State v. Second Judicial District Court of Silver Bow County
| Decision Date | 18 February 1895 |
| Citation | 39 P. 316,15 Mont. 324 |
| Parties | STATE ex rel. INDEPENDENT DIST. TEL. CO. et al. v. SECOND JUDICIAL DISTRICT COURT OF SILVER BOW COUNTY et al. |
| Court | Montana Supreme Court |
Certiorari by the state of Montana ex rel. the Independent District Telegraph Company, the Citizens' District Messenger & Burglar-Alarm Telegraph Company, and G. A. Lauzier against the Second judicial district court of the state of Montana in and for the county of Silver Bow, and the judges presiding to review the action of such court in appointing a receiver for the two corporations. Dismissed.
This is a writ of certiorari directed to the district court to review its action in appointing a receiver of the properties of two of the relators, viz. the Independent District Telegraph Company and the Citizens' District Messenger & Burglar-Alarm Telegraph Company, it being claimed by the relators that the district court acted in that matter without jurisdiction. The receiver was appointed in an action entitled as follows: The appointment was made upon the complaint in that case and upon affidavits filed. The following facts appear from the complaint:
Each of the companies defendant in the case in the district court (and who are relators here) is a corporation organized under the laws of this state. The plaintiff Haupt is owner of 76 shares of the stock of the Independent Company. The plaintiff Nichols, as trustee, is also owner of 76 shares of said company. The Independent Company is the owner of a franchise from the city of Butte permitting it to carry on the district messenger business, and granting to the company the use of the streets and alleys of the city for the purpose of said business. The Citizens' Company owns a similar franchise. On May 1, 1892, the said two companies entered into an agreement by which they should put their respective stocks franchises, and property into a common business, to be carried on by officers and agents to be appointed by the two corporations jointly. This agreement was to run for 20 years. All moneys earned should go into a general fund, and be in the hands of a general treasurer. After paying expenses, a reserve fund of $500 was to accumulate in the hands of the treasurer. After paying expenses and the accumulation of this reserve, the profits were to be paid by the general treasurer to the respective corporation treasurers in the proportion of five-ninths to the Independent Company, and four-ninths to the Citizens' Company, to be distributed by the said respective companies as dividends on their stock. Thereupon the general manager and general treasurer were elected to carry on this joint business. The reserve fund of $500 was accumulated. The business was carried on until June 1, 1893. At that date the stockholders Sommers, Lauzier, Butterfield and O'Rourke united together and obtained a majority of the stock of each company. After obtaining this stock, those stockholders united and conspired together to manage and conduct the combined corporations for their individual benefit, and to exclude from the management, profits, and benefits the plaintiffs Haupt and Nichols. Since that time said plaintiffs Haupt and Nichols have been entirely excluded from the profits, management, and benefits of said corporations and the combination of the corporations. From the time said association of the two corporations was formed until said Sommers, Lauzier, Butterfield, and O'Rourke obtained control of the said combined business, there was paid to the treasurers of the said corporations $500 a month, to be distributed by them as dividends on the stock of the corporations. That, when said Sommers and others obtained control of the said associated corporations, there was in the hands of the general treasurer said reserve fund of $500, and also cash in the sum of $1,000, and also interest on the reserve fund of $25. That this total sum of $1,525 was turned over to Lauzier, the general treasurer elected by his friends Sommers, Butterfield, and O'Rourke. That the current expenses which then remained unpaid did not exceed $300, and that there was therefore $1,225 available as a dividend to be paid to the stockholders. That, ever since said Sommers and others obtained control as aforesaid, they have refused to give the plaintiffs any account of the profits of the association, and have refused to pay any dividends on the stock. Plaintiffs allege, on information and belief, that, since the Sommers control obtained,--that is, since June 1, 1893,--the net profits of the associated corporations have been $500 per month, and that said Sommers, O'Rourke, Butterfield, and Lauzier, instead of paying those profits as dividends, have converted the same to their own use. On February 9, 1894, the officers elected under the Sommers management executed to Fred B. Puddington three promissory notes, payable each in nine months, for the sums, respectively, of $5,000, $2,000, and $2,000, bearing interest at the rate of 1 1/4 per cent. per month. That said Sommers management, also as security for said notes, executed to said Puddington a chattel mortgage upon the franchises and all the property of said corporations. That said notes purported to be given for the purchase price of a certain franchise granted by the city of Butte to said Puddington,--a franchise to erect and maintain a district messenger and burglaralarm telegraph system in the city of Butte. That said franchise was granted by the city subject to certain conditions precedent. The complaint then sets out those conditions, and then alleges that none of those conditions were fulfilled. The complaint alleges that said Puddington's franchise is forfeited and void, and was forfeited and void at the time of the pretended sale of the same to the two said companies and the execution of said notes and mortgage. The complaint further states that said Sommers and others, at the time of said pretended sale, well knew that the Puddington franchise was forfeited and void and was of no value whatever. It is further alleged that said Sommers, Lauzier, Butterfield, and O'Rourke conspired together to defraud the plaintiffs, and to obtain possession of the plaintiffs' stock, and all interest in the Independent Company, and of the said combination of the two companies; and that in fact they executed said mortgage and notes without any consideration, and for the purpose of bringing about the sale of said property and franchises of the said companies, and of foreclosing all interest of the plaintiffs therein. The complaint further alleges that unless the negotiation of the said notes is restrained, and the notes and mortgage declared fraudulent and void, all the property of the Independent Company will be sold under the mortgage, and plaintiffs will be deprived of their interests in the said corporation. The complaint prays for several items of relief, among them that said Fred B. Puddington, and all persons claiming under him, may be enjoined from negotiating said notes or mortgage, or from collecting or foreclosing the same, or from interfering in any manner with the properties or franchises of the said companies, and that said mortgage and notes be adjudged null and void.
In addition to the allegations made in the complaint, a number of affidavits were filed and used on the hearing. One Le Clare deposes that he heard John O'Rourke and G. A Lauzier, two of the defendants in the district court, conversing about the business of the said district messenger companies, and that O'Rourke said "that if they [meaning himself, Butterfield, Lauzier, and Sommers] would stand together, they would do that Dutch outfit up [referring to the Shultzes and the other stockholders]." H. A. Neidenhofer deposes that from December, 1890, to February, l892, he was manager of the Independent Company, and that all that time monthly dividends were paid to its stockholders amounting to $750 per month, excepting during the time when there was an opposition company, and that those dividends were net profits. This affiant also states that after the combination was made between the two companies they paid dividends of $500 a month. Seth B. Smith, another affiant, stated that, prior to the time when Sommers and his party obtained control of the combined corporations, he (affiant) was treasurer of the combination. He testifies in his affidavit rather fully about the formation of the combination between the two companies. He testified that the reserve fund above mentioned, of $500, accumulated in the hands of the treasurer; that finally Sommers and his party bought the affiant's stock, and he retired from the management; that he turned over to the new management all the funds in three different checks of $911.80, $107.94, and $14.25; that at that time there were expenses outstanding and unpaid of only $400; that when he retired he was just preparing and ready to declare a dividend of $500, but he was instructed by the Sommers party not to pay said dividend; that while affiant was treasurer of the company he paid dividends to the stockholders of about $500 a month. Carl Shultz and his wife, Mary Shultz, each made an affidavit in which they testify as to Lauzier's and Butterfield's negotiations for the purchase of affiants' stock, and threats that if they did not sell that they (Lauzier and Butterfield) would freeze out said affiants. Haupt, one of the plaintiffs, also makes an affidavit that for more than a year after the combination of the two...
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