Wilbanks v. Mardette Oil Co.

STOKES, Justice. Appellee, a Texas corporation, filed this suit in trespass to try title against appellant, Ophelia E. Wilbanks, Mark Denson, F. A. Denson, Burdette Denson, W. S. Birge and Panhandle Northern Oil Company, a defunct corporation, whose officers at the time it ceased to do business were Mark Denson, F. A. Denson-, Burdette Denson and W. S. .Birge, and a number of other parties who, by disclaimer and otherwise, were eliminated at the trial. In her answer appellant, in addition to a general denial and plea of not guilty, pleaded in the nature of a cross-action and stockholder’s bill in which she sought, on behalf of herself and other stockholders of the Panhandle Northern Oil Company similarly situated, to recover an oil and gas leasehold interest in eighty acres of land located in Carson County, and prayed that a receiver be appointed to take charge of the leasehold interest and such other property as may have been owned by the corporation when it ceased to do business and administer the same under the orders of the court to the end that the property be disposed of, the indebtedness paid and the residue, if any, distributed among the stockholders. The case was originally filed in the District Court of Carson County but by agreement of all parties the venue was removed to the 108th District Court of Potter County The trial in that court on the 7th of July, 1937, before the court, without the intervention of a jury, resulted in a judgment in favor of appellee, Mardette Oil Company, for the title and possession [584] of the oil and gas leasehold estate and that appellant take nothing upon her cross-action, from which she has prosecuted this appeal. The record discloses that the Panhandle Northern Oil Company was chartered as a Texas corporation August 12, 1927, by Allen M. Wilbanks, Jr., J. B. Aiken and James D. Wyman, who became its directors, with an authorized capital stock of 150,000 shares of the par value of $1 per share, of which $100,000 was paid by investing the corporation with the title to certain oil and gas leases. The balance of $50,000 of the capital stock was never paid in and the record does not reveal the disposition that was made of the original oil and gas leases. By- December 10, 1930; however, the corporation had no property of any kind except the oil and gas lease here involved which was assigned to it by Mark Denson on the 15th of December, 1928, in consideration of 39,175 shares of the capital stock of the corporation. In some manner not disclosed by the record, Mark Denson, J. D. Wyman and Allen M. Wilbanks, Jr., became the owners of 60,725 shares of the capital stock which were placed in the hands of Mark Denson in trust and with the agreement that enough of it would be sold to pay the expenses of completing an oil and gas well which was being drilled on the lease and to pay the franchise taxes, attorneys’ fees and other incidental expenses, the balance, if any, to be held and managed for the benefit of the three owners. On the 28th of September, 1929, a written agreement was entered into by these three parties in which they agreed that, owing to the great difficulty which they had experienced in selling the stock, the minimum selling price of 45⅜ provided in a previous contract should be abrogated and the stock sold at any price which Denson could procure for it. The contract further provided that if it should become necessary to sell an interest in the lease and any interest therein should be sold, the amount of - the capital stock of the corporation issued for the leases, viz., 100,000 shares, should be cancelled in the ratio equal to the fractional portion of the lease conveyed. After this agreement was entered into it became necessary to sell a half interest in the lease to pay indebtedness incurred in developing the lease and to secure funds for further development, and on November 11, 1930, a conveyance of the half interest was made to other parties. It was agreed upon the trial that of the 60,725 shares of stock held in trust by Denson, 35,350 shares were sold prior to December 10, 1930, and, while the capital stock of the corporation was not reduced in the manner provided by law, as far as Wilbanks, Wyman and Denson were concerned, the sale of the half interest in the lease automatically reduced by half their holdings and interest in the 60,725 shares of stock held in trust by Denson. On August 2, 1930, the right of the Panhandle Northern Oil Company to transact business in the state was forfeited because of its failure to pay the annual franchise tax due May 30, 1930, and on December 10, 1930, its charter was forfeited by the Secretary of State on account of its failure to make proof of final payment of its capital stock. Notwithstanding this, however, the directors continued with the business of the corporation, holding meetings and transacting business as a corporation as though the charter had not been forfeited, and on September 5, 1934, its indebtedness, amounting to $15,-827.76, was taken up by F. A. Denson and three notes executed by the corporation, payable to him, the first two being in the sum of $5,000 each, and the third in the sum of $5,827.76, due and payable October 1st, November 1st, and December 1st, 1934, respectively. To secure the payment of these notes a deed of trust was executed in the name of the corporation by authority of the board of directors. The notes were not paid at maturity and, after publishing notices as provided by the deed of trust, the trustee, on January 1, 1935, sold the remaining half interest owned by the corporation in the oil and gas lease to F. A. Denson for $10,000, and executed and delivered to him a trustee’s deed in which the oil and gas lease was conveyed. On January 23, 1935, F. A. Denson filed in the district court of Carson County a suit in trespass to try title against the Panhandle Northern Oil Company and procured judgment on the 1st of February, 1935, in which the title and possession of the oil and gas lease was decreed to him. Soon thereafter the appellee, Mar-dette Oil Company, was organized with a capital stock of $15,000 and the lease conveyed to it. [585] The -basis of the contentions of appellant Mrs. Wilbanks, is that the notes and deed of trust executed by the Panhandle Northern Oil Company under authority of its directors on September 5, 1934, were void for lack of authority in the corporation, after forfeiture of its charter, to transact business, and that the title of appellee, Mardette Oil Company, to the lease necessarily coming through the deed of trust and the foreclosure sale made thereunder is not a valid title and the court erred in rendering judgment in its favor, decreeing to it the title and possession of the oil and gas lease. She contends further that the court erred in denying her the relief for which she prayed to the effect that a receiver be appointed and the property placed in custodia legis to be handled and disposed of under orders of .the court for the payment of the debts of the corporation and the balance, if any, distributed among the stockholders. There is no statement of facts in the record, but the trial court found that appellant owned no stock in the corporation because the sales of the trust stock held in the name of Mark Denson were, in fact, more than half of the stock originally placed with him in trust and, under the written agreement executed by Allen M. Wilbanks, J. D. Wyman and Mark Denson, half of the trust stock was, in effect, surrendered when the half interest in the oil and gas lease was sold to procure funds to pay the expenses of development. Appellant is the surviving wife of Allen M. Wilbanks, Jr., who died January 27, 1933. If she owned any of the capital stock of the Panhandle Northern Oil Company it came to her through the community estate and by assignment from her children of what they inherited from their father as his interest therein. If, therefore, her husband, Allen M. Wilbanks, Jr., did not own any interest in the corporation or its capital stock at the time of his death, appellant obtained none and had no interest in the corporation or its capital stock when this suit was filed. If she had no such interest, it follows she had no right to maintain this suit, and the judgment of the trial court was proper, since the only rights asserted by her are those to which she claims she is entitled by virtue of being a stockholder in the corporation. As we have stated, Mark Den-son became the owner of 39,175 shares of the capital stock which was issued to him in consideration of the assignment by him to the corporation of the oil and gas lease involved in this case. The remaining 60,725 shares became the property of Mark Denson, J. D. Wyman and Allen M. Wilbanks, Jr., and was placed in the hands of Mark Denson in trust, with the agreement and understanding that- he would sell so much of it as may be necessary to pay • the expenses incident to developing the lease. Under this agreement he sold 35,350 shares. In the written agreement executed by the owners of the trust stock on September 28, 1929, it was agreed that if it should become necessary to sell an interest in the lease and such interest should be sold, the amount of the capital stock that had been issued, viz., 100,000 shares, should be cancelled in the ratio equal to the fractional portion of the lease conveyed. The trial court found it became necessary to sell a half interest in the lease which, under the agreement, in so far as these three parties were concerned, reduced - their holdings to 30,362½ shares. These transactions necessarily extinguished all interest which Mark Denson, Wyman and Wilbanks had in the trust stock and as the record does not show Wilbanks to have been the owner of any other stock, the conclusion is inescapable that, at the time of his death, Wilbanks did not own any stock or interest in the corporation. Since appellant does not claim to own any stock other than whatever interest she may have received through her deceased husband, it follows that she had no interest whatever in the subject matter of this suit. The trial court so found and such finding is supported by the record before us. Appellant presents a number of assignments of error pertaining to other actions of the court, but as we view the record, she, not being the owner of any interest in the subject matter,' had no right to recover nor to prosecute the suit and it becomes unnecessary to discuss them. The judgment of the trial court is affirmed.