Sellers v. Phoenix Iron Co.

• Decision Date: 01 July 1881
• Citation: 13 F. 20
• Parties: SELLERS v. PHOENIX IRON CO. [1]
• Court: U.S. District Court — Eastern District of Pennsylvania

13 F. 20

SELLERS v. PHOENIX IRON CO. ^[1]

United States Circuit Court, E.D. Pennsylvania.

July 1, 1881

This was a bill by George H. Sellers against a corporation known as the Phoenix Iron Company, and against its officers and directors individually. The allegations of the bill were in substance:

That the Phoenix Iron Company was originally organized out of the firm of Reeves, Buck & Co., which was composed of David Reeves, Samuel J. Reeves, Robert S. Buck, and Samuel A Whitaker, and that at the time of the incorporation the said Robert S. Buck withdrew, the stock being divided among the remaining members of the firm, with the exception of a few shares transferred to employes to provide for filling the offices and the board of directors; that David and Samuel J Reeves afterwards died, but that their stock continued to be held, and was still held, by their families; that complainant had become the owner by purchase of the stock originally owned by Samuel A. Whitaker, but that all the other stock was held by the families of said David and Samuel J. Reeves, most of it, amounting to a large majority of the whole capital stock, being held or controlled by David Reeves, son of Samuel J. Reeves, and by William H. Reeves, either in their own names or as trustees under the will of Samuel J. Reeves that said David Reeves was president of the corporation, and William H. Reeves one of the directors; that the business of the corporation was extensive and prosperous, but that the profits were absorbed by excessive salaries to the officers that instead of making its contracts for bridge building which was an extensive branch of its business, directly with its customers, the corporation had entered into an agreement with the firm of Clarke, Reeves & Co., of which firm David Reeves and William H. Reeves were partners, the terms of which agreement were concealed from complainant, but which obliged the corporation to take all contracts for bridge building in the name of the firm, and to divide the profits with the firm in a proportion not known to complainant; that the corporation had spent large sums in unnecessary and costly improvements; that although it had made large profits the dividends declared were very small; that complainant was refused all information with regard to the affairs of the corporation, and denied access to the books and papers; and that although he had attended the meetings of the stockholders and endeavored to obtain information he had been defeated by the majority of the stock controlled by the Reeves family.

The bill prayed--

(1) For an account of the assets and liabilities of the corporation and of the receipts...