Lee v. Lee

• Decision Date: 30 June 1960
• Docket Number: 6 Div. 579
• Citation: 122 So.2d 139,271 Ala. 5
• Parties: Roy LEE v. Anna LEE.
• Court: Alabama Supreme Court

Page 139

122 So.2d 139

271 Ala. 5

Roy LEE v. Anna LEE.

6 Div. 579.

Supreme Court of Alabama.

June 30, 1960.

Wm. E. James, Cullman, for appellant.

St. John & St. John, Cullman, for appellee.

GOODWYN, Justice.

This is an appeal from a decree of the circuit court of Cullman County, in equity, sustaining the demurrer of appellee (Anna Lee), hereinafter referred to as 'G', to the cross-bill of appellant (Roy Lee), hereinafter referred to as 'E'.

The case, to the extent with which we are concerned on this appeal, may be stated as follows:

There were five owners (A, B, C, D and E) of a tract of land in Cullman County consisting of 65 acres. Each owned a one-fifth undivided interest in the land. Four of these owners (A, B, C and D) deeded said land to a corporation being formed by them and another person (F) principally for the purpose of subdividing said land into building lots. Said conveyance was made in fulfillment of the grantors' subscriptions to stock in said corporation. Each of the four grantors received 12 shares, as did also F, who paid for his shares by rendering certain services. An effort was made by the corporation to acquire E's one-fifth interest in the land. In the meantime D died, leaving, as his only surviving heirs, his widow (G), and his mother, two brothers and a sister (A, B, C and E). Failing to acquire E's interest, the corporation then conveyed the land to A, B, C and E. What consideration, if any, was paid for said conveyance does not clearly appear. Thereafter, the corporation and four of its stockholders (A, B, C and F) filed a petition in the circuit court of Cullman County, in equity, to dissolve the corporation, alleging, among other things, that it owned no property of any kind.

The petition to dissolve made D's widow, G, the sole respondent. G answered the petition and made her answer a cross-bill, with the original petitioners and E being made cross-respondents. The relief sought by G's cross-bill is dismissal of the petition to dissolve the corporation, a revesting in the corporation of title to the land 'to the extent of the value of an undivided one-fifth interest therein', liquidation of 'said corporation in an orderly, legal and statutory manner,' a holding that G is the owner of the said one-fifth interest in the land, and a divesting of title 'out of said corporation of said interest' and placing the same in G.

There was no demurrer testing the sufficiency either of the original petition or G's cross-bill.

A, B, and C made a general answer to G's cross-bill by denying its allegations and demanding strict proof thereof.

E filed a separate answer to G's cross-bill and made his answer a cross-bill to G's cross-bill. E's cross-bill made G the sole cross-respondent.

Basically, the relief sought by E's cross-bill is a holding that the corporation never came into legal existence; in other words, that it was 'a dummy corporation' and should be held 'null and void and of no legal force or effect whatever on the right of' E 'in and to the land.' It is also prayed 'that the court will hold that the stock issued by' the corporation 'is absolutely worthless'; that G, as the widow of D, 'does not own any interest, right or title to any of said lands'; that the court will order the register to mark on the probate records 'that such 'dummy' corporation is void and of no force or effect whatsoever'; that 'the court will hold that the purported stock issued by said alleged corporation, * * * is absolutely worthless and of no force and effect and that the title to all of said real estate is in' E 'and his mother and brothers and sister, according to the laws of descent and distribution of the State of Alabama, subject only to the dower and homestead rights of his mother in and to the same.'

G demurred to E's cross-bill. The demurrer was sustained. E brings this appeal from that ruling.

Apparently, what E is attempting to do by his cross-bill is to attack the validity of the corporation collaterally. If this can be successfully accomplished in this proceeding it seems to be E's theory that there would then be a failure of consideration for the deed executed in favor of the corporation by A, B, C and D; hence, said grantors never parted with their title and D's interest in the land would descend to his mother, two brothers and sister (A, B, C and E), under the provisions of Code 1940, Tit. 16, § 1. On the other hand, if the conveyance to the corporation was valid, and the 12 shares of stock issued to D are also valid, such shares, being personal property, would descend to D's widow, G, under the provisions of Code 1940, Tit. 16, § 10.

So, it can be seen that the real controversy attempted to be set up and resolved by E's cross-bill is whether D, at the time of his death, was the owner of a one-fifth interest in the land or of 12 shares of stock in the corporation. In this connection, it should be noted that none of the incorporators, including the grantors in the deed to the corporation questions the validity of the corporation or the deed to the corporation.

This brings us to the crucial question raised by G's demurrer: Is E in a position to question the validity of the corporation and the stock issued by it and, if so, is his cross-bill sufficient to that end? Assuming, but by no means deciding, that E may make such an attack, ...