de Bevoise v. H. & W. Co.

• Decision Date: 09 June 1904
• Citation: 67 N.J.E. 472,58 A. 91
• Parties: DE BEVOISE v. H. & W. CO. et al.
• Court: New Jersey Court of Chancery

58 A. 91

67 N.J.E. 472

DE BEVOISE

v. H. & W. CO. et al.

Court of Chancery of New Jersey.

June 9, 1904.

Bill by Charles R. De Bevoise against the H. & W. Company and others. On rule to show cause why an injunction should not issue. Rule discharged.

Edward G. Adams, for complainant.

Albridge C. Smith, for defendants.

BERGEN, V. C. It appears from the bill of complaint that the complainant served until November 17, 1903, as the president of the defendant company, and as one of its directors until the 10th day of December, 1903, the stockholders, at their annual meeting held on that day, refusing to re-elect him as director; that the compensation to be paid the complainant for his services as president was fixed by a resolution of the board of directors adopted December 13, 1903, as follows: "A salary of $2,000 per annum to be paid in monthly installments, and in addition to get twenty-five per cent. of the net profits after ten per cent for dividends on outstanding stock be set aside;" that in ascertaining the net profits for the year ending December 10, 1903, it is alleged, an injustice was done the complainant in the following particulars: First in taking the inventory of the stock of goods "manufactured and unmanufactured," because they were inventoried at a price below their real value to an amount in excess of $1,700; second, that while the complainant had agreed that 20 per cent. of the book value of the machinery, tools, and fixtures should be deducted from their costs, as they stood on the books, to represent depreciation, the board of directors, in ascertaining the net profits, calculated such 20 per cent. upon the sum of $10,300, instead of upon the sum of $9,468.55, that being the amount, according to the complainant's claim, to which the book value of the machinery account had been reduced by previous credits of like character, the excess being $166.29, of which the complainant would be entitled to 25 per cent.; third, that the directors, in ascertaining the net profits, first deducted from the gross profits $5,000, as a reserved fund to offset a like amount standing on the books of the company to represent the value of patents, trademarks, etc., and as a part of its capital stock account. It further appears in the bill of complaint that the complainant, while president and one of the directors of the company, and on the 25th day of June, 1903, borrowed from the company $1,000, and "deposited" with the treasurer of the company 12 shares of the capital stock of the defendant company as "collateral security," the loan to be repaid on or before January 1, 1904; that no such payment was ever made, and, as an excuse for the default, the complainant charges that upon an accounting it will be found that the company is indebted to him in the sum of $782.82, after charging him with the amount of the loan; that he had demanded payment of the $782.82, and also the return of his stock certificate; that the defendant not only refused to comply with this demand, but threatens to sell the stock in satisfaction of the loan. The prayer of the bill is for a discovery of the contents of the books of the defendant, relating to their profit and loss account for the year ending December, 1903, and of certain entries in the minutes of the proceedings of the corporation, and also that an accounting may be had to determine the amount due to the complainant for services as president, and that for this purpose the annual inventory taken November 30, 1903, may be corrected under the direction of this court, and that the deduction for depreciation of machinery may be calculated upon the sum of $9,408.55, instead of the amount used by the directors, and also that the said sum of $5,000 be deducted from the earnings, only after 25 per cent of the net profits have been set apart for the complainant, and, further, that the defendants be enjoined from selling the stock pledged for the loan, and be decreed to deliver the same to the complainant, and pay him $782.82.

This is the complainant's case fully stated, and I fail to see the slightest ground for equitable interference. He bases his claim for equitable relief upon two grounds—the necessity for an accounting and discovery. I have considered the question of the complainant's right to require the defendants to account in this court, and am fully convinced that the legal remedy is so plain, ample, and effective that the right to exercise a discretion and retain this bill for the purpose of an accounting cannot be supported. If it could, then every case where a pledge has been deposited as collateral for the payment of a debt would be the subject of equitable jurisdiction. In this case the creation of the debt, the borrowing, the date of the loan, the amount and nonpayment, according to the terms of the agreement, are all confessed. The complainant seeks to excuse the nonpayment, because be claims the defendant is indebted to him in a larger amount growing out of a separate transaction, and that, having such counterclaim, he is entitled to have it set off against his debt and the defendant decreed to pay the surplus due on his claim. Waiving the question whether in any event he can release the lien against the pledge, without at least: tendering in his bill of...