103 Neb. 256 | Neb. | 1919
This is a suit for an injunction. Plaintiffs are stockholders in the Farmers Elevator Company, and sue in their own behalf and in behalf of other stockholders similarly situated. Defendants are the Farmers Cooperative Mill & Elevator Company óf Cozad and its officers. The latter are managing the corporation with the understanding that, by an amendment of the articles of incorporation, the corporate name was changed from the Farmers Elevator Company to the Farmers Co-operative Mill & Elevator Company, and that the original method of dividing profits by means of dividends on stock had been changed to make the amount of a stockholder’s business transactions with the corporation a basis for distribution of profits. Plaintiffs allege that the amendment relating to profits is illegal and void, and defendants plead that the amendment and their action thereunder are regular and
Was the injunction properly allowed? The question subjects the amendment in controversy to .judicial scrutiny. The Farmers Elevator Company was organized in 1906 as a business corporation. The original articles and the laws then in force made dividends on stock the means of distributing profits. On this basis plaintiffs bought stock and invested money. They thus entered into a contract of which the original articles of incorporation and the laws applicable thereto were by construction material parts. Enterprise Ditch Co. v. Moffitt, 58 Neb. 642. In this way plaintiffs acquired the contractual right to share the net profits in the form of- dividends on stock. In 1911 the legislature passed an act permitting the organization of a cooperative association “which authorizes the distribution of its earnings in part, or wholly, on the basis of, or in propbrtion to the amount of property bought from or sold to members, or of labor performed, or other service rendered to the corporation.” Rev. St. 1913, sec. 733. In 1916 there was an attempt to amend the articles of incorporation by changing the Farmers Elevator Company to a co-operative association within the meaning of the statute cited. Later defendants planned to distribute profits under the amendment. Such a-course, if pursued, would deprive plaintiffs of dividends to which they were entitled under their contracts as original stockholders and would destroy their contractual rights. This neither the legislature nor the defendants can lawfully do. 10 Cyc. 355; McLeod v. Lincoln Medical College, 66 Neb. 555.
It follows that the amendment and defendants’ proceedings thereunder are void. It is well known that powers of corporations recognized under legislative charters are only such as the statute confers, eon-
It appears that this purported arrangement of the articles of incorporation was never presented at a stockholders’ meeting, nor at any time considered or passed at a stockholders’ meeting, and was never made a part of the records of the corporation, and it is void because it' changes vested ' rights given in the articles and by-laws of 1906. We hold the name of the corporation under the circumstances cannot be changed by a board of directors as was attempted to be done. Lange v. Royal Highlanders, 75 Neb. 188, 121 Am. St. Rep. 786, 800, and note.
There was no acquiescence or other conduct on the part of plaintiffs to prevent relief by injunction. The amendment was void for other reasons which, in view of what has already been said, need not be stated. The injunction was properly allowed.
Affirmed.