Jackson v. Hubbard, 5 Div. 490

• Decision Date: 15 March 1951
• Docket Number: 5 Div. 490
• Citation: 53 So.2d 723,256 Ala. 114
• Parties: JACKSON et al. v. HUBBARD et al.
• Court: Alabama Supreme Court

Page 723

53 So.2d 723

256 Ala. 114

JACKSON et al. v. HUBBARD et al.

5 Div. 490.

Supreme Court of Alabama.

March 15, 1951.

Rehearing Granted June 30, 1951.

Lawrence K. Andrews, Union Springs, and Walker & Walker, Opelika, for appellants.

A. A. Carmichael, Atty. Gen., amicus curiae.

Borden Burr, Frontis H. Moore and Benners, Burr, Stokely & McKamy, Birmingham, and L. J. Tyner, Opelika, for appellees.

LAWSON, Justice.

On December 16, 1947, the Water Works Board of the City of Auburn was incorporated in accordance with the provisions of §§ 394-402, Title 37, Code 1940, as amended. It will hereafter be referred to as the corporation.

Several weeks thereafter on, to wit, January 6, 1948, the governing body of the city of Auburn, its mayor and council, acting under the provisions of § 397, Title 37, Code 1940, as amended, appointed H. R. Hubbard, Charles S. Rush, and B. Conn Anderson as members of the board of directors of the corporation. Section 397, Title 37, Code 1940, as amended, reads as follows: 'Each corporation formed under this article shall have a board of directors which shall constitute the governing body of the corporation, which board shall consist of three members who shall serve without compensation, except they shall be reimbursed for actual expenses incurred in and about the performance of their duties hereunder, and, at the discretion of the board of directors, they may be paid a director's fee of $10.00 for each directors' meeting attended by them not exceeding one meeting during each calendar month. No member of the board of directors shall be an officer of the municipality. The directors of the corporation shall be elected by the governing body of the municipality, and they shall be so elected that they shall hold office for staggered terms. The first term of office of one director shall be two years, of another director shall be four years, and of the third director shall be six years, as shall be designated at the time of their election, and thereafter the term of office of each director shall be six years. Provided, that with respect to corporations heretofore organized under this article their directors shall continue to hold office for the terms for which they were elected and at the expiration of such terms their successors shall be elected for staggered terms in accordance with the provisions of this section.'

Hubbard was appointed for a six-year term, Rush for a four-year term, and Anderson for a two-year term. After their appointment, they immediately entered upon the performance of their duties as the governing body of the corporation.

Upon the formation of the corporation, the city of Auburn conveyed its water works system to the corporation.

On February 1, 1948, the corporation, acting through its governing body, its board of directors, executed a bond issue in the amount of $600,000 with the Birmingham Trust National Bank of Birmingham as trustee. The loan is secured by a mortgage on the water works system and is payable solely from the revenues of the corporation. The mortgage debt is payable serially and will not be completely paid until February 1, 1978.

On May 4, 1948, an election was held in the city of Auburn under the provisions of Article 1, Chapter 4, Title 37, Code 1940, to determine whether the form of government of the city should be changed from the aldermanic form to the commission form or plan. The change in the form of government was approved by the electorate.

As of July 20, 1948, G. H. Wright, T. A. Sims, and W. H. Ham were elected as city commissioners. They qualified and have continued to serve in that capacity.

Thereafter, on January 3, 1950, the city commissioners above named, acting as the governing body of the city of Auburn, adopted a resolution purporting to remove Hubbard, Rush, and Anderson as members of the board of directors of the corporation and to appoint as members of the board of directors R. C. Jackson for a six-year term, Herbert Benson for a four-year term, and J. B. Hitchcock for a two-year term.

After such action was taken by the city commission of the city of Auburn, Hubbard, Rush and Anderson instituted this proceeding in the circuit court of Lee County, in equity, against Jackson, Benson and Hitchcock.

The complainants allege in their bill that the action of the city commission of the city of Auburn, taken on January 3, 1950, purporting to remove complainants from the board of directors of the corporation and to appoint the respondents as their successors, was illegal, without authority of law, and is a mere nullity. It is alleged in the bill that complainants are the only legal members of the board of directors of the corporation and that since their appointment on January 6, 1948, they have continued to discharge the duties and obligations imposed upon them by law. But it is averred that respondents are vexing, harassing and interfering with complainants in the exercise of their duties as members of the board of directors of the corporation; that because of the dispute which exists between complainants and respondents, the corporation is faced with irreparable damage unless prompt declaration by judgment is made as to whether complainants or respondents constitute and are the legal members of the corporation and unless, in the meantime, there is issued against respondents and each of them a temporary injunction enjoining them, their agents and representatives, from in any way interfering with the administration of the affairs of the corporation by complainants and authorizing and directing complainants to continue in the customary administration of such affairs pending the rendition of the declaratory judgment prayed for.

The prayer of the bill was in substance that the court render a declaratory judgment, declaring that complainants and not respondents are the lawful and rightful members of the board of directors of the corporation and that complainants are entitled to continue as such during the time for which they were appointed. The bill also prays that pending the declaratory judgment that a temporary injunction be issued enjoining respondents from in any way interfering with the exercise by complainants of the control and management of the corporation and that, upon final hearing, the temporary injunction be made permanent.

Upon the filing of the bill, the court set a time for hearing the application for injunction. Counsel for respondents, being present at the time such order was entered, waived formal notice and consented that the hearing be held at the time fixed.

On the day set for the hearing, the respondents filed their sworn answer and incorporated therein their demurrer to the bill of complaint. It is settled that demurrer to a bill of complaint may be incorporated in the answer at any time before final decree. Eisenberg v. Stein, 222 Ala. 576, 133 So. 281; Baggett Mercantile Co. v. Vickery, 213 Ala. 427, 105 So. 207; Wells v. Wells, 252 Ala. 390, 41 So.2d 564.

The answer of the respondents admitted the averments of the bill of complaint except as hereafter pointed out. The answer averred: 'The respondents aver that by reason of said change in the form of municipal government of the City of Auburn, which change was effected under Article 1 of Chapter 4 of Title 37 of the Code of Alabama, 1940, the theretofore existing Board of Directors of The Water Works Board of the City of Auburn, consisting of the complainants was abolished. If the complainants continued to serve as said directors, they served merely as a de facto board until their successors were appointed by the City Commissioners. The respondents admit that on January 3, 1950, the City Commission of the City of Auburn adopted a resolution purporting to remove the complainants as members of the Board of Directors of The Water Works Board of the City of Auburn (they having in fact been removed by operation of law as above stated) and appointing your respondents as members of such Board of Directors but they deny that the action of said Commission was illegal, without authority of law and a mere nullity, but, to the contrary, aver that the action of said City Commission was lawful and legal in all respects and was certainly lawful and legal in respect to the appointment of your respondents as members of said board and that as a result of such action on the part of the City Commission, respondents constitute the duly appointed and lawful members of the Board of Directors of The Water Works Board of the City of Auburn; and respondents deny that the complainants or any of the complainants are members of said Board of Directors.'

Respondents denied that they were vexing, harassing and interfering with complainants in the exercise of their duties and aver in effect that complainants, since the date of the appointment of respondents, have had no duties to perform in connection with the corporation and that the duties imposed by law upon the Board of Directors of the corporation have been performed by respondents since the date of their appointment.

The cause was submitted on the bill of complaint, demurrer, answer and affidavits of the parties.

Two decrees were rendered. In one the trial court overruled the demurrer of respondents. In the other the trial court granted the temporary injunction as prayed. From such decrees the respondents below appealed to this court.

In our original opinion, we held certain grounds of demurrer were well taken. We reversed the decree overruling the demurrer and rendered a decree here sustaining the demurrer. The decree granting the temporary injunction was also reversed. In the original opinion we did not write to the question of whether the averments of the bill were sufficient to show that appellees, complainants below, were the legal members of the board of directors of the corporation.

Application for rehearing was filed. The certificate of reversal was withdrawn and the temporary injunction reinstated...