Citation Numbers: 263 S.W.2d 114
Judges: Cammack
Filed Date: 12/18/1953
Status: Precedential
Modified Date: 10/1/2021
This action was instituted in 1949 by the appellants as stockholders of the Pythian Mutual Industrial Association, a corporation, in their own behalf and for all other stockholders, to have canceled a deed by which the Association transferred a large building at Tenth and Chestnut Streets in Louisville, in August, 1935, to the Pythian Dependent Widows and Orphans Aid. The shares of stock in the Association held by the appellants constituted approximately 1.3 per cent of the outstanding stock in 1935. The chancellor found against the appellants on the ground that they were guilty of laches and because they had notice of the transfer of the property.
On this appeal the appellants insist that the judgment should be reversed because the transfer of the property was made in violation of section 883b-3 of Carroll’s Kentucky Statutes, in effect at that time. That statute provided that a corporation could sell and convey its real estate upon the consent of the holders of not less than three-fourths of the capital stock given in writing or by vote at a special meeting of stockholders called for that purpose.
The Association was organized in 1911. Sometime prior to 1915 it started raising fluids to construct the building in question. Stock was sold to members and lodges at $5 per share. After 1915, the capital stock was increased from $50,000 to $100,000,
The records and minutes of the stockholders’ meetings of the Association for the middle 1930s have been lost or destroyed. There is proof that Mr. Barrickman, a reputable attorney of Shelbyville, now deceased, helped prepare notices to the stockholders before the property was transferred in 1935. On the other hand, there is proof from some of the appellants that they had no notice of the proposed transaction in 1935. There is proof for the appellants also that it was not until shortly before the filing of this action in 1949 that they learned of the transactions concerning the Tenth and Chestnut Streets property in the middle 1930s. The Association was hopelessly insolvent in 1935. The deed transferring the property to the charitable organization was put to record in that year. It seems inconceivable that members of the Association did not know or could not have learned of the transactions concerning the building and the financial structure of the Association. We think the chancellor properly dismissed the claim of the appellants because of laches. It was 14 years before they asserted their claim. The situation of the parties had changed materially. It would be impossible at this date for the parties to be restored to their original position. The holdings in the cases of Klineline v. Head, 205 Ky. 644, 266 S.W. 370; P. V. & K. Coal Co. v. Kelly, 301 Ky. 180, 191 S.W.2d 231; and Bartley v. Tackett, 306 Ky. 299, 207 S.W.2d 749, are applicable here.
Judgment affirmed.