Winsor v. Bailey

• Decision Date: 13 March 1875
• Citation: 55 N.H. 218
• Parties: Winsor v. Bailey.
• Court: New Hampshire Supreme Court

55 N.H. 218

Winsor v. Bailey.

Supreme Court of New Hampshire

March 13, 1875

Equity---Multifariousness.

A bill in equity, brought by part of the stockholders of a manufacturing corporation, charged an illegal vote of the directors, and an illegal and fraudulent payment of money in pursuance thereof, by way of dividends to part only of the stockholders, and prayed that the stockholders who thus received the funds of the corporation be decreed to restore the same. It also charged fraud and maladministration in office against the treasurer, and prayed for an injunction restraining him from further performing the duties of the office. Held bad for multifariousness.

In such a bill, it should appear that the plaintiffs bring the same on behalf of others having a like interest, who may join, as well as themselves.

Owners of stock in such a corporation may maintain a bill in respect of matters which transpired before they became thus interested.

Under our practice, an answer not sworn to being no more than a mere pleading, a demurrer will not be sustained because the bill calls for an answer to charges which amount to crime

IN EQUITY. The bill is as follows:

Nathaniel Winsor, J. W. Olmstead, Samuel G. and Gilman Tuttle, of Boston, in the county of Suffolk, and commonwealth of Massachusetts, Isaac Farrington and Joshua W. Daniels, of Lowell, in the county of Middlesex, and said commonwealth complain against Robert W. Bailey, Joseph W. Guernsey, George A. Guernsey, and Axel Dearborn, of said Boston, Albert G Folsom, Samuel B. Smith, of Laconia, in our county of Belknap, the Laconia Savings Bank, a corporation duly established by the laws of New Hampshire, James W. Bailey, of Gilford, in said county of Belknap, and the Hooksett Manufacturing Company, a corporation duly established by the laws of said state of New Hampshire, having its place of business at Hooksett, in said county of Merrimack, and say that the capital stock of said Hooksett Manufacturing Company consists of three hundred shares, of the par value of one thousand dollars each, and that said Winsor is the owner

and holder of seventy-three of said shares, said Olmstead of fifteen of said shares, said Farrington of twenty-one of said shares, said Daniels of fifteen of said shares, and said Tuttles, together, of fifteen of said shares of said capital stock, making in the aggregate one hundred and thirty-nine shares of said stock, of the par value of one hundred and thirty-nine thousand dollars; that the board of directors of said company consists of seven members, and the existing directors of said company, chosen at the last annual meeting of the stockholders of said corporation, are said Folsom Smith, Dearborn, Winsor, Samuel Tuttle, and said Robert M. Bailey; that, in the organization of said board of directors, said Folsom was chosen and is at the present time president of the board of directors, and said Robert M. Bailey was chosen and is at the present time treasurer of said corporation; that on the third day of June, 1871, the directors of said company for the time being, passed a vote authorizing and requiring the then treasurer of said company to pay to a portion of the stockholders of said company, who were designated specially therein, a dividend of six per cent. as interest upon the par value of the stock owned by them for a year and one month, from the first day of January, 1870, to the first day of February, 1871; that by the vote of the directors aforesaid, those of said stockholders who were not specially designated therein as aforesaid, were, by the terms of said vote, excluded from the receipt of said dividend upon any stock which they owned between said first day of January, 1870, and the first day of February, 1871, and at the time of the passage of said vote; that, under the authority of said vote of June 3, 1871, said Robert M. Bailey, as treasurer of said corporation, on the fifteenth day of June, 1871, paid to said Albert G. Folsom three hundred and twenty-five dollars, to said Laconia Savings Bank six hundred and fifty dollars, to George A. Guernsey thirteen hundred dollars, to Robert M. Bailey seven hundred and eighty dollars, to James M. Bailey nine hundred and seventy-five dollars, and to Joseph W. Guernsey nine hundred and seventy-five dollars.

That neither of the plaintiffs nor any other person who was the owner of stock in said company at the time of the passage of said vote or at the times mentioned in and covered by the same, except the persons above named, have ever received any money on account of said dividend. *

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And the said R. M. Bailey, Folsom, and Smith, notwithstanding the illegal and fraudulent character of said vote, and that they have received said money paid them as aforesaid without right, with intent to cheat and defraud said company, and these plaintiffs and the other stockholders aforesaid, who were excluded from the receipt of any dividends upon their stock, under said vote of June 3, 1871, though requested as aforesaid, wholly refuse to pay back to said company said sums of money received by them as aforesaid, or any part thereof, but still illegally and fraudulently hold the same.

And the said Bailey, Folsom, and said Smith, who, with said Dearborn,

constitute a majority of said board of directors, * * refuse to allow any legal proceedings to be commenced in the name of said company to recover said different sums of money improperly and fraudulently paid as aforesaid, although thereto often requested by the plaintiffs as aforesaid; that by reason of the fact that said R. M. Bailey, Folsom, Smith, and Dearborn constitute a majority of said board of directors, no vote can be passed by said board authorizing any proper legal proceedings in the name of said company for the investigation of the alleged fraud, and the recovery of any of the money so improperly paid as aforesaid from any of the said stockholders now holding the same, although said Winsor, Tuttle, and Farrington, who are also members of said board, desire such action, and have, at many times heretofore, sought to obtain a vote of said directors authorizing the same, but said action has been prevented by the corrupt and fraudulent combination and conspiracy of said other four members of said board, with the intent and for the fraudulent purposes aforesaid.

And the plaintiffs further allege, that said Robert M. Bailey, who has been elected to the office of treasurer of said company, and who now pretends to discharge the duties of said office, has been guilty of such official impropriety and mismanagement of the affairs of the company, and has so improperly and fraudulently conducted himself in said office as to render him entirely unfit for the same, and that his longer continuance therein would be hazardous to the interests of the company.

The bill then goes on to set out specifically a variety of matters, showing fraud and misconduct of a very gross character by said Bailey in the office of treasurer, and ends with a prayer that each of the defendants, who have received from said treasurer the...