Hudson v. Belzoni Equipment Co., 37780

• Citation: 51 So.2d 223,211 Miss. 178
• Decision Date: 19 March 1951
• Docket Number: No. 37780,37780
• Parties: HUDSON v. BELZONI EQUIPMENT CO.
• Court: United States State Supreme Court of Mississippi

Page 223

51 So.2d 223

211 Miss. 178

HUDSON v. BELZONI EQUIPMENT CO.

No. 37780.

Supreme Court of Mississippi, Division A.

March 19, 1951.

Suggestion of Error Overruled May 7, 1951.

See 52 So.2d 294.

Green, Green & Cheney, Jackson, for appellant.

Montgomery & Varando, Belzoni, for appellees.

ARRINGTON, Commissioner.

Appellant, W. C. Hudson, a minority stockholder, filed a bill of complaint against the Belzoni Equipment Company, a Mississippi, corporation, and C. R. Gholson, C. L. Hooker, B. S. Reed, J. F. Slaughter, John C. Halbrook, H. L. Martin, Bert N. Reagan and E. G. Reagan, being all of the stockholders in the corporation, in the Chancery Court of Humphreys County, asking for the appointment of a receiver to liquidate and dissolve the corporation. From a decree dismissing the bill of complaint, appellant appealed.

The record herein shows that the Belzoni Equipment Company was organized by the appellant, W. C. Hudson, and, at the time of its incorporation in 1940, had an authorized capital of $20,000.00, being 400 shares of the par value of $50.00 each, and the original capital stock paid in at the time of the organization was $6,800.00; that in 1946, in addition to a cash dividend of 5%, a stock dividend of 200% was declared. When the bill was filed there were 462 shares. Appellant Hudson owned 93 shares and the directors, B. S. Reed, C. R. Gholson, J. F. Slaughter, John C. Halbrook, and C. L. Hooker, owned 327 shares. In April, 1948, by amendments to its charter, the authorized capital stock was increased to $40,000.00.

According to exhibits filed, the company, at the end of 1940, had assets of $14,181.91 and earnings of $792.86. The record shows that the appellant was the manager of said corporation from its organization until the early part of 1942. The record shows that, when the appellant left the company, he pledged his stock with a bank for a loan. It was later acquired by the corporation and he had to resort to the courts to regain his stock. That case was decided February 9, 1948. Hudson v. Belzoni Equipment Company et al., 203 Miss. 212, 213, 33 So.2d 796. That suit was for redemption of corporate stock and for an accounting. The appellant admitted that an accounting was had with the company and that his 93 shares of stock was issued to him in May, 1948.

As grounds for the appointment of a receiver and dissolution of the corporation, appellant charged that John C. Halbrook, a stockholder and director in the corporation, owned the building occupied by the company and received rent therefrom; that since the culmination of the former lawsuit, when complainant was awarded his 93 shares of stock (issued to him in May, 1948), there had been no dividends paid on his stock; that the fees of the directors were increased from $150.00 to $400.00 per year; that stockholders were allowed a discount upon all equipment; that C. L. Hooker, a director, was manager and received a salary, together with a bonus of 15% on the net profits; that the appellant, since the issuance of his stock, had been given no notice of any stockholders' meeting; that the management of the corporation, since the issuance of his stock, had sought and was seeking to deprive him of his rights and his capital was improperly and unlawfully frozen and, through their actions, set out to cause a gradual dissipation of the assets of said corporation so as to lead to eventual insolvency without loss to any of said shareholders except complainant; 'that the acts of said directors in diverting the revenues and profits of said corporation and in distributing said assets, revenues, and profits of said corporation in such fashion so as to deprive this complainant of that to which he is lawfully and legally entitled have been wilfully, intentionally, improperly and unlawfully done and thereby have worked a legal fraud upon this complainant so as to cause said directors to each and every one be individually liable to this complainant for that so done and so distributed, whereasto there should be between this complainant and these directors, defendants, an accounting had.'

The prayer of the bill is as follows: '* * * that this court order a liquidation of the Belzoni Equipment Company and that your petitioner, W. C. Hudson, be appointed receiver of said corporation by this court, for the purpose of liquidating and dissolving said corporation, so as to equally preserve the rights of all the stockholders therein, and for such other and further relief as the court may think proper and necessary in the premises.'

Appellees answered and admitted that the corporation rented a building from Halbrook, one of the directors; that no dividends had been paid since 1946; that directors' compensation had been increased; that a discount was allowed to stockholders of the corporation purchasing equipment; that the manager received a salary together with a commission of 15% on the net profits, and that no notice was given to appellant of stockholders' meetings because the time for said meetings was permanently fixed in the by-laws of the corporation. They denied that they were seeking to divert or had diverted any profits or revenues from the corporation or that they were in any way trying to defeat or deprive appellant of his rights and his stock; denied that the corporation was being managed so as to lead to eventual insolvency, and denied that anything had been wilfully, intentionally, improperly or unlawfully done which amounted to a legal fraud upon the appellant, which would cause the directors to sustain any liability to the complainant, and denied that a receiver should be appointed to liquidate and dissolve the corporation.

The bill of complaint was filed on October 6, 1949, and according to the exhibits filed and the evidence herein, the corporation is not insolvent. Its earnings have steadily grown for the nine year period of its operation. At the end of business in 1948, the assets were $79,975.40, surplus, $25,073.78, capital...