Southwestern Portland Cement Co. v. Latta & Happer

• Decision Date: 15 March 1917
• Docket Number: (No. 659.)
• Parties: SOUTHWESTERN PORTLAND CEMENT CO. et al. v. LATTA & HAPPER et al.
• Court: Texas Court of Appeals

193 S.W. 1115

SOUTHWESTERN PORTLAND CEMENT CO. et al. v. LATTA & HAPPER et al.

(No. 659.)

Court of Civil Appeals of Texas. El Paso.

March 15, 1917.

On Rehearing, April 12, 1917.

Appeal from District Court, El Paso County; P. R. Price, Judge.

Suit by W. D. Latta and J. A. Happer, composing the firm of Latta & Happer, and others, against the Southwestern Portland Cement Company and others. From a judgment in part for plaintiffs, both parties appeal. Reformed and affirmed.

Burges & Burges, of El Paso, and McNamee & McNamee, of Los Angeles, Cal., for Southwestern Portland Cement Co. and others. Davis & Goggin and T. A. Falvey, all of El Paso, for Latta & Happer and others. Statement of Case.

HIGGINS, J.

On July 6, 1915, W. D. Latta and J. A. Happer, composing the firm of Latta & Happer, E. E. Neff, trustee, et al., suing for themselves and in behalf of all stockholders of the Southwestern Portland Cement Company who were similarly situated, filed this suit against the Southwestern Portland Cement Company and against the directors and the secretary of said company to enjoin them from constructing and operating a cement plant near Victorville, in the state of California, and for other relief. It was alleged that said company was a corporation, incorporated under the laws of West Virginia, and, under its charter, had no power to construct and operate such plant; that the board of directors had unlawfully paid to defendant Leonardt, its president, and to defendant Martinez, its vice president and secretary, $6,000 and $1,200, respectively, in back salaries, for which they asked judgment in behalf of the corporation; that defendants Leonardt and Martinez and Courchesne had acquired the stock of the corporation at less than par; and that defendants had otherwise diverted and appropriated the funds and assets of the corporation, to its damage. Plaintiffs prayed an injunction to restrain the issuance and sale of stock for the purpose of erecting the California plant, and asked for a full accounting of receipts and disbursements of the funds of the corporation, and, upon such accounting, prayed the court to give plaintiff judgment in behalf of the corporation against any of the defendants who had wrongfully acquired any of the property or funds of the corporation, and that all surplus moneys on hand be declared dividends by the board of directors. Plaintiffs alleged provisions of the laws of West Virginia and of the charter of defendant corporation claiming that the same showed that the establishment of a cement plant in California was ultra vires. They also pleaded that in violation of the law defendants were about to give to defendant Leonardt, the president of the corporation, $75,000 worth of the capital stock of the corporation for the cement site at Victorville, which was worth not more than $18,000, and that they were about to unlawfully purchase and acquire the capital stock and properties of the Mojave Northern Railway Company and make the defendant corporation a common carrier.

The pleadings in the case are very voluminous, and it is believed the foregoing statement is sufficient to indicate the issues raised by the plaintiffs' suit. It is unnecessary to detail the pleadings of the defendants.

The case was tried before a jury and submitted upon special issues. The questions asked and the answers of the jury thereto are as follows:

"No. 1. Do you find from the preponderance of the evidence that plaintiffs instituted this suit for the sole benefit of John G. Treanor, or for the sole benefit of said Treanor and other persons or corporations? Answer: No.

"No. 2. Do you find from the evidence that at the time the trustees Martinez and Leonardt conveyed the El Paso property to the Southwestern Portland Cement Company that the value of the same for the purpose of the manufacture of cement was $300,000, or in excess of that sum? Answer: No.

"No. 3. What was the actual value of said El Paso property at the time of its conveyance by said trustees to the Southwestern Portland Cement Company? Answer: $175,000.

"No. 4. Do you find from a preponderance of the evidence, under all the facts and circumstances in evidence, that the value of the property at or near Victorville, Cal., conveyed by Carl Leonardt to the Southwestern Portland Cement Company, was either of the value of $75,000, or of a value in excess of that sum? Answer: No.

"No. 5. What sum would represent the actual value of the property at or near Victorville, Cal., conveyed by the said Carl Leonardt to the Southwestern Portland Cement Company at the time of its said conveyance? Answer: $35,000.

"Plaintiffs' question No. 4: Do you find that the property turned over by the defendant Leonardt to the corporation for the purpose of establishing therewith a cement factory at Victorville, Cal., was at the time of such transfer to the company in value less than the value of the stock of the Southwestern Portland Cement Company that defendant Leonardt was to and did receive for said property? Answer: Yes."

"Plaintiffs' question No. 15: Do you find that the board of directors gave to defendant Leonardt back salary in the sum of $6,000 and to defendant Martinez back salary in the sum of $1,200? Answer: Yes."

The court rendered the following judgment in the cause:

"First. That the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, take nothing by reason of their suit against the defendants J. G. McNary, T. A. Riordan, W. E. Keller, C. Boettcher, Robert Krakauer, F. H. Powell, A. Courchesne, C. C. Merrill, C. A. Fellows, and O. J. Binford, and that said defendants last above named go hence without day.

"Second. That the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, take nothing by their suit, in so far as they seek to enjoin or restrain the defendants Southwestern Portland Cement Company, Carl Leonardt, Robert Krakauer, A. Courchesne, W. E. Keller, Felix Martinez, J. G. McNary, C. Boettcher, C. C. Merrill, T. A. Riordan, F. H. Powell, C. A. Fellows, and O. J. Binford, officers and directors of the said Southwestern Portland Cement Company, from acquiring property and directing, building, and maintaining and operating a cement manufacturing plant and works and properties incident thereto, at or near Victorville, in the state of California, or from expending the moneys of the said defendant company for said purposes or any of them.

"Third. It is further ordered, adjudged, and decreed by the court that the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, either personally, in their own behalf, or in the interest of the said defendant Southwestern Portland Cement Company, or any of the stockholders thereof, take nothing by reason of their suit. as against the defendants Carl Leonardt, Felix Martinez, A. Courchesne, for the recovery of stock issued to them or any of them, in payment for lands purchased in the name of the defendants Southwestern Portland Cement Company, in El Paso county, Tex., for the erection of the manufacturing plant of said defendant company in El Paso county, Tex., or otherwise issued to them for any consideration, or for any purpose whatever, except as hereafter provided.

"Fourth. It is further ordered, adjudged, and decreed by the court that the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, and for the use and benefit of the defendant Southwestern Portland Cement Company, do have and recover of and from the defendant Carl Leonardt the sum of $6,000, with interest thereon from the 31st day of January, A. D. 1915, at the rate of 6 per cent. per annum, for which let execution issue.

"Fifth. It is further ordered, adjudged, and decreed by the court that the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, for the use and benefit of the Southwestern Portland Cement Company do have and recover of and from the defendant Felix Martinez the sum of $1,200, with interest thereon from the 31st day of January, A. D. 1915, at the rate of 6 per cent. per annum, for which let execution issue.

"Sixth. It is further ordered, adjudged, and decreed by the court that the Southwestern Portland Cement Company, its officers, directors, and agents, be, and the same are hereby ordered to at all times refrain from paying to the defendant Carl Leonardt, or his assignees, any dividend whatsoever upon 400 shares each of preferred and common stock of the 750 shares of preferred and common stock issued to the said Carl Leonardt in payment for the property situated at or near Victorville, in the state of California, and shall refrain from recognizing or counting any vote of the said 400 shares common stock upon any matter or subject concerning the affairs and management of said defendant company.

"Seventh. It is further ordered, adjudged, and decreed by the court that the said defendant, Carl Leonardt be and he is hereby forever restrained from voting the said 400 shares of common stock of the 750 shares of the common stock of the said defendant Southwestern Portland Cement Company, issued to him in payment for properties by him conveyed to the said defendant at or near Victorville, in the state of California, and from demanding or receiving or offering to demand or receive any dividends whatsoever on said 400 shares each of common and preferred stock of said defendant company in any manner whatsoever.

"Eighth. It is further ordered, adjudged, and decreed that this cause be dismissed and in all things discontinued as to C. W. Wilcox, Christine Garlick, and Crawford Harvie, independent executor of the estate of W. C. Harvie, deceased, and that they recover all costs in behalf incurred.

"Ninth. It is further ordered, adjudged, and decreed that the plaintiffs W. D. Latta, J. A. Happer, E. E. Neff, and Dr. Ida Bishop, recover of the defendants Southwestern Portland Cement Company and Carl Leonardt and Felix Martinez pay all costs by them respectively...