Richardson v. Clinton Wall Trunk Mfg. Co.

• Decision Date: 17 June 1902
• Citation: 181 Mass. 580,64 N.E. 400
• Parties: RICHARDSON et al. v. CLINTON WALL TRUNK MFG. CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

181 Mass. 580

64 N.E. 400

RICHARDSON et al. v. CLINTON WALL TRUNK MFG. CO. et al.

Supreme Judicial Court of Massachusetts, Worcester.

June 17, 1902

COUNSEL

Jonathan Smith, for petitioners.

Herbert Parker and H. H. Fuller, for respondents.

OPINION

KNOWLTON J.

The defendant corporation was established under the laws of Maine, but all of its officers except its clerk are residents of this commonwealth, and all its property is in Massachusetts. The prayer of the bill as originally drawn was that the officers be enjoined from disposing of any of its property, that a receiver be appointed, that the affairs of the corporation be wound up by the collection of its assets and the payment of its debts, and that it be dissolved. It is obvious that courts of equity have no jurisdiction to dissolve a foreign corporation or to liquidate its indebtedness, and this primary purpose of bringing the bill has been abandoned. The prayer of the amended bill is for the appointment of a receiver, for an injunction against the defendant officers to prevent them from using the name or property of the company for carrying on business contrary to its charter, for an account of the company's property taken and misappropriated by them, and for general relief. It is stated in the bill that the defendant directors have fraudulently used the property and franchise of the corporation for their own private gain, and have misappropriated the property in different ways, and have caused the corporation to carry on business which it was not permitted to do under its charter. The bill states a case which entitles the plaintiff to relief, and the averments make it plain that he could not expect to obtain favorable action from the directors or from the corporation, and that he would be left without remedy if he was not permitted to bring the suit in his own name. Brewer v. Theater Co., 104 Mass. 378; Dunphy v. Association, 146 Mass. 495, 16 N.E. 426. In reference to the allegations that the defendant directors are engaging the corporation in business ultra vires, the plaintiff is not left to seek his remedy through the attorney general of Maine acting in the public interest in the courts of that state. The corporation is doing business under our statutes in this commonwealth. The plaintiff's rights are affected and his property is imperiled by the unlawful action of the defendants within our jurisdiction. The parties are all subject to the process of our courts. The plaintiff should have relief in a court of equity against the continuance of this violation of our laws. The principles applicable to the unlawful conduct of the directors in this particular are like those invoked against the frauds of directors in misconducting the business of a corporation or misappropriating its property for their own personal gain. Brewer v. Theater Co., supra; Dunphy v Association, supra; Hodges v. Screw Co., 1 R. I. 312, 53 Am. Dec. 624; Gregory v. Patchett, 33 Beav 595; Colman v. Railway Co., 10 Beav. 1; Salomons v. Laing, 12 Beav. 341; Bagshaw v. Railway Co., 7 Hare, 114; Ware v. Waterworks Co., 2 Russ. & M. 480, note. We are of opinion that, upon proof of its averments, the bill can be maintained for the purpose of enjoining the defendant directors from further using the company's name or property in carrying on in this commonwealth a business not authorized under the company's charter.

The plaintiff asks that the defendant directors be ordered to account for the company's property taken and misappropriated by them. It is contended that this calls for an interference by this court with the management of the internal affairs of a foreign corporation, which should be left to the courts of the state in which the company is incorporated. The rule is well established in this commonwealth that ordinarily our courts will decline jurisdiction in matters which pertain to the interior life and conduct of a...