Great Western Const. Co. v. N. C. Ribble Co.

Citation427 P.2d 246,1967 NMSC 85,77 N.M. 725
Decision Date24 April 1967
Docket NumberNo. 7892,7892
PartiesGREAT WESTERN CONSTRUCTION COMPANY, a corporation, Plaintiff- Appellant, v. N. C. RIBBLE COMPANY, Defendant-Appellee.
CourtSupreme Court of New Mexico
Waldo Spiess, Santa Fe, James Sidwell, William R. Hendley, Albuquerque, for appellant
OPINION

CHAVEZ, Chief Justice.

This is an appeal from a summary judgment in favor of defendant-appellee, N. C. Ribble Company. The complaint alleged a breach of warranty contained in a lease agreement, wherein appellee leased a crushing and screening plant to appellant with an option to purchase said crushing plant.

The record shows that Great Western Construction Company was incorporated under the laws of New Mexico on June 1, 1956. The original incorporators, first directors and officers were W. M. Purdon, president; W. H. Garrett, vice-president; and J. B. Womack, secretary-treasurer. During its corporate life, one William C. Morgan was the only person authorized to conduct all of the business of the corporation. Purdon was and still is considered a director and president of the corporation, but Morgan often signed papers as president. Meetings of the board of directors appeared to have been held only twice, the first in 1956 and the second in 1957. None of the directors participated actively in the business except to advise Morgan. The situation is further confused by the fact that records of the corporation were stolen from the Grants office in September 1958. The last business conducted by the corporation was in 1959. In its brief, appellant alleges that, prior to the filing of this suit, the corporation ceased to have corporate existence without being formally dissolved by its directors.

With respect to William C. Morgan, the record is not clear as to whether he has ever held any stock in his own name or been elected to any office. He testified that he is general manager, president by proxy, and 'last serving' director of the corporation. He supports this contention by two rather broadly written powers of attorney from Purdon, the majority stockholder, and statements, written and oral, that he was appointed a director by the majority stockholder.

In August 1960, Morgan filed a petition in bankruptcy, which stated in Debtor's Petition No. 3110: 'WILLIAM CUSTER MORGAN, jr. dba . . . GREAT WESTERN CONSTRUCTION COMPANY.' In the statement of debts of the bankrupt, there were listed as a part of the total debts $26,656.52 as 'also jointly incurred by Great Western Construction Company, Inc.' Morgan was given a discharge in bankruptcy in Cause No. 3110 in February, 1961.

The decision to file this suit was apparently made by William C. Morgan and filed by him on behalf of plaintiff-appellant on December 27, 1963. Morgan discussed this decision only with Purdon and Purdon verbally gave his approval. Morgan did not obtain approval from anyone else to file this suit.

Appellee argues that, since Morgan was not a stockholder, he could not have been a director of the corporation with the right to file this suit, relying on § 51--2--14, N.M.S.A., 1953 Comp., which states in part:

'The business of every corporation shall be managed by its directors (who shall respectively be stockholders therein unless otherwise provided in its charter), * * *.'

This section conflicts with § 51--6--1, N.M.S.A., 1953 Comp., which states in part:

'* * * Unless otherwise provided in the certificate or articles of incorporation, or an amendment thereof, it shall not be necessary for directors to be stockholders. * * *'

These two sentences were incorporated into §§ 51--2--14 and 51--6--1, supra, by an amendment on March 14, 1927, Laws 1927, Ch. 112, which amended Laws 1905, Ch. 79, §§ 11 and 50; Code 1915, §§ 895 and 935. The sentence contained in § 51--2--14, supra, is in § 5 and the one found in § 51--6--1, supra, is in § 8 of the 1927 amendment. In Nye v. Board of Com'rs of Eddy County, 36 N.M. 169, 9 P.2d 1023, this court held that, if two provisions of the same statute are irreconcilable, the provision last placed will be deemed to repeal the other. The sentence quoted from § 51--6--1, supra, is the provision last placed and is controlling.

Appellee also argues that the right to file this suit belongs to the trustee in bankruptcy, as cause No. 3110 placed not only Morgan in bankruptcy but also Great Western Construction Company. Appellee contends that Debtor's Petition No. 3110 was a petition of Morgan and Great Western Construction Company, because the petition was styled 'WILLIAM CUSTER MORGAN jr. dba . . ., GREAT WESTERN CONSTRUCTION COMPANY' and because debts jointly owed were listed in the petition.

Appellant contends that the listing of debts jointly owed by appellant corporation and Morgan was to excuse Morgan's obligation on those debts and concludes that, as Morgan did not own any shares in said corporation and appellant was not in bankruptcy, the trustee in bankruptcy acquired no right or interest in appellant. We agree with appellant.

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