Title: Rezner v. Fairhope Single Tax Corporation
Citation: 296 So. 2d 166
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: May 30, 1974

296 So. 2d 166 (1974)
Rudolph John REZNER et al.
v.
FAIRHOPE SINGLE TAX CORPORATION, a corporation, et al.
SC 782.

Supreme Court of Alabama.
May 30, 1974.
*167 Kenneth Cooper, Bay Minette, for appellants.
Chason, Stone &amp; Chason, and Charles C. Partin, III, Bay Minette, for appellees.
BLOODWORTH, Justice.
Complainants, all lessees of respondent corporation, filed a bill of complaint in the circuit court of Baldwin County against Fairhope Single Tax Corporation and certain of its officers seeking to dissolve the corporation, or, in the alternative, to enjoin the corporation, its officers, board of directors and members from fixing rents on complainants' leases on any basis other than the actual value of the land exclusive of improvements, from devoting any of the rents to purposes other than those mutually beneficial to all of the lessees, and from paying any taxes on the corporation's unrented and unproductive lands from complainants' rents. Respondents' demurrer to the original bill of complaint was sustained. [This ruling was prior to the effective date of the new Alabama Rules of Civil Procedure.] Whereupon, complainants amended their complaint, adding three additional paragraphs. [The amendment came after the effective date of the new rules]. Respondents then filed a motion to dismiss the amended complaint for failure to state a claim upon which relief could be granted. [Rule 12(b)(6) A.R.C.P.] The trial court granted the motion, dismissing the cause and taxing costs to complainants. Complainants appeal. We affirm.
In their first assignment of error, complaints contend that the trial court erred in sustaining respondents' demurrer to the original complaint. This Court has theretofore held that where a demurrer to a complaint is sustained and the complaint is later amended and a demurrer sustained to the amended complaint, and a nonsuit taken, the action of the trial court in sustaining the demurrer to the original complaint is not before this Court for review. Thus, this assignment of error is without merit. Kent v. Coleman Company, Inc. et al., 285 Ala. 288, 231 So. 2d 321 (1970); Whatley v. Alabama Dry Dock and Shipbuilding Company, 279 Ala. 403, 186 So. 2d 117 (1966).
In assignments of error 2. and 3., complainants insist that the trial court erred in granting respondents' motion to dismiss the amended complaint for failure to *168 state a claim upon which relief can be granted. Complainants argue that paragraph 10 of the amended bill of complaint does state a claim upon which relief can be granted. Paragraph 10 reads as follows:
Subparagraphs a., b. and c. present allegations virtually identical to those this Court considered in Fairhope Single Tax Corporation v. Melville, 193 Ala. 289, 69 So. 466 (1915). In that case a complaint was filed by a member of the same Fairhope Single Tax Corporation seeking a dissolution or, in the alternative, an injunction (the same as in the case at bar), on the ground, among others, that "the corporation has failed and must fail in its purpose to demonstrate the `beneficiency, utility and practicability of the single tax, with the hope of its general adoption by the governments of the future.'"
This Court in Fairhope Single Tax Corporation v. Melville held, inter alia, at 193 Ala. 305, 308, 69 So. 471:
* * * * * *
Looking to the amended complaint in the case at bar, it is clear that complainants' subparagraphs a., b. and c. present claims which "lie entirely in the realm of irrevisable individual conception and personal judgment" for which there is "no standard" and which "[n]o court can safely undertake to consider" following our holding in Fairhope Single Tax Corporation v. Melville.
Likewise, the efficacy of subparagraphs d. and e. are directly controlled by this Court's decision in Fairhope Single Tax Corporation v. Melville, supra. In that former case, this Court was faced with almost identical allegations that the rents charged by the same corporation were excessive and based on other than the actual value of the lands, exclusive of improvements, and it expressly held that allegations as to these wrongs did not state a cause of action absent allegations that the internal remedies of the corporation had been invoked or that to do so would be futile. The Court held, in the former decision, at 193 Ala. 311, 69 So. 473:
There are no allegations in the complainants' amended bill of complaint that correction and redress of these wrongs have been sought from respondents. Nor is it alleged that to do so would be futile. Therefore, we conclude that, under our prior decision in Melville, supra, subparagraphs d. and e. do not state a claim upon which relief can be granted.
*170 Finally, in subparagraph f. it is alleged that the respondent corporation has invested its major assets or holdings with a financial institution governed by individuals who are also officers of the respondent corporation, all to the detriment of the members of the respondent corporation. While the exact nature of complainants' grievance is less than clear, in keeping with the liberal spirit of the new rules of civil procedure, we will assume that complainants are alleging a conflict of interest on the part of certain unnamed officers of the corporation.
Again, however, we must conclude that complainants have not stated a claim upon which relief can be granted. It is a well-established rule of substantive law in this state that before stockholders can sue the corporation to remedy corporate wrongs, they must first apply to the corporation's directors for redness. See, e. g., Minona Portland Cement Co. v. Reese, 167 Ala. 485, 52 So. 523 (1910); Hagood v. Smith et al., 162 Ala. 512, 50 So. 374 (1909); Howze et al. v. Harrison, 165 Ala. 150, 51 So. 614 (1910); Fairhope Single Tax Corporation v. Melville, supra. The only exception to this rule is where it clearly appears that such demand would be refused or that the proceedings to obtain redress would be under the control of the parties whose conduct is complained of such that the effort would be useless. See, e. g., Henry v. Ide, 208 Ala. 33, 93 So. 860 (1922); Howze v. Harrison, supra; Alabama Fidelity Mortgage &amp; Bond Co. v. Dubberly, 198 Ala. 545, 73 So. 911 (1917); King v. Livingston Mfg. Co., 192 Ala. 269, 68 So. 897 (1915).
In the case at bar there is no allegation that demand for redress has been made on the corporation or that such would be futile. Moreover, it is far from clear from the allegations that, if complainants do have a valid grievance (which we do not decide), redress cannot be had from the corporation. Therefore, we hold that subparagraph f. does not state a claim upon which relief can be granted.
For the reasons given, and having examined the complaint, we conclude that the trial judge's dismissal of the complaint for failure to state a claim upon which relief can be granted is due to be affirmed.
Affirmed.
COLEMAN, McCALL, FAULKNER and JONES, JJ., concur.