Briggs v. Scripps

SCOVEL, J.,

pro

tem.

Plaintiffs are minority stockholders in all of the defendant corporations excepting Scripps Newspapers, Inc. Defendant E. W. Scripps is the son of Mrs. Josephine S. Scripps. In 1932 she was indebted to the defendant corporations excepting Scripps Newspapers, Inc., in the sum of some $316,000. E. W. Scripps was the managing director and treasurer of all defendant corporations and after talking the matter over with the various directors of defendant corporations canceled the obligation of Mrs. Josephine S. Scripps and in lieu thereof accepted a note of Scripps Newspapers, Inc., for the same amount, secured by one thousand shares of Scripps Newspapers. Inc., the book value of such collateral being $450,000. Scripps Newspapers, Inc., is a holding corporation, at least ninety per cent of its assets consisting of shares of stock in the other deféndant corporations. The stock of Scripps Newspapers, Inc., is owned by defendants E. W. Scripps, James G. Scripps, Josephine L. Scripps and Ellen Browning Scripps, brothers and sisters, Mrs. Josephine S. Scripps having no interest whatsoever therein., The evidence fails to show that the exchange of indebtedness from Mrs. Josephine S. Scripps to Scripps Newspapers, Inc., in any way injured the other corporations or that there was any fraud involved in the transaction. For many years, it was the custom among the various defendant corporations at the annual stockholders’ meetings to adopt a blanket resolution ratifying and confirming all of the acts theretofore done by E. W. Scripps, as manager and treasurer of the various corporations. Subsequent to the cancellation of the Jose

[45]

phine S. Scripps loan and the acceptance of the Scripps Newspapers, Inc., note in lieu thereof, such a resolution was adopted by the stockholders of the various corporations ratifying and confirming all acts of E. W. Scripps, as manager and treasurer. Subsequent thereto, plaintiffs filed this action seeking to set aside the transfer of indebtedness. Judgment was entered in favor of defendants, from which plaintiffs appeal.

Appellants maintain that the so-called loan to Scripps Newspapers, Inc., is a misappropriation of moneys by E. W. Scripps as treasurer of other defendant corporations for the benefit of E. W. Scripps and his brother and sisters, the sole stockholders of Scripps Newspapers, Inc. The evidence shows, however, that in truth and in fact no actual moneys were received by Scripps Newspapers, Inc., the transaction consisting in the assumption by Scripps Newspapers, Inc., of the indebtedness of Josephine S. Scripps and the cancellation of her indebtedness represented thereby. While the directors of the various corporations took no formal action approving the same, it was done with their knowledge and approval. The new obligation was amply secured, and from all that appears in the transcript the new debtor may be more financially responsible than the old one. The fact that E. W. Scripps was a director of all of the corporations and actively engaged in the transaction does not make it void or subject to attack by minority stockholders in the absence of fraud or damage to them.