Red Bud Realty Company v. South, 335

CourtSupreme Court of Arkansas
Writing for the CourtWOOD, J.
Citation241 S.W. 21,153 Ark. 380
PartiesRED BUD REALTY COMPANY v. SOUTH
Docket Number335
Decision Date01 May 1922

241 S.W. 21

153 Ark. 380

RED BUD REALTY COMPANY
v.

SOUTH

No. 335

Supreme Court of Arkansas

May 1, 1922


[241 S.W. 22]

Appeal from Baxter Chancery Court; Sam Williams, special chancellor; modified.

Decree affirmed.

Allyn Smith, for appellants.

1. The Red Bud Realty Company could not rightfully be sued in Baxter County. Conceding that the removal of the situs of this corporation was not in compliance with the requirements of C. & M. Digest, § 1737, yet its principal office was in fact removed. The residence of a corporation is where the management is carried on. 147 Ind. 292; 46 N.E. 641. Its principal office being in Little Rock, service of summons upon it in Pulaski County did not give the chancery court of Baxter County jurisdiction over it. 109 Ark. 77; C. & M. Dig., 1171. On the question of de facto removal, see 134 Ark. 23; 121 Id. 541; 1 Thompson on Corporations, 2nd Ed., § 234; 114 Ark. 344; 36 Kan. 128; 47 Id. 250; 10 A. 471; 47 N. J. L., 218; 126 Mass. 303; 51 Kan. 631; 159 S.W. 1143, 1144.

2. The motion to dismiss for multifariousness of the complaint should have been sustained. C. & M. Digest, §§ 1076, 1077, 1078, 1292, subdiv. 2; 74 Ark. 536; 19 N.W. 741; 21 Kan. 474; 30 Conn. 316-323; 104 U.S. 245; 59 Ill. 389- 401; 9 Paige (N. Y.) 188-194; 44 Mo. 350; 9 Mich. 45; 104 U.S. 245; 11 Ark. 726. The principle of multifariousness applies "where two parties are attempted to be brought together by a bill in chancery who have no common interest in the litigation, whereby one party is compelled to join in the expense and trouble of a suit in which he and his codefendant have no common interest." 128 U.S. 315; 18 How. (U. S.) 253; 57 Fla. 489; 222 F. 142; 188 U.S. 56; 26 Kan. 47; 51 Id. 617; Id. 39; 25 Id. 665.

3. The complaint does not state, neither does the evidence prove, a cause of action. A necessary allegation, which should have been followed by proof, was that the plaintiff had demanded and endeavored to procure redress for his alleged wrongs by application to the company, and this demand is a condition precedent to the right to maintain the action. 104 U.S. 450; 134 P. 665; 110 U.S. 219. That a corporation has not been successful, and that a stockholder is dissatisfied, is no ground for equitable relief. 84 Kan. 828; 149 P. 879. See also 233 S.W. 713. Allyn Smith had never been dismissed as attorney for Missouri State Life Insurance Company, and was its sole attorney of record, Pettit & Pettit having withdrawn from the case long before the commencement of the trial. He had the right to withdraw the answer. 11 Ark. 230.

5. The provision in the notes for a greater rate of interest after maturity than was stipulated they should bear until maturity was in the nature of a penalty, and not enforcible in equity. 14 Ark. 329; 2 Minn. 352, 72 Am. Dec. 102; 6 Kan. 395; 18 John 223; 16 Ill. 400; 2 Aikens (Vt.) 106; 16 N.Y. 469, 1 Am. Rep. 329; 5 Cowan 569; 6 How. 154; 5 Sanford 192; 39 N.J.Eq. 590; 8 Blk. 140; 1 Yeager 602; 78 Ill. 53; 3 Iowa 244; 6 Mumf. 71; 15 Mass. 177; 112 Id. 204; 29 Conn. 268. See also 73 Ill.App. 691; 22 How. 118; 22 Wall. 170; 100 U.S. 72; 104 U.S. 771, 26 Law. Ed. 923; 38 Ark. 114; 36 Id. 355; 46 Id. 87; 54 Id. 437; 98 Id. 519.

6. The court erred in suppressing the depositions taken in February and March, 1921, both because there was no chancellor to whom to apply for leave to reopen the case and take the depositions, and because defendants had the right to rely on the rule established by the court in that circuit. 32 Ark. 721; 55 Ark. 163; 54 Id. 124; 15 S.W. 153; Id. 154.

7. There was no warrant of law for decreeing a dissolution of the corporation. The statutes of this State recognize only two grounds for the dissolution of a corporation, viz: insolvency, and ceasing to do business. 111 Ark. 238; 84 Kan. 828, and cases cited; 125 S.W. 184, 195; 135 S.W. 938; 10 Encl. of Law and Proc. 1035; High on Receivers, 289 § 288; 4 Thompson on Corp. § 438; 143 Ill. 197; 1 Edw. Ch. (N.Y.) 84; 44 Barb (N. Y.) 239; 99 Mass. 274; 1 Hopk. Ch. (N. Y.) 354; 80 N.Y. 605; 127 Ill. 257; 2 Johns. Ch. (N. Y.) 371; 5 Id. 366; 8 Humph. (Tenn.) 234; 3 N. J. Equity, 332; 55 Wis. 624, 13 N.W. 895; 16 Cal. 145.

W. C. Alley, John T. Castle and Frank Pace, for appellees.

1. The jurisdiction in the Baxter Chancery Court was complete, not only because the alleged removal of the situs of the corporation was void for failure to comply with the statute, C. & M. Digest, § 1737; 106 Ark. 552; 8 Thompson on Corporations, § 494; 96 U.S. 369; 24 Law Ed. 853; 104 N.E. 750. But also because, by virtue of the statute, C. & M. Digest, § 1176, that court acquired jurisdiction by reason of the fact that service was had upon one of the defendants in that county, being the domicile of that defendant, and that gave jurisdiction of the defendant served in Pulaski County. 122 Ark. 502; 4 Fletcher on Corporations, § 2975.

2. The complaint is not bad for multifariousness. The object of the suit is to recover corporate property fraudulently transferred by the managing officer of the corporation, and the cancellation of certain instruments executed by that officer in carrying out his fraudulent schemes, is incident to the relief sought. It is well settled that such matters can be litigated in one suit. 21 Corpus Juris, 416, § 435; Id. p. 420; 9 Minn. 183 and authorities cited; 104 N. W. (Minn.) 817; 136 N.W. 271; 91 P. 667; 147 F. 295; 128 U.S. 403; 182 F. 215.

3. Powell, owner of a majority of the capital stock of the corporation, gained and held complete control and dominated its affairs. It would have been useless to apply to the corporation for relief. It was therefore unnecessary for the plaintiff to make such demands before instituting the suit. 3 Cook on Corporations, § 741; 19 S.W. 82; 97 Id. 202; 59 Ore. 483; 188 Mass. 515; 104 Vt. 121; 156 F. 389; 91 P. 1091; 192 Iowa 733; 39 Minn. 1; 82 Ala. 437; 141 Ill. 320.

4. There was no error in refusing to permit Allyn Smith to withdraw the answer and cross-complaint of Missouri State Life Insurance Company. An attorney has no authority to dismiss a cause of action over the objection of his client. 6 C. J. 646, § 1511; 95 N.W. 684; 1 Thornton on Attorneys at Law, 458; Id. § 215; 2 Chit. P. (Vt.) 117; 2 Greenleaf, Evidence, 2nd Ed. 140, § 145; 11 Ark. 230; 6 C. J. 643; 200 Ill. 84; 65 N.E. 690; 117 Ark. 504; 140 Id. 587.

5. The provision in the notes for a higher rate of interest after maturity, was not a penalty, and the same was enforcible as written. Moreover this question was not raised in the lower court and should not be considered here. 3 C. J. 689; Id. 695; 106 Ark. 525; 29 Id. 500; 64 Id. 305; 74 Id. 241; 57 Id. 312; 101 Id. 22; 95 Id. 593; 89 Id. 300; 84 Id. 399; 80 Id. 476; 77 Id. 195; 76 Id. 551; 80 Id. 65. On the proposition that the provision is enforcible, see C. & M. Dig., § 7353; 22 Cyc. 1526; 32 Ark. 573; 33 Id. 416; 52 Kan. 579; 35 P. 201; 71 Id. 836; 130 Id. 665; 147 Id. 826; 154 Id. 1108 and authorities cited; 104 F. 584 and authorities cited; C. & M. Digest, § 7361.

6. The court properly suppressed the depositions taken in February and March, 1921. It was the master's duty, under the statute, to take all of the testimony in the matter submitted to him. C. & M. Dig., §§ 7154-7160. It is too late, after the evidence is concluded, the report filed, the decree rendered and the appeal perfected, to raise for the first time the question of irregularities on the part of the master in taking the testimony. 52 Ark. 437. After the master had closed the taking of depositions, it was the duty of the defendants, on the discovery of new evidence they desired to submit, to apply to him to reopen the case and take the additional testimony. 23 Corpus Juris 613; 83 F. 772; 96 Ill.App. 323.

The suppression of depositions rests in the sound discretion of the court, and unless that discretion has been abused, it will not be disturbed on appeal. 56 So. 235; 91 S.C. 549; 88 S.C. 360; 56 Penn. S.Ct. 183; 18 Corpus Juris, 727, § 331.

7. The Red Bud Realty Company having ceased to transact the business for which it was chartered, the decree dissolving the corporation was right. C. & M. Dig., § 1820; 4 Pomeroy, Equity Jur. 4th Ed. § 1540; 53 N.W. 218; 162 N.W. 1056; 179 P. 608; Helliwell on Stock and Stockholders, 792; 60 So. 1918.

OPINION [241 S.W. 23]

[153 Ark. 387] WOOD, J.

The Red Bud Realty Company, hereinafter called corporation, is a domestic corporation having a capital stock of $ 50,000 divided into 2,000 shares, of the par value of $ 25 each. The corporation was organized in 1903 for the purpose of transacting a general real estate business. The assets of the corporation consisted originally of a tract of 202 acres of land situated along the White River branch of the St. Louis, Iron Mountain & Southern Railway Company in Baxter County, Arkansas. A townsite was established on this tract of land called Cotter, and the [241 S.W. 24] town was laid out into lots and blocks. The situs of the corporation was the town of Cotter, and its principal business was the sale and disposition of lots in that town. At the organization of the corporation W. V. Powell was elected president, J. C. South, secretary, and Thomas Combs, treasurer. In 1907 J. C. South, who was a minor stockholder, instituted an action against the corporation and the majority stockholders to require the president to account for large sums of money which it was alleged he had misappropriated. The litigation resulted in placing the corporation in the hands of a receiver. [153 Ark. 388] At the end of this litigation in 1910 (see Red Bud Realty Co. v. South, 96 Ark. 281, 131 S.W. 340) the receivers made settlement of the affairs of the corporation and turned the assets in their hands over to the corporation.

On April 11, 1911, there was a regular meeting of the stockholders at Cotter. At this time Powell controlled three-fifths of the capital stock...

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7 practice notes
  • Caldcleugh v. Caldcleugh, 292
    • United States
    • Supreme Court of Arkansas
    • April 9, 1923
    ...Taking of testimony was ordered finished within 30 days after May, 1921, and defendant had taken no testimony after December, 1920. 241 S.W. 21; 21 C. J. 582, sec. 717. Burden on appellants to show appellee's marriage illegal. 131 Ark. 225, 18 R. C. L. 417. On cross-appeal, widow was entitl......
  • Graysonia, Nashville & Ashdown Railroad Co. v. Newberger Cotton Co., 261
    • United States
    • Supreme Court of Arkansas
    • March 29, 1926
    ...of equity jurisdiction; first, to prevent a multiplicity of suits, and to give plaintiffs an adequate remedy (Redbud Realty Co. v. South, 153 Ark. 380, 241 S.W. 21; Little River Levee District v. Thomas, 154 Ark. 328, 242 S.W. 552); second, to give the plaintiffs [170 Ark. 1051] the benefit......
  • Turpin v. Antonio, 372
    • United States
    • Supreme Court of Arkansas
    • May 15, 1922
    ...compulsion may be recovered. To enable the party making the compulsory payment to recover it, the compulsion must have been illegal, [153 Ark. 380] unjust or oppressive. To constitute the coercion or duress which will be regarded as sufficient to make a payment involuntary, there must be so......
  • Harger v. Oklahoma Gas & Electric Co., 4-4738
    • United States
    • Supreme Court of Arkansas
    • December 6, 1937
    ...were proper parties to the suit, and judgment against the bank could be upheld under § 6072 [1176]." In Red Bud Realty Co. v. South, 153 Ark. 380, 241 S.W. 21, Mr. Justice WOOD had the question under consideration. It appeared that local defendants were duly served in a transitory acti......
  • Request a trial to view additional results
7 cases
  • Caldcleugh v. Caldcleugh, 292
    • United States
    • Supreme Court of Arkansas
    • April 9, 1923
    ...Taking of testimony was ordered finished within 30 days after May, 1921, and defendant had taken no testimony after December, 1920. 241 S.W. 21; 21 C. J. 582, sec. 717. Burden on appellants to show appellee's marriage illegal. 131 Ark. 225, 18 R. C. L. 417. On cross-appeal, widow was entitl......
  • Graysonia, Nashville & Ashdown Railroad Co. v. Newberger Cotton Co., 261
    • United States
    • Supreme Court of Arkansas
    • March 29, 1926
    ...of equity jurisdiction; first, to prevent a multiplicity of suits, and to give plaintiffs an adequate remedy (Redbud Realty Co. v. South, 153 Ark. 380, 241 S.W. 21; Little River Levee District v. Thomas, 154 Ark. 328, 242 S.W. 552); second, to give the plaintiffs [170 Ark. 1051] the benefit......
  • Harger v. Oklahoma Gas & Electric Co., 4-4738
    • United States
    • Supreme Court of Arkansas
    • December 6, 1937
    ...They were proper parties to the suit, and judgment against the bank could be upheld under § 6072 [1176]." In Red Bud Realty Co. v. South, 153 Ark. 380, 241 S.W. 21, Mr. Justice WOOD had the question under consideration. It appeared that local defendants were duly served in a transitory acti......
  • Turpin v. Antonio, 372
    • United States
    • Supreme Court of Arkansas
    • May 15, 1922
    ...compulsion may be recovered. To enable the party making the compulsory payment to recover it, the compulsion must have been illegal, [153 Ark. 380] unjust or oppressive. To constitute the coercion or duress which will be regarded as sufficient to make a payment involuntary, there must be so......
  • Request a trial to view additional results

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