Miner v. Belle Isle Ice Co.
| Decision Date | 04 October 1892 |
| Citation | 93 Mich. 97,53 N.W. 218 |
| Court | Michigan Supreme Court |
| Parties | MINER v. BELLE ISLE ICE CO. et al. |
Appeal from circuit court, Wayne county, in chancery; HENRY N BREVOORT, Judge.
Action by Joseph L. Miner against the Belle Isle Ice Company Charles A. Lorman, and others, to compel defendant Lorman to account for property of the corporation, and for the appointment of a receiver to wind up the affairs of the corporation. From a judgment for defendants, complainant appeals. Reversed.
John W. A. S. Cullen, (Gray & Gray, of counsel,) for appellant.
John J. Speed and George H. Prentis, for appellees.
Complainant and defendant Charles A. Lorman had been in the ice business in the city of Detroit, as partners, since 1869, each having an equal interest in the business. In January, 1874, the joint property was inventoried at $23,500. Miner put in the further sum of $1,500, and the Belle Isle Company was organized, with a capital stock of $25,000, divided into 1,000 shares of $25 each. Lorman and Miner each held 435 shares. I. J. Carpenter held 30 shares, and Lorrissa Carpenter 100 shares. In 1878 the capital stock was increased to $50,000, or 2,000 shares at $25 each. At that time the Belle Isle Ice Company absorbed the Wolverine Ice Company, and Robert Wench, Isaac Wench, Frank Hoadly, and H. C. Kibbee became stockholders. In 1881 Lorrissa Carpenter, R. B. Wench, Isaac Wench, and Frank Hoadly filed a bill against Miner and Lorman to have certain lands held by defendants decreed to belong to the corporation, to obtain an account of the rents and profits, to compel the payment over to the corporation of certain moneys which had been expended upon said lands, to compel the surrender of certain stock illegally issued to defendants, and to pay over all moneys taken by defendants for their private use. The stock held by the Wenches and Hoadly was purchased by Lorman, and the suit was discontinued. In the spring of 1882, Miner, who was then president of the company, complained of the loose manner in which Lorman, who was manager, was managing the affairs of the company, particularly respecting the handling of the ice tickets. It seems that tickets were sold by the company to customers for cash or duebills. These tickets were exchanged with the drivers for ice. The drivers upon each trip would turn in what cash and tickets were received, and an account with each driver was kept upon slips. He was charged with the weight of his load of ice, and credited with the cash and tickets. The tickets were then placed in a drawer, which was kept for that purpose. The complaint was that Lorman would in the morning fill his pockets with these tickets, and dispose of them through the day for cash and duebills, turn in certain cash at night, and keep the duebills, in order, as he claims, to make further entries upon them. Miner insisted that the bookkeeper should keep an account of the tickets taken out and of the cash returned by Lorman, and of the duebills. Lorman looked after the sales and distribution of the ice, and Miner looked to the filling of the ice houses, and the shipment of the ice from the various ice houses to the points where loaded into wagons for distribution; and each received a salary of $1,200 per annum. Bitterness grew out of Miner's complaint, and at Lorman's suggestion, in April, 1882, amended articles of association were filed, dividing the 2,000 shares as follows: Lorman 1,006, Miner 694, Lorrissa Carpenter 259, W. K. Muir 4, G. H. Lothrop 10, H. L. Kanter 10, S. L. Miner 5, W. Sanderson 4, W. F. Linn 4, and George H. Prentis 4, shares. Linn was Lorman's nephew, and was but nominally a stockholder, holding his stock in trust for Lorman; and the evidence tends to show that Muir and Sanderson also held their stock for Lorman.
At the next stockholders' meeting, held April 20, 1882, Lorman, Miner, and Linn were elected directors. At the directors' meeting it was proposed to make Lorman president and superintendent at a salary of $4,000. Miner objected, moved to adjourn, and, upon the failure of his motion, he left the meeting. Afterwards, Linn and Lorman only being present, Linn moved that Lorman be elected president at a salary of $1,000 per year as president, and $3,000 as manager. Lorman seconded the motion, and Lorman and Linn voted "Aye." Sanderson was elected secretary at a salary of $1,000. No treasurer was elected, but Lorman has ever since acted as president, manager, and treasurer. At the directors' meeting held April 15, 1883, it was moved by Sanderson, and seconded by Muir, that Lorman be appointed general manager and superintendent at a salary of $4,000, "all voting 'Aye."' At the meeting held May 28, 1884, Muir moved that Lorman be general manager at a salary of $4,000; seconded by Sanderson; and Muir, Lorman, and Sanderson voted "Aye." At the meeting held April 26, 1885, Muir moved that Lorman be general manager at a salary of $4,000; seconded by Sanderson; and Muir, Sanderson, and Lorman voted "Aye." In May, 1886, Muir moved that Lorman be general manager at a salary of $4,000; seconded by Sanderson; and carried. In June, 1888, Sanderson had died, and one Gray, to whom Lorman had assigned some stock, and who was a nominal owner holding for Lorman, was elected director. Muir moved, Gray seconded, and Lorman was again appointed at a salary of $4,000. Miner remained in the employ of the company until the spring of 1883, when he was discharged. The balance sheet for the year ending March 1, 1883, showed a net gain of over $9,000. For the next year, the balance sheet showed a net loss of $3,460. For the next year, net loss of $2,878. For the next year, ending March 1, 1886, the balance sheet showed a net gain of $8,672, and for the next year a net gain of $1,712. No dividends have been declared since 1882. The salary account for the year ending March 1, 1883, was $6,287, and for each of the five years following it was $5,200. When the company was formed, Lorman and Miner owned three parcels of real estate, upon which the ice houses were located. The ice houses were turned in to the company, but the title to the real estate was retained by Lorman and Miner, who were joint owners, and leased to the company. These three parcels may be designated as the "Dock Property," the "Steam Power Property," and the "Creek Property." The company had leases of these parcels,-of the steam power property for five years, from April 7, 1881, at $1,000 per year, and of the Creek property for the same term at $300 per year. The leases were renewable at the option of the company, and, in case the parties failed to agree as to rental value for the new term, two arbitrators were to be appointed to fix the rental. In May, 1883, the directors passed a resolution directing the purchase of Lorman's interest in these parcels of property, and Lorman conveyed his half interest to the company. The price paid for the dock property was $5,000, subject to half of a mortgage of $8,000; for the creek property $3,000, subject to a half of a mortgage of $3,000; and for the steam power property $5,000,-"in all, $13,000; cash down, $1,000, and the balance of $12,000 in payments of $1,000 each, payable, one September 24, 1883, and one every four months thereafter, with interest at 7 per cent."
In July, 1883, Miner filed bills for the partition of the dock property and the steam power property, and partition was bad. The dock property was found to be incapable of subdivision. The directors ordered its purchase for the company, but Lorman, in December, 1884, bought it in at $15,725, of which sum $8,326.66 was paid upon the mortgage, $3,653.42 was paid to the company, which was held by Lorman, and credited upon the company's $13,000 purchase, and $3,652.42 was paid to Miner. The steam power property was divided, the east half being assigned to Miner, and the west half to the company and the company paid Miner $400 for difference in value. The final decree was entered February 12, 1884. In March, 1884, the company reconveyed the steam power property to Lorman for $5,000, the same price for which it had been sold by Lorman to the company 10 months before. Whatever the purpose or occasion of these transfers from Lorman to the company, and from the company to Lorman, it appears that the company paid Lorman $10,000 for his half interest in the two parcels. They paid the expenses of the litigation. They paid $400 to Miner upon the partition of one parcel,-and naturally the property would not depreciate. Yet Lorman has the property, and the company has $8,653.42, or $1,746.58 less than it paid, and has paid its share of the expenses of the partition, and its solicitors. In 1887, the company reconveyed the interest in the creek property, which it had purchased from Lorman, back to him at $2,137.50, while it had paid $3,000 for the same property four years before, although it is insisted that the property had increased in value. When the first five years under the leases of the creek and steam power properties had expired, the company elected to renew, but neither Miner and the company, nor the arbitrators who were called in, could agree as to the rental value; Miner claiming a rental of $300 for his share of the creek property, and $1,000 for his share of the steam power property. The courts were appealed to, and the rental value of Miner's interest in the steam power property was fixed by the court for five years at $500, and that of the creek property at $200. No steps were taken by arbitration or in court against Lorman, although he at that time owned one-half interest in the steam power property. He was paid $850 per year for 1886 and 1887, and for 1888, 1889, and 1890 he received $1,000 per year for his share of this property, and the only...
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