Madison Limestone Co. v. McDonald

• Decision Date: 10 May 1956
• Docket Number: 8 Div. 831
• Citation: 264 Ala. 295,87 So.2d 539
• Parties: MADISON LIMESTONE COMPANY, Inc., et al. v. W. E. McDONALD et al.
• Court: Alabama Supreme Court

Page 539

87 So.2d 539

264 Ala. 295

MADISON LIMESTONE COMPANY, Inc., et al. v. W. E. McDONALD et al.

8 Div. 831.

Supreme Court of Alabama.

May 10, 1956.

Carl A. Morring, Jr., Bell, Morring & Richardson, Huntsville, for appellants.

Watts & Salmon, Huntsville, for appellees.

PER CURIAM.

This is an appeal by respondents from an order granting a temporary injunction after notice and hearing as authorized by sections 1054 and 1057, Title 7, Code.

The bill alleges that on May 6, 1955 complainant W. E. McDonald paid $1,680 to the individual respondents as the consideration of an option to be exercised in thirty days, which they executed on that day, granting him, his heirs and assigns the right to purchase all the shares issued and outstanding on the books of the Madison Limestone Company at the price of $210 per share, of which $105 'shall be payable in cash upon the exercising of this option and the balance of said purchase price shall be and become payable in three (3) equal, annual installments. * * * The act of exercising, hereinabove mentioned, of this option shall be consummated by notice in writing to Lawson E. Jarrell, as president of Madison Limestone Co., Inc., and shall be accompanied by a tender of payment of the portion of the stipulated purchase price which is stipulated hereinabove to be paid in cash, said tender to be by either certified or cashier's check'. The bill alleges that the capital stock was worth approximately $200,000.

Before this suit was begun W. E. McDonald transferred and assigned twenty-five percent of his interest in the agreement to Roy M. Niel and a like interest to S. R. Moore. The three are complainants. All of the shareholders together with the corporation are respondents.

The bill prays for a temporary injunction (which complainants designate a temporary restraining order) enjoining the corporation from declaring or paying dividends, transferring on its books shares of stock, issuing additional 'capital stock,' removing any of its machinery and equipment beyond the State, paying salaries and wages to respondents in greater amounts than they were receiving May 31, 1955, paying an alleged salary, bonus or gift to respondent Stella Rogers Jarrell (who, it is alleged, rendered no service to the corporation). It also sought a temporary injunction enjoining respondents, other than the corporation, from selling or transferring their capital stock or pledging it for personal loans or otherwise.

The final relief sought is a declaratory judgment and for specific performance by the individual respondents, and general relief.

The bill alleges in paragraphs 5, 6, 7 and 8, as follows:

'5. That on to wit: May 31, 1955, respondents breached said option agreement by failing to accept, and by preventing complainants from paying the balance of the purchase price provided for in said option agreement, although tender of the entire consideration was by complainants attempted; and thereafter respondents retained possession of said capital stock and physical assets of said corporation, and have thereafter continuously and wrongfully treated and used the same as their own, excluding complainants from possession and control of the same.

'6. And complainants are informed and believe, and on such information and belief charge the fact to be that said respondents are dissipating the current assets of said corporation by paying to Mrs. Stella Rogers Jarrell, the mother of several of the respondents, the sum of $400.00 per month, for which she renders no services to said corporation, and by increasing the salaries of the officers of said corporation.

'7. That subsequent to notice to the respondents by the complainants that they would exercise the option and purchase said capital stock, on to wit: May 31, 1955, the respondent, Madison Limestone Co., Inc., wrongfully paid a dividend upon all of the capital stock referred to in said option agreement in the amount of $12.00 per share, reducing the value of said stock in the total amount of $20,160.00; that the respondents, after the 31st of May 1955, and after the complainant, W. E. McDonald, had paid $1680.00 to the respondents, in the wrongful exercise of their claim to the capital stock and ownership of said corporation, wrongfully satisfied a mortgage secured by the assets of said corporation in the amount of to wit: $62,572.94, out of current assets, thus wrongfully reducing the operating capital of said Madison Limestone Co., Inc.

'8. Complainants would further show unto the Court that they are still ready, able, willing and anxious to pay the respondents, other than Madison Limestone Co., Inc., the amount of the purchase price of said stock due, subject to this court's adjustment in price made equitably necessary by the acts of the respondents in their manner of dealing with said corporation after the execution by respondents of said option agreement and the delivery and acceptance of the same by the complainant, W. E. McDonald; and complainants do hereby agree and offer to abide by all orders and decrees of this court that may be entered in this proceeding, and hereby offer to do equity.'

The question here, as stated above, is the review of an order for a temporary injunction. When so, the following principles control as stated in Slay v. Hess, 252 Ala. 455, 41 So.2d 582, 584:

'In passing on the application for the issuance of an injunction pendente lite, the trial court is invested with a wide judicial discretion and has the right to consider and weigh the relative degree of injury or benefit to the respective parties, and where such discretion is not abused the order of the circuit court will not be disturbed. Jones v. Jefferson County, 203 Ala. 137, 82 So. 167; Holcomb v. Forsyth, 216 Ala. 486, 113 So. 516; Boatwright v. Town of Leighton, 231 Ala. 607, 166 So. 418.

"The right to temporary injunction does not depend on any advance finding for complainant on the merits. Odoms v. Woodall, 246 Ala. 427, 20 So.2d 849; Berman v. Wreck-A-Pair Bldg. Co., 234 Ala. 293, 175 So. 269. It is not necessary that complainant must present a case which will certainly entitle him to a decree upon a final hearing for he may be entitled to temporary injunction though his right to relief may ultimately fail. If the bill clearly shows a substantial question to be decided, a temporary injunction to preserve the status quo is in order. Glass v. Prudential Ins. Co. of America, 246 Ala. 579, 22 So.2d 13; Coxe v. Huntsville Gaslight Co., 129 Ala. 496, 29 So. 867.' Hamilton v. City of Anniston, 248 Ala. 396, 27 So.2d 857, 861.'

In acting on a bill seeking a temporary injunction, we must first see that it contains equity as then set up. McHan v. McMurry, 173 Ala. 182, 55 So. 793; Loop National Bank v. Cox, 255 Ala. 388, 51 So.2d 534. In determining whether it has equity, shown on its face, its averments alone are to be considered, that is, 'unaided by construction and unamplified by assumed amendment.' McHan v. McMurry, supra [173 Ala. 182, 55 So. 794]; Dean v. Coosa County Lumber Co., 232 Ala. 177, 167 So. 566; Loop National Bank v. Cox, supra. When the bill contains equity, the trial judge, in granting a temporary injunction to preserve the status quo until the final hearing, exercises a wide discretion, taking into consideration the relative advantages and disadvantages resulting from granting or refusing to grant the injunction. Unless that discretion is abused it will not be disturbed on appeal. Slay v. Hess, supra; Loop National Bank v. Cox, supra.

A court of equity not only has jurisdiction to make a declaratory judgment when an actual justiciable controversy is shown to exist, but it also has jurisdiction for the specific performance of a contract to sell all the capital stock of a corporation. Boozer v. Blake, 245 Ala. 389, 17 So.2d 152.

We are dealing with an option to begin with. It was to become a contract of purchase if and when it is accepted according to its terms; or when its acceptance, adding new conditions, shall be approved as thus tendered. Asbury v. Cochran, 243 Ala. 281, 9 So.2d 887; Gadsden Bowling Center v. Frank, 249 Ala. 435(3), 31 So.2d 648, 172 A.L.R. 1430. Acceptance may be accomplished by filing a bill in equity within the time specified, in which the terms of the opinion are met and complied with. Asbury v. Cochran, supra (headnote 4).

Since the bill was not filed within thirty days after the option was executed it must show that the right to a performance accrued before the bill was filed and within the specified time, and this must be apparent upon the face of the bill to support a decree for specific performance.

We now revert to the question of the equity of the bill. It not only seeks a declaration settling the effect of the option and whether it became a contract to purchase, but it also seeks the supplemental relief of specific performance. This is available. Dozier v. Troy Drive In Theatres, 258 Ala. 417, 63 So.2d 368. The bill should be sufficient to obtain the relief of specific performance to support the right to a temporary injunction. It is true that the supplemental relief may be legal as well as equitable, Wolff v. Woodruff, 258 Ala. 1, 61 So.2d 69, but when the supplemental relief is equitable the conditions which justify it should be alleged. The injunction here is in aid of a claim of specific performance as supplemental relief.

If complainants do not show a right to purchase the stock of the corporation and have it assigned to them, enforceable in equity, the court will not issue an injunction to preserve the status. We must therefore see if the facts alleged in the bill show that complainants have become executory purchasers of the property by accepting the option under the agreement. As we have stated, the allegations must show that status as a conclusion of law, unaided by...