Opinion ID: 1790173
Heading Depth: 1
Heading Rank: 5

Heading: Directed Verdict for Joseph McDonald, Jr., Robert McDonald and David Jefferies

Text: Trustee claims that there was a scintilla of evidence to support his allegation that Joseph McDonald, Jr., Robert McDonald, and David Jefferies were directors or de facto directors, and that the question of their liability should have been submitted to the jury. The scintilla rule is the standard by which the trial judge determines the propriety of granting a motion for a directed verdict. Alabama Power Co. v. Taylor, 293 Ala. 484, 306 So.2d 236 (1975); Rule 50(e) ARCP. A directed verdict may be granted where there is a complete absence of pleading or proof on an issue material to the claim or where there are no controverted issues of fact upon which reasonable men could differ. Loeb & Co. v. Martin, 295 Ala. 262, 327 So.2d 711 (1976); Alabama Power Co. v. Taylor, supra. We have found no proof in the record that these three defendants were de jure directors of the bankrupt corporation. Directors are to be elected at the first annual meeting of the stockholders and at each annual meeting thereafter. § 10-2-51 (Code 1975). It is uncontroverted that these defendants were never elected to the board of directors, nor were they designated directors in the articles of incorporation. A person is not a de facto director when he is not holding office under color or appearance of right or when he is not generally exercising the functions of his position. 19 C.J.S. Corporations, § 740. In support of his allegation that these defendants were de facto directors, Trustee cites testimony by Morris Rabren that the company had a policy that stockholders were considered directors, and testimony of others that these defendants were stockholders. Rabren further testified that they were invited to attend and did attend directors' meetings and that they participated in the discussions held during these meetings. However, Rabren testified that he did not know whether these defendants were directors or not and that he could not recall if they voted at the directors' meetings. On cross-examination he stated that they never assumed the duties of directors. It does not appear that there is a scintilla of evidence to prove that the defendants held the office of director under color of right or that they exercised the functions of directors. Rabren's statement alone that the company had a policy that stockholders were considered directors does not constitute a scintilla of evidence that these defendants were directors. There are only two ways to become a de jure director: designation in the certificate of incorporation or election by the stockholders. § 10-2-51 (Code 1975). A de facto director holds office under color of right, through designation or election, but fails being a de jure director by some irregularity in his election or by his ineligibility or failure to qualify as required. Thus, in order to prove that a person is a de facto director, there must be some evidence of an election or designation, and the record is devoid of such proof here.