Monmouth Inv. Co. v. Means

• Decision Date: 22 December 1906
• Docket Number: 2,409.
• Citation: 151 F. 159
• Parties: MONMOUTH INV. CO. et al. v. MEANS.
• Court: U.S. Court of Appeals — Eighth Circuit

151 F. 159

MONMOUTH INV. CO. et al. v. MEANS.

No. 2,409.

United States Court of Appeals, Eighth Circuit.

December 22, 1906

[Copyrighted Material Omitted]

This is an appeal from an order of the United States Circuit Court for the District of Colorado granting a temporary injunction. The bill of complaint was filed on the 29th day of December 1905, by Harry F. Ross-Lewin, as executor of the estate of George E. Ross-Lewin, against the Monmouth Investment Company, the State Investment Company, Henry A. McIntyre Frederick A. Williams, and Newell W. McIntyre; the said Harry F. Ross-Lewin being a citizen of the state of Illinois and the defendants citizens of the state of Colorado.

The controversy, as shown by the bill of complaint and the affidavits, grows out of substantially the following state of facts: George E. Ross-Lewin, the brother of the complainant, and the defendant Henry A. McIntyre, both of Denver, Colo., were associated together in large real estate dealings and enterprises, in equal interests. In July, 1903, they had organized the Monmouth Investment Company, a Colorado corporation, as a holding corporation of their respective interests. The stock of this company was divided into 1,000 shares of the par value of $100 each. At the time of the organization of the company the interest of said McIntyre, except one share, stood in the name of the State Investment Company, one of the defendants alleged to have been in reality owned and controlled by said McIntyre, although in that company only one share of its stock stood in his name, the balance standing in the names of members of his family; and at the time of the death of said George E. Ross-Lewin, hereinafter stated, the stock of said Monmouth Investment Company stood one share in the name of Henry A. McIntyre, who was treasurer and manager thereof, one share in the name of said George E. Ross-Lewin, who was president thereof, one share in the name of Frederick A. Williams, one of the defendants herein, who was vice president thereof, 499 shares in the name of the State Investment Company, and 495 shares, being the shares of said George E. Ross-Lewin, stood in the name of said Henry A. McIntyre as trustee, claiming that they so stood as a method of pledging them for certain obligations of said George E. Ross-Lewin to the Monmouth Investment Company, and one share appearing to be unissued.

On the 14th day of July, 1905, the said George E. Ross-Lewin died at Denver, Colo., leaving a will, naming his brother, the said Harry F. Ross-Lewin, and the defendant Henry A. McIntyre, his executors, which will was duly probated in the county court at Denver, Colo., in the month of September, 1905; the said executors duly qualifying. The bill charges that prior to the funeral of said George E. Ross-Lewin, and prior to the arrival of the complainant at Denver, from his home in Chicago, for the purpose of attending the funeral and to the affairs of his brother's estate, a meeting, as complainant afterwards learned, was held by the surviving directors of said Monmouth Investment Company, to wit, Henry A. McIntyre and said Williams, at which meeting Newell W. McIntyre, one of the defendants, a son of said Henry A. McIntyre, to whom was then issued the unissued share of stock, was elected a director in the place of said George E. Ross-Lewin, and he was also made secretary-- the said Newell W. BcIntyre was then attending college in the East. These facts were not known to the complainant until subsequently, when he made inquiry respecting the vacant directorship, and suggested that as an executor of the estate he ought to be made a director. Mr. McIntyre declined to concede this, saying that he controlled the stock and was unwilling to permit the complainant to be upon the board of directors.

The bill further charges that, although the complainant was much dissatisfied with the foregoing refusal of said Henry A. McIntyre, he nevertheless, upon the promise of said Henry A. McIntyre that he would send him monthly statements in the nature of a trial balance showing the status of the company, and the further promise that he would not dispose of any important part of the property of the company or involve it in important transactions without informing the complainant so as to afford him an opportunity to interpose any objections he might have, acquiesced in what was done. But after sending such statement, of date August 31, 1905, and giving him some information, he did not keep his promise to send such monthly statements, although often requested thereto. Afterwards, about the 19th day of December, 1905, the complainant went to Denver for the purpose of attending to the affairs of the estate and looking after said company, to become informed of the true situation, and, upon calling on said Henry A. McIntyre, he refused him any access to the books of the company until the afternoon of the 22d of December, and thereupon he discovered what purported to be minutes of the board of directors, of date September 11, 1905, at which said Henry A. McIntyre, Newell W. McIntyre, and Frederick A. Williams were present, showing the following resolution offered by said Williams and adopted, to wit: 'Whereas the board has never fixed the salary of Mr. McIntyre, the manager of this company, who for the past two years has been secretary and treasurer and sole manager, and who is now president and treasurer and sole manager of the business of this company, therefore be it resolved that the salary of Mr. McIntyre be fixed at six thousand dollars per annum, to date from July 1st, 1903, and until the further pleasure of this board.'

The minutes of this meeting showed that said Henry A. McIntyre did not vote for said resolution. The bill charges that this action was wholly unwarranted, wrongful, and a fraud upon the estate; that at said meeting Henry A. McIntyre was authorized, in his discretion, to make any loans for the use of the company which he might deem necessary, and said minutes were signed by the secretary and by all three directors. The bill further charges that said Henry A. McIntyre is paying, from the funds of said Monmouth Investment Company, all the rent and office expenses, including the salaries of two employes, of the offices occupied in said city, not only by the said Monmouth Investment Company, but by said Henry A. McIntyre for his own purposes, and by the State Investment Company, who do a large business in said offices, using said employes.

It is further shown that the Monmouth Investment Company's assets consist largely of real estate in the city of Denver, subject to mortgages, and that the action of said Henry A. McIntyre and Frederick A. Williams in selecting said Newell W. McIntyre a director with said Williams, who have no beneficial ownership in the shares held by them, they became mere dummies in the hands of said Henry A. McIntyre, enabling him to take action at any time empowering him to dispose of any and all of the property of said Monmouth Investment Company in such manner as he pleases, without the knowledge or approval of the complainant or any opportunity to ascertain the real nature of the transactions or to guard the interests of the estate therein. While the Monmouth Investment Company is the owner of much valuable property, much of which is mortgaged, and has not paid any dividends or earned any money other than such as was needed to apply upon the indebtedness of the company, yet, if economically administered in the interest of the estate and stockholders, profitable results would come therefrom, but it will not be so managed by its present directors; and neither the estate nor the beneficiary thereof, who is a minor child of the testator, would derive any benefit therefrom. Unless said Henry A. McIntyre is restrained by the order of the court from paying himself the salary in arrears aforesaid, great detriment and injury to the company and estate will ensue therefrom. The bill alleges the refusal of said Henry A. McIntyre to agree to a dissolution of the corporation and the winding up of its affairs.

The prayer of the bill is for the appointment of a receiver and the dissolution of the company, and that said Henry A. McIntyre, Newell W. McIntyre, and Williams be enjoined from interfering with the affairs of the Monmouth Investment Company, or from disposing of or incumbering its assets, and that they be enjoined especially from paying the whole or any part of the salary voted or appearing to be voted by the directors of the company to the said Henry A. McIntyre.

It is disclosed by the affidavits at the hearing that the executors had collected $15,000 on the life insurance policy of the said George E. Ross-Lewin, which sum Henry A. McIntyre importuned the complainant to pay over to the Monmouth Investment Company; there being indebtedness from the estate to said company, which the complainant declined to do unless the estate could be safeguarded in giving this preference to the Monmouth Investment Company. When the complainant came to Denver in December, 1905, to look after matters, Henry A. McIntyre refused to permit him to see the books of the company until he had signed a petition to the probate court for and they had paid over to the Monmouth Company the $15,000, after which the complainant was permitted to see the books, when he discovered the vote to pay the said salary.

It was further developed on the hearing of the application for a temporary injunction that on the 29th day of December, 1905 the day the bill of complaint was filed, the complainant made petition to the probate court for the removal of said Henry A. McIntyre as coexecutor of the will, to which said McIntyre made answer and a cross-petition asking that the complainant be removed as such exe...