RANGER RAN(lER
11.
CHAMPION COTTON-PRESS CO.
609
CHAMPION
Co. et aZ.
(Oircuit Court, D. South Carolina. July 25,1892.) CoRPORATIONS-,APPOINTMENT OJ' RECEIVERS-RIGHTS OJ' BTOCKHOJ,DER.
W here a bill by one stockholder against the corporation and the other stockholders charges that the president refuses to account for money intrusted to him for the interests of the company, or to allow; any inspection of the books by complainant, and an affidavit filed with the bill charges that the president is insolvent, and since the inauguration of the suit has mortgaged all his real estate with intent to defeat the claim of the company, there being no allegation of fraud on the part of the other stockholders, but rather a distinct intimation that the president is sustained by them, and the solvency of the corporation being unquestioned, the court will not, before. the time for answer has expired, grant a motion for the appointment of a receiver, and thereby take the corporation out of the control of the large majority of the stockholders.
.
In Equity. Bill by Louis Ranger, a stockholder, against the Champion Cotton-Press Company and all other stockholders. Heard on motion for the appointment of a receiver. Denied. Mitchell &; Smith and Smythe &; Lee, for the motion. J. N. Nathans, Lord &; Burke, and Bryan &; Bryan, opposed. SIMONTON, District JUdge. This is a motion for the appointment of a receiver. The time for answering has not yet expired, and no answers are in. The motion, therefore, is on the bill andl1ffidavits. The suit is brought by Louis Ranger, the holder and owner of 20 shares in the Champion Cotton-Press Company, against that corporation and all the other stockholders. The capital stock of the company is subdivided into 120 shares. The corporation purchased some time ago 19 of these, and has recently acquired title to 20 more. The defendants to this bill represent 61 shares. The bill charges abuse of his authority on the part of B. F. McCabe, the president, refusal on his part to account for some $25,000 intrusted to him by the company to be used in the promotion of its interests, the application of this money to his own use, and his repeated and obstinate refusal to give complainant an inspection of the books of the company, or any information whatever of its affairs. The affidavit with the bill charges that McCabe is insolvent, and that since the inauguration of this suit he has been mortgaging-has in fact mortgaged-all of his real estate, with manifest intent to defeat the claim of the company. There is no allegation of fraud or fraudulent collusion on the part of the other stockholders, and there is a distinct intimation in the bill that McCabe, as president, is sustained by the other stockholders. Upon these allegations is based the motion for a receiver. The solvency of the corporation is unquestionable. So far as appears, there are no creditors. At this stage of the case we deal with the allegations ofthe bill as if they were true. They present a grave condition of things, and without doubt, even with the qualifying statements of Mr. McCabe's affidavit, there does seem reason for great apprehension in the mind of the complainant. But this motion is, in effect, to take the control of this company out of v.52F.no.7-39
the hands of the majority of its-stockholders and put it under the conanq its. at 'he of a person who trol of the is in a minority of the stockholders. The majority entertain and favor a certain method affairs .olthe company, by which a large, and perhaps uncontrolled, power is given to the president. trn.st-'-ll:p t() thilS stage of the case, a remarkab!edegree oficonfidence-in thell presnO in iLnd is willing to 'believe the.wQl'stc<>t him., .. therefore, hlvites the interference of the tlpl1ttto this, to him, dangerous methOd.J,lla bases his prayer for toe favorable consideration of the court that. the others.' Each one'oftli'em'has as mlichright to the aid of the.court,and to its interference, as he; and, as the aggregate of them have a larger num ber of than he,this. 'm8ljority hav.e, '8 'Paramount claim upon the court. The iNU:seek1Sno reliefagainst the: stockhblders; .makes no charge against them. It attacks Mr. McCabe, and, seeks judgment against him. . !fa receiver be appointe#lihisw'ould he in 'effect a decree against all the other stocltoolders,an4· 'against ,,tIie IC0rporation. Were it necessary, in order to secure a proper account from Mr. McCabe, and a judgment .. :thUl. would be done at i,.e.trnstee",and, as such, .he:can and,$hould be made to ae, qq'Unt lJ;lstllJl.ceof IlU orany 9f his ce8tU1B qtU$ trt{8wnt. The xesuJt. QfthiB, bill, 8,sl!umingthat its in the main' correct,' ,:pph anaCQo'Unting.Bllt, this will not ,warrant the court, ofJhe the consent of the majorityof the in. this corporation, to take its property qut contrql icifitsmanagement, and .to wind up it liOne ,of the of membership in a we may say-is th!lt the minority are lllrgely uQder Ple <x>ntrolof the. majority:,' So long .8$ . the latter act in good the constitution and ,by-laws of the corporation, they can. .adQptany)ine 9f policy which ,commends. itself to their jupg", mant, n;1ay be the hQl!tility of the to it, or however their conviction that it is ,of their interests. If this minoritY:.wl'lre originalstockhplders, they are; .'bemselves responsible fqr the, with the majority·. If they the stock a:fter the organi?4ltion ·of the compll,ny, they :have voluntarily assumed the risk. In any event, they are bound, to the life of the corporation dur.orits charter, unles,!!. other stockholders concur witll ing t.he them to it. In noevent,thElrqfore, can the court, at this .stage of these prayer of a ,minority, appoint a receiver, and so defeat .and disappoint the majority of the stockholders, ll.nd praoticaUy existeqce of th,!corporation. 1 The Ul,Q.tion ... dismissed. is . . \'.' ,
I !lor. Corp.S 281; Bardon v. Newto:Q.l·. .Blatohf. 876; Einstein Y. Rosenfeld. B8 H I. Ell. 809; La Granp v. State Treasurer, lUWch. ... .
RANGER
v;
CHAMPIONClhTON-PRESS CO.
611
RANGER v.
CHA!lIPION
Cb.et at
(Circuit Court,D. South Carolina.' November 3,1892.)
1.
A bill by a stockholder against the cortJ0rlJ,tion. its president, and .11011 the other stockholders, charged that the president was using for his own' benefit moneys- 9! th,!! corporation aptJllcable toa dividend, and refused to account therefor; that, aided by the secretary, be refused to entertain or allow ,to be voted on a motion properly. made at a regUlar stockholders' meeting calling for such an account; that in viola,tiono! the bY,lawsbedeposited the corporate moneys in his, individual namej that he wasted $3,300 of the corporate moneys.by bad management; that he loa.nllu $10,000 to a stockholder, secured bya pledge of the latter's stock; that afterwards t)le st.ock was bought by the company against complaiI\ant's protest; that' the officers declined to make a statement of the company's. affairs, or to allow complainant to examine'the books; and that the president 'was,attempting to depress the company's stock so as to compel complainant to sell out to him. Held,thatthe bill stated a case for equitable relief, and was good as against a general demurrer. 2. SAME-EQUITY RULE 94. TbebUl did not come within equity rule 94, relating to suits by stockholders, or, if its provisions could be considered as applicable, the allegations substantially complied therewith. Hawes v. Oakland, 104 U. S.45O, distinguished. 8. EQUITY PLEADING-MULTIFARIOUSNESS. . . ' . , An objection to a bill for multifariousness cannot be taken merely at the hearing, but must be specifically stated by demurrer or pleading.
CORPORATIONS-RIGHTS OF STOOKHOLDERS-MISOONDUOT Oll" ()FlI'IOIlRslEQth:TABLE . RELI1'lF. . ,. /. "
In Equity. Bill by Louis Ranger against the Champion Cotton-Press Company, B. F. McCabe, and other stockholders, for the declaration of a dividend and other relief. A motion for the appointment of a ra-. 'ceiver before the answers were due was denied. 52 Fed. Rep. 609. ,Heard on demurrer. Overruled. Mitchel), Jc SmUh,for complainant. Lord Jc Burke, J. N. Nathans, and J. P. K. Bryan, for defendants. SWONTON, District Judge. This case comes up on the bill and demurrers thereto. The bill is filed by Louis Ranger, alleging that he is a stockholder in the Champion Cotton-Press Company, a body COl'POrate. That the number of shares was 120, at $700 each. That the company purchased and owned 19 of these. That Mrs. Elizabeth Dowie, who is a defendant, owns 15 shares; Miss Margaret B. Mure, another defendant, owns 15 shares; William Mure, another defendant, 10 shares; R. D. Mure, also a defendant, 6 shares; William Fatman and B.F. McCabe, the other defendants, 20 shares and 15 shares, respectively. Thus all the stockholders are parties to the suit, and with them the corporation. The bill further alleges that, having been prevented by the failure to hold, in 1891, the meeting provided by the by-laws, and the consequent failure to make an exhibit of the affairs of the company by the officers thereof, complainant requested and demanded, at the annual meeting in 1892,a clear and full exhibit of the business and affairs of the company, and that this was peremptorily refused by the president and other officers. That he desired also to examine the books of the company so as to ascertain its condition, and that this also was peremp·
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