Court Opinion

ID: 9681729
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:55:33.083863+00
Date Added: 2024-06-11T18:17:35.606847
License: Public Domain

PHILLIPS, Chief Justice
(dissenting).
I respectfully dissent.
After trial to the court whereupon an extensive, well-developed record was compiled, the court held that at all pertinent times appellant occupied a fiduciary relationship with Texas Cycle Supply, Inc., because of his position as vice-president, director and shareholder; that he was acting for and on behalf of the corporation when the property was acquired; and that he holds the property as constructive trustee for and on behalf of appellee corporation with rights to certain setoffs for personal funds expended.
I would affirm this judgment.
The facts of this case, as found by the trial court, place it squarely within the aegis of those cases which hold that under certain circumstances, opportunities to acquire assets are corporate opportunities. The leading Texas case is International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.1963), and the doctrine has been reaffirmed recently in Huffington v. Upchurch, 532 S.W.2d 576 (Tex.1976).1 The essence of the trial court’s findings of fact is that the purchase of the building2 had all of the trappings of a corporate enterprise from beginning to end. Connor located the building and began negotiations. The monthly payments in the amount of the mortgage notes were noted as corporate payments on principal (with the exception of several checks made out by appellant with the self-serving notation “rent”).
During the trial of this case, seven witnesses, including the appellant, testified. The testimony of six of those witnesses supports the findings made by the trial court. The only testimony to the contrary is that of the appellant.
During the trial the appellant testified that he and Connor were each 50 percent shareholders of the corporation. This fact *515has not been challenged in any way nor was it ever in issue. Yet, the majority of this Court has concluded and found that appellant was the sole stockholder because of some innuendo that Connor’s stock was paid for either by a note or by the promise of services to be rendered, either of which method of acquiring stock is proscribed by Tex.Bus.Corp.Act Ann. art. 2.16(B). A fair reading of the statement of facts does not clearly disclose how Connor’s stock was acquired.
The testimony of Guzman, the corporate accountant, was that Connor and Canion were each 50 percent shareholders, and that the initial capital of the corporation was $15,000 by “a check from . . . Mr. J. R. Canion to the corporate account, and Mr. Connor was supposed to give Mr. Canion a note for $7,500 for his half.’’ (Emphasis added) Borrowing funds from a third party for the purchase of corporate stock does not fall within the prohibition of Tex.Bus. Corp.Act Ann. art. 2.16(B). Ruthart v. First State Bank of Tulia, Texas, 431 S.W.2d 366 (Tex.Civ.App.1968, writ ref’d). There is no evidence whatsoever of any note executed to, or funds borrowed by Connor from the corporation for stock.
In addition, Connor testified that he invested $5,000 in the corporation in early 1972 “as my part in putting in some money just like Mr. Canion put money in in the beginning. It was in the nature of capital.” The fact that no stock certificates were issued either to Connor or Canion, is immaterial. Tex.Bus.Corp.Act Ann. art. 2.16(A) (Supp.1976). Connor’s testimony was that he invested this sum at that time because “Mr. Canion was needing $5,000 for something, and I put $5,000 in the company, he took it out, he returned it.” Connor’s testimony of his investment was corroborated by the accountant Guzman, who testified that $5,000 was put into the corporation before his February, 1972, balance sheet was drawn, and was taken out of the business by Canion.
The majority has chosen to reverse the judgment of the trial court by finding facts neither alleged at trial, nor supported by any evidence in the record. As a result, the appellant is allowed to withdraw from the corporation its only substantial asset, and leave only a shell corporation against which fifty-three creditors may attempt to recover $95,231.60 in claims.

. See: Comment, 42 Texas L.Rev. 252 (1963); Hamilton Business Organizations, § 717, p. 219, n. 91, and the cases cited therein; Comment, The Corporate Opportunity Doctrine, 18 Sw. L.J. 96 (1964).

. Article III of the Articles of Incorporation states: “The purposes for which this corporation is organized are (the) wholesale and retail sales of motorcycles, parts, accessories, and related items to include all sporting goods as may be used in indoor and outdoor activities. To own and control under lease or otherwise, land, buildings, and property necessary to the conduct of such business.” (Emphasis added)