Huyler v. Cragin Cattle Co.

• Decision Date: 21 December 1885
• Citation: 40 N.J.E. 392,2 A. 274
• Parties: HUYLER and others v. CRAGIN CATTLE CO. and others.
• Court: New Jersey Court of Chancery

2 A. 274

40 N.J.E. 392

HUYLER and others

v. CRAGIN CATTLE CO. and others.

Court of Chancery of New Jersey.

December 21, 1885.

Petition for order that the books of the company be brought into this state, etc.

J. B. Vredenburgh and Barker Gummere, for petitioners.

S. H. Grey, for respondents

RUNYON, C. This is an application by petition for an order that the books of the Cragin Cattle Company, which it is alleged in the petition are kept out of this state, and in the city of Philadelphia, in Pennsylvania, be brought into this state. The company is a corporation created under the general law. The application is made under the fiftieth section of the act entitled "An act concerning corporations," (Revision, 186,) which provides that in all cases, where it is not otherwise provided by law, the meeting of the stockholders of all corporations of this state shall be held at the principal office or place of business of the company in this state; that the directors may hold their meetings and have an office and keep the books of the company (except the stock transfer book) outside of the state, if the by-laws so provide: provided, however, that the company shall always maintain a principal office or place of business in this state, and have an agent of the company in charge thereof, wherein shall be kept the stock transfer books of the company for the inspection of all who are authorized to see the same, and for the transfer of stock; and provided, further, that the chancellor, or the supreme court, or any justice thereof, may, upon proper cause shown, summarily order that any or all of the books of the company be forthwith brought within this state, and kept therein at such place as may be designated, for such time as such chancellor, court, or judge may deem proper, and that, upon failure of any company to comply with such order, its charter may be declared forfeited by the chancellor or the supreme court, and it shall thereupon cease to be a corporation, and all the directors and officers of the company shall be liable to be punished as for contempt of court for disobedience of such order. The amount of the capital stock of the company is $300,000, divided into 300 shares of the par value of $1,000 each. Of these shares the petitioner Mrs. Huyler owns 60; Mr. Huyler, 5; and Mr. Ridder, 2; 67 in all,—for which they paid (including premium) $85,500 in cash. The grounds of the application are that the officers of the company refuse to permit the petitioners to inspect those of the books which are out of the state. The petitioners state that the value of the capital stock has greatly declined, and that a still further depreciation is threatened; that, since the petitioners bought their stock, the company has expended large sums of money, amounting to at least $64,000, in the purchase of a certain ranch in Indian territory, and in the purchase of cattle and other property necessary to its business; and that, after it acquired that ranch, and had put its cattle upon it, the president of the company put upon it about 1,200 head of cattle, the larger part of which belonged to himself, and none of them to the company; that the facts concerning the number of cattle put there by the president cannot be ascertained, except from an inspection of the books of the company; that the petitioners have reason to believe that the books will show that more cattle have been purchased by the company than have been accounted for by the officers, except by a general statement as to the death of cattle; and that, though an inspection of the books has been duly demanded by the petitioners, it has been refused by the officers of the company. The petition states that on the sixth of October last one of the petitioners, Mr. Ridder, on behalf of all of them, called at the office of the company, in Philadelphia, and demanded of the president and treasurer permission to inspect the books at a proper time, and that those officers refused to permit such inspection of any of the books, except the stock book; and that, on the tenth of November last, at a meeting of the stockholders held in Camden, in this state, at which were present the owners of 145 shares of stock other than those held by the petitioners, Mr. Ridder, speaking for himself and Mr. and Mrs. Huyler, asked permission to examine the books, stating that the president had refused to permit him to do so, and that the petitioners, having invested $85,500 in the stock of the company, were desirous of knowing something about its affairs; that Mr. Woodman, one of the stockholders, then said that he understood that Mr. Huyler had vilified the company, and the officers had determined that he should not see the books without the order of the court. The petitioner states, also, that although Mr. Huyler then denied that he had vilified the company, and challenged the production of any evidence that he had done so, an inspection of the books was denied by a formal vote. The petition alleges, also, that by the by-laws no one can dispose of his or her stock to any one not already a stockholder of the company without the consent of the board of directors. It further states that no financial report other than a mere statement of receipts and expenditures has ever been made to the stockholders, and that the petitioners believe that it is the intention of the president and his confederates to so operate the company as to compel the petitioners to sell their stock to them at a great loss.

The respondents, who are the company, and Charles I. Cragin, president, and Thomas J. Curtis, treasurer, by their answer admit that the petitioners are the owners of stock as alleged in the petition, and that the books, except the stock ledger and transfer book, have been kept in Philadelphia, in pursuance of a provision of the by-laws, although the principal office of the company is in Camden; and that they are in the possession of the officers in the former place. It admits that the capital stock—the value of it—has greatly declined, but alleges that the decline is entirely due to the losses sustained by the death of cattle from the severity of the past winter. It admits that the cattle of the president have been pastured upon the ranch, as stated in the petition, and alleges that that matter was a legitimate transaction, and that the books contain a true account of it, and...