Mobile Land Improvement Co. v. Gass

DOWDELL, J. Tlie bill in this case is filed for the-purpose of annulling a certain resolution adopted and passed by the board of directors of the complainant company, and for 'the cancellation of > certain enveyances. made to the respondent, and to hare an accounting. Actual fraud is charged, and it is also averred that at the-time of the alleged transactions complained of, a confidential and fiduciary relation existed between the defendant and the complainant -corporation, in which he-was an officer and director. Three several demurrers were interposed to the bill. The first going to the bill as a whole contained three several grounds or assignments, the other two, being directed to.parts of the bill, contained one assignment each. There was a decree-sustaining these demurrers, except as to the first assignment of demurrer number one, and from this decree-the present appeal is prosecuted. The second ground of demurrer number one raises the question, that the complainant seeks to repudiate-the action -of its board of directors and still retain the benefits derived therefrom. There is nothing in the-allegations of the bill, to which this -demurrer can be-referred. It is true that the complainant seeks to repudiate the action of the board -of directors -as being Avh-olly unauthorizfid, but it does not appear from any averment or -statement in the bill that any benefit ever resulted to, or was received by the -complainant under-said alleged unauthorized acts. The third ground of demurrer number one i-s equally wanting in merit. This ground asserts that the complainant, has an adequate-remedy at law for the. enforcement of its rights. The bill after stating the facts as to the adoption of the resolution '-showing its invalidity, avers the resolution of the -board of directors authorizing the grant of the lots in question to be null and void, and that the deeds executed under and by virtue of -said resolution to be also void. These -statements -and averments are to 'be taken -as -confessed on the demurrer. The bill then seeks the -annulment of the resolution and the cancellation of the deeds, and further to have the defendant, who under the allegations of the bill was. a trustee, to account for the-trust- estate which he had conveyed-away. It is too man [222] ifest to require argument, that the relief sought could be had only in a court of equity. Demurrer number two does not go to the whole bill, but only to that part which seebs to set aside the several conveyances, copies of which are made exhibits “A,” “B,” and “C” to the bill of complaint. This demurrer asserts that the bill shows that the legal title to the several parts of the lands conveyed by said deeds sought to be set aside, are in persons not made parties to the bill. The bill it is true admits that these persons are innocent purchasers for value and does not seek to subject the property they hold. But the bill as it stands seeks to annul the resolution and to cancel the deeds made to the respondent Gass, the vendor of these absent parties, under said resolution, without limitation or reservation as to the rights of the purchasers from Gass. The unqualified annulment of the resolution and the cancellation of the deeds of the complainant corporation to said Gass would unquestionably affect the rights of the vendees of Gass, inasmuch as the decree of annulment and cancellation would destroy a link in the chain of title of these vendees. Although no relief is prayed against them they have such an interest in the suit, taking the averments and prayer for relief together as to require their presence. The general rule in a court of equity is that all persons having an interest in the subject matter of the suit, must be made parties, either as plaintiffs or defendants. It is of importance to the vendees of Gass to have the decrees granting the relief prayed for in the bill so molded as to preserve the integrity of their title. We think this demurrer was well taken and was properly sustained. The third demurrer attacks the bill- upon the ground that it shows an executed contract between the company and Gass. The case of Long v. Ga. Pac. R’y. Co., 91 Ala. 522, cited in support of this contention, is different in fact and principle from the case at bar, and, consequently, has no application as an authority. That case simply holds that one who has sold and conveyed land to a corporation and received payment for the same, cannot sue to rescind on the ground that the corporation had [223] no power to purchase. In the case at bar it does not appear that any consideration was paid by O-ass for the lots in question, or that any benefit resulted to the complainant company, and the bill seeks to annul the illegal and unauthorized, contract of the board of directors, whereby the corporation has been deprived of its property to the Avrong and injury of its stockholders. This demurrer should have been sustained. The decree in respect to the first and third demurrers Avill be modified so as to conform to the views hereinabove expressed, and as modified will be affirmed. Tyson, J., dissenting.