Paducah Land, Coal & Iron Co. v. Hays

• Decision Date: 28 November 1893
• Citation: 24 S.W. 237
• Parties: PADUCAH LAND, COAL & IRON CO. v. HAYS.
• Court: Kentucky Court of Appeals

24 S.W. 237

PADUCAH LAND, COAL & IRON CO. v. HAYS.

Court of Appeals of Kentucky.

November 28, 1893

Appeal from court of common pleas, McCracken county.

"Not to be officially reported."

Action by Thomas Hays against the Paducah Land, Coal & Iron Company for services performed as president of defendant. There was judgment for plaintiff, and defendant appeals. Reversed.

W. D Greer and J. W. Bloomfield, for appellant.

Thos E. Moss and Helm & Bruce, for appellee.

HAZELRIGG J.

In the spring of 1887 the appellant company was organized under the provisions of the General Statutes of Kentucky. The purpose of the concern was to deal in mineral lands, notably iron ore lands, on the Cumberland and Tennessee rivers, to build blast furnaces, and sell its stock, and take stock in other enterprises, etc. Its authorized capital stock was $3,000,000. It had not, however, a dollar of paid-up capital. The promoters of the enterprise consisted of a dozen or more prominent business men in and about Paducah, Ky. and in Tennessee. Of these, Messrs. Tharpe and three others were the owners of some 5,000 acres of valuable ore lands in the desired locality, which they estimated to be worth $100,000. Indeed, they asserted that, if capitalists could be induced to locate furnaces at or near Paducah, they had one bank so inexhaustible in its supply of iron that it alone was worth $500,000. The company eagerly took this land at the first-named estimate. The stock was then put on the market and sold at the rate of $10 per share, and at that rate was taken by the owners of this land. It develops, however, that of the 10,000 shares thus coming to these owners, 4,500 of them, by a private, written agreement, were set apart to one Palmer in trust for these owners,-themselves directors in the company,-and a number of other parties, including a majority of the directory of the company. Such was the situation in August, 1887, when it was concluded that the one thing needful to make the enterprise a success was to obtain a president other than one of their own number, whose high character and business qualification would make the stock "go," and whose name would draw the attention of capital, and induce the erection of furnaces, etc. The appellee, a resident of Jefferson county, living near Louisville, was selected as the proper man. He was identified with the successful development of the iron interests of Birmingham, Ala., and had associated in enterprises there with Dr. Standiford, Dr. Caldwell, and other men of wealth. He was then engaged in constructing the Elizabethtown &amp Hodgensville Railroad. A committee of the incorporators, including the attorney for the company, was sent to induce him to accept the presidency of the concern. There was some delay in getting a favorable answer, owing to the work appellee had on hand, but he finally agreed to accept the position if paid an annual salary of $5,000. He also asked that he be given a block of stock, to place him on an equal footing with the other directors. They agreed to this salary, for the company, and, after a consultation among themselves, agreed that the appellee should have a block of stock out of the 4,500 shares held by Palmer. The appellee supposed he would get about 500 shares. He afterwards got 323 shares. The appellee at once repaired to Paducah, was elected president of the company, and entered upon the duties of his office. He was again elected president in January following, and drew his salary regularly until in the spring of 1888, when he voluntarily ceased to draw it, because the company became short of funds, or needed all it had on hand to meet its obligations, and especially its subscription to the Paducah Iron Company, which had been created by the energy of the appellee. He severed his connection with the company in January, 1889, and upon the refusal of the...