Beard v. Beard

• Decision Date: 15 July 1913
• Citation: 133 P. 797,66 Or. 512
• Parties: BEARD v. BEARD.
• Court: Oregon Supreme Court

133 P. 797

66 Or. 512

BEARD v. BEARD.

Supreme Court of Oregon

July 15, 1913

Department 2.

Appeal from Circuit Court, Multnomah County; Henry E. McGinn, Judge.

Action by S. Roscoe Beard, as Secretary of the Beard Fruit Company against A. Edgar Beard. Judgment for plaintiff, and defendant appeals. Affirmed.

This is a mandamus proceeding commenced July 19, 1912, to compel the defendant to deliver to the plaintiff, as secretary of the Beard Fruit Company, certain books, papers, and promissory notes. The writ sets forth, in substance, as follows: The Beard Fruit Company is a foreign corporation, organized under the laws of the state of Washington, and the plaintiff is and has been since July 9, 1912, the duly qualified and acting secretary of the corporation, and entitled to the books and choses in action of the company, some of which are without the state of Oregon, and all under the control of the defendant. The defendant resides in Multnomah county, Or and cannot be served personally in the state of Washington. For a long time prior to July 9, 1912, the defendant was secretary of the Beard Fruit Company, and had and claimed the records and papers as such secretary. Plaintiff demanded the possession of the same, but the defendant did not comply therewith. The latter demurred to the writ for want of jurisdiction and sufficient facts. The circuit court overruled the demurrer. The defendant answered, denying all the allegations of the writ, except that the company is a Washington corporation, and that the defendant resides in Oregon, and was secretary prior to July 9, 1912. The first defense alleges in effect that the defendant is and has been since November 17, 1901, secretary of the corporation, and sets forth in detail facts from which the defendant claims that the election of the plaintiff as secretary was illegal. The second defense shows that the books and papers are in the possession of Gilbert Daniels, the resident trustee of the company at Vancouver, Wash. The third defense alleges in effect that there is controversy existing among the stockholders as to the ownership of the shares of stock in the corporation; that this proceeding is a plan to obtain control of the corporation illegally, in furtherance of a conspiracy; that the title of the plaintiff to the office has not been adjudicated, and that the court has no jurisdiction over the subject-matter, or over the defendant; that the proceeding relates entirely to the management of the internal affairs of a foreign corporation. Plaintiff filed a reply putting in issue the material allegations of the answer. Upon the trial the circuit court made findings in favor of the plaintiff. The defendant requested certain findings of facts which were refused and exceptions duly saved. Judgment was entered making the writ peremptory, and the defendant appeals.

R.A Leiter, of Portland (Griffith, Leiter & Allen, of Portland, on the brief), for appellant.

Wallace McCamant, of Portland (Snow & McCamant, of Portland, on the brief), for respondent.

BEAN, J (after stating the facts as above).

The first point urged by the defendant's counsel is raised by the demurrer and by the third separate answer, to wit, that it is not within the judicial province of a court of this state to supervise the internal affairs of a corporation of the state of Washington. The Beard Fruit Company was organized under the laws of the state of Washington by S.M Beard, now deceased, who was the equitable owner of nearly all the assets of the corporation. In 1906 he moved from Vancouver, Wash., to Portland, Or. Until July 6, 1912, all the stockholders of the company resided at the latter place. At that time a share of stock was assigned to E.S. Biesecker, of Vancouver, as trustee. The by-laws of the Beard Fruit Company were amended July 13, 1909, so that they required four directors. It was also necessary, under the Washington laws, that there should be a Washington stockholder, who should also be a member of the board of directors. One share of the stock was therefore assigned to each of the following: Captain Griffith, E.S. Biesecker, and W.L. Gray, who executed certificates of trust therefor to Mary B. Gray. They were chosen directors. The authorized capital stock of the company was 100 shares. At the time of the organization 50 shares of the stock were issued to Mary E. Beard, whose present name is Mary B. Gray, 40 shares to A. Edgar Beard, and 10 to S.M. Beard. The latter died January 8, 1910. The ownership of the 10 shares is in litigation; the defendant claiming them as his own, and the plaintiff claiming that they belong to the estate of S.M. Beard. These shares were involved in an action for the possession thereof, in which an opinion has just been rendered by this court, to wit, in the case of S. Roscoe Beard, as Executor of the Estate of S.M. Beard, deceased, v. A. Edgar Beard, 133 P. 795. The estate of S.M. Beard is being administered in the probate court of Multnomah county, Or. S. Roscoe Beard is the sole executor. The devisees under S.M. Beard's will are S. Roscoe Beard, Mary B. Gray, A. Edgar Beard, and Carrie Ella Cadwell, who are brothers and sisters, and were the nephews and nieces of S.M. Beard, deceased, and Susan Beard, the mother of the four devisees just mentioned, and a sister-in-law of the deceased. These parties, by the will, were each given a one-fifth interest in the estate for the payment of certain small legacies.

The doctrine that courts decline jurisdiction of controversies relating to the management of the internal affairs of a foreign corporation is not strictly a question of jurisdiction, but rather of discretion in the exercise of jurisdiction. Except in cases involving the exercise of visitorial powers, the rule rests more upon grounds of public policy and expediency than upon jurisdictional grounds, and more upon a want of power to enforce a decree than upon jurisdiction to make it.

Where the relief sought amounts to requiring a resident of the state, who has been an officer in the corporation, to deliver property to his successor in office, who has been duly elected, in order that the property may be cared for and protected, and where all the parties interested are residents of this state, and where the authority of the court is to be exercised upon the person of the defendant, and the action is brought in behalf of the corporation, the court should exercise the power of determining the controversy without remanding the suitor to a foreign jurisdiction in which it is shown that services of process cannot be had upon the defendant. Babcock v. Farwell, 245 Ill. 14, 91 N.E. 683, 137 Am.St.Rep. 284, 19 Ann.Cas. 74; Edwards v. Schillinger, 245 Ill. 231, 91 N.E. 1048, 33 L.R.A. (N.S.) 895, 137 Am.St.Rep. 308; Ernst v. Rutherford, etc., 38 A.D. 388, 56 N.Y.Supp. 403, 405; Richardson v. Clinton Wall, etc., Co., 181 Mass. 580, 64 N.E. 400; Beale on Foreign Corporations, §§ 300-312.

This is not an action where it is claimed that an officer of a corporation has offended solely against the majesty of the state of Washington. It appears from the pleadings and all the evidence that the action is brought to protect the rights of stockholders and citizens of this state to the property in the corporation. No good reason appears why they are not entitled to receive full relief in our courts, in so far as such relief can be accomplished by acting directly on the person of the defendant. Should there be a question as to the enforcement of the judgment, we should be inclined to apply the suggestion made in the case of Kalyton v. Kalyton, 45 Or. 116, 131. 74 P. 491, 78 P. 332, and declare the law irrespective of consequences that may result therefrom.

Courts will not exercise visitorial powers over foreign corporations or interfere with the management of their strictly internal affairs. The difficulty is in drawing the line of demarcation between matters which do, and others which...