Viley v. Wall

• Decision Date: 11 July 1923
• Docket Number: 25399
• Citation: 97 So. 409,154 La. 221
• Court: Louisiana Supreme Court
• Parties: VILEY v. WALL et al

97 So. 409

154 La. 221

VILEY v. WALL et al

No. 25399

Supreme Court of Louisiana

July 11, 1923

Appeal from Thirteenth Judicial District Court, Parish of Grant John A Williams, Judge.

Suit by Leland P. Viley against Donald F. Wall and others. From a judgment for defendants, plaintiff appeals.

Judgment set aside, and case remanded, with instructions.

Wiley R. Jones, of Colfax, for appellant.

White Holloman & White, of Alexandria, for appellee Wall.

Palmer & Hardin, of Shreveport, for appellee Three Rivers Oil Co.

OPINION

DAWKINS, J.

Alleging himself to be a stockholder in the Three Rivers Oil Company, a corporation organized under the laws of Delaware, with its domicile in Kansas City, Mo., but with an officer for the service of process in the state of Louisiana, plaintiff sued Donald F. Wall and the said company to annul a sale of certain property made under foreclosure proceedings by the said mortgagee, who was likewise the purchaser, and to annul the said mortgage, upon the ground of fraud and conspiracy. He alleged that the officers of the defendant company were and are parties to said conspiracy, and could not be induced to take action on behalf of the corporation, and that he was suing for and on behalf of the company, himself, and such other stockholders as might be interested therein. The other pertinent allegations of the petition are as follows:

(1) That on March 6, 1920, the board of directors, consisting of A. B. Walter, J. F. Koogler, F. T. Wall, and A. H. Walter, attempted to authorize a mortgage, through its president, A. B. Walter, to and in favor of the said Donald F. Wall, a son of the said F. T. Wall, and a party interposed, covering all of the property of said corporation of every kind and nature, all of which was located in the state of Louisiana, being in the parishes of Caddo and Grant, copy of which mortgage was attached to the petition to prove rem ipsam.

(2) That although said mortgage purports to have been authorized by resolution of the board of directors of said company, copy of which is also attached to the petition for the purpose of attacking it, petitioner is informed and believes, and, so believing, avers, that no such resolution was ever passed, and that the pretended action of A. B. Walter as president thereunder was null and void.

(3) That petitioner never had any notice of said mortgage until a part of the property had been sold; that he was unable to enjoin said sale, or to induce the officers of said company to do so, and that no meeting of the stockholders was ever called to authorize the same.

(4) That instead of there being a necessity for said mortgage on March 6, 1920, there was or should have been, according to figures furnished the stockholders, a large amount of funds in the hands of the company, sufficient to meet all indebtedness and to leave a balance in the treasury.

(5) That petitioner believes, and, so believing, avers, that there was a cabal and conspiracy between the directors and the said Donald F. Wall to place this fraudulent mortgage upon the property of the company, in order that it might be foreclosed and the property sold, so that said conspirators could obtain the same for themselves, in fraud of the rights of the other stockholders, and that the defendant Donald F. Wall was present at the time and a party to said conspiracy.

(6) That in furtherance of said conspiracy the property was allowed to deteriorate through the years 1920-21, no effort being made to raise crops, and the personal property was disposed of and dissipated, in order that the said officers might claim that there were no funds to meet its obligations, and that when said mortgage became due, no effort was made by the said officers to pay it off, and that offers of assistance for that purpose from some of the largest stockholders were refused.

(7) That said company was organized by residents of the state of Missouri, and that neither said company nor its officers have complied with the laws of said state, and that it was organized under the laws of Delaware to avoid the laws of Missouri, and that a permit to do business in the latter state had not been procured, as a result of which every contract of every kind made by said company in said state of Missouri was null, void, and ultra vires.

(8) That the said company likewise had never complied with the laws of the state of Louisiana, in that, in accordance with the requirements of the Constitution, no books had been kept in this state; and, in the alternative, that if the court should hold that the said mortgage was not null and void ab initio for not complying with the laws of Missouri, then the same was illegal, null and void for not complying with the laws of the state of Louisiana.

(9) That the officers of said company had applied to the proper officers of the state of Missouri for permission to sell said stock, which was refused, but notwithstanding they had sold same to petitioner and other parties, who acquired in good faith, and are entitled to the protection and safeguards of the law.

(10) That petitioner is informed and believes, and, so believing, avers, that Donald F. Wall never loaned $ 45,000 to said company as a consideration for said mortgage, and the same is therefore null, fraudulent, and void for this, as well as for the other reasons set forth; that F. T. Wall is the real party at interest in this affair, and is merely using his said son as a party interposed to carry out said conspiracy.

(11) That since petitioner and his associates discovered the property of the company was going to be sacrificed, they have done every thing in their power to retrieve the same, and to get the officers of the company to work in harmony with them to protect it; but that the old officers, as well as those now in charge, were either actively engaged in the said conspiracy, or passively aiding and allowing same; that petitioner and his associates are the minority stockholders, and they and each of them who may see fit to do so are invited to join in this litigation.

(12) That, as another evidence of said conspiracy, one George McCormick had been paid $ 3,000 of the company's money, when, if anything was due him, it was a personal debt of the conspirators; that S. Thompson, secretary, is a firm friend of the conspirators and cannot be induced to take action; that John U. Dale, who is claimed to be president, is a nephew of the said A. B. Walter; that W. T. Phillips, who claims to be a director, is an old-time friend and business associate of F. T. Wall; and that J. K. Foster, another supposed director, has been offered a lucrative position as manager of the Bynum plantation (part of the property sold under foreclosure), if the said conspirators should succeed in their undertaking.

(13) That many efforts have been made by stockholders to obtain an inspection of the books and records of the company to determine the condition of its affairs, without avail; that many suits have been filed, which were promptly removed to the federal courts, and the conspirators have in every way sought to hamper and prevent the stockholders from protecting and conserving its property and affairs, all of these proceedings being set out in detail in the petition; that the books were several times shipped from one state to another to avoid the efforts of said stockholders to obtain an inspection; and that petitioner and said stockholders had never been able to make said inspection or to obtain any information in regard thereto.

Petitioner prayed that a curator ad hoc be appointed to represent Donald F. Wall, a resident of the state of Missouri, and that the said corporation be cited according to law; that on trial there be judgment for the use and benefit of the Three Rivers Oil Company and its stockholders against the said Donald F. Wall, avoiding, canceling, and setting aside the said pretended mortgage, and that same be stricken from the records of Grant parish; that the pretended sale of the property be likewise annulled and set aside, and the property restored to the said company for its use and benefit and for the benefit of its stockholders.

Defendants appeared and excepted upon the ground that the lower court was without jurisdiction to annul the final decree of the First district court for Caddo parish, being the order of seizure and sale issued by that court, and further that the said district court of Grant parish was without jurisdiction ratione personae. Later the defendants pleaded the exception of lis pendens, in that plaintiff had filed an identical suit to annul the sale of the property made under the same execution in the parish of Caddo, and, in the alternative, asked that the present suit be abated until that in Caddo parish had been decided. Defendants next pleaded that plaintiff was estopped to prosecute this suit, because he had neither appealed from the said order of executory process nor sought to enjoin the same, and further that the allegations of the petition were contradictory, in that in paragraph 3 it was alleged that the Three Rivers Oil Company was duly organized and doing business, with a domicile in Louisiana; whereas, in paragraphs 11, 12, and 13, he disputed the regularity of its organization and qualification to do business in any foreign state or in the state of Louisiana. Further, because he claimed to have brought this suit on behalf of the Three Rivers Oil Company, and was estopped from attempting to both sue the said company and to represent it. Defendants further moved to strike paragraphs 11, 12, and 13 from the petition for the reason that they contradict the other allegations thereof and that a collateral attack upon the organization of the company could not be made.

The...