Allen v. Wilson
| Decision Date | 28 July 1886 |
| Citation | 28 F. 677 |
| Parties | ALLEN and others v. WILSON and others. [1] |
| Court | U.S. District Court — Northern District of Illinois |
This is a suit in chancery, originally brought in the circuit court of Rock Island county, in the state of Illinois, and afterwards removed from the state court to this court. The complainants are Calvin H. Allen, a citizen of New York, and Lucian C. Jones, Henry C. Baldwin, and Warren Packard citizens of Ohio, who sued for themselves and, generally, for other stockholders of the Banner Coal & Coal-oil Company, an Illinois corporation. The defendants are the corporation, and John H. Wilson, John Crubaugh, Edward D. Sweeney, William Jackson, William A. Ross, and several others, all stockholders in the corporation. The corporation was organized in 1865 under a charter granted by the Illinois legislature. The capital stock was $500,000, divided into 5,000 shares, of $100 each. It was issued as paid-up stock.
Complainants allege, that upon the organization of the corporation, Wilson held 1,167 shares of its stock; that since January, 1868, he has held a majority of its stock in his own name, or that of his agents; that, by means of the stock held by him, he has since January, 1868, controlled all elections of directors that he transferred stock without consideration to Sweeney Jackson, Ross, (his son-in-law,) and others, that they might act as directors of the corporation; that such persons acted as directors and officers of the corporation at Wilson's request, and in his interest; that in 1868 Wilson caused himself to be elected president and superintendent, ousting defendant Crubaugh from the latter office; that since 1868 Wilson has controlled and managed all business of the corporation, has had possession of all its property, books, papers, and money, has received and controlled all its receipts, has borrowed and paid money as he saw fit, has omitted to elect officers from time to time, and in every way has managed and controlled its business; that Wilson has disbursed the money of the corporation without taking vouchers as required by the by-laws; that the by-laws have been almost, if not entirely, disregarded; that the corporate books have been kept in a very imperfect manner; that in 1873 Wilson, while president and superintendent, arranged to lease a large part of the property of the corporation, i.e., its coal mines, to himself and one Cable; that immediately thereafter Wilson resigned as president, and the board of directors executed the contemplated lease, under which he has acted ever since; that Wilson continued superintendent and manager, and as such leased to himself the surface land of the corporation at an inadequate rental, and continues so to do; that Wilson has made exorbitant charges against the corporation for his services; and that no dividend has ever been declared. Complainants pray for a cancellation of the leases made by the corporation to Wilson, and for an accounting.
Defendants allege that all allegations in the bill imputing wrong to Wilson, or the members of the board of directors, or a fraudulent control by Wilson, as a majority stockholder, are false; that Wilson had full authority to do what he did; that his authority was ratified from time to time by the board of directors; and that the acts of Wilson, at the time they were performed, were known and approved by the directors and stockholders, including complainants.
The evidence is conflicting. The facts are indicated by the allegations of the parties and opinion of the court.
Osborn & Lynde and Henry Curtis, for complainants.
Geo. W. Kretzinger and E. D. Sweeney, for defendants.
This suit is brought by the complainants, four stockholders, in right of the company, against the company and Wilson, who owns a majority of the stock, and all the other stockholders. It is brought upon the theory that Wilson fraudulently controlled the company to its injury, and for his own benefit, through a board of directors of his own selection who were his mere creatures. No effort was made to induce the company to bring suit, or to call Wilson to account in any way for his alleged...
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