Landes v. Globe Planter Mfg. Co.

• Decision Date: 02 October 1884
• Parties: LANDES et al. v. GLOBE PLANTER MANUFACTURING COMPANY et al.
• Court: Georgia Supreme Court

73 Ga. 176

LANDES et al. v. GLOBE PLANTER MANUFACTURING COMPANY et al.

Supreme Court of Georgia.

October 2, 1884

September Term, 1884.

1. Where the only verification of a bill for injunction was an affidavit of one of counsel, to the effect that what he knew of his own knowledge was true, and what he had heard he believed to be true, but it was not stated that he knew any fact of his own knowledge, such verification was not sufficient; and where the answer did not admit or verify the material facts alleged in the bill, and there were no depositions, an injunction was properly refused.

2. Complainants in equity must do equity, and must come in with clean hands. Therefore, where a corporation was unable to pay its indebtedness, and made an arrangement with the indorser on its notes whereby he was to assume the payment of its debt on certain terms agreed upon, and the indorser thereupon took charge of the property under the agreement, and discharged the debt by an arrangement with the creditor to look to him individually for its payment, and all the stockholders acquiesced except one, who had not paid for her stock, and whose excuse therefor was not verified, equity will not enjoin the consummation of the agreement at her instance. She should pay up before equity will grant relief; especially by enjoining the payment of a just debt to an innocent third party and stopping the only way to pay it, except by sheriff's sale, after expensive litigation.

3. The stockholders empowered the directors to make the arrangement which was made in this case, with Thomson or anyone else; nor did the action of the stockholders confine the directors to one mode of arranging for the debt, but was broad enough to cover that which was made.

Equity. Practice in Superior Court. Debtor and Creditor. Corporations. Stockholders. Injunction. Contracts. Before Judge HAMMOND. Fulton County. At Chambers. August 4, 1884.

S. J Landes and his wife, Mrs. L. W. Landes, filed their bill on behalf of themselves and of all other persons who might come in and be made parties, against the Globe Planter Manufacturing Company and William S. Thomson, alleging, in brief, as follows: The Globe Planter Manufacturing Company was chartered by the superior court of Fulton county, on June 24, 1882, and organized on August 26, with a capital stock of $50,000.00, divided into shares of $100.00 each, with the privilege of increasing the capital to $100,000.00, and adopted certain by-laws, among which were the following:

Article II. Section 3. " The board of directors shall have power to elect the officers of the company, fill vacancies in the board and, in the absence of the president or his inability to act, may appoint a president pro tempore, upon whom shall devolve all the duties of the president. They shall have general control and management of the property and directions of the affairs of the company, subject only to the special instructions of the stockholders by vote at a regular meeting. … "

Article VI. Section 1. " The company shall not be responsible for or on account of any contract or agreement whatever unless the same has been entered into by the president or other authorized agent, in accordance with the by-laws and direction of the board of directors."

Article VIII. Section 1. " The foregoing by-laws may be altered, amended or repealed at any regular meeting of the board of directors, or a meeting called for that purpose."

On August 26, 1883, the by-laws were amended so as to authorize the election of a vice-president, and William S. Thomson, who had theretofore been the treasurer, was elected vice-president, and shortly thereafter began to discharge the duties of the president, in the absence of that officer, and also continued to discharge the duties of treasurer up to January 1, 1884. On August 26, 1883, the capital stock was increased to $80,000.00. At the date of organization, Thomson owned only nine shares, but in June, 1884, he had become the owner of three hundred and fifty-three shares, and two of his relations owned twenty-four shares. Before and during the administration of Thomson as vice-president and acting president, the company became largely indebted and financially embarrassed; and on — 1884, he executed, in the name of the company, notes to the amount of $17,500.00 which he endorsed individually, and negotiated at the Gate City National Bank; and this indebtedness, or a part of it is still due and unpaid. While acting as vice-president and treasurer, Thomson purposely so conducted and mismanaged the affairs of the company as to deplete its business, destroy its credit and wreck its fortune, so that its stock should be considered worthless, and so that he should get possession of the entire property and assets. With this end in view, he caused a meeting to be called for June 17, 1884. Of the eight hundred shares authorized to be issued, about seven hundred and eighty-five had been issued, and five hundred and twenty-five were represented at the meeting, three hundred and seventy-three of which were voted by Thomson. At that meeting the following motion was made and carried:

" Whereas, we have, in convention assembled, carefully investigated the condition and prospects of this company, and heard various plans for relief; and whereas, negotiations have been opened with Thomas Mickle & Company, of Louisville, Kentucky, for the manufacture of the planter on royalty; and whereas, such negotiations and terms already proposed by said Mickle & Company are satisfactory to us as stockholders:

Therefore resolved, that the whole matter be referred to the board of directors, with full power to make such contracts and such disposition of the property of the company as will, in their judgment, secure the interests of the company."

The board of directors did nothing under the authority vested in them by this resolution; but on July 7, 1884, a meeting of the directors was held, and the following communication was presented:

" To the Board of Directors of the Globe Planter Manufacturing Co.:

GENTLEMEN:— It seems to be impossible to make any arrangement by which the indebtedness of the company will be met on the 15th inst., when it falls due; and inasmuch as I am the endorser for the company to the extent of seventeen thousand dollars of its indebtedness, and wish to protect myself against loss on my said endorsement, I make the following propositions: If you will convey, transfer, assign and set over to me absolutely all the property and effects of the company, both real and personal, including notes, accounts and patent, I will surrender and cancel two hundred shares of my stock, and will assume and pay all the indebtedness of the company, and will further agree that, in the event I dispose of the property, I will, after paying all the indebtedness and retaining the real estate or the proceeds thereof, divide the excess pro rata amongst the stockholders; or, if I continue the manufacture of the planter, I will pay the company, for pro rata distribution amongst the stockholders, one-half the net profits arising from the manufacture of the planter, after paying off the present indebtedness, as long as I manufacture under the...