Submitted
September 13, 1905.
Rehearing
Denied June 21, 1906.
Syllabus
by the Court.
A
stockholder in a corporation, who is present and participates
in a meeting of the stockholders thereof, is estopped to deny
the legality of such meeting.
Under
the provisions of the statutes of West Virginia as amended
and re-enacted by chapter 35, p. 93, Acts 1901, a
corporation, "on the affirmative vote in person or by
proxy, of the holders of at least sixty per centum of the
outstanding stock of the corporation, may sell, transfer or
assign in good faith all of its property and assets,"
and may accept in payment therefor the stock, bonds, or other
securities of any joint stock company.
The
provisions of chapter 35, p. 93, of the Acts of 1901, apply
alike to all corporations which are subject to chapters 52
53, and 54 of the Code of 1899, whether incorporated prior or
subsequent to the passage of said chapter 35, p. 93, Acts
1901.
Appeal
from Circuit Court, Cabell County.
Bill by
Edward G. Germer and others against the Triple-State Natural
Gas & Oil Company and others. Decree for defendants, and
plaintiffs appeal. Affirmed.
Poffenbarger
J., dissenting.
LOUIS ROSEnweig, H. L. Moore, and Simms & Enslow
for appellants.
Chilton
McCorkle & Chilton, Holt & Duncan, Pam & Hurd, McComas & Northcott, and Mollohan, McClintic & Mathews, for appellees.
MCWHORTER
P.
Triple-State
Natural Gas & Oil Company was chartered by the state of West
Virginia on the 5th day of May, 1898, "for the purpose
of acquiring, owning, leasing, holding, developing, operating
and disposing of lands, and interest in lands containing or
supposed to contain, oil or natural gas, or both, or of
acquiring, owning and operating all such pipe lines, and
other instrumentalities as may be necessary and desirable, or
either, in the production, transportation, consumption, sale,
and delivery of oil or natural gas, or both, and of doing all
other lawful acts
necessary or believed to be necessary or of use or believed
to be of use in carrying out the objects of the said proposed
company, and of the business which may be connected therewith
in the production, transportation, sale and delivery of oil
and natural gas, or either one hereof," and was duly
organized with a capital stock of $2,000,000, with $200,000
paid in, with privilege of increasing the capital stock to
$5,000,000 in all, by the sale of additional shares of $100
each. On the 6th day of February, 1905, a special meeting of
the stockholders was called, at which meeting one O. D.
Bleakley made to said meeting of stockholders the following
proposition:
"To
the Triple-State Natural Gas & Oil Company--Gentlemen: I
hereby offer to purchase and acquire from you, each and all
of the property, assets and things of value belonging to
your company, upon the following terms and conditions: (1)
By the term 'property, assets and things of value,'
I mean all of the real property, all of the gas and oil
leases, rights and privileges, mains, pipe lines,
machinery, implements, apparatus, furniture, fixtures,
supplies and every species of real and personal property;
your books, bills, notes, stocks, bonds, moneys, bills
receivable, accounts receivable, contracts, ordinances,
franchises, rights of way, and each and every
species of property, right, privilege or thing of value,
real, personal, or mixed, tangible or intangible, legal or
equitable, wheresoever situated and in whatsoever form,
whether held in your name, or the name of others for you;
it being intended that I shall take over your business as a
going concern. (2) A corporation is about to be organized
under the laws of the state of West Virginia, which
corporation will acquire the property and assume the
liabilities of your company and of the Kanawha Natural Gas,
Light & Fuel Company; the latter company having outstanding
capital stock to the amount of $500,000 and bonds to the
amount of $330,000. The new corporation will be authorized
to issue three million dollars ($3,000,000) par value of
capital and three million dollars ($3,000,000) six per
cent. fifteen-year gold bonds secured by a consolidated
mortgage upon all the property of the companies thus
acquired; subject, however, to the lien of such of the
outstanding bonds of your company and of the Kanawha
Natural Gas, Light & Fuel Company as shall not be
surrendered for the consolidated bonds of the new company.
For the property of your company which I hereby offer to
purchase, I agree to pay you the sum of $1,000,000, par
value of the stock of the said new corporation fully paid
and nonassessable. (3) As a further consideration of the
transfer of your property to me, or to said new
corporation, I will also cause said new corporation to
assume and agree to pay, discharge, carry out and perform
each and all of the debts, liabilities, contracts,
obligations and undertakings of your company (other than
the liability of your company to its stockholders on
account of their respective stockholdings) including your
outstanding bonded indebtedness. (4) In order that your
company and all its stockholders may be fully advised of my
connection with the transaction, and of all profits to be
derived by me therefrom, I beg to advise you that I have
arranged that I shall transfer, or cause to be transferred,
the property of your company and the property of the
Kanawha Natural Gas, Light & Fuel Company to said new
corporation, and to pay to said new corporation $1,249,000
in cash, in consideration of the issuance to me of
$2,999,000 of its capital stock ($1,000 having been subscribed for by the corporators and paid in
cash), and $1,250,000, par value, of its said proposed
bonds. The remaining bonds will be reserved and used for
the following purposes: $956,000 par value thereof, for the
purpose of being used at par to exchange for or retire the
present outstanding bonds of your company, amounting to
$626,000; and the present outstanding bonds of the Kanawha
Natural Gas, Light & Fuel Company, amounting to $330,000;
$794,000 of said new bonds are to be reserved for the
future corporate needs of the new company. Of the stock to
be issued to me, $1,000,000 thereof will be issued and
delivered to me by your company in payment for its
property, as provided in this offer; and $666,000 thereof
will be issued and delivered by me to the Kanawha Natural
Gas, Light & Fuel Company in payment for the property of
that company. $84,000 of said stock and $1,000 par value of
said bonds will be retained by me for my own individual
use, as a profit derived by me out of the transaction. The
$1,249,000 to be paid by me to the new company will be
raised by the sale of $1,249,000 of the bonds issued to me
and $1,249,000 par value of the stock which will be sold by
me to various persons (most of whom are now interested as
directors or stockholders, or both, in one or the other of
the old companies above mentioned) at the rate of one bond
and ten shares of stock for each $1,000 subscribed. I have
arranged that all persons who are stockholders of your
company, or of the Kanawha Natural Gas, Light & Fuel
Company, shall be permitted, if they so desire, to share in
the purchase of said bonds and stocks, so to be sold, upon
the following terms: The stock issuable to your company,
and to the Kanawha Natural Gas, Light & Fuel Company
aggregates $1,666,000. Each person who, at the date of the
mailing of the notice hereinafter referred to, is a
stockholder of either of said companies, shall be
permitted, in the proportion which the stock of the new
company issuable to him bears to the total amount of
$1,666,000, to subscribe for the
bonds and stock issuable to raise said $1,249,000 cash as
aforesaid, provided he makes such subscription and payment
at the time, place and in the manner
designated in the notice mailed to him at the address shown
on the books of the old company, stating the amount to
which he is entitled to subscribe. Subscriptions for
fractional parts of a bond will not be received; but
stockholders entitled to such fractional subscriptions may
combine their subscription rights. Any such stock and
bonds, not ratably subscribed and paid for by the
stockholders of the old companies, will be subscribed and
paid for by other persons, some of whom will be
stockholders or directors, or both, of the new and old
companies, or one or more of them, and who will be
permitted, upon making such purchase, to hold and dispose
thereof as their own property without accountability to
anyone. (5) The conveyance of the property of your company
shall, at my election, be made either to me, or my
nominees, or to the new company. (6) The acceptance of this
proposition, in writing, will constitute a contract between
us. Dated February 6, 1905. O. D. Bleakley."
At said
meeting of stockholders the proposition of Mr. Bleakley for
the purchase was by resolution accepted by a vote of 13,332
shares, against 4,979 shares against the proposition. On the
17th of February, 1905, Edward G. Germer, in his own right
and as administrator of the estate of Otto Germer, deceased
and of Otto Germer, who sued for and on behalf of themselves
and all other stockholders of Triple-State Natural Gas & Oil
Company, and on behalf of themselves and all other holders of
mortgage bonds of said company who might come in or be made
parties to the suit and contribute to the cost thereof, filed
their bill in equity in the circuit court of Cabell county
against the Triple-State Natural Gas & Oil Company, W. O.
Johnson, president and director, and J. B. Moorhead,
secretary thereof, O. D. Bleakley, Charles Miller, trustee,
and Charles Miller, in his...
