Le Warne v. Meyer

Citation38 F. 191
PartiesLE WARNE v. MEYER et al., (HARRIS, Intervenor.)
Decision Date14 March 1889
CourtUnited States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)

About February 13, 1888, the Mexican government ceded to Gen. Pedro Beranda, under certain terms and restrictions, lottery franchises and privileges to draw lotteries in Mexico. These franchises and privileges passed by assignment, the terms of which are not known, to Gen. Beranda and associates, for the purpose of carrying out the contract, and carrying on the lottery. The associates organized an incorporation under the public improvement law of Louisiana for the purpose of carrying on the lottery business in Mexico. The corporation was organized under the name of 'The Mexican International Improvement Company,' for the avowed purpose of constructing, operating, maintaining promoting, and developing various works of public and private improvement in the republic of Mexico. The capital stock was fixed at $100,000, divided into 10,000 shares of $100 each to be paid in as might be provided by the board of directors and the board of directors were authorized to issue such portions of such stock as they thought necessary, as full-paid stock, for the purchase of property, franchises and grants, and payment of labor done, and services performed. Immediately, upon organization, the full amount of stock was issued as full-paid stock, and divided among the associates or promoters of the enterprise. Such stock was thereafter put upon the market in New Orleans, and notoriously and openly bought and sold as Mexican Lottery stock. All the stock being issued as full-paid stock, to be given out for the purchase of the lottery privilege, it became necessary to raise by other means funds sufficient to comply with the contract of the Mexican government, and to carry on the lottery business. Thereupon a general meeting of stockholders was called in pursuance of the laws of Louisiana in such cases made and provided, for the purpose of increasing the stock. At such meeting eight-tenths of the stockholders were represented in person or by proxies. At the meeting the charter was amended so as to authorize the issue of $1,000,000 of preferred stock and $400,000 of bonds, to be subscribed and paid for on certain terms and conditions; the preferred stock so issued to be paid, as dividends, 50 per cent. of the net earnings of the company; 25 per cent. of the same being set apart to pay dividends on certain 2,500 shares of the original stock issued to certain persons; the remaining 25 per cent. of net earnings to be applied as dividends on the remaining $750,000 of original stock. When this arrangement was concluded, the ordinary stock rose rapidly in the New Orleans stock market from $5 and $6 a share to $60 and $70 a share. On the 12th of January, 1889, Benjamin F. Le Warne, a citizen of California, had transferred to him on the books of the company 100 shares of this stock. On the 14th of January he applied, through an attorney, by letter, to the directors of the company to have issued to him his proportion of the preferred stock and of the bonds provided for in connection with the issue of preferred stock. The demand was rejected on the ground that the preferred stock was all subscribed for. Thereupon he brought his bill attacking the issue of preferred stock. He alleged fraud and conspiracy in the board of directors; the illegality of the proceedings in relation to the issuing of preferred stock; prayed for an injunction restraining the recognition of the preferred stock as valid stock, and for a decree declaring the whole issue of preferred stock illegal, null, and void. Soon after he filed an amended bill, wherein he set forth, among other things, the following, from information received by him and coming to his knowledge since the filing of the original bill: 'That he has reason to believe, and does believe, and therefore charges, that not only are said defendants guilty of the wrongs and unlawful acts complained of and set forth in said original bill of complaint, but they were and are guilty of other serious and flagrant wrongs and frauds upon the rights that your orator holds in common with the bona fide good faith holders of all the other shares of the original 10,000 shares of capital stock of said defendant corporation. That said defendants, as the directors and officers of said corporation, have without any warrant of law, and in utter disregard of the rights of the bona fide shareholders, undertaken to subsidize said corporation, its assets and credits, to the accomplishment of fraudulent and illegal purposes, and, unless controlled by the restraints to be put upon them by his honorable court, will squander and destroy the same in acts and operations ultra vires of any power incident to, or vested in, the said corporation, under and in virtue of its original...

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6 cases
  • Woolfolk v. January
    • United States
    • Missouri Supreme Court
    • December 17, 1895
    ... ... Laforce, 71 Mo ... 356; McDaniel v. Harvey, 51 Mo.App. 199; Howe v ... Agricultural Works, 46 Ill.App. 85; LeWarne v ... Meyer, 38 F. 191. (6) The price paid is a telltale ... Curd v. Lackland, 49 Mo. 451; Ames v ... Gilmore, 59 Mo. 549; Morgan v. Wood, 38 Mo.App ... ...
  • Davis v. A. W. Riewe Architectural Realty and Building Company
    • United States
    • Missouri Supreme Court
    • March 21, 1912
    ... ... valid indebtedness by sale of part of its assets in the ... absence of fraud. Foster v. Mill Co., 92 Mo. 87; ... Meyer v. Folding Chair Co., 130 Mo. 188; ... Shuflelt v. Smith, 131 Mo. 280. (3) He who comes ... into a court of equity, must do so with clean hands ... [Tobey v. Robinson, 99 Ill. 222, 233; Railroad ... v. Mowatt, 12 Jur., pt. 1, 407; Le Warne v. Meyer, 38 F ...           ... Plaintiff and the other defendants who were parties to the ... illegal agreement stand in pari delicto, ... ...
  • Senour Manufacturing Company v. Church Paint & Manufacturing Company
    • United States
    • Minnesota Supreme Court
    • November 12, 1900
    ...or limit the business of the company exclusively to manufacturing. Brundred v. Rice, 49 Oh. St. 640; McGrew v. City, 85 Tenn. 572; Le Warne v. Meyer, 38 F. 191; Nicollet Bank v. Frisk-Turner Co., 71 Minn. 413, 421; Cuyler v. City Power Co., 74 Minn. 22. Notwithstanding the fraudulent statem......
  • Garrett v. Kansas City Coal Mining Company
    • United States
    • Missouri Supreme Court
    • December 31, 1892
    ... ... equity will not enforce. Tobey v. Robinson, 99 Ill ... 222; Railroad v. Mowatt, 12 Jur. pt. 1, 407; Le ... Warne v. Meyer, 38 F. 191 ...          Plaintiff ... and the other defendants who were parties to the illegal ... agreement stand in pari ... ...
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