Dennis v. Joslin Manuf'g Co.

• Decision Date: 30 December 1896
• Citation: 19 R.I. 666,36 A. 129
• Court: Rhode Island Supreme Court
• Parties: DENNIS v. JOSLIN MANUF'G CO. et al.

36 A. 129

19 R.I. 666

DENNIS

v. JOSLIN MANUF'G CO. et al.

Supreme Court of Rhode Island.

Dec. 30, 1896.

Bill for an injunction by Arthur W. Dennis, as a stockholder, against the Joslin Manufacturing Company and others. Parol evidence offered by complainant held inadmissible.

James M. Ripley and John D. Thurston, for complainant.

William G. Roellker, for respondents.

STINESS, J. This bill was filed to enjoin the defendant company from selling stock belonging to the complainant, to satisfy a debt alleged to be due from him to the company. The bill alleges that the three stockholders composing the company at the time had agreed that each might withdraw money from the profits of the company, to be offset by a dividend to be declared at the following annual meeting, sufficient to cover the amounts withdrawn, in proportion to the stock owned by each, and that at the annual meeting in July, 1894, a dividend was so voted. The stockholders withdrew certain sums, and the amount drawn by the complainant constitutes the debt in question. The records of the company show no vote declaring a dividend, but, to the contrary, show an account of advances made to the stockholders. The complainant seeks to prove the vote declaring a dividend, by parol. The respondents, denying the dividend, and relying upon the records, object to parol testimony to vary or supplement the records.

It is undoubtedly true, as a general rule, that the best evidence of the votes of a corporation is the recorded action of its stockholders or officers, although they are not conclusive evidence against a stranger or against a stockholder in an individual transaction between him and the corporation. 6 Thomp. Corp. §§ 7731, 7734, 7739, 7740, and cases cited. But the claim here set up by the complainant is not an individual claim, but one in privity with the corporation and the other stockholders. The declaration of a dividend is one of the most important acts of a corporation. It is an assignment pro tanto of its property. It clearly implies corporate action to that effect. It is action of such a character that it ought to appear upon the books of the company. A corporation is not a co-partnership, where members can make an agreement between themselves informally, but it must act as a corporate body; and, as corporations are now so numerous in all branches of business, we deem it to be highly important to require regularity and certainty in their proceedings, so far as mutual rights of...