Reilly v. Oglebay.

• Decision Date: 15 November 1884
• Parties: Reilly v. Oglebay.
• Court: West Virginia Supreme Court

25 W.Va. 36

Reilly

v.Oglebay.

Supreme Court of Appeals of West Virginia.

Submitted June 5, 1884

Decided. Nov. 15, 1884.

1. What purported to be a notice calling a meeting of the stockholders of a corporation held to be insufficient; and all the proceedings had at the meeting thus called declared invalid.

2. No authority existing in a number of persons, such as the stockholders of a corporation, can be rightfully exercised, in the absence of any member of such body, unless all have had reasonable notice arid an opportunity to be present.

3. A party holding a fiduciary relation to trust-property cannot become the purchaser of such property, either directly or indirectly; and if he does the sale is voidable and may be set aside at the mere pleasure of the beneficiaries, although the price may have been adequate and the purchaser gained no advantage.

4. Under the circumstances presented by this cause, this rule is held to apply to a purchase of corporate property by or for the benefit of stockholders of a corporation, of which there was no board of directors and the sale was ordered by the stockholders in general meeting.

Snyder, Judge, furnishes the following statement of the case:

The Northwestern Virginia Agricultural Society became a orporation of this State by act of the legislature in 1866, andin 1871, it was and still is the owner of about twentyfive acres of land, known as the "Fair-Crounds," on Wheeling sland in the city of Wheeling, Ohio county. The second ection of the charter declares that, "The only purpose and object of said corporation shall be to advance and improve he condition of agriculture, horticulture, floriculture, stock and domestic animals, and the manufacturing, mechanical and mining arts, with such additional and other objects as may be advantageously connected therewith." Acts 1866, ch. 94.

The said land was for several years used by the corporation as a place for holding annual fairs and carrying on the business provided for in the charter, but for a number ot years next preceding the year 1880, and since then, no fairs have been held there and the whole purpose and object of the corporation seems to have been abandoned and the land has been occasionally rented for holding pic-nics, and exhibitions by traveling shows, &c, whereby certain profits have been derived from which small dividends have been declared and paid to the stockholders. The purpose of the corporation having thus been virtually abandoned in the early part of 1880, the stockholders concluded to sell and dispose of said land, being the only property owned by it, and dissolve the corporation. To this action there seemed to be no objection by any of the stockholders. The capital stock at this time consisted of 173 shares of the par value of $100 each, but the market price was greatly in excess of the par value. Of the stock more than two-thirds of the shares were held by Jacob Hornbrook, S. J. Boyd and Oglebay Bros., of whom Karl W. Oglebay was one, and the other shares were held by a number of persons, none holding more than three shares each and the large majority but one share each.

Accordingly, to effect what seemed to be the wish of all the stockholders, a meeting of the stockholders, (there being no board of directors,) was held March 6, 1880, and a committee, consisting of said S. J. Boyd, Karl W. Oglebay and Michael Reilly, was appointed to sell and dispose of saidland "for the best interest of the stockholders, for not less, as a whole, than $25,000 dollars, and on such terms as to payment as said committee may deem best. Pursuant to said order the committee made sale of the land at public auction, and W. V. Hoge, on behalf of Jacob Hornbrook, S. J. Boyd and Oglebay Bros, became the purchaser at the price of $25,400. After the sale, and after it had become known that said Boyd and Oglebay, two of the committee of sale, were interested in the purchase, some of the stocholders objected to the sale as illegal, and therefore another meeting was held and said sale set aside as voidable.

Subsequently, on June 21, 1881, Earl W. Oglebay caused to be published in the Wheeling Intelligencer the folllowing notice:

" stockholders' meeting.

" A meeting of the stockholders of the Northwestern Vir- ginia Agricultural Society will be held at the office of the Fire and Marine Insurance Company, on Saturday, July 9, 1881, at 2 o'clock, p. m.

" E. W. Oglebay, Secretary."

Pursuant to this notice a meeting was held July 9, 1881, it which one hundred and twenty-eight shares of stock were represented and of these said Jacob Hornbrook, S. J. Boyd and Earl W. Oglebay owned or controlled 125 shares, being all that was present except seven shares, and the other fortyfive shares were not represented at all. At this meeting the following resolution was adopted:

" Resolved, That R. G. Barr be appointed to sell and dispose of, at public auction, on August 20, 1881, at the front door ot the Ohio county court house, to the highest and best bidder, all the real estate and appurtenances owned by the Northwestern Virginia Agricultural Society, and located on Wheeling Island. Terms of sale: One-third cash, balance in six and twelve months, in equal amounts, with interest at six per cen.t If purchaser so elects can pay part or all cash. Title to be retained until purchase money is fully paid."

An amendment was offered to this resolution providing for the sale and division of said land into building lots and streets, and then first offering the lots at private sale and ofterwards, if found necessary, at public sale. This amendment was rejected and the resolution adopted by a stock vote of one hundred and twenty-one to seven shares, the former being the shares of stock owned and controlled by the said Jacob Hornbrook, S. J. Boyd and Earl W. Oglebay. Thereupon, Alonzo Loring and four others, being the owners of the said seven shares of stock thus voted in the minority, entered on the minutes of the meeting their protest against the action of the majority in ordering the sale of said land as a whole instead ot dividing the same and selling it in lots.

In pursuance of said resolution R. G. Barr, on July 12, 1881, advertised said land to be sold on the 20th day of August, 1881, and thereupon the said Alonzo Loring, Michael Reilly and eight others, stockholders and owners of founteen shares of stock, presented their bill to the judge of the municipal court of Wheeling, against the said R. G. Barr and Earl W. Oglebay and all the other stockholders of said cor- poration, praying "that the said Barr, his agents and servants, and the defendants, and each of them, may be enjoined from selling said property until the further order of this court, and that at the final hearing of this cause the said injunction may be made perpetual." On August 19, 1881, said judge granted the injunction "as prayed for" in the bill, and process was issued thereon.

The plaintiffs, after stating in their bill the foregoing facts, aver that the notice, announcing the meeting of the stockholders for July 9, 1881, was unauthorized, because the said Oglebay as secretary had no authority to call the same and because it failed to allege the authority, if any, by which the meeting was called; and that all action taken at said meeting of July 9, 1881, is null and void.

They also aver, that the said Oglebay, Boyd and Hornbrook, at the said meeting voted down the amendment providing for a division of said land with the intention of purchasing the same as a whole tor a smaller sum than it was worth and to shut out competition against themselves at the sale, and thereby they endeavored to defraud the plaintiffs and all the other stockholders than themselves out of their property. The plaintiffs insist that said property should, in justice and good faith, be divided and sold in lots, so as to increase the number of bidders and get what the same is really worth.

The defendants, Earl W. Oglebay, S. J. Boyd and Jacob Hornbrook, demurred to and answered the bill. By their answer they admit the facts hereinbefore stated, but deny that the proceedings had at the meeting of July 9, 1881, are void. They say, while said Oglebay was not authorized by the board of directors to call said meeting, he was authorized to do so by respondents, who were the owners of more than one halt the stock of the corporation; and they deny that said notice ought to have alleged the authority by which it was given. They deny that they voted down the proposition to divide and sell the said land in lots with the intention of acquiring the same at less than its value, or that they intended by the resolution adopted to shut out competition, or that by the whole facts stated they alone or with any other person or persons, intended to defraud the other stockholders or to obtain the...