Appeal
from Superior Court, Spokane County; Henry L. Kennan, Judge.
Rudkin
and Dunbar, JJ., dissenting.
ROOT
J.
Plaintiff
as the owner of eight shares of the capital stock of the
Spokane Falls Gaslight Company (hereinafter called the
'Spokane Company'), brought this action, in behalf of
himself and all others similarly situated and in behalf of
the company, against the defendants, to nullify an
arrangement made by some of defendants while acting as
trustees, agents, and majority stockholders in this
corporation and another, known as the Union Gas Company
whereby it was alleged by plaintiff the business and
development of the Spokane Company were to be stunted, its
franchise forfeited, and its business and property destroyed.
From a judgment and decree in plaintiff's favor, several
of the defendants appeal.
The trial court made findings of fact, which we
will set forth in full:
'(1)
That the defendant Spokane Falls Gaslight Company is, and
has been for more than 15 years last past, a corporation
organized under the laws of the state of Washington, for
the sole object and purpose, as provided by its articles of
incorporation, of manufacturing and selling illuminating
and nonilluminating gas, and the residuary products arising
therefrom, in the city of Spokane Falls (now Spokane), in
Spokane county, state of Washington, with the usual powers
as to purchasing, erecting, and operating gas works and
houses, laying mains, etc., under contracts with the said
city of Spokane, a municipal corporation, and with power to
borrow money, issue bonds, and other evidences of
indebtedness, secured by mortgage upon its entire property,
or otherwise. That it has been engaged in such business in
the city of Spokane during all of said time, and is now so
engaged. That the plaintiff is, and has been for more than
two years last past, the owner and holder of eight shares
of the capital stock of said corporation. That the total
issue of said capital stock is 1,500 shares of the par
value of $100 each.
'(2)
That, according to the articles of incorporation, the board
of trustees consists of five members, and at the time of
the commencement of this action said board consisted of the
defendants Anderson, Murphy, Twohy, Aldrich, and Nicholls,
and during the pendency of the said action Aldrich was
succeeded by one Gimper. That defendant Murphy was and is
president, and at the time of the commencement of the
action the defendant Aldrich was secretary and treasurer,
and he was thereafter succeeded in said office by said
Gimper.
'(3)
That the Spokane Falls Gaslight Company is the owner of
several valuable pieces of real estate in the city of
Spokane and a gas manufacturing plant, with many miles of
mains, extensions, surface pipes, and appliances usual in
the business of manufacturing and supplying gas. It is also
the owner of a franchise from the city of Spokane, referred
to in paragraph 3 of the complaint. That prior to the
passage of such ordinance said corporation had been acting
under another ordinance granted by the city of Spokane,
which has expired, and the sole authority of the corporation for using the streets and alleys of said
city for laying and maintaining of mains and pipes is the
ordinance described in said paragraph 3 of the complaint.
That said corporation was the only corporation engaged in
said gas business in the city of Spokane until the
formation of the defendant the Union Gas Company.
'(4)
The defendant Spokane Falls Gaslight Company is a
prosperous and solvent corporation having no bonded or
other indebtedness, except a small sum in the form of bills
payable. That its property and assets are worth in excess
of the sum of $500,000, and it is making annually a net
income over and above all expenses of a sum in excess of
$30,000.
'(5)
That there is an express prohibition in the ordinance
referred to in paragraph 3 of the complaint against any
union or combination of any kind or character between the
Spokane Falls Gaslight Company and any other gas company
doing business in the city of Spoaken, which provision is
section 7 of said ordinance, and is as follows, to wit:
'Sec. 7. If at any time after the acceptance of this
franchise by the grantees herein, and before the expiration
thereof, the person, association or company operating under
this franchise or selling gas thereunder in said city,
shall either directly or indirectly, unite or combine with
a competing company, institution or person furnishing light
in said city, whether such uniting or combining be through
the sale of property or of stock or in any way, an absolute
forfeiture of this franchise and all of its terms and
provisions shall, at the option of said city, be declared,
and a suit for such forfeiture may be brought in a court of
proper jurisdiction, and such court may in such suit order
and decree said franchise forfeited absolutely to said
city. It is the expressed intention of this section to
prevent the destruction or limiting of competition in the
business of furnishing light to the said city or its
inhabitants.'
'(6) That on May 12, 1904, there was passed by the city
council of the city of Spokane an ordinance entitled
'An ordinance authorizing Roger H. Williams, his
associates, heirs, successors and assigns, to maintain and
operate a plant for the manufacture and sale and
distribution of illuminating and fuel gas, and their
by-products, and to use the streets and
alleys of the city of Spokane therefor, and providing for
the consideration to be paid for said privilege,' which
ordinance went into effect in June, 1904, and was accepted
by said Roger H. Williams. That by said ordinance said
Williams and his assigns were authorized to erect and
maintain and operate a complete plant for the manufacture,
sale, and distribution of illuminating and fuel gas and
their by-products, within the limits of the city of
Spokane, and to lay pipes therefor throughout the streets
and alleys of said city. That thereafter said Williams, or
his associates, erected a plant sufficient for the
manufacture of 2,000 cubic feet of gas for every 24 hours,
and have laid several miles of mains thereunder in the
streets of said city. That said Williams and his principals
caused a corporation to be formed with power to manufacture
and sell gas in the city of Spokane under the laws of the
state of West Virginia, and the rights, privileges, and
authorities granted by said ordinance were assigned to said
corporation before the commencement of this action, and
there was also transferred to said corporation the
manufacturing plant, mains, and real estate described above
in this paragraph.
'(7)
That before the attempted transfer of stock hereinafter
referred to to the defendant the Union Gas Company, at
least 1,486 shares out of the total issue of 1,500 shares
of the capital stock of the Spokane Falls Gaslight Company
were owned by the defendants N.W. Halsey, Isaac W.
Anderson, and associates of theirs, commonly known as the
Halsey Syndicate, which syndicate was controlled by said
Halsey and Anderson with plenary powers. A short time after
the formation of the corporation, the Union Gas Company
(which was formed by said Halsey Syndicate), and after that
corporation had acquired the Williams franchise and the gas
manufacturing plant referred to in the preceding paragraph,
the owners of said stock assigned the same to said the
Union Gas Company, and that corporation took physical
possession thereof. That at such time the officers of the
Union Gas Company were the agents or representatives of
said syndicate, and the ownership of a majority of the
stock of the Union Gas Company was vested in said
syndicate, and the business manager thereof was the
defendant Anderson, and said Roger H. Williams was at all
times merely the agent of said syndicate.
'(8) That the trustees of the Spokane Falls
Gaslight Company have no personal interest in said
corporation. That they are not stockholders therein, except
that each has one share of stock placed in his name on the
books of said corporation, of which he is not actually the
owner. That each and every member of said board of trustees,
and each of the officers of said corporation, is dominated
and controlled by the defendant the Union Gas Company, and
each and all of them are now acting in the interest of that
corporation and are managing the Spokane Falls Gaslight
Company for the benefit and advantage and exclusively in the
interest of the Union Gas Company, and such was the condition
of affairs, at the time of the commencement of this action,
that it was not incumbent upon the plaintiff to ask the board
of trustees, or any of the officers of the Spokane Falls
Gaslight Company, to bring this action or take any other
steps for the protection of that corporation because so to do
would be a vain and useless thing.
'(9)
That a short time before the commencement of this action, the
defendant the Union Gas Company executed an instrument in
writing in the form of a mortgage running to the defendant
United States Mortgage & Trust Company, a corporation
organized under the laws of the state of New Yrok, and to
George M. Cumming, who is a nonresident of the state of
Washington and a resident either of New York or some other
state on the Atlantic Coast, under which instrument the Union...
