Maya Corporation v. Smith

• Decision Date: 05 December 1940
• Docket Number: 8 Div. 6.
• Citation: 240 Ala. 371,199 So. 549
• Parties: MAYA CORPORATION ET AL. v. SMITH ET AL.
• Court: Alabama Supreme Court

199 So. 549

240 Ala. 371

MAYA CORPORATION ET AL. v. SMITH ET AL.

8 Div. 6.

Supreme Court of Alabama

December 5, 1940

Rehearing Denied Jan. 16, 1941.

Appeal from Circuit Court, Marshall County; A. E. Hawkins, Judge.

Suit in equity by W. L. Smith against the Maya Corporation, Street &amp Bradford, Leo K. Steiner and others, wherein there were cross-bills by the named respondents. From an adverse decree respondents Maya Corporation and others (affiliated companies) appeal.

Reversed and rendered.

Where errors were all assigned separately and severally, and not jointly, order of severance of the assignments was unnecessary, as against contention that all errors not jointly available to all who assigned error were not available to any of them. Code 1923, § 6143.

The original bill made parties respondent thereto J. S. Cullinan and L. B. Coppinger, non-residents (against whom the bill was later dismissed); Maya Corporation and Cherokee Mining Company; certain corporations, known at the "seven companies"; and Street & Bradford, individually and as a firm of attorneys.

The bill set up that complainant Smith entered into a written contract with Cullinan, January 1, 1926, whereby Cullinan agreed to organize a corporation (Maya Corporation) to purchase and take over the stock of the seven Smith Corporations, practically all of which stock was owned by Smith; to assume the indebtedness of the "seven companies" to the amount of $447,000; to pay Smith certain shares of preferred and common stock of the purchasing corporation, and, in addition, to pay him an amount per acre (in money and stock) for all mineral land owned by him and then "seven companies", when and as title to such land should be approved; to give Smith management of the purchasing corporation for a stated time, at a stated salary. It is further alleged that Coppinger and Cullinan, thereafter, caused pretended deeds of conveyance to be executed by the "seven companies" to respondent Cherokee Mining Company (owned practically in toto by Cullinan and Coppinger), purporting to convey to it all mineral interests which the "seven companies" then or had ever claimed, including lands to which they had never set up claim; that such conveyances were not bona fide, but were made for the purpose of defrauding complainant.

Maya Corporation's cross-bill as filed thereto averred, in substance, that about March 24, 1926, following negotiations, and upon representations by complainant Smith that he and his companies owned and could make delivery of mineral lands to the extent of 354,000 acres or more, Maya Corporation agreed with Smith, subject to approval and closing details by its counsel and representatives, to purchase the Smith holdings, as represented by him, to pay him a stated sum and lend him another sum of money (which was done), Smith to receive certain stock in the Maya Corporation and certain other stock for land turned in by Smith; that upon such representations by Smith, and without awaiting abstracting of titles, Maya Corporation took transfer of such stock and purported deeds to lands, issuing stock tentatively to Smith. It is further alleged that in the fall of 1926, it was ascertained that certain of the lands supposedly turned in by Smith were apparently owned by others, and other differences developed; that the facts stated by Smith as to the obligations of his companies were not true, and as claims against the companies or the management thereof were apparently being inspired by Smith, Maya Corporation caused conveyances to be executed, transferring all of the lands in question, so far as owned, to its subsidiary Cherokee Mining Company; that upon abstracting, less than 90,000 acres of said lands were found to be acceptable; that, for such reasons, Maya Corporation demanded return of shares of its stock tentatively issued to Smith, without success; and that Smith has failed and refused to furnish abstracts or to pay for same or have same charged to him, and has refused to be bound by the action of Maya Corporation's counsel or representatives in accepting or rejecting titles. It is alleged that the contract set up in the original bill is spurious, the only contract made by Maya Corporation being that alleged in its cross-bill.

Cabaniss & Johnston and K. E. Cooper, all of Birmingham, for appellants.

Street, Bradford & Street, of Guntersville, for appellee Smith.

Oliver D. Street, Jr., of Montgomery, and Thos. E. Orr, of Albertville, for appellees Street and Bradford.

Leader, Hill & Tenenbaum, of Birmingham, for appellee Steiner.

FOSTER Justice.

The pleadings as originally filed are substantially set out on a former appeal. 227 Ala. 6, 148 So. 621. The facts there stated need not be repeated. Amendments have been filed since that appeal was disposed of. As amended, the bill alleges that there was a modification of the contract of January 1, 1926, effected at a later date (shown to have been March 24, 1926), and complainant consented in the amendment that the rights of the parties may be settled and adjusted in the light of such changes, but does not set out his version of such changes.

It also alleges that the Cherokee Mining Company is a corporation, all of whose shares, except qualifying shares of others, "are and have all the time been owned by the Maya Corporation," as well as the stock of the "seven companies" assigned to it by complainant.

It prays, among other things, that the Cherokee Mining Company and Maya Corporation be declared trustees of said mineral interests conveyed by said "seven companies," for the benefit of complainant and said "seven companies", and for the purpose of the contract of January 1, 1926, and be enjoined from conveying said interests until said contract be complied with and until said corporations shall pay or cause to be paid to complainant the money and stock which under said contract should be paid before the mineral interest should vest in them, and for a decree against them for the amount they should pay complainant and for other specially described relief and for general relief.

As finally amended, it prays also that the court will ascertain the amount due complainant and those in interest with him, under said agreement of January 1, 1926, and give Cherokee Mining Company, Maya Corporation and said "seven companies" the option within a reasonable time of paying the amount due him and of issuing and delivering the capital stock in the Maya Corporation as agreed on and of restoring to the treasury certain stocks and correcting the stock set up and ownership of shares in the Maya Corporation pursuant to said contract of January 1, 1926. That if this is done as required, then the claims of complainant and his associates shall be vested in defendant. But if this is not done, then all the claims of said companies shall cease and be forever divested out of them and vested in complainant and his associates. We have not undertaken to copy the prayer but to state its substance as here material.

The contentions of the Maya Corporation are set out in its cross-bill and are substantially as stated in the report of the case on the appeal reported in 227 Ala. 6, 148 So. 621.

Without now considering the collateral questions and the decree as to them, the court in its final decree found that the contract of January 1, 1926, was executed and not rescinded but was modified on March 24, 1926, so "that the amount to be presently paid by said Cullinan or said Cherokee Mining Company or said Maya Corporation on the debts of the said 'seven companies' should be three hundred thousand dollars to liquidate liens and mortgages against the properties of said 'seven companies' which were threatening foreclosure instead of paying at that time the $447,000.00 as stipulated in said contract of January 1, 1926; (2) that activities under subsection 'e' paragraph 2 of said contract should be curtailed to keep within the finance which the said Cullinan might be able to secure for said purpose; (3) that mineral lands which were being acquired under said subsection 'e' of said contract should continue to be acquired in the name of J. S. Cullinan as grantee and paid for in his name until April 1, 1926, but that after said date said acquisitions and purchases should be made and paid for in the name of Cherokee Mining Company as grantee, with the exception of lands upon which options had been taken in the name of J. S. Cullinan or the Southern Exploit Company and that in such last named instances deeds might be made to the person in whose name the option ran--but it was agreed that all activities in the purchase of lands under said subsection 'e' after January 1, 1926, should be for the account of the Cherokee Mining Company, but the court finds that said contract of January 1, 1926, has never been abrogated or rescinded and is still in full force and effect so far as concerns the issues in this case."

It is also found that said modification was as just set out and not material to the questions arising in this case, since it related to the acquisition of other lands than those here involved.

The court then found that the cash amount due complainant and his associates under said contract of January 1, 1926, was for 359,902 acres of land at $3 per acre or $1,079,706, which with interest to April 1, 1939 (about the date of the decree), was $2,143,570. That from this amount should be deducted the total sum of $738,049.21, amounts with interest paid by defendants on complainant's account, leaving a balance of $1,405,520.91, to which should be added the amount of $46,155, unpaid salary of complainant, under the contract of April 1, 1926, leaving the definitive sum of $1,451,675.91.

Thereupon the Cherokee Mining Company and the Maya...