conclusion that the present petitioners were sufficiently conversant with the value of the property or other facts which would amount to a ratification of the transaction, or justify the conclusion that they should now be precluded from attacking the same. The management of the company, including the fixation of values upon the property put into the corporation by the defendants, was entirely in their hands while many of the petitioners were persons residing in distant sections of the country, and without reasonable opportunity to know anything about the value of the property exchanged for the stock.
What has been said likewise disposes of the second contention that there was error in the decree for the par value of the stock, but with the right to surrender it for cancellation. The latter privilege was quite favorable to defendants, in view of the fact that for several years they had controlled the corporation by virtue of this excessive issue of stock, but in the prayer of the plaintiffs this identical relief was asked; i. e., that the stock be surrendered or defendants pay therefor, hence we think the master and the court below were correct in granting relief in that form.
The record in No. 5413 covers the appeal of plaintiffs, who have grouped their...
To continue reading
Request your trial
-
Dick v. Koski Prof'l Grp., P.C.
...11 S. Ct. 303, 34 L. Ed. 984 (1891) ; Wilshire Oil Company of Texas v. Riffe , 406 F.2d 1061 (10th Cir. 1969) ; Flint River Pecan Co. v. Fry , 29 F.2d 457 (5th Cir. 1928) ; Backus v. Finkelstein , 23 F.2d 357 (D. Minn. 1927) ; T.A. Pelsue Co. v. Grand Enterprises, Inc. , 782 F. Supp. 1476 (......
-
Lydia E. Pinkham Med. Co. v. Gove
...Wis. 512, 210 N.W. 839;Munro v. Smith, 1 Cir., 259 F. 1, 21, 22;Backus v. Finkelstein, D.C., 23 F.2d 357, 360, 361;Flint River Pecan Co. v. Fry, 5 Cir., 29 F.2d 457, 459. The plaintiff makes a strong argument for its application in this case. But the rule is not an inflexible one. Each case......
-
Zakibe v. Ahrens & Mccarron Inc.
...1153 558 P.2d 1211, 1222 (1976); Wilshire Oil Company of Texas v. Riffe, 406 F.2d 1061, 1062 (10th Cir. 1969); Flint River Pecan Co. v. Fry, 29 F.2d 457, 459 (5th Cir. 1928); Kassab v. Ragnar Benson, Inc., 254 F. Supp. 830, 833 (W.D. Pa. 1966); Backus v. Finkelstein, 23 F.2d 357, 361 (D. Mi......
-
Richardson v. Blue Grass Mining Co., 858.
...persons acting in a fiduciary relation. Munro v. Smith, 1 Cir., 259 F. 1; Backus v. Finkelstein, D.C., 23 F. 2d 357; Flint River Pecan Co. v. Fry, 5 Cir., 29 F.2d 457; Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 62 A.L.R. 1; and Comingor v. Louisville Trust Company, 128 Ky. 697, 108 S.W......