Myers v. Oklahoma Oil & Gas Royalty Co.

1942 OK 121, 138 P.2d 109, 192 Okla. 620, 1942 Okla. LEXIS 435

• Court: Supreme Court of Oklahoma
• Decided: March 24, 1942
• Docket: No. 30489.
• Status: Published

Opinions

CORN, V.C.J.

This action was brought by a shareholder of the Oklahoma Oil & Gas Royalty Company, a declared trust, for the purpose of dissolving said trust, and for the appointment of a receiver to sell and distribute the assets and to settle and close the same. All of the remaining shareholders were brought in as parties defendant, along with the trustees, and demurrers to the plaintiff’s petition were filed by the trustees and by a large majority of the shareholders. The demurrers were sustained, and upon the election of the plaintiff to stand upon his petition and his refusal to plead further, the case was ordered dismissed, and the plaintiff brought this appeal for the reversal of said judgment of the trial court.

The property of the trust consisted of certain oil and gas mineral rights in some 20 different tracts of land which were conveyed to five trustees to be held and administered according to the terms of the declaration of trust, which instrument was duly executed and recorded as required by law.

The authorized capital is $110,000, which is divided into 1,100 beneficial' interests called shares, and the shareholders’ interests are represented and evidenced by certificates issued by the trustees.

The sole question presented is whether the plaintiff’s petition states sufficient grounds for the granting of the relief sought.

It is a general rule of law that a minority stockholder is precluded from maintaining an action to dissolve a business trust. The rule, as stated in 65 C. J., p. 1095, § 1037, is as follows:

“Ordinarily a stockholder in a business trust cannot have its affairs wound up and its assets distributed during the period for which the trust was organized under the declaration of trust, at least in the absence of a very clear showing of necessity.”

In 12 C. J. S., p. 820, is found this statement:

“A business trust may not be dissolved in contravention of the provisions of the trust agreement unless adequate ground therefor appears.”

And in Bogert on Trusts and Trustees, sec. 304, the rule is expressed in these terms:

“In one sense, of course, the business ness trust is not indestructible, since the shareholders, acting together or by vote of a specified portion, may always terminate the trust, but a single shareholder acting alone has no such power.”

In the case of Oklahoma Fuller’s Earth Co. et al. v. Evans et al., 179 Okla. 124, 64 P. 2d 899, the question of the power of the court to dissolve a business trust was presented, and this court stated the rule in paragraph 1 of the syllabus as follows:

“In an express or business trust created under authority of sections 11820-11823, both inclusive, O. S. 1931, a court of equity has the power to remove trustees whenever good cause is shown and appoint others in their stead, but cannot dissolve the trust in plain violation of the provisions of the trust agreement without sufficient showing of reasons why the business cannot be continued.”

See, also, Phoenix Oil Co. v. McLarren (Tex. Civ. App.) 244 S. W. 830; Hossack v. Ottawa Development Ass’n, 244 Ill. 274, 91 N. E. 439.

Under this rule the plaintiff’s right of action is determined by the provisions of the instrument creating the trust, and if the relief sought is in violation of the provisions of the instrument, in the absence of proper allegations in the petition that the business cannot be continued, the plaintiff’s petition fails to . state a cause of action. That such a situation exists in this case is beyond question, in view of the following provision of the declaration of trust:

“7. The shareholders of the Association shall have no legal right in the trust property or to any title therein, or the right to call for a partition or division of the same, a dissolution of the trust, or an accounting, but shares hereunder shall be personal property, giving only the rights in the instrument and certificates thereof specifically set forth, carrying only the right to a division of the profits and to a division of the trust funds upon the dissolution of the trust.”

The plaintiff complains that the trustees are inactive and are not pursuing the purposes of the trust and have paid no dividends to the shareholders. These complaints • might be considered valid in a proceeding to remove the trustees, as such, but are insufficient as grounds for the dissolution of the trust. The plaintiff’s petition does not state any fact that would indicate that the purposes of the trust are no longer capable of fulfillment under proper management, or that the business could not be properly continued as contemplated by the agreement, or any other facts or circumstances that would empower the court to decree a dissolution of the trust and the winding up of its affairs.

As a further ground for the dissolution of the trust the plaintiff alleged that the organization of the trust was illegally formed and that it does not now have any legal existence as a trust under the laws of this state for the reason that the duration thereof was not limited in the original declaration of trust to a definite period of not to exceed 21 years, or to the period of the life or lives of the beneficiary or beneficiaries thereof as provided in 60 O.S.A. § 172.

The period of duration specified in the instrument is as follows:

“This trust shall continue for 21 years after the death of the last surviving original trustee signing this agreement.”

The beneficiaries of the trust are identified only as shareholders, and under the statute the limitation embraces the span of life of the beneficiary or beneficiaries, which in this instance is the life of the shareholders. It is therefore not apparent that the duration exceeds that fixed by statute.

In our view the petition does not state a cause of action, and the demurrer was properly sustained and the cause dismissed.

Judgment affirmed.

WELCH, C.J., and OSBORN, BAY-LESS, GIBSON, HURST, DAVISON, and ARNOLD, JJ., concur. RILEY, J., dissents.