Piedmont Press Ass'n v. Record Pub. Co.

• Decision Date: 26 March 1930
• Docket Number: 12869.
• Parties: PIEDMONT PRESS ASS'N v. RECORD PUB. CO. et al.
• Court: South Carolina Supreme Court

152 S.E. 721

156 S.C. 43

PIEDMONT PRESS ASS'N v. RECORD PUB. CO. et al.

No. 12869.

Supreme Court of South Carolina

March 26, 1930

Suit by the Piedmont Press Association against the Record Publishing Company and others, in the original jurisdiction of the Supreme Court, for an injunction.

Temporary injunction vacated, and decision postponed pending determination of an appeal in the United States Circuit Court of Appeals.

C. T Graydon, of Columbia, and H. K. Osborne, of Spartanburg, for plaintiff.

Nicholls Wyche & Byrnes, of Spartanburg, Benj. F. Pierce, of Augusta Ga., and D. W. Robinson, of Columbia, for defendants.

COTHRAN J.

This is an action solely for injunction in the original jurisdiction of this court, commenced February 17, 1930.

At the time of the commencement of the action, the plaintiff obtained from three of the justices of this court an order requiring the defendants to show cause before this court at 10 a. m., or as soon thereafter as counsel can be heard, on Monday, the 10th day of March, 1930, why the prayer of the plaintiff should not be granted and why the said defendants, their agents and servants and all persons acting under or on their behalf, should not, pending this action, be restrained and enjoined from trespassing or entering upon the premises occupied by the plaintiff at the Record Publishing building in Columbia, S. C.; from interfering or intermeddling with said plant and the publication of the Columbia Record and Sunday Record; from intermeddling with any other properties covered by the lease referred to in the complaint; from interfering with any of the officers, agents, or employees thereof; from intermeddling or interfering with any other business of the plaintiff; and from attempting to interfere with or dissuade any of the debtors of the said company from promptly paying to the said company any amounts due by them to the said company incident to the operation of the business of the plaintiff. The order also contained a temporary restraining provision, in the meantime.

At the appointed time the matter came on for hearing.

The defendants submitted a motion to dismiss the complaint upon various grounds stated, and at the same time, reserving the right without prejudice to insist thereupon, submitted their joint answer to the complaint, supported by sundry affidavits and exhibits.

The apparent controversy, as will appear, is between the plaintiff, Piedmont Press Association, claimed to be a corporation of South Carolina and a lessee of the defendant Record Publishing Company, and the last-named company, likewise a South Carolina corporation, in reference to the possession of the property of the Record Publishing Company and the operation of the newspaper business heretofore conducted by it. The plaintiff claims to be in possession under a valid lease, and that the defendants are interfering and threatening to further interfere with its possession and operation. The defendants deny the validity of the alleged lease and insist that they are entitled to such possession and operation under the circumstances which will be hereinafter detailed .

The real controversy, as we shall endeavor to show, is between William La Varre and Harold Hall, individuals once engaged, under friendly relations, in a joint enterprise of acquiring the capital stock of the Record Publishing Company for the purpose of conducting the operation of publishing that newspaper, but now embroiled in bitter and apparently irreconcilable conflict.

The facts, as we find them from the mass of pleadings, affidavits, exhibits, and records, are those (adopting as we feel obligated to do, and independently are so inclined, the findings of fact of the Georgia federal court, as will be explained later):

In the latter part of the year 1928, William La Varre and Harold Hall, made an arrangement with the International Paper Company, by which that company agreed to and did advance to them approximately $900,000, for the purchase of the capital stock of three newspaper corporations, the Augusta Chronicle of Augusta, Ga., the Spartanburg Herald-Journal Company of Spartanburg, S. C., and the Record Publishing Company of Columbia, S. C., and to liquidate the outstanding bonded indebtedness of said corporations respectively.

As per agreement, La Varre and Hall executed notes to said corporation representing the advance and agreed to pledge the acquired stock as collateral thereto.

It seems that the advance was made before the stock was acquired; it does not appear that it has ever been actually hypothecated as agreed.

The proceeds of the loan, in large measure, were used in the purchase of the stock which appears to have been issued in the name of La Varre alone. The defendants allege that of the said proceeds La Varre retained and deposited to his own credit in certain banks $122,000 which should have been applied to the outstanding bonded debts of the several corporations, and later used a considerable amount of said funds.

After the consummation of the purchase of the stock of the Record Publishing Company, the former directors and officers of that corporation resigned, on March 15, 1929, at a meeting of the board of directors composed of Wright, Tobias, Taylor, and Marshall. (Why this meeting was that of the old board of directors, and not of the then existing stockholders, does not appear.) At that meeting of the board of directors, La Varre, Hall, and McMaster were elected directors; and at a continuation of the meeting the following officers were elected: La Varre, president, Hall, vice president, Varre, treasurer, and McMaster, secretary; and additional officers, Marshall, assistant treasurer, Taylor, assistant secretary.

The corporation, the Record Publishing Company, continued in the possession of the newspaper property and the conduct of its operations.

On April 4, 1929, in accordance with the act of Congress a statement of the ownership, etc., of the Record was transmitted to the United States Post Office Department and was published in the Record; it declared, under the affidavit of both La Varre and Hall, that at that time the paper was being published by the Record Publishing Company; the names of the editor, managing editor, and business manager; "that the owner is the Record Publishing Company all of the capital stock of which is owned by William La Varre and Harold Hall"; and the names of bondholders, mortgagees, and other security holders.

On May 23, 1929, La Varre with certain other corporators filed a petition for a charter to be issued in the name of the Piedmont Press Association by the secretary of state, and the same was issued upon that date; with a somewhat euphemistic introduction the general purposes of the corporation were declared to be "to establish a system and organization for the gathering and distribution of news, information, statistics and literary features relating to matters of national and local interest; to create, sell and place advertising; to own and operate or invest in newspapers, magazines and other periodicals; to do a general printing and publishing business; and to do any and all other things necessary and incident to and in furtherance of the purposes aforesaid." The capital stock was placed at 1,000 shares of no par value. The directors named were Hearon, McMaster, Hamilton, and La Varre, "although the last, not least"; the officers, La Varre, president, Hearon, vice president, McMaster, vice president and secretary, Hamilton, treasurer.

The entire proposed stock was subscribed for by La Varre, and "qualifying certificates" were issued to Hearon, McMaster, and Hamilton, 2 shares each, and 994 shares to La Varre.

The minute book of the Record Publishing Company shows a record of a stockholders' meeting of the corporation as of June 22, 1929. (The contention of the defendants is that the minutes of that meeting were not entered in the minute book for many months thereafter.) The minutes declare that the meeting was held "by unanimous consent and waiver of the stockholders of the" corporation, although it appears that it was without notice to or knowledge of Hall, a joint owner with La Varre of the entire capital stock with a minor exception to qualify certain directors.

The directors then in office by election at the meeting of March 15, 1929, were La Varre, Hall, and McMaster. Although Hall was vice president and director under the election of March, and had no notice of the stockholders' meeting of June, and of course was not present as the minutes show, it appears that La Varre, who was chairman of the meeting, offered a resolution, which was adopted, calling for the resignation of all of the officers and directors. Accordingly La Varre and McMaster tendered their resignations (as president and secretary, respectively, and as directors); Hall, vice president and director, not being present, of course did not resign either position. Notwithstanding the fact that there was no vacancy in either position, the meeting proceeded with the election of La Varre, McMaster, and Taylor as directors.

After the election of directors a meeting of the board was held immediately at which La Varre was elected president and treasurer, McMaster, vice president, Taylor, secretary, and Marshall, assistant secretary, and the board undertook to authorize and approve a contract of lease of the property of the Record Publishing Company to the Piedmont Press Association, the entire stock in which was claimed by La Varre with the exception noted.

Later on the same day, a stockholders' meeting, at which La Varre and McMaster alone were present, was held, which undertook to ratify the action of the board and to authorize the execution of the said lease by McMaster as...