Forrester v. Boston & M. Consol. Copper & Silver Min. Co.
| Decision Date | 28 November 1898 |
| Citation | 55 P. 229,21 Mont. 544 |
| Parties | FORRESTER et al. v. BOSTON & M. CONSOL. COPPER & SILVER MIN. CO. et al. [1] |
| Court | Montana Supreme Court |
Appeal from district court, Silverbow county; William Clancy, Judge.
Action by James Forrester and another against the Boston & Montana Consolidated Copper & Silver Mining Company and others for injunction. From an order granting an injunction pendente lite, defendants appeal. Affirmed.
The order granted a temporary injunction restraining defendants from voting, or allowing to be voted, any of the capital stock of the Boston & Montana Consolidated Copper & Silver Mining Company, of Montana, in favor of disposing of the property of the said corporation to a corporation of the same name organized under the laws of New York, and from ratifying or adopting any deed of conveyance of the said property theretofore made in the name of the Montana corporation to the New York corporation, or any act of the board of directors with reference to such transfers. This action was brought by plaintiffs in their own behalf, as well as in behalf of such other stockholders of the Montana corporation as are similarly situated, and desire to join them.
From the record we gather the following facts: The Boston & Montana Consolidated Copper & Silver Mining Company (hereinafter called the "Montana Company") was organized under the laws of Montana, in 1887, as a mining and smelting corporation. It has a capital stock of 150,000 shares, of the par value of $25 each. The business in which it is engaged has been successfully carried on, its net income for 1897 being in excess of $3,000,000, of which $1,800,000 were distributed among the shareholders. Its property is valued at $30,000,000, and its debts are insignificant in amount. The stockholders number 1,877, and of these but a very few reside in Montana, the great majority living in the Eastern states and in Europe. While the practical mining and smelting operations have been conducted in Montana, the financial business of the company has been transacted in New York and Massachusetts, as the only markets for its product are in those states. The directors have always resided there, and it is inconvenient for them to hold frequent meetings in Montana. It is also impracticable for the stockholders to attend meetings which are required to be held in this state. The statute requires the transfer books to be kept in Montana. For many years the stock of the company has been daily bought and sold in Boston and New York, and, unless the transfers are entered upon the books of the company, they are, for some purposes, invalid. The directors, on April 5, 1898, caused to be incorporated, under the laws of New York, the Boston & Montana Consolidated Copper & Silver Mining Company, of New York, the same capital stock as that possessed by the Montana Company, divided into the same number of shares, and of a like par value; and on April 6, 1898, the directors of the Montana Company executed in the name of the company, a conveyance to the New York Company of all the property owned by the Montana Company, the consideration expressed being the assumption by the New York Company of all the liabilities of the Montana Company, and the delivery by the New York Company of its entire capital stock to the Montana Company, to be exchanged for stock held in the Montana Company by those holding shares therein, share for share; or, at the option of the stockholders, the New York Company was to pay such of them as did not transfer their shares for stock of the new company the sum of $130 a share. On May 31, 1898, the directors, having obtained the written consent of those owning 131,036 shares of the Montana Company, executed and delivered a like conveyance to the New York Company in confirmation of the deed first executed, the considerations being the same as those inducing the transfer of April 6th, with the exception that the New York Company agreed to pay $170 instead of $130 for each share not exchanged. The New York corporation is in possession of the property attempted to be transferred. On April 6, 1898, the directors of the Montana Company mailed to each of the stockholders a copy of a notice calling for a meeting of the stockholders on June 6, 1898, in Butte, Mont., for the purpose of acting upon the proposition to sell all the assets of the Montana Company, and for the purpose of ratifying or rejecting the action of the directors in disposing of the property of the corporation. The notice was also duly published in a newspaper for six weeks prior to June 6, 1898. The plaintiff Forrester, on April 8, 1898, purchased 100 shares of the stock of the Montana Company; and on May 16 1898, the plaintiff Magginnis purchased a like number of shares. Neither the former owners of these shares so purchased, nor the plaintiffs, in any wise consented to the transfers made by the directors in the name of the Montana Company. Two days before the meeting called by the notice plaintiffs, having served a formal protest against the attempted transfer and its intended ratification, brought this action. On June 6, 1898, the stockholders convened and organized. There were presented at the meeting, by certain of the individual defendants, proxies from the holders of 131,036 shares of the capital stock, authorizing the holders of the proxies to vote in favor of the ratification of the transfer theretofore made to the New York Company. Upon the hearing of the order to show cause why an injunction pendente lite should not issue, the defendants offered a bond in the penal sum of $50,000, conditioned, in substance, that if the defendants shall, when requested by plaintiffs, purchase from them the 200 shares mentioned at the market price thereof and pay any damages that might be sustained by them because of any action that may be taken at the meeting of the stockholders of the Montana Company pursuant to the notice heretofore referred to, the obligation should be void, but otherwise to be in force. The defendants further offered to execute a bond in such form, or with such conditions, in such amount, and with such sureties, as the court might designate, in lieu of the bond so offered, if it were deemed in any wise insufficient. The court declined to accept such bond, and granted the injunction order appealed from.
John F. Forbis, Louis Marshall, and Wm. H. De Witt, for appellants.
Robt. B. Smith, J. J. McHatton, and Clayberg & Corbett, for respondents.
PIGOTT J. (after stating the facts).
We shall discuss briefly such of the points made by the defendants as seem worthy of serious attention.
1. Defendants argue that the failure of plaintiffs to state and prove that they have exhausted their remedies within the corporation is fatal to the maintenance of the action. The point is without merit. Sufficient appears to show, with reasonable certainty, that plaintiffs could not hope to obtain within the corporation itself redress of their alleged grievances. The board of directors had not only executed a deed in the company's name to all its property, but had also procured the ratification and express approval of such act by stockholders owning 131,036 shares of its stock. The directors obtained also the consent in writing of these stockholders to the making and delivery of the confirmatory conveyance of May 31st. They called the meeting of June 6th, at which the proposition to ratify the things done by them was to be submitted to the stockholders; and they held irrevocable powers of attorney executed by owners of the number of shares mentioned, running to defendant Bigelow, who was president of the company, authorizing, and, indeed, it would seem, directing, Bigelow or his substitutes to vote in favor of the ratification of, and consent to, the sale therefore made by Bigelow and the other directors in the name of the Montana Company. Admission is made by defendants that the directors caused the New York Company to be organized, to the end that it might take the place of the Montana Company, and for the purpose of transferring the property of the latter-named company to the former. The further admission appears that the stockholders whose proxies were held by Bigelow, or his substitutes as attorneys in fact, were desirous of voting in favor of the transfer; and that the 131,036 shares would have been so voted but for the injunction is established beyond doubt. The protest of plaintiffs, made just before suit was begun, against the action of the directors, and against the proceedings proposed to be taken at the meeting of June 6th, was unavailing; and the answer is framed upon the theory that the objection by plaintiffs to the action taken by the directors, and any protest against that intended to be taken, would have been disregarded by the holders of 131,036 shares, as well as by the directors. The law, which does not demand a request that a person or corporation sue him or itself, nor require the doing of any useless thing, as prerequisite to the accrual of a right of action, will therefore, in the circumstances here existing, permit the plaintiffs to maintain suit to undo or prevent the acts of directors or stockholders performed or threatened to be performed, if such acts be, as to plaintiffs, ultra vires; and this is within the principles declared in Gerry v. Bank, 19 Mont., at page 199, 47 P. 813; Ashton v. Association, 84 Cal. 61, 22 P. 660, and 23 P. 1091; Botts v. Road Co., 88 Ky. 54, 10 S.W. 134; Smith v. Dorn, 96 Cal. 73, 30 P. 1024; Barr v. Plate-Glass Co., 40 F. 412; and in conformity with the rule laid down in Pom. Eq. Jur. § 1095; Albers v. Merchants' Exchange of St. Louis, 45 Mo.App. 206; 4 Am. & Eng. Enc. Law, 280; 27 Am. & Eng. Enc. Law, 396; 4 Thomp. Corp. § 4521.
2. Another contention of defenda...
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