Bjorngaard v. Goodhue Cnty. Bank

• Decision Date: 05 May 1892
• Citation: 52 N.W. 48,49 Minn. 483
• Parties: BJORNGAARD ET AL. v GOODHUE COUNTY BANK ET AL.
• Court: Minnesota Supreme Court

49 Minn. 483

52 N.W. 48

BJORNGAARD ET AL.vGOODHUE COUNTY BANK ET AL.

Supreme Court of Minnesota.

May 5, 1892.

(Syllabus by the Court.)

Stockholders in a corporation are not disqualified to vote upon a matter coming before a stockholders' meeting by the fact that they may have a personal interest in the matter, as upon a proposition to ratify a purchase of property from themselves which they as directors had assumed to make.

Appeal from district court, Goodhue county; CROSBY, Judge.

Action by Thor R. Bjorngaard and others against the Goodhue County Bank and others. From a judgment for defendants, plaintiffs appeal. Affirmed.

J. C. McClure and F. W. Hoyt, for appellants.

F. M. Wilson and O. M. Hall, for respondents.

GILFILLAN, C. J.

The defendant bank is a banking corporation. The defendants Sheldon, Perkins, Featherstone, Brooks, Boxrud, and William and Frederick Busch, and the plaintiff Hoyt, were, at the times hereinafter mentioned, and now are, its directors. The director defendants were and are stockholders, owning a large majority of the stock. The plaintiffs are stockholders. The defendant stockholders owned a lot and building. At a directors' meeting on July 7, 1890, all the directors being present, it was resolved, all the directors except Hoyt, who protested, voting in the affirmative, that the corporation purchase at a price specified said lot and building, and on July 11th the owners executed a conveyance to the bank. The action is brought to set aside the transaction, and to prevent the funds of the bank being used to complete the purchase, and also to prevent a ratification by the stockholders, a meeting of whom had been called for the purpose; or, rather, to prevent such ratification by the votes of defendants. There is no doubt that, within the rule in Rothwell v. Robinson, 39 Minn. 1,38 N. W. Rep. 772, the plaintiffs may bring such an action without first applying to the corporate authorities to bring it. The directors against whom complaint is made are not only a majority of the directors, but they own a majority of the stock, so that any application either to the board of directors or to the body of stockholders to bring the action would be equivalent to asking the alleged wrongdoers to bring suit in the name of the corporation against themselves. The law does not require of the minority stockholders to do so absurd a thing as a condition of seeking relief against the wrongful acts of the directors and majority stockholders. The court below decided the case in favor of the defendants on the proposition that, although the act of the board of directors was voidable, it was not ultra vires, and was capable of ratification; and where a majority of the stockholders have power to ratify the unauthorized act of the directors, courts will not interfere. We see no reason to think this purchase was ultra vires,-that the corporation had not power to make it. And, that being so, it may be conceded that the board of directors had authority to make a purchase for...