Ganntt v. Arkansas Power & Light Co., 4-3502.

• Decision Date: 25 June 1934
• Docket Number: No. 4-3502.,4-3502.
• Citation: 74 S.W.2d 232
• Parties: GANNTT et al. v. ARKANSAS POWER & LIGHT CO. et al.
• Court: Arkansas Supreme Court

Page 232

74 S.W.2d 232

GANNTT et al. v. ARKANSAS POWER & LIGHT CO. et al.

No. 4-3502.

Supreme Court of Arkansas.

June 25, 1934.

Rehearing Denied September 24, 1934.

Appeal from Chancery Court; Geo. M. Le Croy, Chancellor.

Action by C. J. Ganntt and others against the Arkansas Power & Light Company and others. From a decree sustaining a demurrer to the complaint, plaintiffs appeal.

Reversed and remanded, with directions.

Marsh & Marsh, of El Dorado, for appellants.

C. W. McKay and W. H. Kitchens, Jr., both of Magnolia, and House, Moses & Holmes, of Little Rock, for appellees.

JOHNSON, Chief Justice.

Bringing into question the correctness of the Columbia county chancery court's findings and decree sustaining a demurrer interposed by appellees to appellants' complaint, this appeal is prosecuted. In effect, the complaint alleged: That appellants are citizens, taxpayers, and property owners within the boundaries of waterworks improvement district 1 situated within the corporate limits of Magnolia, Ark.; that in the year 1923 appellee waterworks improvement district 1 of Magnolia was duly organized and established, and that J. O. Hutchinson, H. P. Carrington, and D. D. Goode are now, and have ever been since the organization of said district, the duly constituted board of commissioners thereof; that on May 12, 1924, the board of commissioners of said waterworks district 1 of Magnolia made and entered into an invalid contract with the Consumers' Ice & Light Company, a domestic corporation, by the terms of which contract the waterworks improvement district 1 of Magnolia surrendered to the Consumers' Ice & Light Company the right and privilege to furnish consumers located in said district water and make and collect charges therefor, and in consideration of which the Consumers' Ice & Light Company agreed to pay 10 per cent. of its earnings therefrom upon certain conditions and contingencies then and there agreed upon; that the contract between the water works improvement district 1 and the Consumers' Ice & Light Company was invalid and void because all members of the board of commissioners of said waterworks district 1 were at the time of the execution of said contract, and are now, stockholders in the Consumers' Ice & Light Company; that said board of commissioners and each member thereof were therefore directly and indirectly interested in said contract. Appellants further alleged that in 1925 the city council of Magnolia was composed of J. W. Calquette, H. B. Couch, T. P. Lewis, C. J. Ganntt, J. B. Lee, E. C. Lyle, and T. H. Westbrook, mayor; that on ____ day of July, 1925, said city council, composed of the members aforesaid, by ordinance approved and ratified the contract theretofore executed between the board of commissioners of waterworks improvement district 1 of Magnolia and the Consumers' Ice & Light Company, but that said ratification and approval was invalid and void because, at the time of the passage of said ordinance ratifying and approving said contract, all members of said city council of Magnolia, save one member, were stockholders in the Consumers' Ice & Light Company, and were therefore directly and indirectly interested in said contract; that, after the ratification of said invalid and void contract by said city council of Magnolia, the Consumers' Ice & Light Company, transferred and assigned to appellee Arkansas Power & Light Company all its interest therein, and since said date the Arkansas Power & Light Company has unlawfully charged and collected rentals and charges against the consumers in said waterworks improvement district 1 of Magnolia and converted same to its own use and benefit; that the rentals made and charged by the Arkansas Power & Light Company and the Consumers' Ice & Light Company, during the periods of their respective operations were exorbitant, unreasonable, unlawful, and without right or authority; that the board of commissioners of waterworks improvement district 1 of Magnolia, although requested so to do, have refused to institute, prosecute, or maintain a suit for the collection of said unlawful rentals and charges against appellees, and have refused to endeavor to collect said rentals and charges for the benefit of said waterworks improvement district 1 of Magnolia.

It is the established doctrine in this jurisdiction that a demurrer to a complaint admits the truth of its allegations. Greer v. Strozier, 90 Ark. 158, 118 S. W. 400; Adams v. Primmer, 102 Ark. 380, 144 S. W. 522; Keopple v. McIntosh v. National Wagonstock Co., 104 Ark. 466, 149 S. W. 75; Hamiter v. State Nat. Bank of Texarkana, 106 Ark. 157, 153 S. W. 94.

It appears therefore, for the purposes of this determination, that the contract between waterworks improvement district 1 of Magnolia and the Consumers' Ice & Light Company was executed and consummated by a board of commissioners acting for waterworks improvement district 1, who were stockholders at the time in the Consumers' Ice & Light Company.

On the question of the validity of the contract between waterworks improvement district 1 and the Consumers' Ice & Light Company in its inception but little need be said. Section 5711, Crawford & Moses' Digest, provides: "It shall be unlawful for any board of improvement, or any member thereof, in any city or town in this State, to be interested either directly or indirectly in any contract made by the board for or on behalf of any improvement district."

Therefore, when it is admitted that the members of the board of commissioners of said waterworks district 1 were stockholders in the Consumers' Ice & Light Company at the time said contract was executed and consummated, it follows as a matter of law that each of them was directly interested in said contract which is inhibited by the plain provisions of the statute just quoted. Just how or why a stockholder in a corporation should not be considered as interested in the business and affairs of such corporation is...