Force v. Age-Herald Co.

• Citation: 33 So. 866,136 Ala. 271
• Parties: FORCE v. AGE-HERALD CO. ET AL.
• Decision Date: 28 February 1903
• Court: Supreme Court of Alabama

33 So. 866

136 Ala. 271

FORCE v. AGE-HERALD CO. ET AL.

Supreme Court of Alabama

February 28, 1903

Appeal from Chancery Court, Jefferson County; John C. Carmichael Chancellor.

Bill by Silas C. Force against the Age-Herald Company, the Herald Company, corporations organized under the state of Alabama and J. F. B. Jackson, Frank P. O'Brien, W. A. Walker, W P. Pinckard, J. J. Altman, and Fred Schloss. Decree sustaining demurrers to the bill, and complainant appeals. Affirmed.

It was averred in the bill that the complainant was the owner of bonds evidencing a debt which had been assumed by the Herald Company, and that the payment of said bonds was secured by a deed of trust upon property which had been transferred to and was owned by said Herald Company; that the individual defendants of the bill were at the time of the transactions referred to in the bill the directors of said Herald Company. It was further averred in the bill that the individual defendants had organized, and subscribed for stock in, the Age-Herald Company, and that they had transferred all of the property, assets, etc., of the Herald Company to the Age-Herald Company. The bill, as originally filed, averred the insolvency of the Herald Company, and charged the individual respondents with appropriating and using the assets of said Herald Company to satisfy their individual liability on the subscription made by them for their own benefit to the capital stock of the Age-Herald Company. The other averments of the original bill are sufficiently shown in the opinion. The prayer of the bill, so far as it related to the individual respondents, was that said individual respondents be required to account to the complainant for the value of the property and other things belonging to the said Herald Company which were conveyed or caused to be conveyed by them to the Age-Herald Company, and that a reference be made by it to ascertain for what amount they were liable on account of the matters averred in the bill.

To the bill, as amended, the respondent demurred on several grounds which may be summarized as follows: (1) There are no facts averred in the bill which show that the transfer of the property of the Herald Company by the defendants J. F. B. Jackson, J. J. Altman, W. P. Pinckard, Wm. A. Walker, Fred Schloss, and F. P. O'Brien was fraudulent or wrongful, or that said defendants wrongfully or fraudulently acquired the possession or ownership of such property so transferred in payment of their subscriptions from the Herald Company. (2) Because the complainant, suing as a creditor, has no cause of action in equity against the respondents J. F. B. Jackson, F. P. O'Brien, Wm. A. Walker, W. P. Pinckard, J. J. Altman, and Fred Schloss for their alleged ultra vires act in transferring the property mentioned in the bill in payment of said stock subscriptions. (3) The bill, as amended, presents no cause of action in equity against the individual respondents, and complainant, as a creditor, has no right to recover against the individual respondents because of their ultra vires act as directors, officers, or agents of the Herald Company. (4) The bill, as amended, is repugnant for the reason stated in the last ground of the demurrer. (5) The averments of the bill, as amended, show that the individual defendants transferred the property mentioned in the bill to the Age-Herald Company in good faith to pay the stock subscription of the Herald Company in the capital stock of the Age-Herald Company, and that their act in so doing was merely an ultra vires act, and the bill fails to show that such act was done either with an actual or constructive intent to defraud the creditors of the Herald Company, and the bill, as amended, fails to show that the individual defendants converted any of the assets of the Herald Company which were subject to the payment of its debts to their own use, or in any way transferred them in fraud of creditors. (6) The bill, as amended, fails to show that the individual defendants disposed of any of the assets of the Herald Company which were subject to the payment of its debts in fraud of creditors. (7) The bill, as amended, fails to show that the individual defendants are personally responsible to complainant for the value of the assets alleged in the bill to have been transferred in payment of the stock subscriptions for the capital stock of the Age-Herald Company. (8) The acts of the individual respondents which are relied on as a conversion are alleged to have been done by them as agents of the Herald Company, under authority of a resolution of the stockholders of the Herald Company, and cannot be attacked by the creditors of the Herald Company, unless shown to have been done for the purpose of hindering and delaying or defrauding the creditors of the Herald Company, and no such averment is made in the bill. (9) The complainant, as a creditor of the Herald Company, has no standing in equity to attack the acts of respondents as agents, trustees, directors, or officers of the Herald Company, and to hold said respondents personally responsible therefor, unless on averment that said acts were done for the purpose of hindering, delaying, or defrauding the complainants and other creditors. (10) The bill, as amended, fails to show that respondents committed any act which was in fraud of the rights of creditors, or that the respondents have in their possession or under their control, or have fraudulently converted, any assets of the Herald Company, which were subject to the payment of complainant's debt.

On the submission of the cause on the demurrers, the chancellor rendered a decree sustaining the grounds of demurrer as above set forth.

James E. Webb, for appellant.

W. I. Grubb, for appellees.

DOWDELL J.

This appeal is taken from the decree of the chancellor sustaining the demurrer of...