Amparo Mining Co. v. Fid. Trust Co.

• Decision Date: 14 June 1909
• Citation: 75 N.J.E. 555,73 A. 249
• Parties: AMPARO MINING CO. v. FIDELITY TRUST CO.
• Court: New Jersey Supreme Court

73 A. 249

75 N.J.E. 555

AMPARO MINING CO.

v. FIDELITY TRUST CO.

Court of Errors and Appeals of New Jersey.

June 14, 1909.

(Syllabus by the Court.)

Appeal from Court of Chancery.

Bill by the Amparo Mining Company against the Fidelity Trust Company, executor. Decree for complainant (71 Atl. 605), and defendant appeals. Affirmed.

Richard V. Lindabury, for appellant.

Samuel H. Richards (French & Richards, on the brief), for respondent.

SWAYZE, J. The bill charges that the complainant is a New Jersey corporation; that Paxson was its president and chairman of the executive committee; that as a result of transactions with Williams and Graham, which need not here be set forth, Paxson advanced $40,000 to settle their claims against the complainant, and acquired from them 549,504 shares of the capital stock of the complainant; that this stock is the property of the complainant, subject only to the repayment of the advance of $40,000 with interest, which has been tendered. The important prayers of the bill are that it may be decreed that the stock was held by Paxson in his lifetime, and is now held by the defendant as his executor, as trustee for the complainant, subject to the repayment of the money advanced, and that Paxson had not, and his estate has not, any interest in the stock, except as security for the repayment of the advance. There is a further prayer that the defendant as executor be decreed to assign, transfer, and deliver the stock to the complainant. The defendant pleads to the jurisdiction, averring that it is not a resident or a citizen of New Jersey, or existing as a body corporate under and by virtue of our laws; that it has no office, agent, or agency, or place of business within the state, and never has had, and is not now engaged in business within the state, and never has been; that it is a body corporate under the laws of Pennsylvania; that the ordinary proceedings against absent defendants have been taken against it, but that no process or other legal notice has been otherwise served. It submits that the Court of Chancery has no jurisdiction, and that no decree can be entered in the suit which is enforceable against the defendant under the Constitution and laws of the United States of America or of the state of New Jersey. The learned vice chancellor advised an order overruling this plea.

It is conceded that, in order to sustain jurisdiction over the defendant, it must appear that the proceeding is a proceeding quasi in rem, and that our statutes authorize the Court of Chancery to entertain jurisdiction of such proceedings as distinguished from proceedings in personam, over which alone a court of equity has jurisdiction in the absence of statute.

The question whether the proceeding can be sustained as a proceeding quasi in rem depends, of course, upon whether there is a res in this state upon which the decree can operate. That involves the question whether the stock of a New Jersey corporation belonging to a resident of another state can be said to have a situs In New Jersey, when it does not appear that the certificates of stock are within the state. Since the question is one which involves the rights of a nonresident, under the fourteenth amendment to the federal Constitution, as construed in Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565, the decisions of the federal courts are of great, if not controlling, weight. The precise question has been decided in Jellenik v. Huron Copper Mining Co., 177 U. S. 1, 20 Sup. Ct. 559, 44 L. Ed. 647. At page 11, 177 U. S., and page 559, 20 Sup. Ct. (44 L. Ed. 647), Mr. Justice Harlan distinctly stated that the question to be determined was whether the stock in question was personal property within the western district of Michigan. The Michigan statute contained provisions very similar to ours, declaring that the stock should be deemed personal property, and should be transferred only on the books of the company; that the company might conduct its business, in whole or in part, in any place in the United States or any foreign country; might have a business office out of the state, and hold any meeting of the stockholders or directors at such office; that the shares might be taken in execution, and attached by process of the Michigan courts. In answer to the argument that the certificates were held outside the state he said: "The certificates are only evidence of the ownership of the shares, and the interest represented by the shares is held by the company for the benefit of the true owner. As the habitation or domicile of the company is, and must be, in the state that created it, the property represented by its certificates of stock may be deemed to be held by the company within the state whose creature it is, whenever it is sought by suit to determine who is its real owner." In that case two of the defendants, who were held to be indispensable parties, were residents of Massachusetts, and one, also an indispensable party, resided in Michigan, but not in the western district. The company itself was made defendant, and filed the plea to the jurisdiction. The point actually decided was that the court had jurisdiction where the question involved was the title to the stock of a corporation domiciled within the district. That is exactly the present case. If the allegations of the bill are true—and they must be taken as true for the purpose of determining the validity of the plea—the precise question involved is whether Paxson's executor holds the stock of a New Jersey corporation in trust for the complainant. It is not, as contended by appellant, a bill for specific performance of a contract. A similar question was presented in Andrews v. Guayaquil & Quito Railway Co., 69 N. J. Eq. 211, 60 Atl. 568, affirmed on the opinion of Vice Chancellor Stevens, 71 N. J. Eq. 768, 71 Atl. 1133, where we sustained the jurisdiction under the facts of that case.

It is argued by counsel for the appellant that the reasoning of the Jellenik Case does not command assent, and that we are not bound to follow it. We think, however, that, aside from the respect due the tribunal which pronounced that opinion, and the peculiar force which ought to be given to its determination in a matter of that character, the result itself was in accordance with sound principle. The fact is that the property right of a stockholder in a corporation is an...