I entertain no doubt of the justice of the decision which the majority opinion affirms. I think we should point out however that it is not arrived at in violation of sound rules of procedure taking into account the form and purpose of the suit as instituted. The decision on former appeal (231 Iowa 784,2 N.W.2d 372) established that sufficient facts were pleaded to state a cause of action for at least part of the relief demanded. But it did not, and perhaps could not at that stage of the proceedings, determine the question now presented.
Appellants vigorously — and plausibly — contend the case, as originally brought, was "in the nature of quo warranto" and could be maintained by the State only for violation of then Code chapter 387 (now chapter 495, Code, 1946); and only to question corporate existence, or to dissolve for acts or omissions constituting a forfeiture of the corporation charter. They argue this was the only right or interest the State could have; also that there can be no joinder of any other cause of action, citing section 12418, Code, 1939, now superseded by Rule 301, Iowa Rules of Civil Procedure.
Their argument also asserts there was no pleaded issue between intervenors and appellants as to validity of the new shares, except as related to the alleged violation of said Code chapter 387; and that if there had been such an issue tendered, *Page 1329 based upon alleged unfairness of the new plan as between the various classes of old stock, it would have constituted a misjoinder.
Appellants are wrong in their major premise. The action is not "in the nature of quo warranto" though it may sometimes serve the same purpose. It is a suit in equity, brought under what is now section 495.6, Code, 1946 (formerly section 8438, Code, 1939) which provides, so far as pertinent here:
"Courts of equity shall have full power to dissolve, close up, or dispose of any business or property owned, operated, or controlled in violation of the provisions of this chapter * * * and if the court finds that, in order to carry out the purposes of this chapter, it is necessary so to do, it may dissolve the corporation issuing the stock which is owned in violation of the provisions of this chapter * * *."
This is materially broader than section 491.66, Code, 1946 (formerly section 8402, Code, 1924) which was referred to and involved in Kosman v. Thompson, 204 Iowa 1254, 1256, 215 N.W. 261, 262, cited by appellants. The latter section provides only that courts of equity shall have full power "to dissolve or close up the business" of the offending corporation and "to appoint a receiver therefor." In the Kosman case it was held that the statutory equity suit was within the power of the legislature to enact and that the State was not limited to the law action of quo warranto for ouster or dissolution of the corporation. See Platner v. Kirby, 138 Iowa 259, 115 N.W. 1032. There is in the Kosman case no suggestion that the statutory equitable suit is in the nature of quo warranto or that interested parties might not join therein and obtain protection of their respective rights by some remedy short of total destruction of the corporation.
Section 495.6, quoted above, is even more elastic. It authorizes dissolution and receivership if the court finds it isnecessary "in order to carry out the purposes of this chapter." But it does not limit the court to this remedy or require such dissolution or receivership in all cases. It permits the court of equity to "dispose of any business * * * operated * * * in violation of the provisions of this chapter" and expressly *Page 1330 provides: "* * * reserving, however, to the stockholders owning capital stock not held in violation of this chapter all rights possessed by them."
[8, 9] I construe this to mean that the court may dispose of the situation in such equitable manner as will best preserve the rights of all interested parties. Stock issued for property other than money, without compliance with sections 492.6 to 492.10, inclusive, Code, 1946, is not void but voidable. Bankers Trust Co. v. Rood, 211 Iowa 289, 295, 233 N.W. 794, 73 A.L.R. 1421; Sherman v. Smith, 185 Iowa 654, 169 N.W. 216. The court is not required to invalidate all such stock alike, where as here there is sound equitable ground for canceling some and allowing some to stand.
There is language in the opinion on former appeal at variance with the view just expressed (231 Iowa 784, 803 et seq.). However, it did not become the law of the case. That was a minority opinion representing the view of but four members of the court. A fifth concurred only in the result, three members dissented and one apparently did not vote.
In Gary Realty Co. v. Swinney, 322 Mo. 450, 458, 17 S.W.2d 505, 508, under comparable circumstances the Missouri Supreme Court said:
"This situation warrants the conclusion that the two judges concurring in the result only, did so on grounds other than the one assigned by the writer of the opinion. For the reasons stated, this opinion is not the law of the case * * *."
See also Turner v. Fidelity Loan Concern, 2 Cal. App. 122,83 P. 62, 70.
[10] Furthermore, the doctrine of "law of the case" is not invariably applied, In re Estate of Hermence, 235 Iowa 745, 749,15 N.W.2d 905, 907, and should not be utilized to accomplish an obvious injustice. Cochran v. M. M. Transportation Co., 1 Cir., R.I., 110 F.2d 519, 521; Johnson v. Cadillac Motor Car Co., 2 Cir., N.Y., 261 F. 878, 882 et seq., 885, 8 A.L.R. 1023, 1031.
In the last cited case it is said:
"The fact that the action is the same action, and the *Page 1331 litigation has not yet terminated, and the further fact that the original error, if error was committed, was the error of a divided and not a unanimous court, are circumstances which are entitled to consideration."
It seems to me the language of section 495.6 (formerly section 8438, Code, 1939) does not require us to hold the stock void. In that respect it does not materially differ from section 492.10, Code, 1946 (formerly section 1641-d, 1913 Supplement to the Code) which was considered in Bankers Trust Co. v. Rood and Sherman v. Smith, both supra.
We are not required here to say how far the State (by either the attorney general or a private relator) would be held to be an interested party in adjusting equities among various classes of stockholders when dissolution of the corporation is not required. Undoubtedly the corporation itself and its stockholders have their remedies in equity entirely apart from the remedies of the State. 18 C.J.S., Corporations, section 248 et seq.; Platner v. Kirby, supra, 138 Iowa at page 266, 115 N.W. at page 1034. There would seem to be no sound technical procedural considerations forbidding joinder of suits and disposition of the entire matter as was done here.
All necessary parties are in the present suit either directly or by representation. There are those former holders of original no-par common stock and also some former holders of the old preferred stock to whom has been issued and who have accepted the new $15 par value common in exchange for their former holdings. There are also some who have refused to accept the new issue in exchange for their old stock.
The pleadings are prolix and complex, perhaps confused. This court is not required to untangle them since no one has appealed except the defendants who received $15 par value common stock in exchange for their former worthless no-par common, and plaintiff relator who, purporting to speak for the State of Iowa, demands total destruction of the corporation. None of these appellants is prejudiced by any failure of appellees directly to pray for the exact relief granted by the trial court. The facts were all pleaded and there were ample prayers for general equitable relief. *Page 1332
As I said at the outset, I am convinced of the justice and equity of the decree, and I concur in the majority opinion with this addition thereto.
MULRONEY, C.J., and OLIVER, MANTZ, and HAYS, JJ., join in this special concurrence.