Langdon v. Fogg
| Decision Date | 16 July 1883 |
| Citation | 18 F. 5 |
| Parties | LANGDON v. FOGG. |
| Court | U.S. District Court — Southern District of New York |
John R O'Donnell and Grove M. Harwood, for plaintiff.
E. F Hyde, for defendant.
This action was brought in the superior court of this city by the plaintiff, as a stockholder in the Silver Era Mining Company in behalf of himself and all other stockholders. The company was organized as a corporation under the laws of this state in February, 1880, to have a capital of $10,000,000, divided into 100,000 shares of $100 each. The defendants in the suit are the corporation, and five individual defendants who are alleged to have been the trustees of the corporation at the time of its information, and during the first year afterwards. Three of the defendants, as well as the plaintiff are citizens of New York, where the main office of the corporation is also located. The suit was removed to this court upon the petition of the defendant Fisk, a citizen of New Jersey, under section 2 of the act of 1875, on the ground that the suit contains a controversy which is wholly between himself and the plaintiff, who are citizens of different states. A demurrer to the complaint was served by the defendant Fisk, on May 22, 1883, before the cause was at issue as to the other defendants; and at the June term, which was the first term of the superior court at which the issue of law upon the demurrer as to the defendant Fisk could possibly have been tried, the cause was removed to this court. It was, therefore, removed in due time, and the first ground for remanding cannot be sustained. Johnson v. Johnson, 13 F. 193; Cramer v. Mack, 12 F. 803; Knowlton v. Congress, etc., 13 Blatchf. 170; Forrest v. Keeler, 17 Blatchf. 522; (S.C. 1 F. 459.)
2. The only other ground for the motion to remand is that the cause was not removable at all, because, as it is claimed, it does not contain any controversy which can be separately determined between the defendant Fisk and the plaintiff; and this involves an examination of the nature of the action. The complainant is in equity. In substance it alleges that the defendants, shortly after the organization of the company, and acting as its trustees, agreed with one Henry S. Sanders to issue to him as full-paid stock the whole of the capital stock of the corporation, in consideration of the conveyance to the corporation by Sanders of certain mining claims and property in Arizona, which were of no value for mining purposes, and of the actual market value of less than $100,000, as the defendants knew; that shortly afterwards all of said stock was by Sanders turned over to the five individual defendants, or some of them, or to them and their associates and nominees, upon payment of the sum of $46,666.67 as near as the plaintiff can ascertain, but at any rate not over $100,000, and that this was done in pursuance of an agreement between the defendants and Sanders prior to the conveyance of the mining property; that the defendants thereafter, assuming to act in behalf of the corporation, by certificates of stock issued and circulated by them, represented to the public, including the plaintiff, that the stock was full-paid; that the plaintiff purchased his stock in the market as full-paid stock, relying on such representations; that after the issue of said stock as aforesaid the corporation had no means of developing and improving the property purchased, and, failing to work it, it had become forfeited and passed beyond the control of the corporation; that upon the purchase of plaintiff's stock a new certificate was issued to him for 100 shares as full-paid stock, upon his surrender of the former certificates.
The complainant then charges 'that the individual defendants have individually sold the stock, or a portion thereof, so turned over to them, as aforesaid, and that said individual defendants have individually received large sums of money,-- gains and profits from the sales of the stock of the defendant corporation, or from the portion thereof sold; that plaintiff is unable to state definitely the amount received by said individual defendants, and each of them, from the sales of such stock, or the amount of profits realized from such sales; that the defendants have not accounted for or paid over to the corporation the difference between the $10,000,000, represented by the capital stock, and the actual cost or real value of the property conveyed to it by Sanders, nor for their gains on the stock sold by them; that the defendants, or a majority of them, are still the trustees of the corporation, which is in no condition to prosecute any action for the relief sought by this action, and neglects to do so; for which reason the plaintiff brings this suit.
The relief prayed for is that the defendants may be 'declared trustees of the $10,000,000 represented by the capital stock; and that they may, collectively and severally, be decreed to account of and concerning such sum; and also account for the gains and profits received by each from the sale of the capital stock; that the actual value of the property conveyed by Sanders be determined by the court, if it had any value, and credited on such accounting, and the amounts so found due be brought into court and paid to a special receiver for the benefit of all the stockholders who may join in this suit or come in under the decree.'
If I understand the complaint rightly, it demands (1) that the individual defendants shall 'account' to the corporation, or stockholders, for $10,000,000, less such sum as the court may find the property conveyed by Sanders to have been worth; (2) that they 'severally account for the profits received by each from the sales of the capital stock.'
In ascertaining whether the cause was removable under section 2 of the act of 1875, it is not necessary to determine...
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