Johnston v. Livingston Nursing Home, Inc.

211 So. 2d 151, 282 Ala. 309, 1968 Ala. LEXIS 1130
CourtSupreme Court of Alabama
DecidedMarch 14, 1968
Docket6 Div. 102
StatusPublished
Cited by7 cases

This text of 211 So. 2d 151 (Johnston v. Livingston Nursing Home, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnston v. Livingston Nursing Home, Inc., 211 So. 2d 151, 282 Ala. 309, 1968 Ala. LEXIS 1130 (Ala. 1968).

Opinion

LIVINGSTON, Chief Justice.

This is an appeal from a final decree of the Circuit Court of Jefferson County, Alabama, in Equity, denying appellant’s petition for dissolution of appellee-corpo-ration, and the appointment of a receiver pendente lite for said corporation. Appellant also complains of the action of the trial court in granting cross-respondents’ prayer for a temporary injunction that limited and circumscribed complainant’s activities as an officer and director of the corporation.

We will not undertake to set forth the pleadings or the evidence; to do so would unduly burden or lengthen this opinion without serving any useful purpose. We do state, however, that the entire record comprises 856 pages, of which 719 pages present the evidence and some of the exhibits. A condensed recital of the evidence, pursuant to Supreme Court Rule 9, covers 142 pages. We have carefully reviewed this narrated evidence. Also, we have reviewed the statement of the case and the pleadings which cover 45 pages.

The record shows that complainant (appellant), along with her sister, Mrs. Lessie H. Vick (one of the appellees), and the latter’s husband, Henry E. Vick, filed in the Office of the Judge of Probate of Jefferson County, Alabama, pursuant to Title 10, Sec. 1 et seq., Code of Alabama 1940, a certificate of incorporation, incorporating the Livingston Nursing Home, Inc., which corporation is also an appellee in this cause.

The Livingston Nursing Home, Inc., was incorporated on July 11, 1959.

The Articles of Incorporation show that the total authorized capital stock was $2,-000, divided into one hundred shares of the par value of $20.00 each. The incor-porators, together with the number of shares subscribed by each are as follows:

Esther J. Johnston 50 shares (appellant)
Lessie H. Vick (appellee) 49 shares
Henry E. Vick (appellee) 1 share

The names of the officers and directors chosen for the first year, specified in the certificate of incorporation, are:

OFFICERS
Esther J. Johnston President
Henry E. Vick Vice President
Lessie H. Vick Secretary-Treasurer
DIRECTORS
Esther J. Johnston
Plenry E. Vick
Lessie H. Vick

All the incorporators, namely, Esther J. Johnston, Iienry E. Vick and Lessie-H. *311 Vick, signed the petition for incorporation and signed their approval of the foregoing officers and directors. Esther J. Johnston certified that all the subscriptions for stock by the foregoing had been paid in cash.

A significant omission was the failure of the incorporators to adopt any bylaws pertinent to the operation of the corporation. No mention was made in the Articles of Incorporation of any bylaws and none were subsequently adopted. No provision was made for stockholders’ or directors’ meetings, either regular or special.

Mrs. Vick was named Administrator of the Livingston Nursing Home, Inc., and the evidence shows that it was with the consent of all the incorporators. Mrs. Johnston, the appellant, was not eligible to administer the affairs of the Livingston Nursing Home because she was already the administrator of another nursing home and under the rules of the Alabama State Board of Health, which licenses the operation of nursing homes, she was not eligible to be the administrator of more than one nursing home.

Appellant contends in her bill of complaint that the business affairs of the corporation have been grossly mismanaged under the control and administration of her sister, Lessie H. Vick, and her husband, Henry E. Vick; also that the nursing home has been poorly managed and operated with neglect of the patients whom she claims were served with poor quality of food. Also, complainant (appellant) contends that the officers of said Livingston Nursing Home have come to an impasse, and that due to dissension and bickering among the stockholders and officers “it is impossible for the complainant and said Lessie H. Vick and Henry E. Vick to carry on said corporation and its business affairs.” In other words, the contention is that the operation of said corporate home for corporate benefit of the stockholders has become deadlocked and paralyzed. Hence, she contends that the equity court should appoint a receiver, dissolve the corporation and sell the assets for payment of debts and distribution of the excess among the stockholders. There is no contention that the corporation is presently insolvent.

Appellant also complains that Henry E. Vick is a “dummy” director, has no lawful right to vote, and that the two remaining directors are irreconcilably in disagreement with respect to the management of the corporation and its assets and properties.

We are not unmindful of the elaborate brief that appellant has filed with this Court in support of her contention by assignment of error that the corporation be placed in the hands of a receiver. Appellant cites and argues many cases in support of her contention for a receiver. We are also not unmindful that each case sets forth facts that present different situations which motivated the action of the trial court.

The evidence in the instant case does not support the relief for a receiver. It is to be noted that appellant signed the Articles of Incorporation wherein she consented for Mr. and Mrs. Vick to be directors along with herself. She certified that the stock issued to Mr. and Mrs. Vick, as well as to herself, was fully paid for in cash. She was informed at the time who would be the directors. She was charged with lawful notice that any two of these directors would constitute a quorum, and that all three directors had a lawful right to participate in the management and control of the corporate affairs to the extent prescribed by law. She also was charged with notice that the majority vote of the directors at a lawful meeting would control, excepting, of course, a situation of disqualification to vote.

Appellant was also lawfully informed that said directors would hold office for one year “[and] until their successors are elected.” Section 23, Title 10, Code of Alabama 1940. The Alabama Business Corporation Act, effective soon after the instant corporation was charted, has a *312 like provision. See Act No. 414, Sec. 25, Acts of Alabama 1959, Vol. 2, p. 1055.

As we view the evidence, Mrs. Vick assumed the duties of administrator of the Nursing Home with the consent of all the incorporators. Appellant was not eligible under the rules of the Alabama State Board of Health, which licenses the operation of nursing homes, to be the administrator.

While Mrs. Vick might have been derelict in the performance of some of her duties, we do not think that such derelictions affected the progress, welfare or advancement of the project to any appreciable extent. The quality of the food served might not have been to the liking and approval of appellant.

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Bluebook (online)
211 So. 2d 151, 282 Ala. 309, 1968 Ala. LEXIS 1130, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnston-v-livingston-nursing-home-inc-ala-1968.