Court Opinion

ID: 5009970
Source: CourtListenerOpinion
Date Created: 2021-10-01 02:40:00.394771+00
Date Added: 2024-06-11T08:17:23.646253
License: Public Domain

YOUNG, Justice
(dissenting).
The. majority holds that under Arts. 1388, 1389, the trustees (directors) of a dissolved corporation may reincorporate its assets for another fifty years, including the l/75th interest (20 shares) of appellee, a protesting stockholder; and that such action is a legal settlement of the dead corporation’s assets as to all stockholders within the meaning of the above statutes on liquidation. I dissent from this holding.
Certainly the statutory language allows the trustees some discretion in an outright sale of assets, looking to a distribution; but nowhere is found any authority for the same trustees to form another corporation, appropriate a dissenting stockholder’s interest in the transaction, and to term the new venture a settlement of the particular interest. In point is Gresham v. Island City Sav. Bank, 2 Tex.Civ.App. 52, 21 S.W. 556, quoting from the syllabus: “All but three stockholders of an insolvent bank agreed to transfer to certain persons all the stock, in consideration that the latter would provide $100,000 for resuming business by the bank under a new organization, by the issuance of a new stock under its charter, and pay its creditors 74 per cent, of the amounts due them in full settlement. Held, that the execution of such agreement by the parties to it did not- affect the rights of stockholders not consenting thereto.” A similar note heads the case of Mason v. Pewabic Mining Co., 133 U.S. 50, 10 S.Ct. 224, 33 L.Ed. 524: “On the dissolution of a corporation at the expiration of the term of its corporate existence, each stockholder has the right, as a general rule, and in the absence of a special agreement to the contrary, to have the partnership property converted into money, whether such a sale be necessary for the payment of debts, or not.”
Regarding corporate dissolution laws, 19 C.J.S., Corporations, § 1745, page 1514,, says: “The trustees have no power under these statutes to continue the business with no intention of winding it up * * * ”; and the general rule is stated in 13 Am.Jur., Corporations, Sec. 1366, pp. 1206, 1207: “The extension allowed by statute for the winding up of dissolved corporations implies a continuation of their corporate existence in a qualified manner only and within the strictly limited powers and purposes as' provided in the statutes. * * * it has no power to form a new company or amend its articles of incorporation.” See, also, 11 T.J. p. 135, § 470, Effect of Dissolution.
The majority concludes that the words “settle the affairs” and “sell, convey and transfer,” of Art. 1388, embrace the power of organization of a new corporation in the face of minority objection, just so the action is taken by the trustees “for the benefit of creditors and stockholders and the utilization of the assets to a great*331er advantage.” No decisions are cited for the statement just made, and I have found none.
The assets of this defunct concern being a trust fund in the hands of its directors for the benefit of creditors and stockholders (Waggoner v. Herring-Showers Lumber Co., 120 Tex. 605, 40 S.W.2d 1), their appropriation of appellee’s interest for a purpose foreign to a winding up of the corporate affairs was a legal conversion of the 20 shares by said trustees; with consequent liability for the then value thereof. All parties who act in effecting a conversion may be held jointly and severally liable; 42 T.J., Trover and Conversion, § 25, p. 535; and the statute (Art. 1388) expressly provides: “Said trustees shall be severally responsible to the creditors and stockholders of such corporation to the extent of its property and effects that shall have come into their hands.”
The trial court found that the value of appellee’s 20 shares, when he was unwillingly made a party to the reincorporation, was $1,000; and that his 9 shares, attached to the Orleans note, on which appellants seek contribution herein, were reasonably worth $450. The suit by plaintiffs (directors of the dead corporation) was on an alleged liability against Wilson for $440; each having a separate claim, but joined by the trial court because the basis thereof was contribution — a right of equitable origin and governed by equitable considerations. 10 T.J., Contribution, p. 539; Glasscock v. Hamilton, 62 Tex. 143. Relief by contribution will not be awarded unless the party seeking it is equitably entitled thereto. United States Fidelity & Guaranty Co., v. Century Indemnity Co., Tex.Civ.App., 78 S.W.2d 737.
Appellee was justly entitled to raise the defense of conversion against demands of the trustees, and in the present suit'; the plea merely constituting a superior equity in appellee that would preclude a recovery by plaintiffs. It was undoubtedly assertable to the extent of the 9 shares, which were collateral to the initial obligation — the Orleans note.
Defendant Wilson is here seeking' only an abatement of plaintiffs’ action to the extent of his prior injury; and his pleading is not affected by limitation: “There is no problem of -limitation, when defendant’s answer is ‘of an intrinsically- defensive .nature’ and amounts merely to a negation or abatement of plaintiff’s claim. Thus non-performance of a contract according to specifications may be urged in •defendant’s answer as failure of consideration and will defeat a suit on the contract, though barred as the basis of an independent action against plaintiff.” 18 Tex.Law Review, p. 210; Mason v. Peterson, Tex.Com.App., 250 S.W. 142; Morriss-Buick Co. v. Davis, 127 Tex. 41, 91 S.W.2d 313; Hinds v. Biggs, Tex.Civ.App., 142 S.W.2d 902, Syl. 8.
The trial court’s judgment should be affirmed.