Farrar v. Empire Talc & Lumber Co. , 190 Ga. 649 ( 1940 )

1. In a suit by a stockholder for rescission and cancellation of a deed alleged to have been made in behalf of the corporation by the president without authority of the directors or stockholders and for an inadequate consideration, where a copy of the deed was attached to the petition and recited that it was made in pursuance of and in accordance with a lease contract "with option to purchase said property," which antedated the deed by nearly two years, and which lease contract had been transferred by the lessee to the persons named as grantees in the deed, and there is no allegation attacking the recital or showing that the lease with option to purchase was not a valid and binding contract as against the corporation, the petition when considered on general demurrer must be construed as showing that the corporation was under a legal and binding obligation to execute the deed in question, and consequently that the final sale and conveyance, the only transaction complained of, did not result in injury to the corporation or its stockholders, notwithstanding the averments as to want of authority in the president. Code, §§ 22-710, 22-711, 37-106; Blaisdell v. Bohr, 77 Ga. 381; Hand v. Dexter, 41 Ga. 454; Smith v. Albright-England Co., 171 Ga. 544 (3) (156 S.E. 313); Krueger v. MacDougald, 148 Ga. 429 (96 S.E. 867); James v. Maddox, 153 Ga. 208 (3) (111 S.E. 731).

2. The petition failed to state a cause of action, and was properly dismissed on general demurrer.

Judgment affirmed. All the Justicesconcur.

No. 13266. JULY 13, 1940. The exception in this case is to the dismissal on demurrer of a minority stockholder's petition against the corporation and certain individuals, seeking cancellation of a deed executed by the president in behalf of the corporation to the individual defendants, on the ground that the making of the deed was without authority of the directors or stockholders, and for an inadequate consideration. The petition as amended alleged: Empire Talc and Lumber Company is a corporation having officers and agents within Murray County, Georgia. G. W., W. A., and C. S. Meier are residents of said county. Petitioner is the owner of sixty-seven shares of stock in the defendant corporation, which is the owner of certain real estate situated in the City of Chatsworth, and a large plant for manufacturing, drying, and dressing of lumber (describing the property). On or about July 11, 1938, "the officers of the said Empire Talc and Lumber Company, to wit, W. B. Farrar, president, undertook to sell said property to the said defendants, G. W. Meier, W. A. Meier, and C. S. Meier, which defendants were at said time in possession of said property as lessees." Petitioner learned of this attempted sale shortly thereafter, and some time during the month of August, 1938, she demanded of W. B. Farrar that the sale be rescinded and canceled, and Farrar has failed and refused to act in accordance with her request, but permits said property to remain in the possession of the individual defendants. She is informed and believes that the property referred to was sold for $6000. She charges the same had a reasonable market value of $30,000 or more at the time of the attempted sale. This sale was made without authority of the directors or stockholders of the company, and constituted a sale of practically all of its assets. At the time of the attempted sale petitioner was a stockholder of the company, having acquired her stock on May 5, 1937. The sale would have been void even had it been attempted by all other stockholders and directors of the company, for the reason that it constituted an abandonment of the business of the company. The property has a reasonable rental value of $6000 per year. About August 10, 1938, petitioner demanded of W. B. Farrar, president of the Empire Talc and Lumber Company, and of the directors thereof, that the sale be rescinded and canceled, and that the corporation file suit for cancellation of the deed and rescission of the sale, which demand was refused. The directors of whom such demand was made were a majority of the stockholders of the company. Attached as an exhibit is a copy of the deed it is sought to cancel. Petitioner prayed that the attempted sale of the property be decreed void; that it be ordered that the property be recovered by the corporation from the possession of the grantees named in the deed; that judgment be rendered in favor of the plaintiff, for the use of the corporation, against the grantees in the deed, for such sums as may be found by the court to be due as a reasonable rental of the premises. The deed referred to contained the following recital: "This deed is made pursuant to and in accordance with a lease contract with option to purchase said property, dated July 22, 1936, which lease contract has been transferred by George E. Meier, lessee therein, to the Chatsworth Lumber Company, a trade-name under which the above-named grantees conduct a partnership business."