Court Opinion

ID: 9831581
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:13:17.98674+00
Date Added: 2024-06-11T07:43:36.174442
License: Public Domain

On Motion for Rehearing.
The appellants, in their motion for rehearing, accuse this court of inconsistency in the original opinion, in that we held in order to maintain the suit that the corporation was dissolved, and that it was not necessary to make parties all the stockholders because the corporation was a party.
[11] In the first place, we did not hold the corporation dissolved. It was alleged in the petition it was dissolved, and that it had lost its corporate identity or forfeited its charter because it had not paid its franchise tax. We held the allegation not sufficient for that purpose, but that it was sufficient to deprive it of the right to do business or to defend or prosecute a suit as such. The failure to pay the franchise tax has repeatedly been held not an act of dissolution. Fox v. Robbins, 70 S. W. 599; Rippstein v. Railway Co., 85 S. W. 314; Maloney Mercantile Co. v. Savings Bank, etc., 56 Tex. Civ. App. 397, 121 S. W. 889. Having lost its right to do business or to sue, a stockholder can maintain an action to protect its property or prevent its officers, or any one else, from appropriating its assets. This is the holding of Judge Reese, in a well-considered opinion, in the case of Favorite Oil Co. v. Chaison, 162 S. W. 423. If appellants’ theory is correct, the managing officers of a corporation can refuse to pay the franchise tax, appropriate the assets of the concern to their own use, and render the corporation itself powerless to sue for the recovery; and because it is yet an entity in law without corporate rights in the courts, prevent the recovery thereof, or prevent a stockholder, not a party to the appropriation of the corporate property, from suing. Such, as we understand, is not the law, and clearly would not be right.
[12] Article 2128, R. C. S., authorizes the appointment of a receiver in this very condition of a corporation; that is, when a corporation “has forfeited its corporate rights.” The corporation was not dissolved; hence the property was not held in common by the stockholders, but was then in the corporation, whose entity was not destroyed, but whose rights to sue and act were forfeited. Being in that condition, clearly, the statutes recognizes the right of any stockholder for the corporation to sue for the property and to place the property in court, for the reason under the law there was no managing officer or corporate body with a right to do so as such. In that sense, the corporation is a party. The court, having taken charge, instead of the directors, can pay the debts and .distribute the assets to those entitled thereto. The court having rightfully acquired jurisdiction to protect the property at the suit of a stockholder, and having found it to be insolvent, and in such condition as that it cannot perform its charter purposes, we see no reason why a court of equity, having thus rightfully acquired jurisdiction, may not wind up its affairs and adjust the rights of the various stockholders.
[13] It is, also contended that we were wrong in holding that the evidence was sufficient to show that Johnson and Brainard did not ratify the action of the stockholders at the last meeting, of which no minutes were kept, because the pleading and the evidence show that appellants went into pos-' session of the property with full knowledge on the part of the appellees and used it for over two years before the suit was filed. In the first place, the record does not show appellants were in possession, claiming the land, as theirs, over two years before bringing the suit. Some of the witnesses in testifying at the trial said at that time the appellants had been in possession about two years. The judgment in this case shows to have been rendered September 4, 1914; the amended petition shows that the original petition was filed April 14, 1914; the facts further show, as set out in this case, that the last meeting of which any record was kept was on January 5, 1912. The meeting of which no record was kept, and by virtue of which appellants claim the land, was held after that meeting, just when the record is silent; but the facts clearly indicate it was some time after January 5, 1912. At the January, 1912, meeting, a committee was appointed to call upon the stockholders to obtain money to buy in the property at a foreclosure sale, or, as some seem to understand, to pay the debt.- On February 4, 1913, appellants procured a transfer of the note from Simpson and wife. It is not at all certain from this record when the appellants took possession of this land as their own, or announced that their possession was adverse to that of the corporation.
*844In addition to the above the facts aré practically uncontroverted that appellees at all times refused to acknowledge appellants’' right to take the land, and demand that if they did so they must be paid the amount they put into the corporation. At this meeting, upon which appellants rely, there was no contract to sell. Real estate of a corporation is not disposed of in that way in this state, and there was nothing to ratify, even if it had been in the power of appellants to ratify the sale, for the corporation. It is said by appellants that, in order to rescind, it must' be done promptly, and that two years, according to our holding, is promptness. There was no contract to rescind. Part of the stockholders could not convey, or contract to convey, the real estate of the corporation. The directors, president, vice president, or secretary, under the corporate seal, did not purport to do so. Appellees were not at the stockholders’ meeting; hence made no agreement, and therefore made no contract to rescind. The appellants were not induced to take possession of the land by appellees’ solicitation or any act of theirs. Appellants took possession of their own volition. There is not an element of estoppel in it. It is a strange and new doctrine, because one sees another in wrongful possession of his land, or land to which he has an interest, and because he does not bring suit in less than two years, that he is estopped from thereafter claiming title or suing to recover the land. When appellants assumed that ap-pellees stood quietly by and made no objection to the claim made by appellants, they assumed that which is in the very teeth of appellees’ testimony, and much of that which came from appellants.
We sought to acquit appellants of any intentional fraud, but counsel who prepared the motion for rehearing charges that we held as a matter of fact there was sufficient evidence to show fraud, while there was none alleged or proven. We overlooked none of the assignments, as supposed by appellants, but answered all, or gave, as we thought, a reason why they should not prevail. We held the directors, who were also the claimed grantees, stood in a fiduciary relationship to the corporation and stockholders and could not, under the law, buy the land from themselves. The evidence shows that the vice president and others were at the meeting at which it is claimed they were given the right to the property. It is testified that it was the unanimous consent of all present. Appellants’ sworn pleading is that practically all the stockholders were present at that meeting, and that it was unanimously agreed for appellants to take the property. There is not a fact or a circumstance showing that the appellants did not participate in the agreement to transfer the property to themselves. These appellees were not present is established beyond serious question. In addition to the authorities cited by us in the original opinion, we call attention to McCord v. Nabours, 101 Tex. 494, 109 S. W. 913, 111 S. W. 144. The Supreme Court, speaking through Judge Brown, said:
“A more thorough knowledge of the facts of this case assures us of the necessity for and wisdom of the rule which the courts have established that the good faith and purpose of the assignee or trustee who, without the consent of the beneficiary, becomes the purchaser of property confided to his care constitutes no defense to an assertion by the beneficiary of voidability of the title thus acquired.”
The above case was before the Supreme Court prior to the above decision, where the same rule was announced and discussed. 100 Tex. 456, 100 S. W. 1152.
We also refer to the able opinion in the McCord Case, supra, when before the Court of Civil Appeals, by Special Justice Cochran, 36 Tex. Civ. App. 504, 75 S. W. 827. Whether the directors were all present or not, those who were acted for them, and they are found claiming the property belonging to their beneficiaries. The directors, to pay a debt in part due them, have taken the entire corpus of the corporation. So holding it, all the decisions charge them with its value. Their possession is that of the beneficiaries. It belonged to the corporation, and upon settlement of the debts the stockholders, upon winding up, are entitled to their proportionate share of that value.
[14] The appellants also assert that we went outside the record to. assume that Simpson was paid; that we are hound by the agreement of the counsel at the trial, etc. It is also urged that the agreement admitted that Simpson conveyed the title to the land to appellants. We do not so interpret the agreement. The agreement is as follows:
“It is agreed that the note and interest described in all the pleadings was paid by the defendants and due transfer of the same, and lien securing same, made to the defendants, and thereby became subrogated to all the rights of the original payee, Geo. A. Simpson, both as to the note and lien.”
Interpreted in the light of the record, this was not an agreement that Simpson conveyed the land to appellants, as argued by them. It is an agreement that the interest of Simpson in the “note and lien” became appellants’ by subrogation.
On February 4, 1913, when the transfer was made, what interest did Simpson have in the note apd lien? He had, by warranty deed, conveyed the land. The note was due January 26, 1910. On that date there was $1,121 paid and credited on the note; and on September 27, $1.606.58 was paid and credited on the note, which discharged the entire note, principal and interest. Appellants proved positively the note did not belong to the bank. There is no other inference to be had than that it was paid to Simpson. It is clear it was not paid to appellants at that time, or to the makers of a *845note to get the money to pay it. More than two years after its payment the appellants procured an assignment of Simpson’s interest; what did they get? Simpson had no title to the land or lien on it. He had conveyed the one and the other was discharged.
Appellants introduced the minutes of the meeting of September 23, 1910, in which certain parties were authorized to give their notes to the bank to borrow the money and pay off the notes, and gave such parties a lien on all the corporate property to secure them in such payment. It is manifest Simpson’s note and lien were discharged in 1910, more than 2 y2 years before his written transfer. If so, his transfer conveyed nothing. It is agreed that the parties paid the note and thereby became subrogated. It is true the construction of the sentence is such, without the aid of the facts in the record, it might be interpreted by the transfer that appellants obtained the lien thereby; if so, they got it by the transfer of the lien, and not by subro-gation. If the note was paid, it discharged the lien. It might be, if the appellants paid the note, equity would subrogate them to the rights of the lienholder, but that did not convey the land. It was not agreed that it did, but was agreed that appellants were subro-gated to the lien, not that the lien was transferred by Simpson’s instrument at the date of the payment of the note. If the agreement is to be held as a transfer of the lien, then it is an ambiguous one and inconsistent, because it is also agreed the note was paid, not purchased, and that thereby subrogation resulted. If it was paid, there was nothing to transfer. Subrogation is an act of law, and not of contract. In order to keep a lien alive, the intention must exist at the time of payment. There is no such intention shown on the part of Simpson, the corporation, and the parties paying the note, when the note was paid; but the agreement between parties paying off the note in 1910 and the corporation for so obtaining the money was they should have a lien on all the club’s property, real, personal, and mixed. We do not think the quoted agreement is subject to the construction that when the payment of the note was made, there was then a transfer of the lien; but counsel evidently intended to agree in the light of this record, by paying off the debt, they were subrogated by virtue of the law to the lien; at any rate, they did not agree the title passed to the land. The evidence shows there was no title in Simpson to pass on February 4, 1913. We think the trial court correctly held that appellants had a lien for the money advanced, and had no legal title to the land. It appears to us any other holding would be unjust in the light of this record.
The appellees, in the petition, offered to pay into court the money due appellants, and offered to do so upon the trial. The actual payment of the money into court was waived by the parties. We think the trial court properly disposed of this case, and upon a re-examination of the case and our opinion thereon, we see no reason for changing it.
The motion is overruled.