American Refrigerating & Construction Co. v. Linn

• Decision Date: 09 January 1890
• Citation: 7 So. 191,93 Ala. 610
• Court: Alabama Supreme Court
• Parties: AMERICAN REFRIGERATING & CONSTRUCTION, CO. et al. v. LINN.

7 So. 191

93 Ala. 610

AMERICAN REFRIGERATING & CONSTRUCTION, CO. et al. v. LINN.

Supreme Court of Alabama

January 9, 1890

Appeal from chancery court, Jefferson county; THOMAS COBBS Chancellor.

Bill by E. W. Linn against the American Refrigerating & Construction Company, J. M. Rutherford, and one Batler, for an injunction restraining the defendant corporation from voting its stock at a stockholders' meeting of the Alabama Ice &amp Cold-Storage Company, and to have that stock canceled on the books of the Alabama Company. The bill alleges that E. W Linn, a resident of Jefferson county, Ala., and complainant in the original bill of complaint in this case, together with a number of other persons, was induced or influenced by one J. M. Rutherford to build an ice and cold storage plant,-the American Refrigerating & Construction Company agreeing to furnish said plant with machinery capable of manuufacturing 20 tons of merchantable ice per day; that the said plant was constructed, and the said American Refrigerating &amp Construction Company placed therein machinery which they represented would manufacture 20 tons of merchantable ice per day; that the said E. W. Linn and his associates, not being acquainted with the business of manufacturing ice, relied on the representations made by the agents of the said American Refrigerating & Construction Company, and in December, 1887 organized and incorporated said plant into a company known as the "Alabama Ice & Cold-Storage Company." The whole capital stock of said company was 800 shares, of the par value of $100 each, and the said Linn subscribed for and received 60 shares of said stock, and the said American Refrigerating & Construction Company, subscribing said machinery through its agents, received on its stock subscription 420 shares of said stock; said stock being subscribed in the name of an agent, which it now holds. The bill then alleges that he said Alabama Ice & Cold-Storage Company was organized in the winter, when there was no demand for ice, and that the full capacity of the machinery was not tested until the following summer, when it was discovered that it was impossible to manufacture said 20 tons of ice per day with said machinery, and the Alabama Ice & Cold-Storage Company, for that reason, lost money, and was compelled to make debts, which debts the American Refrigerating &amp Construction Company acquired; that the American Refrigerating & Construction Company forced the appointment of incompetent agents on the Alabama Ice & Cold-Storage Company, against the protest of some of the stockholders, and refused to allow the directors to remove them. The bill then avers that the American Refrigerating & Construction Company is a foreign corporation, not organized in the state of Alabama, and has a majority of the stock of the Alabama Ice & Cold-Storage Company, and seeks to run said last-named company for its own benefit, and not for the benefit of the stockholders of the said company. It also contains allegations as to the American Refrigerating & Construction Company having and controlling a line of transportation cars, etc. The bill then avers that the American Refrigerating & Construction Company had a meeting of the stockholders of the Alabama Ice & Cold-Storage Company, called for the avowed purpose of assuming entire control over the last-mentioned company, and of issuing bonds to pay an indebtedness to itself, caused by the defective machinery it had sold to the said Alabama Ice & Cold-Storage Company. The respondents demurred to the bill, and assigned as grounds of demurrer: "(1 a) That Linn is not a proper party to bring a suit complaining of an ultra vires act of the American Refrigerating & Construction Company; (1 b) that Linn had no right to sue, but the Alabama Ice & Cold-Storage Company is the proper party complainant; (2) that the Alabama Ice & Cold-Storage Company is a necessary party; (3) that the bill is multifarious, in that it seeks to enjoin the voting, and to cancel the stock of the American Refrigerating & Construction Company, and of Rutherford, as trustee; (4) that Linn is not entitled to the relief prayed for, because the American Refrigerating & Construction Company has a right to vote and control its said stock." And the defendants in their answer deny the allegations of the bill as to its (the American Refrigerating & Construction Company) attempting to exercise exclusive control over the Alabama Ice & Cold-Storage Company, and that to the detriment and destruction of the said Alabama Company, and also denied other allegations of the bill. The defendants also moved the court to dissolve the injunction granted on the filing of the bill; on the denials of the answer; on the demurrers to the bill; and for want of equity in the bill. The case being submitted to the chancellor on the demurrers and the motion to dissolve the injunction, the chancellor rendered a decree sustaining the second ground of demurrer, and so much of the demurrers as related to the canceling of the stock belonging to the defendant corporation, and...