Marks v. American Brewing Co

• Decision Date: 06 June 1910
• Docket Number: 18,077
• Citation: 126 La. 666,52 So. 983
• Court: Louisiana Supreme Court
• Parties: MARKS et al. v. AMERICAN BREWING CO

52 So. 983

126 La. 666

MARKS et al. v. AMERICAN BREWING CO

No. 18,077

Supreme Court of Louisiana

June 6, 1910

Appeal from Civil District Court, Parish of Orleans; Fred D. King Judge.

Action by Mrs. A. F. Marks and others against the American Brewing Company. Judgment for defendant, and plaintiffs appeal. Affirmed.

Cage Baldwin & Crabites, for appellants.

Gustave Lemle, for appellee. Walter Guion,

Walter Guion, Atty. Gen., amicus curiae.

MONROE J., concurs in the decree.

OPINION

BREAUX C.J.

This suit was instituted to force the defendant to sell real estate referred to in the petition and to compel it to call in its loans and distribute a large amount of the surplus to its stockholders.

The plaintiff does not complain of the management of the corporation. She does not charge the board of directors with neglect of the business or with bad management of its affairs.

Substantially the only complaint is that the surplus should be reduced to a comparatively small amount.

She seeks to avail herself of the provision of the Gay-Shattuck bill (Act No. 176 of 1908), which prohibits corporations engaged in brewing and in distilling intoxicating liquors from obtaining a license for conducting a beer saloon or garden, or from being interested financially in any concern so engaged, or to be the owner or lessee or interested in any lease of premises used for such business.

As relates to the undivided surplus, her contention is that it is contrary to sound business principles to have so large a surplus; that it should be reduced by dividing, it among the stockholders.

The capital stock of the corporation was $ 200,000, divided into 2,000 shares of $ 100 each.

Plaintiff owns 95 of these shares, and her husband 5 shares.

Defendant filed in evidence a full statement of its business, which makes a favorable showing of its condition.

The statement of defendant, sustained by the testimony, substantially is that large annual dividends have been declared since its organization in 1894.

That the plaintiff has received on her investment of $ 10,000 the sum of $ 54,500 -- of this amount, $ 24,500 in dividends, and $ 30,000 collected on bonds she received as a shareholder.

That her stock is worth $ 400 per share.

Plaintiff has not sought to deny the success of the business.

She only wishes the board of directors to add to the amount paid to her by dividing the surplus, and she also is concerned about the enforcement of the statute cited supra.

All the shareholders except the plaintiff and her husband intervened and joined the defendant in its defense.

Two distinct and separate questions present themselves, viz.: First, whether a stockholder can compel the board of directors to divide the surplus and declare another and second dividend of such amount as will, taken from the assets, leave in the corporation a considerably reduced surplus; and, in the second place, whether in this case and under the pleadings the plaintiff can force the board of directors to call in all of its outstanding loans and sell all the real estate not actually used in the manufacture of beer.

As relates to the company's business: The uncontradicted evidence is that the policy adopted by the board of directors was necessary to the success it has met.

The evidence further is:

That large dividends were declared because the amount retained for the business enabled the company to so operate on a scale as enabled it to realize large profits for which it has always accounted.

The contention of defendant further is that it would be hampered, if not ruined, in its business, were any other policy adopted than that which it follows.

This is not denied by plaintiff; the suit is directed to reducing and dividing the surplus, and incidentally the contention of plaintiff is that the statute before cited should be obeyed.

As to this statute, defendant's contention is that all the contracts in which it entered with its customers antedate the date of the statute, and furthermore that it does not violate it.

At this point it is of some moment in the decision to state how the business is conducted and investments are made to which plaintiff objects and which she says is in violation of the cited statute supra.

The company bought real estate (corner lots, it is stated) for its customers before the date the Gay-Shattuck statute was adopted. The title was taken in its name. Much of the property defendant immediately after sold to its customers. A counter letter was given by the buyers who are customers of the company. The customer, vendee, pays daily, weekly, or monthly, and after he has paid the whole price with interest and taxes the property is the customer's.

The testimony shows that $ 150,345.34 of the company's assets were invested in real estate and were sold to customers as just mentioned.

Another method of business adopted by the company is the loan, particularly at that period of the year when customers are called upon to pay licenses to the tax collecting department.

These loans are secured by mortgage. They afford security for the sums advanced to customers, including the sums advanced to them to pay their licenses.

These methods of advancing money create a business tie between the brewery and its customers, the saloon keepers, and in that way the brewery controls a volume of business that it would not otherwise control.

If these methods be...