Crumlish's Adm'r. v. Shen. Val. Railroad Co.
| Decision Date | 30 October 1886 |
| Citation | 28 W.Va. 623 |
| Parties | Crumlish's Adm'r v. Shen. Val. Railroad Co. |
| Court | West Virginia Supreme Court |
Submitted June 29, 1886.
1. According to the ancient and strict rules of pleading matters, which occurred after the filing of the original bill could not be introduced into the suit by an amended but only by a supplemental bill, but this rule is not now enforced and such matters may be introduced by amended bill. (p. 630.)
2. A bill is not multifarious, which is filed by a stockholder on behalf of himself and the other stockholders of a dissolved corporation for the purpose of compelling a defendant having in his possession property of said corporation or owing debts to it to account for and pay over the same, and which also asks, that the creditors of such corporation may be convened and its assets distributed among its creditors and stockholders. (p. 631.)
3. It is ordinarily necessary, before a court of equity can interfere with the management of a corporation at the suit of a stock-holder, to show that the directors or managing officers having control of it have refused to act in its behalf. But, if it be made to appear in any manner, that the corporation can not safely be left to obtain relief through the action of its officers, equity will interfere at the suit of a stockholder without proof of a demand upon the managing agents and their wrongful refusal or neglect to proceed on its behalf. (p. 632.)
4. When it is shown that the corporation has ceased to exist either in law or in fact, or that it has abandoned its corporate business and neglected to maintain its corporate existence by the election of directors and the appointment of officers to manage its affairs, a stockholder may without showing more bring suit on behalf of himself and the other stockholders against the corporation or others having assets belonging to it for the protection of his rights. (p. 633.)
5. After a corporation has been dissolved or its charter declared forfeited, the stockholders occupy towards it the position of deferred creditors, and they may in such case sue as any other creditor to have its assets administered. (p 634.)
6. A suit is brought by a stockholder of a foreign corporation on behalf of himself and the other stockholders against a domestic corporation having property in this State belonging to said foreign corporation or owing debts to it; and the bill shows that the foreign corporation had ceased to use its franchises, and been dissolved by virtue of the laws of the State of its creation, and had no property or assets except those in the hands of the said domestic corporation and within the jurisdiction of the court. HELD:
I. The courts of this State have jurisdiction of such suit notwithstanding the fact that said foreign corporation can not be brought within the jurisdiction of such courts:
II. The said foreign corporation is not an indispensable party to such suit. (p. 635.)
7. Where such suit is brought within less than four years from the time the cause of action arose, and it does not appear that any of the parties have died, or that the rights of third persons have intervened, or that there has been any loss of evidence, the doctrine of laches has no application. (p. 637.)
D. B. Lucas, McDonald & Moore and F. Beckwith for appellant.
W. H. Travers for appellees.
Suit in equity instituted, December rules, 1882, in the circuit court of Jefferson county by the administrator of H. H. Crumlish, deceased, suing on behalf of himself and all the other stockholders of the Central Improvement Company, against the Shenandoah Valley Railroad Company, and the said Central Improvement Company, to restrain the said railroad company from disposing of, and to compel it to account for, certain assets of said Improvement Company, and to have the court by its receiver or otherwise take possession of these assets and administer the same among the creditors and stockholders of said Central Improvement Company.
On December 18, 1884, the court made an order sustaining the demurrer of the said railroad company to the plaintiff's bill and granted him leave to file an amended bill which was accordingly done at April rules, 1885. The railroad company also demurred to this bill, and on March 1, 1886, the court entered a decree sustaining the demurrer and dismissing both the original and amended bills, but without prejudice to a new suit. From this decree J. Garland Hursh, sheriff of Jefferson county, and as such administrator of H. H. Crumlish, deceased, appealed to this court.
The only questions to 1 e determined by this Court are,
whether or not the rulings of the circuit court sustaining said demurrer and dismissing the plaintiff's bills were erroneous? In considering these questions, according to well settled principles, all the facts properly pleaded in the bills must be taken to be true.
Omitting details and such allegations as have no bearing on the questions to be decided, as well as some other averments which will be hereafter specially stated and considered, the case made by the bill is as follows:
The Shenandoah Valley Railroad Company is a corporation chartered by the laws of both the State of Virginia and this State, authorized by its charters to construct a railroad from the Potomac river at or near Shepherdstown, through the county of Jefferson in this State and through Clarke, Warren, Page and other counties in Virginia. The said railroad has been constructed and equipped and is now in full operation. The Central Improvement Company was chartered and organized under the laws of the State of Pennsylvania with authority to construct and equip works of internal impprovement. Its paid up capital stock is about $150,000,00, of which the plaintiff's intestate was the owner and the plaintiff as administrator is now the holder of two certificates for 100 shares each of the par value of $50.00 per share. In the winter of 1873, or the spring of 1874, upon a final settlement then had between the said railroad company and said Central Improvement Company, it was agreeed that the latter should receive from the former in settlement for work done by the Central Improvement Company, in the construction of said railroad, certain bonds of the counties of Clarke and Jefferson, certificates of paid up stock in the said railroad company to the amount of $500,000.00, and first mortgage bonds of the railroad company to the amount of $781,000.00. The mortgage to secure these bonds was executed about the year 1870, by the railroad company on its track and other property in the counties aforesaid to J. Edgar Thompson, the then president of the Pennsylvania Railroad Company, and was duly recorded in Jefferson and other counties along the line of its railroad. In the fall of 1873, the Central Improvement Company transferred to the Pennsylvania Railroad Company
the said county bonds, the $500,000.00 of paid up stock and $250,000.00 of said first mortgage bonds as collateral security for money borrowed by it from said Pennsylvania Railroad Company, so that of said issue of $781,000.00 the Central Improvement Company is now entitled to hold only $531,000.00. All the stocks and bonds so transferred to the Pennsylvania Railroad Company have been sold by it and the proceeds credited on its debt against the Central Improvement Company, leaving a large balance still due on said debt. In addition to the mortgage above mentioned the Shenandoah Valley Railroad Company subsequently executed two other mortgages on its property. All the bonds issued under said first and second mortgages were in the year 1879 destroyed, including the $531,000.00 belonging to the Central Improvement Company, and the said mortgages released, with the understanding that the bonds secured by the released mortgages were to be substituted by bonds issued under the third mortgage. The bonds to be substituted for the $531,000.00 belonging to the Central Improvement Company have not yet been issued, or if issued it was without the knowledge of the management or the stockholders of the Central Improvement Company, and they are held by some pretended agent for the company with the intent to make plunder of them. The said $531,000.00 of first mortgage bonds are now worth on the market nearly par value. The indebtedness of the Central Improvement Company is about $300,000.00, the larger portion of which is due to the Pennsylvania Railroad Company and the most of the residue to sub-contractors of the Central Improvement Company for work done in the construction of the Shenandoah Valley Railroad. These claims all appear as part of the "Griffith record," which is referred to and made part of the bill in this cause.
In addition to the foregoing facts the bill avers, that since the suspension of work in 1873, upon the Shenandoah Valley Railroad, the C. I. Co. has done no other work and ceased to do any business under its charter or otherwise; that all its chartered rights and franchises in the State of Pennsylvania were sold in 1874 under execution at the suit of two of its creditors in the city of Philadelphia; that prior to August, 1874, R. D. Barcley was president and John P. [28 W.Va. 627] Page 628
$500,000.00 of the first mortgage bonds of the said railroad company of nearly par value; that the aforesaid Shenandoah Valley R. R. bonds are the only assets of the Central Improvement Company, and inasmuch as they are in danger of being entirely lost to it by the said railroad company issuing the mortgage bonds to be substituted therefor to some party or parties not entitled to or authorized to receive them who may transfer them to others for value without notice of the equities herein asserted, the plaintiff prays that the Shenandoah Valley R. R. Co....
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