MST, Inc. v. Mississippi Chemical Corp.

• Decision Date: 08 April 1992
• Docket Number: No. 89-CA-0399,89-CA-0399
• Citation: 610 So.2d 299
• Parties: MST, INC. v. MISSISSIPPI CHEMICAL CORPORATION.
• Court: Mississippi Supreme Court

Page 299

610 So.2d 299

MST, INC. v. MISSISSIPPI CHEMICAL CORPORATION.

No. 89-CA-0399.

Supreme Court of Mississippi.

April 8, 1992.

Rehearing Denied Dec. 17, 1992.

Appeal No. 5099 from Judgment dated March 13, 1989, William R. Lamb, Ruling Judge, Calhoun County, Circuit Court.

S. Duke Goza, Hickman Goza & Gore, Marjorie T. Hankins, Oxford, for appellant.

J. Price Coleman, Joe H. Daniel, Michael A. Heilman, John M. Lassiter, Daniel Coker Horton & Bell, Jackson, for appellee.

Before ROY NOBLE LEE, C.J., and PRATHER and SULLIVAN, JJ.

Affirmed.

En Banc.

ON PETITION FOR REHEARING

PRATHER Justice, for the Court:

I. PROCEDURAL HISTORY

MST, Inc. (MST) filed the complaint to begin this suit on December 20, 1988. In the complaint, MST alleged that Mississippi Chemical Corporation (MCC), operating through a corporation which was allegedly its subsidiary, Committee for North Central Mississippi Paper Mill, Inc. (the Committee), breached a contract and used the Committee to perpetrate a common law fraud upon it. On January 20, 1989, MCC filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted, For Improper Venue, and for Summary Judgment, with supporting affidavits. Also on that date, MCC filed a Motion to Stay Discovery. On January 27, 1989, MST filed a Motion for Additional Time to Respond to Defendant's Motion to Dismiss asking for an additional five days, until February 3, 1989. An order regarding briefing and hearing on the motion to dismiss was also entered on January 27, 1989, which set February 3, 1989, as the due date for the MST's response to MCC's motion; February 8, 1989, as the due date for MCC's rebuttal; and February 10, 1989, as the date for a hearing on MCC's motion.

MCC filed a memorandum in support of their motion on February 9, 1989, as well as supplemental and additional affidavits. MCC re-noticed the hearing on February 10, 1989, for February 16, 1989. On February 14, MCC filed the affidavit of Walter R. Bridgforth, stating as the reason for the late offer that the parties had previously agreed not to contact Bridgforth prior to February 10. No further matter was entered into the record on behalf of MST, and the motion was heard before the circuit court on February 16, 1989. The circuit court entered summary judgment in favor of MCC on March 14, 1989, from which judgment MST appealed to this Court. This Court issued a per curium affirmance on April 1, 1992. MST argues in its petition for rehearing that the Court erred in its prior ruling. In its original brief, MST assigned the following as error:

WHETHER THE TRIAL COURT ERRED AS A MATTER OF LAW IN GRANTING THE DEFENDANT/APPELLEE'S MOTION FOR SUMMARY JUDGMENT?

WHETHER MISSISSIPPI CHEMICAL CORPORATION CAUSED THE FORMATION OF AN UNDERCAPITALIZED

CORPORATION LACKING AN ACTUAL BUSINESS PURPOSE, THAT IS, A "CORPORATE SHELL," NAMED THE COMMITTEE FOR NORTH MISSISSIPPI PAPERMILL, INC., WITH THE DESIGN AND INTENT TO PERPETRATE A FRAUD ON MST, INC. AND TO TAKE FROM MST, INC., WITHOUT JUST COMPENSATION ITS WORK PRODUCT, IDEAS, PLANS AND SCHEMES TO BUILD A NEWSPRINT PAPER MILL IN NORTH MISSISSIPPI.

WHETHER OR NOT THE TRIAL COURT ERRED IN ITS HOLDING THAT CALHOUN COUNTY CIRCUIT COURT WAS AN IMPROPER VENUE FOR THIS CAUSE OF ACTION AND IN FACT THAT YAZOO COUNTY, MISSISSIPPI, WOULD BE THE PROPER VENUE.

In its petition for rehearing, MST now asserts as additional errors in the lower court:

WHETHER THE TRIAL COURT IMPROPERLY REFUSED TO ALLOW PLAINTIFF/APPELLANT MST, INC. ADEQUATE OPPORTUNITY TO CONDUCT DISCOVERY AS TO THE ALLEGATIONS RAISED IN THE COMPLAINT?

WHETHER THE TRIAL COURT IMPROPERLY REFUSED TO ALLOW MST, INC. TO OFFER ORAL TESTIMONY TO REBUT MISSISSIPPI CHEMICAL'S "ELEVENTH HOUR" AFFIDAVIT THAT WAS PRESENTED IN SUPPORT OF MISSISSIPPI CHEMICAL'S MOTION FOR SUMMARY JUDGMENT?

II. STATEMENT OF THE FACTS

MST and the Committee entered into a contract on February 18, 1980. MST agreed to sell the Committee all of its assets, ideas and plans for a paper mill. However, no payment from the Committee was provided for until the occurrence of two events. The first event, which would trigger a payment of $81,500 to MST, involved the execution of a partnership agreement between the Committee or its successors or associates and another entity or entities for the purpose of erecting a paper mill. The second payment of $81,500 would then become due when a construction contract for the erection of a paper mill was entered into. The contract further stated that the contract itself was no admission that MST had any assets and recited that the agreement was offered only in compromise and settlement and in order that pulpwood farmer interest be of one mind and fully cooperative. MST was further given the right to unilaterally terminate the contract if no payment was received before April 1, 1980.

On September 18, 1980, MST and the Committee entered into another agreement. It amended the terms of the original agreement to provide that MST could not exercise the option to terminate the contract before April 1, 1981, and recited payment of $10,000 to MST in consideration of the amendment.

As mentioned, MCC supported its motion for summary judgment with a number of affidavits and exhibits. The first exhibit was the certificate of incorporation for the Committee, dated August 8, 1979, showing that the initial directors of the Committee were Owen Cooper, G.A. Triggs and Robert A. Filgo and that the incorporators of the corporation were Walter R. Bridgforth and Hugh M. Love.

The affidavit of Tom C. Parry stated that he was President and Chief Executive Officer of MCC and that he had replaced Owen Cooper in those capacities upon Cooper's retirement from MCC in 1973. He stated that Cooper remained a director of the corporation but had no authority to incur obligations on behalf of MCC. He further stated that MCC was never a party to any negotiations with MST and that the only connection with MST's efforts to build a paper mill was MCC's extension of a $25,000 loan to the Committee in 1980. MCC made the loan at Cooper's request and to further MCC's tradition of helping farmers. Parry stated that MCC was asked by Cooper and Donald Branch of the New Orleans Bank for Cooperatives to invest in a paper mill project in 1981, but MCC declined to participate. According to Parry, that ended MCC's involvement with the paper mill project until 1985, when Branch contacted MCC regarding a new proposal to build a paper mill. At no time, Parry stated, did MCC ever receive anything from MST.

Donald Branch also filed an affidavit. He supported Parry's contentions, stating that as Secretary and then Vice-President of the New Orleans Bank for Cooperatives (later the Jackson Bank for Cooperatives) he was involved in two totally separate attempts to build a paper mill in Mississippi. The first effort lasted from the mid 1970's until 1982 and involved Fred Beckett and his corporation, MST, and Owen Cooper and his corporation, the Committee. To his knowledge, MCC was never involved in any of the negotiations involving that effort. The effort failed because his bank could only lend money for the project if a cooperative was involved and the efforts to form a cooperative involving the timber farmers were unsuccessful. These efforts included Cooper's attempts to organize the cooperative through the corporation he formed, the Committee. In all of his contacts with Cooper, he never heard or was aware of Cooper representing that the Committee was in any way affiliated with MCC or that he was acting on behalf of MCC.

According to Branch, he began the second effort to build the paper mill by contacting Cooper about the prospects. Cooper again became interested in the project and the two acted together to persuade the management of MCC to take on the project.

Gene A. Triggs, Vice-President of MCC, stated in his affidavit that he knew that Owen Cooper participated in many business and civic activities unconnected with his association with MCC. According to Triggs, Cooper was instrumental in forming a number of corporations, including MCC, First Mississippi Corporation, Southern Farm Bureau Life Insurance Company, Southern Farm Bureau Casualty Insurance Company and Mississippi Hospital and Medical Services (Blue Cross/Blue Shield). He was involved with Cooper in the unsuccessful efforts of the Committee to build a paper mill. According to Triggs, no partnership was ever formed, which would have been the condition precedent to the first payment under the contract between MST and the Committee. The general plan the Committee had was to form a partnership between the timber farmers, newspaper publishers and a mill operator to build the mill. The failure of the timber farmers to raise enough capital was the primary reason for the failure of the effort. Triggs attached several news articles and a proposal for the plan, apparently to show that diligent efforts were made to form the partnership.

Walter Arnold stated in his affidavit that he was Vice-President of research and engineering at MCC, as well as an officer of Newsprint South, Inc., the corporation which built the paper mill and which is a wholly owned subsidiary of MCC. He stated that the applications to the Bureau of Pollution Control from Newsprint South were totally the work of Newsprint South. Further, although MCC did receive some preliminary engineering studies from Cooper and Branch in 1981 and 1982, MCC had its own study done in 1985 and 1986 at a cost of $564,000.

Rosalyn Glascoe, corporate secretary for MCC, stated in her affidavit that she had examined the corporate minutes of MCC in search of references to the Committee and that she found only three references. The first was at a meeting of the executive committee on May 27, 1980, when Cooper presented a request for a $25,000 loan to the Committee. The loan was requested out of MCC's traditional role of helping farmers help themselves by forming...