Price v. Holcomb

• Decision Date: 09 October 1893
• Parties: PRICE v. HOLCOMB ET AL.
• Court: Iowa Supreme Court

89 Iowa 123

56 N.W. 407

PRICE

v.HOLCOMB ET AL.

Supreme Court of Iowa.

Oct. 9, 1893.

Appeal from district court, Des Moines county; James D. Smythe, Judge.

Plaintiff, owner of one-seventh of the stock of the Iowa Rolling Mill Company, a corporation under the laws of Iowa, organized for the purpose of rolling and making iron at its works in Burlington, Iowa, prosecutes this action in equity to set aside a sale and conveyance of the works of said corporation to the defendant J. F. Holcomb in pursuance of certain resolutions adopted by the stockholders. Decree was entered dismissing plaintiff's petition, from which decree he appeals.C. L. Poor and Thomas Hedge, for appellant.

Power & Huston, for appellees.

GIVEN, J.

1. Prior to 1887 the plaintiff and others, residents of Burlington, Iowa, organized a corporation known as the Burlington Rolling Mill Company, with a paid-up capital of $36,000, for the purpose of erecting and operating a rolling mill at Burlington for the manufacture of iron. The works were constructed and operated for a time at a loss. These parties being inexperienced in the business, and the company without sufficient capital, the defendant Richard Brown, of Youngstown, Ohio, a gentleman of experience in the iron business and possessed of means, was solicited to take an interest in the business, and to associate with him other men of experience to operate the works. In pursuance of an agreement, the defendant the Iowa Rolling Mill Company was incorporated with a capital stock of $70,000, and the property of the old company was transferred to it free of debt and incumbrance. Certificates for one-half of the capital stock were issued to the stockholders in the old company in lieu of their stock therein, and for the other half to Mr. Brown and his associates, M. C. Williams and E. H. Wilson, of Youngstown, upon Brown's promise to pay $20,000, to be used in making needed changes in the works and as working capital. The defendant company, being thus organized, leased the works to Brown and his associates for one year free of rent, and at the end of that year extended the lease for a second. Brown and his associates operated the mill on their own account, but in the name of the corporation and through its treasurer, until in May, 1889, when the buildings were destroyed by fire. The mill was operated at a loss to Brown and his associates. During the second year of the lease the defendant J. F. Holcomb, of Youngstown, purchased nearly all of the stock held by Wilson, and thereafter took part in the management of the business. Certain improvements were authorized to be made on the works during the lease, all of which were made and paid for by Brown and his associates, at a cost, as they claim, of $17,000. A committee of the company reported in favor of allowing $16,746.96 of this claim. The works were rebuilt after the expiration of this lease, but were not operated, because of a failure to agree upon any plan for operating them. While all parties seem to have desired that the works should be operated, no tangible plan was suggested. There was a proposition from one Roberts to pay a royalty on the iron made for the use of the works, but this offer was indefinite, and gave but little assurance of work being resumed under it. The fact is apparent that such differences had sprung up between the Burlington and Youngstown stockholders that it was not likely that any plan would be agreed upon for leasing or operating the works. The record of proceedings of stockholders, as set out in the abstract, is as follows:

“October 7, 1890. Annual stockholders' meeting, (there being present and voting 687 shares of stock.) J. F. Holcomb offered the following resolution, which was seconded and adopted, viz.: ‘Whereas, the corporation has been organized and in existence for about three years, having its mills ready for operation; and whereas, the entire capital stock of this company, seventy thousand ($70,000) is invested in the grounds and plant, leaving the company without any working capital; and whereas, the mills were operated for the first two years by Richard Brown and others under a contract, during which time no money was made by such operation, either for Mr. Brown and others or for the company; and whereas, the mills have stood idle ever since October, 1889, this company being utterly unable to set them in motion for want of capital, and during which time the directors have not been able to make any contract or arrangements for the operation of the mills, and in the mean time the property and plant has been largely decreasing in value, and will continue so to do if allowed to remain idle, and, as a result, the stockholders are not only losing the use of their capital invested, but are losing the capital itself; and whereas, the officers and directors do not report any plan or prospect for any arrangement for the operation of the mills during the coming fiscal year, and the company cannot operate them for want of means: Therefore, resolved, that the board of directors of this company be, and they are hereby, directed and instructed to proceed at once and sell the entire property and plant of this company, either at public or private sale, and on such terms as they deem for the best interests of the stockholders, and that they make the sale within the next sixty days; and they are hereby authorized to make, execute, and deliver any and all necessary and proper deeds, contracts, and other instruments in order to effectually carry out and consummate such sale, and, further, that they report their doings in this matter to an adjourned stockholders' meeting. Resolved, further, that when this meeting is adjourned it adjourn to meet on the 8th day of November, 1890, at 3 o'clock P. M., to transact such business as may then seem proper, and, further, that the directors make report at that meeting of the prospects of sale or other disposition of the property, and that no actual sale be made previous to that date, unless pursuant to some other action of the stockholders.’ ”

“October 7, 1890. Board of directors' meeting. ‘Whereas, the stockholders of this meeting, at their annual meeting, October 7, 1890, by a resolution there offered and adopted, directed and instructed the directors of this company to proceed at once and sell the entire property and plant of this company, either at private or public sale; and whereas, the sale, by the resolution, must be consummated within sixty days from Oct. 7, 1890; and whereas, on account of approaching winter, it is desirable to make such sale as early as possible, to enable the purchaser or purchasers to make necessary improvements and repairs: Therefore, resolved, that the president and secretary of this board be, and they are hereby, directed and instructed to proceed at once, and solicit offers and enter into negotiations for the sale of the entire property and plant of this company, by advertising the same at their discretion in at least two of the leading iron trade papers of this country, and otherwise, as they may deem advisable, and that they make a full report in relation thereto to this board at some appropriate time, prior to the adjourned annual stockholders' meeting to be held November 8, 1890.’ To which J. W. Price offered the following substitute, which was also seconded, viz.: ‘Resolved, that the board of directors proceed at once to make the necessary arrangements for putting the Iowa Rolling Mills into operation, under the management of its own officers, at the earliest practicable time.’ Substitute lost, and the original motion carried.”

The minutes of an adjourned meeting of the stockholders of the Iowa Rolling Mill Company held on November 8, 1890: “J. F. Holcomb offered a resolution that the board of directors are hereby instructed to proceed at once and sell at public sale the mill, premises, and entire property and plant of this corporation; terms of sale, half cash, and the balance in six and twelve months from date of sale, with 6 per cent. interest per annum with good security. Mr. Guelich offered an amendment providing that no bids should be entertained at said sale for less than 75 cents on the dollar of the stock. Mr. Huston moved to amend the amendment by striking out ‘75 cents on the dollar.’ and inserting ‘$25,000.’ Mr. Huston's amendment was carried; Price, Guelich, and Gear voting ‘No,’ and the resolution, as amended, was carried by the following vote: Ayes: Rich ard Brown, by Holcomb, 170 shares; E. M. Wilson, by Holcomb, 10 shares; J. F. Holcomb,177 1/2 shares; J. G. Foote, 14 shares; C. J. Ives, by Foote, 17 shares; E. S. Huston, 5 shares,--total, 393 1/2 shares. Noes: J. W. Price, 100 1/3 shares; Price & Wiese, by Price, 8 shares; Theodore Guelich, 69 1/3 shares; J. H. Gear, 78 1/3 shares; Mrs. H. F. Gear, by Guelich, 28 shares; Horace Rand, by Guelich, 5 shares,--total, 282 shares. Mr. Price objected to any stock being voted that had not been fully paid for, and ruled that no such stock be voted, but his ruling was not sustained. ‘The undersigned stockholders protest against the resolution offered by J. F. Holcomb, and adopted, to sell the property of this company at public sale on December 13, 1890, the limit to the price being entirely too low, in our estimation. [Signed] Theo. Guelich. H. F. Gear, by Guelich. H. S. Rand, by Guelich. John H. Gear. J. W. Price.’ Adjourned to meet December 12, 1890. J. F. Holcomb, Secretary.”

“Dec. 12, 1890. Adjourned stockholders' meeting. After some general discussion as to the condition of the property and the prospects of selling, Mr. Holcomb offered the following resolution: ‘There being no offers for the property and plant of this company at private sale, and no offers to lease the same which are acceptable to the majority interest, therefore, be it resolved, that the board of directors be, and they are hereby, instructed and directed to proceed and sell the same at public sale on...