Tampa Waterworks Co. v. Wood

• Decision Date: 06 April 1929
• Citation: 121 So. 789,97 Fla. 493
• Parties: TAMPA WATERWORKS CO. v. WOOD.
• Court: Florida Supreme Court

121 So. 789

97 Fla. 493

TAMPA WATERWORKS CO. v. WOOD.

Florida Supreme Court, Division A.

April 6, 1929

Suit by Walter Wood, individually and as surviving partner of R. D Wood & Co., against the Tampa Waterworks Company. From an interlocutory decree overruling a demurrer to the bill defendant appeals.

Affirmed.

Syllabus by the Court

SYLLABUS

Corporation cannot generally, in absence of statute, be dissolved at instance of stockholder. Generally, corporation while a going concern and before expiration of charter cannot, in absence of statute, be dissolved at the instance of the stockholder by an action in equity for that purpose.

Stockholder was entitled to appointment of receiver for corporation having disposed of principal business, where legal representative of officer was committing fraud in administering assets. Where corporation had disposed of its principal business and assets were being administered by legal representative of officer who was wasting assets in negligent and extravagant management, though nothing remained to be done except to collect assets and distribute them to stockholders, which person in charge of its affairs refused to do, stockholder was entitled to appointment of receiver to take charge of its affairs and collect assets.

Power to appoint receiver for corporation at instance of stockholder is discretionary one to be exercised with great circumspection. Power to appoint a receiver for corporation at the instance of a stockholder is a discretionary one, to be exercised with great circumspection and only in cases where there is fraud, spoliation, or imminent danger of loss of property if immediate possession is not taken by court.

Officers and directors of corporation occupy quasi fiduciary relation to corporation and stockholders. Officers and directors of a corporation occupy a quasi fiduciary relation to corporation and its stockholders, and are required to exercise the utmost good faith and to exercise their powers solely in interest of corporation.

Appeal from Circuit Court, Hillsborough County; F M. Robles, judge.

COUNSEL

Knight, Thompson & Turner, of Tampa, for appellant.

Finley & Kirsch, of Philadelphia, Pa., and Mabry, Reaves & Carlton, of Tampa, for appellee.

OPINION

ELLIS J.

This is an appeal from an interlocutory decree overruling a demurrer to a bill in chancery of Walter Wood, individually and as surviving partner of R. D. Wood & co., exhibited against the Tampa Waterworks Company, a Florida corporation, for an injunction to restrain the corporation from disposing of its assets, for a liquidation of its business and distribution of its assets, and the appointment of a receiver to take charge of its affairs and to collect its assets.

The theory of the bill is that stockholders of a corporation whose affairs are being mismanaged, its assets wasted through the fraud and incompetence of its managing officers, or where the corporation has abandoned the purposes for which it was organized, or where the officers of the corporation wrongfully deal with its property to the injury of the stockholders, may obtain relief in chancery such as is sought by this bill. See Noble v. Gadsden Land & Imp. Co., 133 Ala. 250, 31 So. 856, 91 Am. St. Rep. 27; Exchange Bank of Wewoka v. Bailey, 29 Okl. 246, 116 P. 812, 39 L. R. A. (N. S.) 1032, note.

There is no statute in this state vesting in a court of equity the jurisdiction at the instance of a stockholder of a corporation to wind up its affairs or to have a receiver appointed with that end in view.

The general rule which is supported by perhaps the greater number of jurisdictions in America is that, corporations being creatures of the state, their lives depend upon the action of the state or the stockholders as a whole, and where the charter of a corporation has not expired and it is a going concern it cannot, in the absence of statute, be dissolved at the instance of a stockholder by an action in equity for that purpose. See Taylor v. Decatur Mineral & Land Co. (C. C.) 112 F. 449; Id., 115 F. 1022, 52 C. C. A. 686; Pearce v. Sutherland, 90 C. C. A. 519, 164 F. 609; Croft v. Lumpkin Chestatee Mining Co., 61 Ga. 465; Wheeler v. Pullman Iron & Steel Co., 143 Ill. 197, 32 N.E. 420, 17 L. R. A. 818; Supreme Sitting O. I. H. v. Baker, 134 Ind. 293, 33 N.E. 1128, 20 L. R. A. 210; Wallace v. Pierce-Wallace Pub. Co., 101 Iowa, 313, 70 N.W. 216, 38 L. R. A. 122, 63 Am. St. Rep. 389; Mason v. S.Ct. E. L., 77 Md. 483, 27 A. 171, 39 Am. St. Rep. 433; Benedict v. Columbus Const. Co., 49 N. J. Eq. 23, 23 A. 485; Gilman v. Green Point Sugar Co., 61 Barb. (N. Y.) 9; State v. Merchants' Ins. & Trust Co., 8 Hump. (Tenn.) 235; Barton v. International Fraternal Alliance, 85 Md. 14, 36 A. 658; State ex rel. Donnell v. Foster, 225 Mo. 171, 125 S.W. 184; Vila v. Grand Island Electric Light, Ice & Cold Storage Co., 68 Neb. 232, 94 N.W. 136, 97 N.W. 613, 63 L. R. A. 791, 110 Am. St. Rep. 400, 4 Ann. Cas. 59; Robertson v. Bullions, 11 N.Y. 243.

The bill of complaint in this case prays that the Tampa Waterworks Company be restrained from further distribution of its assets; that its affairs be wound up and the remaining assets be equitably distributed among the stockholders, and that all officers of the corporation who have defrauded or wronged the company or received undue proportion of its assets be required to account therefor and return the same to the corporation; that a receiver be oppointed to take charge of all books, accounts, vouchers, money, property, deeds, papers, and assets of every kind, and that the officers of the company be enjoined from interfering with the receiver in the discharge of his duties; that the receiver be empowered to inquire into the matters complained of in the bill, and that he may prosecute in the name of the corporation all such actions as may seem expedient to recover for the corporation its assets which have been dissipated and appropriated by Stuart Wood. There was a prayer for general relief.

The basis for the relief prayed is, briefly stated, that the complainant Walter Wood and Stuart Wood were in the latter's lifetime copartners and Walter Wood is the surviving partner; that the defendant corporation owned a franchise from the city of Tampa to conduct a system of waterworks for public and private supply in the city which it continued to operate until 1923, when it sold the plant to the city of Tampa, since which time the business of the corporation has been in process of liquidation and an office has been maintained in Tampa, and that there are now $300,000 of undistributed liquid assets in the possession of the corporation; that Walter and Stuart Wood, as copartners, acquired stock in the defendant corporation; the copartnership owned and held as collateral security all the outstanding stock of 600 shares; Stuart Wood became president and treasurer of the waterworks company, which position he held until his death in 1914; the corporation under Stuart Wood's management was successful; that in 1903 the total amount of stock outstanding was 1,135 shares.

From 1893 to 1913 Wood & Co. owned a majority of all the outstanding stock of the corporation which from 1897 was practically a branch of Wood & Co. and under the direction and control of that copartnership; that Stuart Wood acquired a large part of the corporation's stock and held it in his own name at the time of his death, a portion of which it is alleged was paid for with the corporation's money; that in 1914 when Stuart Wood died he held in his own name 2,341 shares of stock in the corporation, and there were then 1,816 shares in the name of Wood & Co.; that since the death of Stuart Wood his legal representatives have assumed to manage and control the corporation in their own interests 'regardless' of Wood & Co.

It is alleged that Stuart Wood in his lifetime while an officer of the corporation acquired some parcels of land in his own name which were needful to the business of the corporation...