Proctor v. Farrar

• Decision Date: 28 March 1919
• Docket Number: No. 19595.,19595.
• Citation: 213 S.W. 469
• Parties: PROCTOR et al. v. FARRAR et al.
• Court: Missouri Supreme Court

213 S.W. 469

PROCTOR et al. v. FARRAR et al.

No. 19595.

Supreme Court of Missouri, Division No. 1.

March 28, 1919.

Motion for Rehearing Denied June 2, 1919.

Appeal from Circuit Court, Livingston County; Frank P. Divelbiss, Judge.

Suit by J. R. Proctor and others against S. F. Farrar and others. From a decree for plaintiffs, defendants appeal. Remanded, with directions.

This suit was brought in the circuit court for Caldwell county to the June term, 1913, by Ellisworth Upp, J. R. Proctor, and Joseph C. Russell, administrator of the estate of Samuel Russell, deceased, and against S. F. Farrar, J. R. Dalbey, and the Missouri & Alabama Land & Live Stock Company. The body of the petition is as follows:

"Plaintiffs for cause of action state:

"That at all of the times hereinafter mentioned the Missouri & Alabama Land & Live Stock Company was, and now is, a corporation duly and legally incorporated under and by' virtue of the laws of the state of Alabama; that their principal offices are in the city of Braymer, Caldwell county, Mo.

"That at the date of the issuing of the contract hereinafter more fully set out, one D. Creswell was president of said corporation. That thereafter, and prior to the date of the bringing of this suit, the said D. Creswell was removed from Caldwell county and the state of Missouri and that J. R. Proctor was duly elected, and ever since has been and now is, the president of said corporation. That Joe C. Russell is the duly appointed and acting administrator of the estate of Samuel Russell, deceased, who was at the time of his death a large stockholder in said company, and said Russell, as said administrator, is a stockholder in said corporation, and has a right to bring this suit and become a party plaintiff herein.

"That this suit is prosecuted for and on behalf of all of the stockholders of said corporation, as well as the plaintiffs herein.

"That on and prior to the dates complained of in this suit the said Missouri & Alabama Land & Live Stock Company owned 13,000 acres of land in Washington county, Ala., known as the `Peach Ridge tract.' That said land is covered with pine and turpentine bearing trees. That said corporation being desirous of selling the turpentine and tie rights then existing on said lands, and S. F. Farrar and J. R. Dalbey, defendants herein, at said time, and all the time since, and still being directors and officers of said corporation, that is to say, vice president and secretary and treasurer, respectively, and having great faith and confidence in their integrity and honesty, said Farrar and Dalbey were at a regular meeting of the directors of said corporation, on the 30th day of October, 1911, constituted by said corporation its duly authorized agents, and were appointed by said corporation and given the power to negotiate and consummate for and on behalf of said corporation, for the best price obtainable, a sale of the turpentine and tie rights on said land for such sum as could be obtained by them, not less, however, than the price and sum of $10,000 for the turpentine rights on said land, and also to sell the dead and down timber on certain lands owned by said corporation. That the said Farrar and Dalbey were appointed and constituted agents as hereinbefore set out, and given authority to make and consummate said sales for and on behalf of said corporation, and that their authority was given to them in the form of a contract, which said contract is in words and figures as follows, to wit:

"`This agreement, made and entered into this 30th day of October, A. D. 1911, by and between the Missouri & Alabama Land & Live Stock Company, a corporation, incorporated under the laws of Alabama, party of the first part, and J. R. Dalbey and S. F. Farrar, of Braymer, Caldwell county, Missouri, parties of the second part,

"`Witnesseth: Whereas the party of the first part for and in consideration of the sum of one dollar to it in hand paid by the said parties of the first part, receipt of which is hereby acknowledged, does hereby give and grant unto the said parties of the second part, the exclusive right and privilege to bargain and sell for the party of the first part, the lands belonging to it in Washington county, Alabama, and known as the `Peach Ridge Tract' and containing 13,000 acres more or less and failing to do so to bargain and sell for the said party of the first part the privilege to turpentine said tract on the following terms:

"`(1) In event of a sale of the land, it shall not be sold for less than six and 50/100 dollars per acre net to the party of the first part. Parties of the second part are hereby authorized to accept $4.00 per acre for the timber on said tract.

"`(2) The right to turpentine said tract shall not be sold for less than ten thousand dollars net to the said party of the first part, or a sum less than one and 50/100 dollars per acre for the land turpentined.

"`(3) Parties of the second part are hereby granted the privilege to use their own judgment as to the advisability of selling the dead and down timber for ties or otherwise.

"`Parties of the second part hereto agree to use diligent efforts to bring about the above sale and to report promptly when sold.

"`Witnesses our hands and seals the day and year first above written.

"`Missouri & Alabama Land & Live Stock Company. Attest: J. R. Dalbey. O. B. Dorsey. J. R. Proctor. G. H. Ogden. Joe C. Russell, Adm'r.'"

An amended petition was afterward filed which it is not necessary to notice, and afterward the cause was transferred by change of venue to Livingston county, where a second amended petition was filed upon which the cause was tried. The plaintiff Upp having died in the meantime, his administrator was made a party plaintiff in his stead.

The second amended petition, in addition to the facts stated in the original petition, alleges that the authorized capital stock of the Missouri & Alabama Land & Live Stock Company consisted of 450 shares of $100 each, 420 shares of which had been issued, and that each of the plaintiffs, in the capacity mentioned, was the owner of 30 shares; that on October 30, 1911, and for a long time afterward, Creswell was president of said corporation, the defendant Dalbey, vice president, and the defendant Farrar, secretary and treasurer. All these were directors. George H. Ogden and plaintiffs Proctor and Russell were also directors. It set out with much detail the execution of the written authority under which Dalbey and Farrar acted in selling the turpentine right and ties mentioned in the original petition; the sale of the turpentine right for $24,000 and the ties at 6 cents each; their concealment of the amount received, and false representation that it had only been $12,000 for the turpentine right and 3 cents each for ties; their" conspiracy with Creswell and Ogden by which the latter signed the so-called contract in consideration of a part of the profits to be withheld from the corporation. The charging part concludes as follows:

"Plaintiffs further aver that plaintiffs, and particularly the plaintiffs J. R. Proctor, Joe C. Russell, as administrator, and the said Ellsworth Upp, during his lifetime, for and on behalf of said corporation, repeatedly demanded of said Farrar and Dalbey that they account to the said corporation for the moneys, notes, and properties received by them as the full purchase price of said turpentine rights, and likewise the moneys and profits received by them for the sale of the tie timbers, but the said defendants have failed and refused to account for the same and pay the same over to the said corporation.

"Plaintiffs further state that the defendants Farrar and Dalbey and the said George H. Ogden constitute a majority of the board of directors of said defendant corporation, and that said George H. Ogden, as a director of said defendant corporation, has at all times refused to join with the plaintiffs Proctor and Russell, administrator, as director, to order and compel the said defendants Farrar and Dalbey to account for the moneys and profits justly due the corporation, as aforesaid, and has refused, and still refuses, to authorize and direct suit to be instituted in the name and on behalf of said corporation against the said Farrar and Dalbey, and to require the said Farrar and Dalbey to account and pay to the said corporation the said moneys and properties, and plaintiffs further aver that the defendants Farrar and Dalbey, still acting and combined with the said George H. Ogden, have obtained control, and have control, of one-half of all the capital stock of said corporation, and have prevented the other stockholders from procuring action by the stockholders, at a stockholders' meeting, authorizing the corporation to institute suit in the name and on its behalf, against said Farrar and Dalbey, to require them to account for the moneys and properties aforesaid, and the plaintiffs aver that by reason of the premises they have been unable, and are still unable, to cause suit to be instituted and maintained in the name and in behalf of said corporation against the said Farrar and Dalbey on account of the matters and things herein complained of.

"Plaintiffs further aver that this suit is prosecuted by the plaintiffs on behalf of all of the stockholders of said defendant corporation, and for the use and benefit of said corporation, and that the said corporation is made a party defendant to this action by reason of the facts hereinbefore set forth."

The prayer for relief is as follows:

"Wherefore, plaintiffs pray the court to take an account of all the moneys and properties received by the defendants Farrar and Dalbey to account and pay to the defendant Missouri & Alabama Land & Live Stock Company the full purchase price of said turpentine rights and said tie timbers, together with 6 per cent. interest thereon from the date of the receipt of said moneys, and that judgment be rendered by this court for and on...