Kelley v. American Sugar Refining Co.

• Decision Date: 29 May 1942
• Citation: 42 N.E.2d 592,311 Mass. 617
• Parties: PATRICK HENRY KELLEY v. THE AMERICAN SUGAR REFINING COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

311 Mass. 617

42 N.E.2d 592

PATRICK HENRY KELLEY v. THE AMERICAN SUGAR REFINING COMPANY.

Supreme Judicial Court of Massachusetts, Suffolk.

May 29, 1942

November 6, 7 1941.

Present: FIELD, C.

J., DONAHUE, QUA DOLAN, & RONAN, JJ.

Corporation Foreign. Equity Jurisdiction, Foreign corporation. Jurisdiction, Foreign corporation, Forum non conveniens Objection to jurisdiction. Equity Pleading and Practice, Declination of jurisdiction, Appeal. Error, Whether error harmful. Constitutional Law, Full faith and credit, Declination of jurisdiction.

The court below rightly declined jurisdiction of a suit in equity by a resident of Massachusetts against a New Jersey corporation doing business here, involving the validity of a purported extension of the original period of its corporate existence by a vote of the stockholders and the status and rights of stockholders who voted against the extension.

Whether or not a motion by the defendant that the court decline jurisdiction of a suit in equity was a proper method of raising the question of forum non conveniens, a refusal to expunge the motion and its allowance showed no reversible error where the suit was of such a nature that jurisdiction should be declined.

There was no merit in contentions by the plaintiff that a motion that the court, on the ground of forum non conveniens, decline jurisdiction of a suit in equity involving the internal affairs of a foreign corporation constituted an admission by the defendant of the correctness of allegations in the bill as to the law of the State of incorporation, and that thus no disputed question concerning that law was left open.

The full faith and credit clause of the Federal Constitution did not prevent a court of this Commonwealth declining jurisdiction of a proceeding on the ground of forum non conveniens.

BILL IN EQUITY, filed in the Superior Court on January 15, 1941. The defendant filed a motion that the court decline jurisdiction. The plaintiff filed a motion that the defendant's motion be expunged. The plaintiff's motion was denied by an interlocutory decree entered by order of Goldberg, J. By order of Fosdick, J., there were entered an interlocutory decree allowing the defendant's motion and a final decree dismissing the bill without prejudice to the plaintiff's rights. The plaintiff appealed from such decrees.

The plaintiff requested the following ruling, among others, and alleged an exception to its refusal: "The plaintiff requests the court to rule that by the full faith and credit clause of the Federal Constitution, the defendant's motion should be overruled as established by the case of Mayer v. Oxidation Products Co. 110 N. J. Eq. 141. See Erie Railroad v. Tompkins, 304 U.S. 64. Converse v. Hamilton, 224 U.S. 243."

P. H. Kelley, pro se.

J. L. Hall, (R.

Wait with him,) for the defendant.

QUA, J. The gist of the bill in this case is that the plaintiff, a resident of Boston in this Commonwealth, owns two hundred shares of the common stock of the defendant out of a total of nine hundred thousand shares of preferred and common; that the defendant operates a sugar refinery in Boston; that it was incorporated in New Jersey in 1891, with a corporate life limited to fifty years, which expired in January, 1941; that in November 1940, the defendant held a stockholders' meeting, and by more than a two-thirds majority of each class of stock there was passed a vote purporting to authorize an extension of the defendant's corporate existence for a second period of fifty years, ending in 1991, and to authorize an amendment to that effect to the original certificate of incorporation; that the plaintiff attended the meeting and voted against the change; that, as the result of various statutes and decisions of the State of New Jersey from the "Corporate Act of 1875," under which it is alleged the defendant was chartered, down to the "Revised Statutes 1938," the attempted extension of the life of the corporation was invalid as against a protesting stockholder; and that the plaintiff's rights as a stockholder were fixed by the terms of the original incorporation, which became a contract binding upon the defendant that could not be affected by subsequent legislation without the plaintiff's consent. He prays that the defendant be required to accept a surrender of his certificates of stock and to pay him the value of the original investment and accrued profits represented by the certificates as of the expiration of the original fifty-year period. The bill contains an elaborate exposition of the law of New Jersey, practically in the form of a brief, occupying about thirteen pages of the printed record.

An inspection of the bill shows clearly that the issues presented involve the internal structure of the defendant and its relations to its stockholders, if not its existence as a corporation. The bill involves the questions whether the extension was valid, whether stockholders who voted against it are still stockholders, and if they are not whether they have now become creditors and what their rights are. If the plaintiff's contention should be sustained, questions as to liquidation or as to methods of ascertaining liquidation values would become involved. All these problems are to be solved, not primarily by the application of principles of the common law or of general equity jurisprudence, but with special reference to the statute law of New Jersey and its history, development, and construction by the courts of New Jersey. Such questions ought to be decided authoritatively by the courts most familiar with the particular problems and in the best position to solve them correctly -- the courts of the State of incorporation. They ought not to be decided, with possibly inconsistent results, by the courts of each different State in which it may be possible to obtain service upon the defendant. There is nothing to suggest that the plaintiff cannot secure in the courts of New Jersey a full and adequate investigation of his claims and complete vindication of any rights he may have. The case belongs to a class of cases concerning the internal affairs and the rights of stockholders of foreign corporations as to which it is settled that a court may in its sound discretion refuse to entertain jurisdiction. ^[1] In Electric Welding

Co. Ltd. v.

Prince, 195 Mass 242 , at page 256, this court said, "the question whether as between the company and a shareholder a person is or is not a...