Universal Sav. & Trust Co. v. Stoneburner

• Decision Date: 04 February 1902
• Docket Number: 418.
• Citation: 113 F. 251
• Parties: UNIVERSAL SAVINGS & TRUST CO. et al. v. STONEBURNER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

113 F. 251

UNIVERSAL SAVINGS & TRUST CO. et al. v. STONEBURNER et al.

No. 418.

United States Court of Appeals, Fourth Circuit.

February 4, 1902

W. P De saussure and Wyndham R. Meredith, for appellants.

Robert Stiles, A. L. Holladay, and Emmett Seaton, for appellees.

Before GOFF and SIMONTON, Circuit Judges, and JACKSON, District Judge.

GOFF Circuit Judge.

The appellees, who were complainants below, on the 25th day of May, 1901, tendered their bill to the circuit court of the United States for the Eastern district of Virginia, alleging among other things, that they were the owners of stock in the defendant company to the amount of $12,000, and that they had paid cash to said company for the stock to the par value of the same; that the appellee Stoneburner owed of said stock 50 shares of class E and 50 shares of class C, each share of said stock being of the par value of $100; that the money invested in the stock of class E could be withdrawn at any time after 6 months from the date of the certificate therefor, and the money invested in class C stock could be withdrawn at any time, upon the holder thereof giving written notice of his purpose so to do, but that, in its discretion the company could require the lapse of 60 days before making payment of the money due on class C stock; that the appellee Stoneburner on the 3d day of April, 1900, gave notice in writing to the company of his intention to withdraw the value of all his stock of both classes, and that shortly thereafter the appellee Young did also give such notice; that the receipt of such notices by the company was duly admitted that both of said appellees repeatedly made demand upon the company for the payment of the withdrawal value of their stock, and that such payment was always refused, nor had the same been made when the bill was filed, that said failure so to pay was because of the improper manner in which the business affairs of the company had been theretofore managed that it was the duty of the officers and directors of the company to make provision for the payment of withdrawing stockholders, and that many stockholders owning relatively smaller amounts of stock than said appellees held had been paid in full the amounts due them, to the prejudice of the appellees, since their said notices had been served; that within the two years immediately preceding the filing of the bill the business of the company had materially decreased, as also had its assets, but that during the same time its liabilities had increased; that the officers and directors of the company in office prior to January 23, 1901, formed a plan with the defendants other than said company, seven in number, that they would, by their votes, and the votes of others controlled by them, deliver said company into the hands and management of said seven defendants, who constituted the board of directors of the Prudential Banking & Trust Company, then a competitor for the character of business the defendant company was engaged in; that on January 23, 1901, five of said defendants were elected directors of the defendant company, one of them secretary and treasurer, and the remaining one assistant secretary and treasurer, the old board and old officers then and there retiring; that after such election the new officials set to work to carry out their preconceived plan of personal gain to themselves, ignoring the interests of the stockholders of the defendant company, the control and management of which had been absolutely turned over to them; that said new officials did, by all means in their power, endeavor to prevent the payment of the cash value of the stock of those who had filed notices for withdrawal, their intention being, instead of paying cash therefor, to issue new stock that would not have the withdrawal feature; that their purpose was to combine the assets of said company with the assets of the Prudential Banking & Trust Company, of which they were then also directors; that said new directors, soon after their election, increased the expenses connected with the management by voting additional salaries to the officers thereof, and that they also passed a resolution reducing the stock of all stockholders 20 per centum; and that the defendant company was, at the time of the filing of said bill, insolvent. The prayer of the bill was that the complainants therein be paid the withdrawal value of their stock, and that the same be declared a lien upon the assets of the company, that a receiver be appointed to take charge of and administer the affairs of the defendant company under the direction of the court, and that the defendants be enjoined and restrained from disposing of any of such assets, and also for such general relief as, under the circumstances, to equity appertains. The bill was sworn to by both of the complainants, and with it were filed a number of exhibits containing the by-laws of the company, its plan of doing business, and copies of various statements published by its management, showing its financial condition. On the day the bill was so presented to the court, an order was made and signed by the judge thereof, after he had read and considered said bill and exhibits, by which it was decreed that the company show cause before the court on the 6th day of July, 1901, why an...