Trahan v. Broussard Cotton Oil Co.

51 So. 898, 125 La. 785, 1910 La. LEXIS 552

• Court: Supreme Court of Louisiana
• Decided: March 14, 1910
• Docket: No. 17,847; Receivership No. 3
• Status: Published

Opinion

BROYOSTY, J.

An exception of no cause of action was maintained in this case, and plaintiffs petition dismissed. The petition reads as follows:

“That petitioner is a stockholder of the Broussard Cotton Oil Company, Limited, defendant, a corporation organized under the laws of this state, to the extent of 15 shares, of the par value of $100; that said company has assets in the village of Broussard, consisting of lots of ground, together with buildings and improvements, oil mill and other machinery, and certain products of said oil mill, open accounts, etc.; that the directors and officers of said company have grossly mismanaged the affairs of said company, and are jeopardizing the rights and interest of the stockholders and creditors of said company and those of petitioner in this:

“That on a stock subscription of approximately $68,000 the said directors and officers incurred a debt of something over $90,000, which in itself would cause a great depreciation in the value of the stock of said company.

“That the operating expenses of said oil mill were out of all proportion to the profits earned during the season of 1908-09, showing that the concern was run at- a practical loss during said season, as the statement filed with your petitioner shows an operating expense of something over ,$50,000 and profits of something like $2,500, all of which will be shown on the trial.

“That said officers and directors of said company have lately, to wit, on the 17th day of May, 1909, mortgaged the property of said company for the sum of $6,434.14 to meet present pressing obligations, without the apparent hope of being able to pay said mortgage, when same shall become due, from the proceeds and sale of the products of said oil mill; that said mortgage was but a makeshift for temporary relief, and at best will but for a short time put off the day of reckoning.

“That on May 5, 1909, the board of directors of said company adopted a set of resolutions embodying a plari to borrow money from the stockholders of said company to take up and pay certain - notes and claims that are due and owing by said company ; that said plan was not to raise money to run and operate said oil mill, but merely to change the personnel of the creditors, and practically leave affairs in the same condition that they were at the time said resolution was passed, as will be more fully shown by the copy of said resolution and statement hereto annexed and made part hereof.

“That in the aforesaid resolution providing for the raising of funds there is no provision made for funds to operate said oil mill, and as far as your petitioner can ascertain there is no prospect that said oil mill will be operated during the season of 1909-10.

“That owing to various causes, such as destructive insects, unfavorable weather , conditions, reduced acreage, etc., all tending to reduce the amount of cotton seed necessary to supply the various oil mills throughout this section of the state, thereby causing great competition in the sale of cotton seed, petitioner believes, and therefore avers, that it will be a practical impossibility under the present management to run and operate said oil mill at a profit, or even to pay expenses for many years to come.

“That said corporation owes a large indebtedness, and petitioner believes, and therefore avers, that it is to the interest of the creditors^ and stockholders that a receiver should be appointed to take over and manage the affairs of the said corporation.

“Petitioner believes, and therefore avers, that there is a certain amount of product of said oil mill still on hand belonging to said corporation, the disposal of which should be under the control of the court.

“Wherefore petitioner prays for citation, etc., and to show cause on the day to be fixed by the court why a receiver should not be appointed to take over the management of the affairs of said corporation, with full power to hold, administer, manage, and dispose of its property, income, rights, and credits, etc., in such manner as the court may direct; and after due proceeding had that Mr. Orren B. I-Iopkins, a resident of the city of Lafayette, be appointed as receiver, and for general relief, etc.”

' Plaintiff alleges mismanagement, and then specifies.the acts of alleged mismanagement. The general allegation of mismanagement is merely the conclusion which plaintiff has drawn from the acts thus specified. By the exception of no cause of action, the acts specified have been admitted, but not the conclusion which plaintiff has drawn from them. Hennen, Digest, 1169; Fertilizing Co. v. Wolf, 48 La. Ann. 631, 19 South. 558.

There is nothing in the alleged acts to stamp them unmistakably as mismanagement; and since plaintiff does not deny that they were done in the honest exercise of the judgment of the officers, as appearing to be what was best to be done in the interest of the corporation, the case presented is that of a stockholder who would have the court interfere with the corporate management or policy simply because he is dissatisfied. The well-settled rule is that the courts will do nothing of the kind. 10 Cyc. 969.

Judgment affirmed.