Frank M. Corry, Trustee v. Barre Granite & Quarry Company Et Als

• Decision Date: 08 May 1917
• Citation: 101 A. 38,91 Vt. 413
• Parties: FRANK M. CORRY, TRUSTEE v. BARRE GRANITE & QUARRY COMPANY ET ALS
• Court: Vermont Supreme Court

101 A. 38

91 Vt. 413

FRANK M. CORRY, TRUSTEE v. BARRE GRANITE & QUARRY COMPANY ET ALS

Supreme Court of Vermont

May 8, 1917

January Term, 1917.

APPEAL IN CHANCERY. Heard on demurrer to the bill of complaint in vacation after the March Term, 1916, Washington County Butler, Chancellor. Decree, sustaining the demurrer adjudging the bill insufficient and dismissing the same. Plaintiff appealed. The opinion states the case.

Decree affirmed and cause remanded with leave to apply.

Edward H. Deavitt for plaintiff.

John W. Gordon and S. Hollister Jackson for defendants.

Present MUNSON, C. J., WATSON, HASELTON, POWERS, and TAYLOR, JJ.

OPINION

MUNSON

This complaint is prosecuted by Frank M. Corry trustee of the Wetmore & Morse Granite Company, against the Barre Granite & Quarry Company and certain of its stockholders, in behalf of himself as trustee and all stockholders of the Barre Company not made parties defendant. The complaint was demurred to for want of equity and on several grounds specially assigned, and was adjudged insufficient and dismissed.

The Wetmore & Morse Granite Company, hereinafter referred to as the Wetmore Company, is a corporation organized and existing under the laws of this State. The Barre Granite & Quarry Company, herein referred to as the Barre Company, is a corporation organized and doing business under the laws of Maine and having its principal offices at Portland in that State, and at Barre City in this State. It was incorporated for the purpose of carrying on the business of quarrying granite in the town of Barre in this State.

The complaint alleges that the capital stock of the defendant corporation is $ 200,000, divided into 20,000 shares, of the par value of $ 10 each; that the plaintiff trustee was on the 7th day of August, 1916, and ever since has been, the owner of 105 shares of said stock; that ever since that date a majority of the stock of the defendant corporation has been owned and controlled by defendants Donald Smith, Angus A. Smith, H. Nelson Jackson and S. Hollister Jackson.

The matters alleged as the ground for relief are these: On the 10th day of August, 1916, a special meeting of the stockholders of the defendant company was held in Portland pursuant to a notice which specified as the business of the meeting the filling of vacancies in the board of directors, and to see what the corporation would do "to settle its indebtedness, whether by sale of its properties or otherwise; and, if by sale, to empower an agent to make proper transfers and to wind up its affairs." At this meeting, the four stockholders above named were elected directors to fill vacancies in the board, which as now constituted consists of five. The following resolution was then offered: "That it is the sense of this meeting that it will be to the advantage of the stockholders to sell all the assets of the corporation, settle the outstanding bills and dissolve the corporation; the directors are therefore instructed to endeavor to find a customer or customers for the property, and whenever they find a customer or customers who are ready and willing to purchase the whole or any part of said property at a price which in their judgment is advantageous to the stockholders, they are authorized to complete said sale and as agents of said corporation to execute and deliver * * such instruments of sale as may be necessary. * * *" Mr. Deavitt, who was present as proxy for the plaintiff and another stockholder originally a party plaintiff, offered an amendment which provided that any sale should be at public auction. This amendment was rejected by a vote of 5,601 shares to 106 shares, and the resolution was then adopted by the same vote. The plaintiff's shares were voted in favor of the amendment and against the adoption of the resolution. Deavitt orally objected to the voting on these questions of the 5,599 shares owned by Donald Smith and H. Nelson Jackson, on the ground that they held the stock in behalf of the E. L. Smith Company, a corporation organized under the laws of Vermont, and that it was a fraud on the other stockholders to thus vote the stock, -- the E. L. Smith Company being engaged in a business similar to that of the Barre Company, and there being other quarry companies and individuals who were ready to purchase this property at auction. The assets of the Barre Company, other than book accounts and bills receivable, consist of land in the town of Barre upon which are located granite quarries, together with buildings, machinery and personal property thereon, and on which the Barre Company has been for the past ten years, and now is, engaged in quarrying granite; having no quarrying or other business in any other place. Surrounding this land are lands owned severally by the E. L. Smith Company, the Wells-Lampson Quarry Company, and the Wetmore & Morse Granite Company, all going Vermont corporations, engaged in the business of quarrying granite, and each having its principal office in this State. The land of the Barre Company is particularly valuable to these companies because of its location. The complaint avers upon information and belief that the individual defendants, being four of the five directors of the defendant company, have conspired together to operate said corporation and control a sale of its assets for their own personal benefit to the detriment of the plaintiff and other minority stockholders, and with intent to deprive the minority stockholders of their property are arranging to turn over the assets of the corporation to the E. L. Smith Company, or some person for it, at a sum much less than its true value. It is alleged that the plaintiff Corry is the president of the Wetmore Company, and that if the real and personal property of the defendant corporation is put up at auction he will start the bidding on account of the Wetmore Company at $ 120,000; and that the property is worth $ 150,000 or more.

The defendants invoke the rule that a court will not take jurisdiction of the internal affairs of a foreign corporation; and contend that the relief sought here would be an interference with the internal affairs of the defendant company. It is doubtless well settled that the general rule is as above stated; but there is some disagreement as to what constitutes the affairs thus designated, and courts have had difficulty in formulating a rule to serve as a test in all cases; as will appear from an examination of the decisions. See North Star, etc., Co. v. Field,64 Md 151, 20 A. 1039; Babcock v. Farwell,245 Ill. 14, 91 N.E. 683, 137 Am. St. Rep. 284, 19...