Perkins v. Coffin

• Decision Date: 29 May 1911
• Citation: 79 A. 1070,84 Conn. 275
• Court: Connecticut Supreme Court
• Parties: PERKINS et al. v. COFFIN et al.

79 A. 1070

84 Conn. 275

PERKINS et al.

v. COFFIN et al.

Supreme Court of Errors of Connecticut.

May 29, 1911.

Wheeler, J., dissenting.

Appeal from Superior Court, Hartford County; William L. Bennett, Judge.

Action by Thomas C. Perkins and others, minority stockholders of the Connecticut River Company, against Arthur D. Coffin and others to restrain defendants from calling and holding a meeting of the stockholders of the company to pass on the question of accepting an amendment of its charter granted by the Legislature, and other corporate action. From a judgment for defendants rendered after sustaining a demurrer to the complaint, plaintiffs appeal. Affirmed.

Lewis Sperry and Lucius P. Robinson, for appellants.

John R. Buck and John H. Buck, for appellees.

PRENTICE, J. The plaintiffs, stockholders in the defendant corporation, the Connecticut River Company, seek a restraining order against it and against its president and secretary and treasurer. It appears by the allegations of the complaint, demurred to, that the charter of the corporation, at the time the action was brought, was the resultant of an original grant made in 1824 (1 Private Laws, p. 73), and of amendments thereto, including one made in 1856 (4 Private Laws, p. 1377) and one made in 1881 (9 Special Laws, p. 68). These resolves of the General Assembly are set out in full in an exhibit annexed to the complaint. Thus the purposes and objects of the corporation, and the powers and privileges enjoyed by it through grant from the state, as they originally were and have since become are fully disclosed. They are to be determined by legal construction to which any allegation thereupon must yield. Auffmordt v. Stevens, 46 Conn. 411, 413.

The plaintiffs charge that the defendants threaten and intend to call and hold a stockholders' meeting for the acceptance of an amendment to this charter, which amendment was passed by the General Assembly in 1909, and by its terms was offered to the corporation for acceptance by a majority vote of the stockholders; that the defendant Coffin, president, personally, and as trustee, is able to control the action at such meeting of a majority of the stock, and that he threatens and intends to so control it that the vote of such stock shall be cast in favor of the acceptance of said amendment against the vote and protest of the plaintiffs and others, minority stockholders. It is further alleged in this connection that this amendment, embodied in the complaint, would, if accepted, change the fundamental character and purposes of the corporation, and thus impair the obligation of the contract existing between the plaintiffs and their costockholders, change the contractual relation between the plaintiffs and the corporation, its stockholders and creditors, and impair the rights, privileges, and immunities which the plaintiffs enjoy under and by virtue of those relations, all in violation of the provisions of paragraph 1, § 10 of article 1 of the federal Constitution. It is also alleged that the acceptance of the amendment would operate to deprive the plaintiffs of their property without due process of law, and to deny to them the equal protection of the laws, in violation of the fifth and fourteenth amendments of that Constitution. It is further charged that it is the intention of the defendant president, in the event of the acceptance of the amendment, to have the corporation proceed to build a large and expensive dam across the Connecticut river at Windsor Locks, and to build and operate a large electric power plant and electric transmission system requiring expenditures of very large sums of money, and that the defendant individuals, as officers and agents of the corporation, and the corporation threaten and intend, in continuance of a policy already inaugurated, to expend large sums of the money of the corporation in the development of an electric power plant, and in attempts to secure further legislation by the General Assembly of this state and by the Congress of the United States to enable it to exercise the powers of an electric power company. In this connection it is also averred that the building, construction, and operation of an electric power plant and electric transmission system, and the generation and sale of electricity by the corporation would "radically change the fundamental character of its corporate business and purposes."

Among the allegations thus referred to are several which embody conclusions of law only. The admissions of the demurrer do not, therefore, run to them, and they may be dismissed save as the facts presented support them. Coughlin v. Knights of Columbus, 79 Conn. 218, 222, 64 Atl. 223. Such an allegation is that which sets out that the acceptance of the amendment would change the fundamental character and purposes of the corporation. It is a question of law whether or not the amendment, if engrafted upon the charter, would accomplish what the law regards as a fundamental change in the character and purposes of the corporation. Cook on Corporations, § 499; Thompson on Corporations (1st Ed.) § 85; New Haven & Derby R. Co. v. Chapman, 38 Conn. 56, 71; Memphis Branch R. Co. v. Sullivan, 57 Ga. 240; Witter v. Mississippi R. Co., 20 Ark. 463. As we have before us in the complaint both the existing charter and the proposed amendment, that question is open to our determination, and that determination will supersede any allegation of the complaint. The allegation that the threatened construction and operation would change the fundamental character of the corporate business and purposes is one of a similar character. Those which charge that the legal result of the threatened acceptance of the amendment would be an invasion of the plaintiffs' rights as guaranteed by the federal Constitution are also included in this category of reviewable conclusions of law.

The relief which is asked is twofold: (1) A temporary and permanent injunction against the defendants restraining them from calling, holding or conducting a meeting of the stockholders of the corporation for the purpose of passing upon the acceptance of the amendment, and (2) a permanent injunction restraining the two defendant officers and their successors in office from "expending any money of the corporation, or obligating the corporation in any way for the purpose of developing an electric power plant and electric transmission system," and against the corporation restraining it from "establishing, building or constructing any electric power plant and from generating, selling or delivering electricity; from the expenditure of any money to secure any legislation either from the General Assembly or from the Congress of the United States for the purpose of aiding in developing an electric power plant or for the generation, sale, or delivery of electricity." It thus appears that there are two classes of subject-matter of complaint, and two classes of prayers for relief which are so distinct that considerations which might with propriety be addressed to one might not be pertinent to the other.

The demurrer contains a considerable number of grounds of demurrer. Some of them deal with incidental matters appearing in the complaint, and not yet referred to, or with aspects of the case which are essentially incidental. Others go to the question which underlies the case, or some phase of it, to wit, the question of the power of a majority of stock to effectively accept an alteration or amendment of a charter in opposition to the will of a minority. The court sustained the demurrer upon certain grounds, and refrained from passing upon others which were regarded as not essential to the result reached. We have no occasion to follow the court below in its line of reasoning, or to pass upon the soundness of its special conclusions as disclosed in its memorandum of decision. We have only to inquire whether the demurrer was one which ought to have been sustained, and therefore, whether the court erred in its action in sustaining it, quite regardless of its reasons for so doing. Lewisohn v. Stoddard, 78 Conn. 575, 589, 63 Atl. 621.

The record discloses that a temporary injunction, as prayed for, was issued ex parte when the action was begun, and that the court at the time of final judgment, acting pursuant to the provisions of section 1009 of the General Statutes of 1902, and having found that the continuance of such order would work great and irreparable injury, dissolved it. It also appears from a stipulation by counsel that since the judgment below was rendered a stockholders' meeting has been called and held to act upon the acceptance of the amendment, that a majority of the stock voted thereat in favor of such acceptance, that the plaintiffs voted in the negative, and that a certificate of the action of the meeting was thereupon filed in the office of the Secretary of State. The question presented by the record as to the legal correctness of the court's action in so far as it concerned the holding of a stockholders' meeting to act upon the acceptance of the amendment was thus deprived of all present practical consequence, and may be dismissed with no further consideration than the observation that its propriety necessarily results from our conclusions upon the other branch of the case.

It is manifest that the burden of the plaintiffs' complaint as to the second phase of the case is not that the defendants threaten and purpose to perform acts of business conduct which are enumerated in any event, but only that they threaten and purpose to pursue that course of conduct under the pretended authority of the proposed amendment after its acceptance by a majority vote of the shareowners. The plaintiffs are seeking to test the legality of the latter course of action, and it is that alone which they are attempting to restrain. We understand counsel to concur in this construction of the complaint and its prayers.

It is beyond question that the...