Leary v. Columbia River & P. S. Nav. Co.

• Decision Date: 06 October 1897
• Citation: 82 F. 775
• Court: United States Circuit Court, District of Washington, Northern Division
• Parties: LEARY V. COLUMBIA RIVER & P.S. NAV. CO. et al.

82 F. 775

LEARY V. COLUMBIA RIVER & P.S. NAV. CO. et al.

United States Circuit Court, D. Washington, Northern Division.

October 6, 1897

Ballinger Ronald & Battle and S. M. Shipley, for complainant.

Preston Carr & Gilman, for defendants.

HANFORD District Judge.

This is a suit in equity by John Leary, a citizen of the state of Washington, against the Columbia River & Puget Sound Navigation Company, a corporation organized under the laws of the state of Oregon, and against certain individual citizens of the state of Oregon, who are officers of said corporation. The bill of complaint avers that the complainant is a large stockholder in the defendant corporation; that the corporation is the owner of certain steamboats engaged in carrying passengers and freight on regular routes on Puget Sound, in the state of Washington, and on the Columbia river between Portland and other points in the state of Washington and the state of Oregon; that the other defendants are officers of the corporation, and in control of its property and business, and that they have abused their trust, by paying large salaries to themselves, employing near relatives in the service of the corporation, whose services are unnecessary, and paying them extravagant salaries, and by permitting the corporation to become a creditor of a townsite company in the state of Oregon, in which the individual defendants are interested, without making any effort to collect from the town-site company the amount due to the navigation company, by which means the entire earnings of the vessels owned by the corporation have been absorbed, in fraud of the rights of the stockholders; that no dividends have been paid to the stockholders, although, if the business had been managed with ordinary business prudence, and if accounts had been honestly rendered, a considerable sum would have been accumulated, which would belong to the stockholders; and that there is danger of the corporation becoming insolvent, in consequence of a continuation of the extravagance of the present management. The object of this suit is to oust the present officers of the corporation from control of its affairs, by placing the corporation, its business and property, in the hands of a receiver, and to compel said officers to render accounts and make good the amounts which they have improperly diverted from the treasury of the company. The corporation has appeared by counsel, and demurred to the bill on the ground that the court has no jurisdiction to grant the relief prayed for, or any relief.

In the argument upon the demurrer it was conceded that the individual defendants whose conduct is brought in question are not inhabitants of this state, and not within the jurisdiction of this court, so that it will be impossible for the court to obtain jurisdiction to render any decree against them personally. The complainant claims to be a creditor of the corporation to the amount which should have accrued in dividends upon stock which he holds, and that he has an equitable lien upon the property of the corporation; but he has not reduced his claim to judgment, and, as the corporation has no money in its treasury, it is obvious that he is not...