Kidd v. New Hampshire Traction Co.

• Decision Date: 03 November 1903
• Citation: 56 A. 465,72 N.H. 273
• Parties: KIDD et al. v. NEW HAMPSHIRE TRACTION CO. et al.
• Court: New Hampshire Supreme Court

56 A. 465

72 N.H. 273

KIDD et al.

v. NEW HAMPSHIRE TRACTION CO. et al.

Supreme Court of New Hampshire. Rockingham.

Nov. 3, 1903.

equity held by the pledgor is property within the jurisdiction of the courts of this state.

7. The right of a foreign corporation to an action against a resident corporation is property within the jurisdiction of the courts of this state.

S. A corporation is a necessary party to a suit by its shareholders to enforce a corporate right in protection of their interest in the corporate assets.

9. Stockholders in a foreign corporation may maintain a suit for property of the corporation in the state, though it is not served with process in the state and does not appear.

10. Where all the assets of a corporation have been transferred to wind up its affairs, and its business is closed up. and it has no creditors, shareholders may maintain a suit to enforce a corporate right for their protection, though the corporation has not been formally dissolved, and they have made no demand on its officers to begin the suit.

11. A plea that a corporation, against whom its shareholders have brought a suit in equity, has no property in the state, is bad because argumentative.

Exceptions from Superior Court Bill in equity by Charles G. Kidd and others against the New Hampshire Traction Company and others. To an order sustaining a demurrer to its plea, defendant traction company excepted. Exception overruled.

Bill in equity by certain shareholders of the Massachusetts Construction Company, Incorporated (a Connecticut corporation), against that company, the New York Security & Trust Company (a New York corporation), Wallace D. Lovell (a resident of Massachusetts), and the New Hampshire Traction Company (a New Hampshire corporation located at Hampton, in Rockingham county). The bill alleges, in substance, that in pursuance of an agreement entered into November 12, 1901, the defendants, on December 2, 1901, caused to be transferred to the traction company certain assets of the construction company, the purpose of the transaction being to fraudulently deprive the plaintiffs of the value of their shares, and that said assets were thereafter acquired by the trust company for an insufficient consideration, in furtherance of the fraudulent intent; that in pursuance of a contract entered into December 28, 1901, the defendants caused the remaining assets of the construction company to be transferred to the trust company, in fraud of the plaintiffs' rights as shareholders of the former corporation. The interests of the other defendants in the traction company, and the money and property of all the defendants in the hands of the Rockingham County Light & Power Company, a New Hampshire corporation, were attached upon a writ in aid of the bill in equity. Service was duly made upon the traction company and Lovell, within this state. Service was made upon sundry persons alleged to be the agents of the construction company and the trust company within this state, and the requisite copies were delivered to officers of those corporations in Hartford, Connecticut, and New York city, respectively, in accordance with orders of the superior court Lovell appeared and answered. The bill was taken pro confesso as to the construction company and the trust company. The traction company filed a plea alleging that the construction company and the trust company were indispensable parties to the suit, and averring that no sufficient service had been made upon either of them. The plaintiffs' demurrer to the plea was sustained, and the traction company, being ordered to answer, excepted.

Roger P. Sturgis and Streeter & Hollis, for plaintiffs.

Brown, Jones & Warren, for defendant Lovell. Harry G.Sargent, Samuel W. Emery, and John L. Thorndike, for defendant traction company.

PARSONS, C. J. The proceeding is a bill in equity by two shareholders in the Massachusetts Construction Company, Incorporated, a Connecticut corporation, brought in behalf of all the shareholders, and charging that through the fraud of the defendants all of the assets of the corporation have been transferred to and are now held by one of the defendants, and that the purpose of the transaction was fraudulently to deprive the plaintiffs of the value of their shares. The following facts appear from the allegations of the bill: The capital stock of the plaintiffs' corporation consists of 5,000 shares of $100 each, par value. Twenty-five hundred shares of this capital are preferred both as to capital and income, but have no voting power, such power being vested exclusively in the remaining shares, called common stock. At the time of the transactions in question the assets of the corporation were worth, in addition to the amount necessary to satisfy the existing indebtedness of the corporation, more than $500,000, the amount of the whole capital stock. The plaintiffs then owned and now own 2,440 shares of the preferred stock. The parties charged with the fraud are the defendant Lovell (then and now the owner of all the common stock, and now owning all the preferred stock not held by the plaintiffs), the New York Security & Trust Company, a New York corporation, and the New Hampshire Traction Company, a New Hampshire corporation. The corporation in which the plaintiffs are stockholders is also made defendant. Lovell has appeared and answered to the bill. The plaintiffs claim to have made service upon the construction company and the trust company, and the bill has been taken pro confesso as to them. The traction company has filed a plea alleging that the construction company and the trust company are indispensable parties to the suit, averring that they are not within the jurisdiction and that no sufficient service has been made upon them, and traversing the material facts set out in the several returns of service.

The practice in equity upon plea filed, and the essentials of a valid plea, are set forth by Chief Justice Bell in Bassett v. Company, 43 N. H. 249. The proceedings in the superior court are hardly in accord with equity practice as there explained. The plaintiffs demurred to the plea, and the demurrer was sustained. Judge Bell says (page 253): "In equity, there is no demurrer to a plea, and no other step can be taken until it is disposed Of * * * To obtain a decision upon the validity of a plea, the course is to set it down for argument, which has much the effect of a demurrer at law, being an admission that the facts stated in the plea are true as they are pleaded, and it is submitted to the court to decide whether they constitute a bar. * * * If the plea wants form, as if it is not verified by oath, the plaintiff must move to set it aside, or take it off the files. He cannot make the objection on the argument." If the demurrer to, the plea can properly be treated as a motion to set it aside, the motion must be granted, because the plea is not verified by affidavit. Bassett v. Company, 43 N. H. 249. This objection has not been taken, and possibly can be avoided by amendment. Since the purpose of the demurrer was undoubtedly to obtain a decision upon the validity of the plea, the proceedings in the superior court may properly be considered as amounting in substance to the overruling of the plea when set down for argument "In pleas in equity, there must in general be the same strictness and exactness as in pleas at law, at least in regard to matters of substance. * * * The plea must not be argumentative. * * * The language must be such as to include all intendments. And if a case can be supposed, consistent with the facts pleaded, which would render the plea inoperative as a full defense, and which is not excluded by particular averments, the plea is bad." Bassett v. Company, 43 N. H. 249, 252. "Where the plaintiff's right to the relief or discovery he seeks depends on a single point, the defendant, instead of answering all the allegations of the bill, may insist on the fact which he relies on as a bar, or deny some fact, alleged in the bill, which is essential to the maintenance of the plaintiff's claim. He may thus narrow the investigation, and save the expense of evidence, as to all the other matters made material by the bill, or which might be made so by the answer." Bell v. Woodward, 42 N. H. 181, 191.

The objection raised by the plea is the want of parties. The question therefore is: If no sufficient service appears, whether either of the parties to whom the plea relates is indispensable to the maintenance of the suit, so that in their absence beyond the jurisdiction of the court no relief can be given the plaintiffs. "A plea to the whole bill of want of parties will be overruled if in any one state of facts charged by the bill the parties would not be necessary, for then the plea is not an answer to all the allegations in the bill." Sto. Eq. Pl. § 745. Upon the argument of a plea, every fact stated in the bill, and not denied by the answer, in support of the plea, must be taken to be true; and the answer must be full and clear, or the court will intend the matter against the pleader. Sto. Eq. Pl. §§ 511, 516, 527; Bell v. Woodward, 42 N. H. 181, 194. There is no answer in support of the plea, and no denial by averments in the plea of any facts charged in the bill; but the averments are directed to the facts set out in the returns of service, and relate, as the defendants claim, to the date of the service, and not to the date of the filing of the bill. The plaintiffs attempted in various ways to secure service upon each of the defendants. Whether this service is sufficient to render the trust company amenable to the jurisdiction in this suit is a question which it is not now necessary to examine. Neither is it necessary to consider whether the facts upon which the plaintiffs rely to sustain the service are sufficiently denied by the allegations of the plea. The sole question is whether the plea is a bar to the further maintenance of the bill...