La Varre v. Hall, 5860.
| Decision Date | 21 July 1930 |
| Docket Number | No. 5860.,5860. |
| Citation | 42 F.2d 65 |
| Parties | LA VARRE v. HALL. |
| Court | U.S. Court of Appeals — Fifth Circuit |
John E. Hall, Warren Grice, and Chas. J. Bloch, all of Macon, Ga., Irvine F. Belser, of Columbia, S. C., A. B. Lovett, of Savannah, Ga., and L. W. Perrin, of Spartanburg S. C. (Hitch, Denmark & Lovett, of Savannah, Ga., Melton & Belser, of Columbia, S. C., Perrin & Tinsley, of Spartanburg, S. C., Hamilton Phinizy, of Augusta, Ga., and Hall, Grice & Bloch, of Macon, Ga., on the brief), for appellant.
John A. Sibley, of Atlanta, Ga., Geo. S. Jones and Scott Russell, both of Macon, Ga., Henry C. Hammond, of Augusta, Ga., and Louis M. Loeb, of New York City (Spalding, MacDougald & Sibley, of Atlanta, Ga., Hammond & Kennedy, of Augusta, Ga., Jones, Jones, Johnston & Russell, of Macon, Ga., and Cook, Nathan & Lehman, of New York City, on the brief), for appellee.
Before BRYAN and FOSTER, Circuit Judges, and GRUBB, District Judge.
The issues in this case can best be stated by briefly reviewing the pleadings and the progress of the case. Harold Hall, appellee, brought this suit originally in the superior court of Richmond county, Ga., against William La Varre, appellant. The petition in substance alleged that Hall and La Varre, both newspaper men of more or less experience, had conceived the idea of acquiring a group of newspapers in the Southeast and had entered into a partnership agreement on an equal basis for that purpose. Each was to contribute such skill and experience as he had, but neither was possessed of sufficient means to carry through the project; that in order to finance the enterprise $870,000 was borrowed from the International Paper Company; that the partnership acquired all the capital stock of the Augusta Chronicle Publishing Company, of Augusta, Ga., the Record Publishing Company of Columbia, S. C., and the Herald-Journal Company of Spartanburg, S. C.; that La Varre obtained all the capital stock of the said corporations and had it transferred to him in his own name on the books of the companies; that it was agreed that this stock should be delivered to the International Paper Company as security for the loan, but that La Varre refused to do this and refused to recognize Hall's interest; that La Varre had received $400,000 of the money borrowed for the purpose of purchasing the stock of the Spartanburg paper and diverted $122,900 of this to his personal account and failed to use the funds for the purpose of paying the debts of the paper as was intended; that La Varre had called a special meeting of stockholders and also a directors' meeting of the Augusta Chronicle Publishing Company for the purpose of amending the bylaws and with the intention of changing the management of that corporation and placing himself in control, and with the intention of displacing Hall and rendering him without authority as president and treasurer of the said corporation. Other allegations of the petition are immaterial. On this petition Hall prayed for a decree dissolving the partnership and impressing the capital stock of all the said corporations with his interest; that the shares standing in the name of La Varre be delivered to the court and canceled; and that new certificates be issued in such manner as to recognize his ownership and protect the interest of third persons. The petition also prayed for a receiver to take possession of the partnership assets and the $122,900 in the hands of La Varre, and for an injunction restraining La Varre from holding the stockholders' and directors' meetings, which had been called for June 25, 1929, and from making any transfer or other disposition of the stock in the three companies, and from disposing of the $122,900. Personal service was had on La Varre, and the state court issued the injunction and appointed a receiver as prayed for. The suit was then removed to the federal court by La Varre on the ground of diversity of citizenship. Thereafter he moved to vacate the appointment of the receiver, set aside the injunction, and to dismiss the bill on the ground that it was without equity. These motions were denied. La Varre answered, admitted he had acquired the stock in the various companies and that he had received the money borrowed from the International Paper Company, including the $122,900, but denied that he had appropriated any part of it to his own use. He denied the partnership agreement and alleged that the idea of acquiring the newspapers was...
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