National Surety Co. v. Citizens' Light, Heat & Power Co.

Citation201 Ala. 456,78 So. 834
Decision Date18 April 1918
Docket Number3 Div. 332
PartiesNATIONAL SURETY CO. v. CITIZENS' LIGHT, HEAT & POWER CO. et al.
CourtSupreme Court of Alabama

Rehearing Denied May 30, 1918

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Action by the Citizens' Light, Heat & Power Company and others against the National Surety Company on an injunction bond. Judgment for plaintiffs, and defendant appeals. Affirmed.

Steiner Crum & Weil, of Montgomery, for appellant.

Rushton Williams & Crenshaw, of Montgomery, for appellees.

THOMAS J.

The suit was against the National Surety Company for the breach of the condition of an injunction bond made by the defendant as surety for Henry L. Doherty & Co., a partnership composed of Henry L. Doherty and Frank B. Frueauff.

During the year 1910, Doherty & Co. owned an electric light and power plant in Montgomery, and made a contract with Alex Rice to purchase a controlling amount of stock in the electric light and power plant owned and controlled by said Rice, with stipulation to make payment for the same on or before the 15th day of June, of that year. On the 16th day of June 1910, said Doherty and Frueauff, as partners in trade under the name of Henry L. Doherty & Co., filed their bill in the United States court for the Middle district of Alabama, on the equity side of said court, for specific performance of said contract of sale made with them by said Rice, and for an injunction. A temporary writ was granted by the Honorable United States District Judge in said cause, on the date of the filing of the petition therefor, restraining Rice from transferring, assigning, selling, or disposing of any stock owned or controlled by him in either the Citizens' Light, Heat & Power Company, or the Citizens' Light & Power Company, and from voting any such stock, and from transferring, assigning, disposing of, or voting any trustee's certificate issued on account of said stock and owned or controlled by him, and restraining the said Citizens' Light, Heat & Power Company and the Citizens' Light & Power Company, and each of them, from permitting to be assigned upon the books of the said corporations or of either of them, any of the stock of said corporations, or of either of them, or any trustee's certificates owned or controlled by the said defendant Rice.

On the 18th day of June, 1910 said complainants exhibited their supplemental bill, alleging that Richard Tillis had on the 17th day of June purchased of the said Rice all of the stock owned or controlled by him in the said power company, and averring it to be the identical stock which said Rice had contracted to sell complainants, and alleging that Tillis, at the time of the purchase from Rice of the stock in question, had notice that Rice had contracted to sell and deliver the same to complainants. It is further averred in the supplemental bill that complainants had an equitable right and title to said stock by reason of their contract for its purchase; that such sale, or pretended sale or conveyance, by Rice to Tillis, of his stock, was of no effect as to the property rights theretofore acquired therein by complainants. This supplemental bill alleged the filing of the original bill and the issuance on the 16th day of June of the temporary writ of injunction or restraining order, directed to Alex Rice, the Citizens' Light, Heat & Power Company, and the Citizens' Light & Power Company, defendants in the original bill, enjoining and restraining them as we have above set out. The prayer of the supplemental bill is that Richard Tillis be made a party defendant; that he and defendants in the original bill be required to plead, answer, or demur to the original and supplemental bills; that said sale or pretended sale or conveyance of said stock be vacated and annulled; that said Tillis be compelled to sell and deliver up said stock to the complainants under the terms and conditions of said contract or agreement alleged to have been made by complainants with Rice; and that "meantime the said Tillis, his agents, and attorneys, and any and all persons and parties claiming or pretending to claim from or through him, the said Tillis, be enjoined and restrained from voting, selling, transferring assigning, or pledging, or from attempting to vote, sell, transfer, assign, or pledge or dispose of the said stock or any part thereof, and that the status of said stock be preserved and maintained so that the same may be forthcoming and delivered to your orators on a final hearing of this cause pursuant to such decree as may be therein rendered."

Thereafter, to wit, on August 8, 1910, said Doherty and Frueauff, partners in trade, etc., styled as complainants in the original and supplemental bills theretofore filed in said court, by leave of the court, amended the supplemental bill, alleging the sale by Rice to them of the stock in question, adding other parties respondent, averring more in detail the several transactions relating to said stock on the part of Rice with complainants and with Tillis and the other respondents, making the new parties respondent parties to the original and supplemental bills theretofore filed. This amendment contained an appropriate prayer for compelling Rice to execute his contract of sale with complainants, and that Tillis be required to surrender the stock or certificates evidencing the sale of the same to him by Rice, and which Rice had previously contracted to sell to complainants--that the status of said property be restored as it existed at the time Tillis acquired said stock. It contained appropriate prayer for injunction against Tillis, Citizens' Light, Heat & Power Company, and Citizens' Light & Power Company, to prevent them or either of them from selling, transferring, assigning, pledging, hypothecating, or voting said stock, etc. There was a further prayer for the appointment of a receiver with power and authority to take possession of, operate, and control the plant and properties of the Citizens' Light, Heat & Power Company, under directions of the court. To this amended supplemental bill there was annexed, as an exhibit, the contract appearing to have been entered into by Alex Rice and Richard Tillis on the 16th day of June, 1910, relative to the purchase of the stock in question.

At the time of the filing of this amendment to the supplemental bill on August 8th, the order and decree of the court was that the petition and motion was granted, "without prejudice to the restraining orders, or any of them heretofore issued in said cause." Pursuant to this order, on August 12, 1910, Henry L. Doherty & Co., as principals, and National Surety Company, as surety, gave to Alex Rice, Citizens' Light, Heat & Power Company, and Citizens' Light & Power Company, and Richard Tillis, defendants in the original bill and first supplemental bill, a bond in the penal sum of $2,000, conditioned on the order of the judge of the District Court enjoining the said defendants, their and each of their agents, officers, attorneys, and employés, from selling, assigning, pledging, disposing of, or parting with the possession of, and from voting, any of the stock or any of the trustee's certificates which were owned and controlled by the said Alex Rice at the time of the making of the contract with him and the complainants in the original bill set forth, or any stock or trustee's certificates issued in lieu thereof, pending the final hearing of this cause; the obligors therein agreeing to pay to the said defendants named in said bond "all such costs or damages as they or either of them may sustain by reason of the issuance of said order, if it shall appear that said order was wrongfully made," etc. The writ of injunction issued in pursuance of this order and bond. On the 11th day of January, 1915, on the petition of Doherty and Frueauff, as partners, etc., praying that "the bill will stand dismissed without prejudice," the court granted the prayer and motion of petitioners and dismissed their bill in said cause "without prejudice at the cost of the complainants."

On the trial of the instant case plaintiffs introduced the files of the United States District Court in equity in said cause with its exhibits, the contracts between Doherty & Co. and Rice, and the supplemental bill with its exhibits, the contract between Rice and Tillis. This evidence, including said exhibit contracts, was admitted without objection before any witnesses were examined ore tenus. Plaintiffs then introduced as a witness Mr. Whiting, who, after being examined as to the market value of the stock in question, was asked by plaintiffs if said Doherty & Co. made any offer of purchase for the trustee's certificates, or stock, and if so, what the offer was. Counsel for the defendant asked the witness if the offer referred to was in writing, and witness replied that it was; his answer being that "It was a written agreement." Thereupon counsel for the plaintiffs offered in evidence a written agreement between H.L. Doherty & Co. and Alex Rice; it being in two separate instruments, and being the agreement made and entered into on the 13th day of May, 1910, between Alex Rice and Henry L. Doherty & Co., and attached as exhibits to the original bill and so offered in evidence.

The defendant objected to the introduction of the agreements on the grounds that said paper writings did not tend to fix the market value of the stock or certificates in controversy, and constituted a mere personal agreement between the parties, containing mutual covenants and stipulations. The court permitted the agreements to be read in evidence, and to this action of the court exception was duly reserved by the defendant.

It will be noted that said agreements were in evidence, having been introduced...

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