Hewett v. Continental Supply Co. of Huntsville, Inc.

• Decision Date: 02 March 1961
• Docket Number: 8 Div. 950
• Citation: 127 So.2d 834,271 Ala. 660
• Parties: Evelyn H. HEWETT v. CONTINENTAL SUPPLY OF HUNTSVILLE, INC.
• Court: Alabama Supreme Court

Page 834

127 So.2d 834

271 Ala. 660

Evelyn H. HEWETT v. CONTINENTAL SUPPLY OF HUNTSVILLE, INC.

8 Div. 950.

Supreme Court of Alabama.

March 2, 1961.

Smith & Moore, Guntersville, for appellant.

Butler & Scott, Huntsville, for appellee.

COLEMAN, Justice.

This is an appeal by respondent from a final decree for complainant in a suit to establish a trust in two tracts of land. It is stipulated that the title is of record in the name of the respondent. The complainant is a corporation, the respondent a natural person. The circuit court heard evidence ore tenus and rendered a decree which divested respondent of title and vested it in the corporation.

The salient facts are that in November, 1954, Jerome Hughey and Elmo Hewett started a building supply and home construction business. The business was incorporated April 17, 1956, as Continental Supply of Huntsville, Inc., a corporation. That corporation is the complainant.

Two hundred shares of stock were issued as follows: to Hughey 99 shares and to his wife 1 share, to Hewett 99 shares and to his wife 1 share. Mrs. Hewett is the respondent. Hewett was president, Hughey vice-president, Mrs. Hughey secretary, and Mrs. Hewett treasurer, respectively, of the corporation. Hewett was the 'acting Manager' and operated the business of the corporation. Hughey, the vice-president, was engaged in another business in the same building. He had no specific duties as vice-president but occasionally discussed the policies and operation of the corporation with Hewett. Respondent did not participate in the business of the corporation. Whether Mrs. Hughey participated or not does not appear.

The record does not precisely show the dates here involved, but we set out the dates as they appear to be shown, at least approximately, by the record. The corporation delivered to one Duncan certain building materials, worth approximately $2,000, on the agreement that Duncan would 'swap' the lots, which are referred to as Tract One, or the Duncan lots, in exchange for the materials. In April, 1956, on the instructions of Hewett, which Hughey expressly approved, Duncan conveyed Tract One to respondent.

On March 10, 1956, Hewett borrowed $1,500 without interest from the Citizens Bank of Oneonta. Respondent's uncle was president of that bank and the transaction was conducted through him. To secure this loan, respondent and her husband executed to the bank a mortgage on their home in Arab. At some time between April and August, 1956, the money thus borrowed was used to buy a tract of land from one Franklin. Title was taken in the name of the respondent. The dimensions of the Franklin tract were 150 by 200 feet. It was divided into two lots, the larger being 100 feet by 200 feet. The larger lot was sold for $1,600 and was conveyed to the purchaser by deed executed by respondent and her husband. There is mention of a house being on the lot, but we understand the $1,600 was paid for the lot. It is difficult to believe that a house and lot sold for $1,600 in 1956. The $1,600 was paid to the corporation. The corporation paid off the $1,500 mortgage to the Citizens Bank of Oneonta and kept the other $100. Payment to the Oneonta bank was made by a check drawn on a Huntsville bank and dated August 7, 1956. Apparently the check was not presented for payment immediately because the mortgage debt was paid November 10, 1956, according to testimony of the president of the Oneonta bank. The remaining lot, 50 by 200 feet, is referred to as Tract Two.

Frank J. Sida testified that he was president of the complainant corporation at the time of the trial; that he first became interested in purchasing stock 'from' the corporation the first of August, 1956; that he contracted to purchase the stock on August 13, 1956; and that he obtained the stock probably April 18, 1957. The stock referred to above appears to be the 100 shares originally owned by Hughey and his wife.

Sida had formerly lived in Chattanooga where he operated or owned a company which sold material to the complainant on open account. On August 13, 1956, he delivered a truckload of merchandise to complainant. On that date he entered into employment by the complainant as store manager and was 'in charge of making purchases.' Hewett and Hughey gave Sida authority 'to make all the purchases,' and he made purchases from his own company and also from others. By November, complainant had purchased from Sida's company 'close to $30,000.00' and had paid something on account. On November 1, 1956, the unpaid debt was $18,000, and some time in December Sida 'cut them off' from further extension of credit.

January 7 or 8, presumably 1957, Sida discussed with Hewett the proposition of buying his interest 'in the business.' Hughey and one Pipes were present. 'It was agreed to sell out to' Sida 'for $4,000.00 for his (Hewett's?) part for all of it, his interest, and the contract was drawn up to that effect,' but the contract was never signed by Hewett. At the time Sida 'consum(m)ated the contracts to purchase the stock from Mrs. Hewett and Mr. Hughey' the financial condition of the corporation was critical, 'It owed more than it was worth. Still does.'

Sida testified that at the time of negotiations with respondent 'for the purchase of stock and also the purchase of her land,' he did not recognize that it was her land, and it was stated that he, Sida would pay for the stock and 'file suit in behalf of the company for the lots.'

Sida testified that when he first entered into 'the contract' (we understand it was the contract to purchase the corporate stock), Sida, Hewett, and Hughey 'Went through the real estate.' Hewett and Hughey showed Sida the lots in suit and represented to him that the lots were 'Part of the interest I would be buying.' Sida also testified:

'Q. You went out on this particular property described as Tract One and Two? A. Yes, sir.

'Q. Tract One is the Duncan property which Mr. Duncan who testified this morning was known as the Duncan property and Tract Two is known as the Franklin property, came from Mr. Franklin who just testified? A. They told me how they bought it and explained to me how they bought it and paid for it.'

Sida testified also that he was present at the time the check to the Oneonta bank, dated August 7, 1956, was issued and that he remembered the discussion.

Sida testified that 'up to the Saturday that the contract was closed over at Guntersville,' respondent was willing 'to deed the property over at the closing and the payment of the contract.' Hughey testified that respondent, after the death of her husband told him, Hughey, 'that she knew that the lots belonged to Continental Supply and she anticipated or planned deeding the lots back to the company.'

Hewett died February 1, 1957. On March 9, 1957, Sida, after some weeks of negotiation, entered into a contract with the respondent to purchase her stock, including her late husband's also, we think, so as to be 100 shares or one-half of all the issued stock of the complainant. Apparently that agreement was executed before this suit was begun and Sida, when the instant bill was filed, owned all the stock of the complainant corporation. With respect to the occasion when the contract to purchase the Hewett stock was finally entered into, the transcript shows the following on cross-examination of Sida, to wit:

'Q. Mr. Sida, when was it that you agreed and entered into a contract with Mrs. Hewett for the purchase of her stock in the Continental Supply? A. When did I enter into it or when did I contract?

'Q. When did you enter into the contract. Not when you negotiated. I understood you negotiated along for a number of weeks. When did you actually embody your agreements into a written contract? A. I believe it was the 9th day of April.

'Q. Where was that done? A. Ninth day of March--I beg your pardon.

'Q. In what year? A. Nineteen fifty-seven.

'Q. Where did you enter into that contract? A. Guntersville.

'Q. In my office? A. Right.

'Q. Now, this time you testified about that you had a conversation with Mrs. Hewett when she said that when she sold you the stock they would also convey the lots, you were negotiating with her then, weren't you? A. Uh-huh.

'Q. You were negotiating with her for the purchase of the stock and the purchase of the lots? A. Right.

'Q. All right, sir, then when you came down to Guntersville and we entered into the contract for the sale of the stock, did the contract embody also the sale of the real estate? A. No.

'Q. In other words, the negotiations did not go through as you hoped they would and you finally negotiated to buy just the stock for $4,000.00 and not the stock and lots, is that right? A. It wasn't any mention in the contract of those particular items.

'Q. It wasn't mentioned in the contract but there was a heap of talk about it, wasn't it? A. Yeah.

'Q. And you finally agreed to buy just the stock for $4,000.00 and not to mention the lots? A. I made the remark that we would go ahead with what we were doing on the rest of it to get the contract negotiated and that we would take care of the lot situation in the future.

'Q. Alright, sir, you--A. Didn't you make an offer at that time that for $1,000.00 she would deed the lots over right at that time, did you not?

'Q. Well, of course, Mr. Sida, you understand that I am not answering the questions. I am asking them. A. I am telling you what the conversation was.

'Q. Are you telling us that we offered we would take $1,000.00 for the lots? A. Yes.

'Q. At the time we entered into the contract for the purchase of stock in the corporation for $4,000.00 we also agreed we would take $1,000.00 for the lots, is that right? A. That you would include the lots, deed them back to Continental Supply.

'Q. Deed them to you for $1,000.00? A. Correct.'

On March 12, 1957, the bill of complaint in the instant suit was filed.

Tract One.

Appellant concedes that the consideration for the conveyance of Tract One...