Gelwicks v. Homan
| Decision Date | 30 June 1942 |
| Docket Number | 9221. |
| Citation | 20 S.E.2d 666,124 W.Va. 572 |
| Parties | GELWICKS v. HOMAN et al. |
| Court | West Virginia Supreme Court |
Rehearing Denied Sept. 7, 1942.
Syllabus by the Court.
R. A. Welch, of Keyser, for appellant.
Emory Tyler, Lester Reynolds, and Joseph E. Hodgson, all of Keyser for appellees.
FOX President.
Pauline Gelwicks, executrix of the estate of John D. Gelwicks deceased, complains of a decree of the Circuit Court of Mineral County entered on the 18th day of November, 1940 dismissing her bill in a suit in which she was plaintiff and H. C. Homan and others were defendants, and prosecutes this appeal therefrom.
In the year 1921, the First National Bank of Keyser, a national banking association, conceived the idea of increasing its capital stock from $60,000 to $80,000. The board of directors of said bank, elected at an annual meeting of the stockholders held on January 25, 1921, consisted of H. C. Homan, F. M. Reynolds, J. E. Patchett, H. G. Wilson, W. H. Markwood, George T. Carskadon, J. D. Gelwicks and R. M. Dean. On June 3rd of that year, a resolution was adopted by the directors in the words following:
At a meeting of the stockholders held on June 18, 1921, the following resolution was adopted:
On the same date, the directors entered upon the minutes of their meeting the following: "It was a sentiment of the Board that the new stock be sold around to new people in small lots, the same to be passed on by the Board."
J. E. Patchett was not present at the directors' meetings, and there is nothing to indicate whether or not he was present at the stockholders' meeting of June 18th. Subsequent to these meetings, one hundred and forty shares of the stock issue authorized, were sold to various parties, leaving sixty shares unsold. On November 4, 1941, the following minute was made by the directors with respect to said shares: "It was agreed among the Directors to take up the stock remaining unsold, same to be distributed later to new stockholders."
At this meeting, all of the directors were present except J. E. Patchett and R. M. Dean. On December 2nd, following, the minutes of the meeting of November 4th were approved by the board of directors, all directors, except J. E. Patchett, being present, and at this meeting, the following was entered upon the record: "It was agreed that Mr. Gelwicks was to take up the unsold Bank stock and the other Directors were to sign an agreement assuming their pro rata share of any liability until the stock was placed in other hands."
We have, therefore, record proof that on November 4th, it was agreed among the directors present that the unsold stock should be taken up by the directors, and that this plan was changed to the one decided upon at the subsequent meeting of December 2nd, by which, instead of all the directors taking up the stock, it was agreed that Gelwicks should do so, and that the other directors were to enter into a written agreement assuming their pro rata share of any liability which might be created thereby. Both actions were taken under an agreement and understanding that the stock so taken up was to be later sold to new stockholders. The contemplated written agreement was never executed.
Following these meetings, Gelwicks executed to the First National Bank of Keyser his note for $9,600, and the proceeds of the same were used to pay for the sixty shares of stock which he had undertaken to purchase under the resolution of December 2, 1921, and that sum became a part of the assets of the bank, and it issued to Gelwicks a certificate for said shares. It appears that possession of the certificate was retained by the bank, and that from time to time sales of stock were made, and in the aggregate twenty-five shares were sold, and the proceeds of such sales, with the exception of $100, were entered as a credit on the Gelwicks note of $9,600. Semi-annual dividends of 5% were declared on all outstanding stock, including that owned by Gelwicks, but as to the sixty shares owned by Gelwicks, those dividends were retained by the bank in lieu of interest on the Gelwicks note. These dividends were regularly paid until January, 1931. The bank closed on March 4, 1933, and was never reopened, and later a receiver was appointed therefor. At the time of the closing of the bank, the Gelwicks note had been reduced to $6,100. There is evidence indicating that $1,000 of this amount represented a new loan, which in nowise entered into the sale and purchase of the stock in question. Gelwicks was then the owner of thirty-five shares of the original block of sixty shares which he had purchased as aforesaid. After the closing of the bank, and in an effort to reopen the same, Gelwicks was induced to execute a deed of trust on real estate to secure the payment of the balance due on his note, and Emory Tyler was named trustee therein. After the closing of the bank and the execution of this deed of trust, Gelwicks was called upon to pay his note, and a sale of his property under the deed of trust was threatened; whereupon, Gelwicks instituted a suit in equity in the Circuit Court of Mineral County to enjoin the collection of said note or the sale of his property under the deed of trust, upon the general ground that in the purchase of this stock, for which the original note was executed, he was, in effect, acting as the agent of the First National Bank of Keyser, and that he was not personally liable on the note. The relief prayed for in this suit was denied, and, Gelwicks having died in the meantime, his executrix paid, not only the amount of said note, with interest, and costs of suit, but, in addition, a 100% assessment on the thirty-five shares of stock, the aggregate of the payments made by her on account of the note, stock assessment and costs being $12,829.71. The suit at bar was instituted to enforce contribution against the directors of the First National Bank of Keyser in office on the second day of December, 1921, who are now living, and against the personal representatives of those now deceased. A general demurrer to the bill on the part of all the defendants was overruled, but upon motion of J. E. Patchett, he was dismissed from the suit on the ground that the bill did not show on its face that he had participated in any of the meetings, out of which, it is alleged, the liability of the other directors was created. It appears from the record that R. M. Dean, one of the directors, died many years ago, leaving no estate. It also appears that H. G. Wilson died, and that his estate has been fully settled, and had been distributed many years prior to the institution of this suit. It also appears that the estate of F. M. Reynolds has been fully administered, and that said estate was insufficient to pay the liens and charges against the same, and that no assets passed therefrom to his heirs.
The suit is prosecuted on the theory that there was a joint adventure entered into between Gelwicks and other members of the board of directors of the First National Bank of Keyser, by which the unsold shares of stock in said bank were to be subscribed and paid for by Gelwicks, and that any losses resulting therefrom should be shared pro rata by all of the directors.
Three outstanding questions are presented: (1) Was there such joint adventure; (2) if so, was it in violation of federal statutes and of such a nature as to prevent any character of relief to any of the participants; and (3) does the action of Gelwicks in the suit instituted by him, undertaking to absolve himself from liability on account of this transaction, estop him and his estate from recovery in this case?
The first question calls for some discussion of what constitutes a joint adventure. We cannot do better than quote from 30 Am.Jur. 677, which states that courts have not laid down any very certain or satisfactory definition of a joint adventure, but gives the following as some of the definitions thereof:
Joint adventure is akin to partnership, and one of the distinctions is that, whereas a partnership relates to a general business of a certain type, joint adventure relates to a single business transaction. Kaufman v. Catzen, 100 W.Va 79, 130 S.E. 292; Horne v. Holley, 167 Va. 234, 188 S.E. 169; Dexter & Carpenter v. Houston, 4 Cir., 20 F.2d 647. When set up, a fiduciary relationship is established among the interested parties, and the same rights and duties are created and imposed as if a technical partnership existed. Independent of any...
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