Albers v. Villa Moret, Inc.

WARD, J. This is an action brought by a group of stockholders on behalf of defendant corporation and “all other share holders” against the corporation and two of its directors, viz., F. L. Owens and Sally Simpson, for an accounting and for the removal of such persons as directors and officers of the corporation, upon the ground, based on information and belief, that those persons had used the assets and property of the corporation for their own advantage and benefit, to the damage of the corporation. The removal of officers or directors other than those named was not sought. The appeal is from a judgment in favor of defendant corporation and the directors sought to be removed.

Appellants, as plaintiffs, alleged in their complaint that certain annual reports of Villa Moret, Inc., did not conform to the provisions of section 358 of the Civil Code; that the failure of the board of directors of the corporation to hold meetings and keep records was a gross abuse of discretion on their part; that the purchase of certificates in two building and loan associations and an investment in a fruit distributing company were an abuse of authority as well as discretion ; that the sale of certain stock to defendant Owens should be set aside, and the stock, with dividends received by him thereon, returned to the corporation treasury. It is also alleged that defendants Owens and Simpson were paid salaries in excess of reasonable amounts, and that such excess should be repaid the corporation. The allegations of the complaint are denied in the answer. The trial court signed findings of fact and conclusions of law denying the truth of the allegations of the complaint and affirming those of the answer. If upheld by the evidence, the findings appear to be a complete answer to appellants’ contention that an accounting should be had, a receiver appointed and the two officers and directors removed.

[56]The evidence in support of appellants’ position is meager and this fact evidently is recognized by them. They contend that all of the above acts or omissions on the part of the two directors were unjustified, but that if “any one of these acts did not constitute gross abuse of authority or discretion, nevertheless when the entire course of conduct for the five years in which these defendants exercised their authority is viewed cumulatively, the answer seems conclusive. ’ ’ The difficulty with appellants ’ position is that while some of the acts of the directors resulted in unwise investment, particularly as viewed in retrospect, they do not necessarily — depending upon the facts — constitute gross abuse of discretion.