Guilford v. Western Union Telegraph Co.

• Decision Date: 07 December 1894
• Docket Number: No. 8862.,8862.
• Citation: 59 Minn. 332
• Parties: JONAS GUILFORD <I>vs.</I> WESTERN UNION TELEGRAPH CO.
• Court: Minnesota Supreme Court

59 Minn. 332

JONAS GUILFORDvs.

WESTERN UNION TELEGRAPH CO.

No. 8862.

Supreme Court of Minnesota.

Argued October 5, 1894.

Modified December 7, 1894.

Appeal by plaintiff, Jonas Guilford, from an order of the District Court of Hennepin County, Robert Jamison, J., made January 20, 1894, denying his motion for a new trial.

On February 8, 1882, Asa Guilford owned 370 shares of the stock of the defendant, The Western Union Telegraph Company, for which he held twelve certificates issued to him at various times from 1869 to 1880. He was nearly eighty years old and while in the city of New York on that day he lost these certificates. The next day he gave defendant notice of the loss and stopped transfer of them. Nothing has ever been heard of them since. He commenced an action June 16, 1882, in the District Court of Hennepin County against the defendant for new certificates in their place. Defendant appeared and offered new certificates if plaintiff would give a bond of indemnity with sureties in a sum double the par value of the stock. Plaintiff offered no indemnity. The issues were tried before the court without a jury. Findings were filed May 10, 1883, denying the relief demanded, because plaintiff did not offer to execute the bond of indemnity, and judgment was entered that plaintiff take nothing by the action. On July 23, 1883, Asa Guilford sold and assigned the stock to Jonas Guilford, his son the plaintiff in this action, and transferred to him all his claims and causes of action against the defendant. On September 14, 1888, the plaintiff as assignee of Asa Guilford commenced an action in the same court against the defendant for new certificates of stock in place of those lost. The defendant made answer as before and in addition pleaded in bar the former action brought by Asa Guilford against it. This action was tried and findings filed April 1, 1889, denying relief unless a bond of indemnity should be given. No finding was made upon the plea in bar. Plaintiff moved for a new trial of that action, but was refused and he appealed to this court, but the decision was affirmed. Guilford v. Western Union Tel. Co., 43 Minn. 434.

On September 3, 1891, Asa Guilford died intestate leaving plaintiff his sole heir at law. He was appointed sole administrator of his estate. On May 1, 1893, plaintiff commenced this third action against the defendant upon substantially the same facts and defendant made the same answer, pleading also the two former actions in bar. The issues were tried and findings filed January 10, 1894. The court found plaintiff to be the owner of the stock, and that the certificates were lost, and came to the same conclusion reached on the former trials, and required the plaintiff to give the bond of indemnity demanded by the defendant. The trial court also held that the plaintiff was barred by the former action, but that the bar might be removed by the lapse of time. That Laws 1893, ch. 45, did not apply to foreign corporations. That the indemnity asked by the defendant was in accordance with its rules which were binding upon the plaintiff. Plaintiff moved for a new trial, but was refused and he appeals.

Jonas Guilford, pro se.

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C. M. Ferguson, for respondent.

MITCHELL, J.

This action was brought to have the plaintiff adjudged the owner of certain shares of the stock of the defendant company, and to compel the company to issue to him new certificates therefor in place of the originals, which are alleged to have been lost, and, if the defendant refuses to issue the same, that plaintiff have judgment against it for the value of the stock.

It is not questioned but that one Asa Guilford, plaintiff's father, now deceased, was once the owner of the stock, and that plaintiff, a citizen of this state, is his assignee, sole heir, or next of kin, as well as the administrator of his estate, and hence the owner of the stock, unless Asa Guilford had, in his lifetime, previously transferred it to some one else. The stock certificates are alleged to have been lost by Asa in February, 1882. The defendant has always been willing to issue to plaintiff new certificates on condition that he first execute to it a bond with two sureties in double the amount of the value of the stock (over $35,000) to indemnify it against the original certificates in case they should turn up in the hands of a third party. This condition the plaintiff has been unable to comply with. This is the third action which has been brought for the same relief, — one in 1882, by Asa Guilford; the second, by plaintiff, in 1888, affirmed on appeal 43 Minn. 434, (46 N. W. 70); and the present action, in 1893, — the judgment in each case being the same, to wit, that the plaintiff was entitled to new certificates only on first giving the bond required by the defendant. The facts in the present action are the same as in the previous actions, except the additional lapse of time during which the original certificates still remain undiscovered, and no other claimant for the stock has appeared, and that in the meantime the legislature of this state has enacted a statute (Laws 1893, ch. 45) providing for the renewal of stock certificates when worn out, lost, or destroyed.

The defendant is a corporation organized under the laws of the state of New York, where its principal place of business is located, and where all its general officers reside, and where all its stock and other books are kept. The only business transacted by it in this state is the maintenance of telegraph lines and the transmission of telegrams, for which purpose exclusively it has local agents here.

1. The defendant, both in its answer and on the argument, makes the point (not raised on the appeal in the former action) that the courts of this state have no jurisdiction of the subject-matter of the action, because it pertains solely to the management of the internal affairs of a foreign corporation.

The doctrine is well settled that courts will not exercise visitorial powers over foreign corporations, or interfere with the management of their internal affairs. Such matters must be settled by the courts of the state creating the corporation. This rule rests upon a broader and deeper foundation than the mere want of jurisdiction in the ordinary sense of that word. It involves the extent of the authority of the state (from which its courts derive all their powers) over foreign corporations. The only difficulty is in drawing the line of demarkation between matters which do and those which do not pertain to the management of the internal affairs of a corporation.

To entertain an action to dissolve a corporation, to determine the validity of its organization; to determine which of two rival organizations is the legal one, or who of rival claimants are its legal officers; to restrain it from declaring a dividend, or to compel it to make one; to restrain it from issuing its bonds, or from making an additional issue of stock, — would clearly all be the exercise of visitorial powers over the corporation, or an interference with the management of its internal affairs. But the distinction between any of these cases and the one at bar seems to us very apparent. None of the cases cited by defendant's counsel fully support his contention. Those which at first sight seem most nearly in point are Smith v. Mutual Life Ins. Co., 96 Mass. 336, and North Star Mining Co. v. Field, 64 Md. 151 (20 Atl. 1039,) both of which, we think, may be distinguished from the case at bar.

In the first of these cases the plaintiff himself was a citizen of Alabama, and had never lived in Massachusetts, — a fact upon which the court lays much stress, and which alone would probably have justified a court of equity, in the exercise of its discretion, in declining to entertain the bill. Moreover, in that case the insurance company, a mutual one, had declared the plaintiff's policy forfeited for the nonpayment of premiums, and the relief sought was to have the policy revived or restored on the ground that the default of the plaintiff was excusable because of the existence of facts which rendered it impossible to pay his premiums. And the court says upon plaintiff's bill it appears that there is not even an existing contract between the parties. The proceeding is based upon a past relation growing out of a contract made without the jurisdiction, which by its own terms has ceased to be operative, and which the plaintiff seeks to revive as an executory obligation, and reinstate him as a member of the corporation, his right to which necessarily depended on the local statute law of the state which created the corporation.

In North Star Mining Co. v. Field, supra, the corporation had declared the plaintiff's stock forfeited for the nonpayment of an assessment, and the latter brought suit to be reinstated as a stockholder in the books of the company, and restored to all his rights as such, alleging that the assessment was illegal and void. As the legality of the assessment and the right of the company to declare the stock forfeited for its nonpayment depended on the charter of the company and the peculiar statute law of the state creating it, the court refused to entertain the bill. But in the present case there is no question as to the issue, validity, or forfeiture of the stock. There is not even any controversy as to the right of the plaintiff to a certificate as evidence of his title. The only dispute is over the terms or conditions upon which that certificate shall be issued. We do not see how the granting of such relief is, in any proper sense, the exercise of visitorial powers, or an interference with the management of the internal affairs of the defendant.

Statements are sometimes found to the effect that where the act of the corporation complained of affects a person solely in his capacity as a member of the corporation, or where the rights of a person grow solely out...