Hall v. Woods
Decision Date | 20 April 1927 |
Docket Number | Nos. 17057-17060.,s. 17057-17060. |
Citation | 156 N.E. 258,325 Ill. 114 |
Parties | HALL et al. v. WOODS et al. |
Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Suit by David W. Hall and others against Frank H. Woods and others, wherein Perley Morse and others were permitted to become parties defendant, and all defendants filed a cross-bill against complainants David W. Hall, as administrator of John B. Hall, deceased, and others. Decree dismissing the bill and in favor of defendants on the cross-bill, and complainants Henry E. Hubbard and another appeal, and defendants assign cross-errors.
Reversed and remanded, with directions.Appeal from Circuit Court, Cook County; Hugo M. Friend, judge.
Alice Greenacre, West & Eckhart, Charles S. Deneen, and William B. Hale, guardian ad litem, all of Chicago (William L. Bourland and William Rothmann, both of Chicago, of counsel), for appellants.
H. K. Tenney, W. T. Alden, C. R. Latham, and Cooke, Sullivan & Ricks, all of Chicago (George A. Cooke, of Chicago, of counsel), for appellees.
David W. Hall, May Cave Hall Lucy A. Hall, and Geraldine Hall Porter or March 20, 1925, filed a bill in the circuit court of Cook county against Frank H. Woods, John B. Russell, and Joseph S. Duncan, praying for an injunction restraining them from acting or attempting to act as directors and president of the Addressograph Company, an Illinois corporation, from interference with the performance of the duties of secretary and treasurer of that company by D. W. Hall, and from instituting legal proceedings for the appointment of a receiver. The complainants base their right to relief on their election as directors of the corporation at the annual meeting of the stockholders on March 12, 1925. The defendants answered the bill. On motion of Perley Morse, Adelaide V. Duncan, and the Addressing Machines Cecurities Company they were permitted to become parties defendant to the bill, and filed an answer adopting the answer which had been filed by the other defendants. All the defendants then filed a cross-bill against the complainants in the original bill, D. W. Hall, as administrator of John B. Hall, deceased, Charles W. Hall, an incompetent person, Henry E. Hubbard, and the Addressograph Company, praying for a decree declaring that Russell, Woods, David W. Hall, and May Cave Hall, were elected directors of the Addressograph Company at the stockholders' meeting of March 12, 1925, enjoining Hubbard (who the complainants in the original bill claimed had been elected president of the Addressograph Company) from acting as president, and declaring his election illegal, enjoining the original complainants from acting as directors, construing the by-laws of the Addressograph Company, determining the powers and duties of the president and secretary and treasurer, ordering a dividend declared of $1,500,000, and appointing a receiver for the corporation. The cause was heard by the chancellor, and a decree was rendered declaring David W. Hall, May Cave Hall, Frank H. Woods, and John B. Russell the directors and Joseph S. Duncan the president of the Addressograph Company, that the acts of the original complainants as directors were void, and ordering their bill dismissed for want of equity, enjoining Hubbard from acting as president and the complainants from interfering with the directors whom the court declared elected, construing the by-laws, fixing the salaries of the president and secretary and treasurer at $60,000 a year until they should be changed by the directors or a manager appointed by the court, directing the payment of a dividend of $500,000 and the retention of the rest of the surplus as a reserve, and appointing Abel Davis ‘as the representative of the court, with the title of manager of the Addressograph Company, and with authority, in case of a dispute or deadlock between the directors, superior to the power and authority of any of the parties hereto to the extent and for the purposes indicated by this decree,’ and giving specific directions as to the powers and duties of the manager and the manner of their exercise. The complainants in the original bill, Henry E. Hubbard and Charles W. Hall, by his guardian ad litem, have appealed from this decree, and the appellees have assigned cross-errors.
The contest is between two groups of stockholders, each controlling one-half of the stock of the Addressograph Company, for the management and control of the corporation. The appeal is brought directly to this court, because by the assignments of error the appellants raise the question of the constitutional power of the Addressing Machines Securities Company to hold stock in the Addressograph Company. The litigation had its origin in a disagreement between the two groups of stockholders, not primarily about the conduct of the ordinary business of the Addressograph Company, but concerning proposed changes of organization and corporate structure.
In 1893 Joseph S. Duncan had invented an addressing machine, which he named Addressograph, and began the manufacture of the machines, for which he obtained a patent. In 1895 John B. Hall acquired a half interest in the business, exclusive of accounts receivable, and on February 15, 1896, the Addressograph Company was incorporated with a capital stock of $25,000, divided into 500 shares of the par value of $50. Hall subscribed for 248 Shares, Duncan for 238, Adelaide V. Duncan, his wife, for 10, W. C. Duncan, a relative, for 2, and H. B. Munger for 2. The subscriptions were paid by transferring to the corporation the business and the patent. No other capital has been put in the business. John B. Hall, W. C. Duncan, H. B. Munger, and Joseph S. Duncan became the first board of directors, and by-laws were adopted containing the following provisions, which remained unchanged until after the annual meeting of the stockholders on March 12, 1925:
meeting a majority of the stock must be represented to constitute a quorum for the transaction of business, but the stockholders present at any meeting, although less than a quorum, may adjourn the meeting to some other day or hour.
meeting unless the meeting shall otherwise decide. Any stockholders' meeting at any time may elect a president and secretary of the meeting, and thereupon the president and secretary of the corporation shall no longer act as president and secretary of said meeting.
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