51 F. 33 | U.S. Circuit Court for the District of Western Pennsylvania | 1892
This bill was filed on May 8, 1889, by Samuel F. Barr, who owns 198 shares out of a total capital of 20,000 shares of the stock of the Pittsburgh Plate Glass Company, which company was incorporated to manufacture plate glass in Allegheny county, Pa., and erected its works at Creighton. It is a stockholders’ bill seeking relief, on behalf of the corporation, against J. B. Ford, Edward Ford, Emory L. Ford, Artemus Pitcairn, and John Pitcairn, Jr., and was filed by said plaintiff on the ground that the last-named defendants, as directors, officers, and majority stockholders, control the corporation, and prevent a suit by the corporation itself. The bill charges that these defendants—all of whom, except J. B. Ford, were directors of the company—entered into a combination and conspiracy to erect atTarentum, in said county, about one half mile above the plate glass works at Creighton, similar works of greater capacity, and to compel said company to pur
The proofs are unusually voluminous, and cannot be here recited with any particularity, without extending this opinion to an unreasonable length. I must then content myself with a mere statement of the material facts as I find them from the evidence, with the conclusions I have reached. It appears that the defendant Capt. J. B. Ford, acting for himself solely, purchased land at Tarentum, with a view of erecting thereon plate glass works, and in 1885, after the Creighton works'were in successful operation, commenced clearing the land for building. This was done by him without consultation with, or the knowledge of, any one of the other defendants. When the defendants Edward and Emory L. Ford, his sons, learned of their father’s intention, they endeavored to dissuade him, mainly because of his advanced age, which was then 74 years; but he remained fixed in his purpose. John Pitcairn also remonstrated with him against his project, but in vain. Capt. Ford took the position that the plate glass business was a new and growing industry in the United States, and that the demand for plate glass was largeW in excess of the home supply; that Creighton could not-fill its orders, and the Tarentum works would not come into unfriendly competition with the Creighton works, nor at all injure the Pittsburgh Plate Glass Company. Undoubtedly these views were honestly entertained by Capt. Ford. He was a large stockholder in the Pittsburgh Plate Glass Company. His two sons were also stockholders therein. It would then be unreasonable to suppose that he intended to injure the company. I am entirely satisfied from the evidence that in this matter he acted in good
“But, in our judgment, the acquisition of the Tarentum works lias been, on the whole, favorable to the general interests of the company, and the transaction should not lie disturbed. In regard to the proposition of J. B. Ford & Company for a reconveyance of the Tarentum works, we recommend that it be not entertained.”
A motion was made, seconded, and carried that the recommendations of the report be adopted. Perhaps a single' vote -was cast against the motion, but no more. In pursuance of the action of this meeting, the $200,000 of stock was issued to Messrs. Ford and Pitcairn.
The charge made in the bill, that the defendants against whom relief is sought entered into a combination and conspiracy to erect the Tarentum jvorks, and then coerce the Pittsburgh Plate Glass Company to purchase them, is not sustained by the proofs. Neither Edward Ford, Emory L. Ford, nor Artemus Pitcairn had any interest whatever in Tarentum; nor did any of them promote that project. On the contrary, they all opposed
At the general annual stockholders’ meeting held on January 22, 1889, a resolution .was adopted that a committee of five stockholders be appointed to negotiate with J. B. Ford & Co. for a transfer of the Ford City Avorks to the Pittsburgh Plate Glass Company, and report to a subsequent meeting. The same five minority stockholders Avho had acted in the Tarentum matter constituted that committee. They had a number of conferences with J. B. Ford & Co., at one of which the latter confidentially communicated to them the approximate cost of the works when completed. Eventually, J. B. Ford & Co. submitted to the committee a proposition to sell the Ford- City 'works for the price of $1,500,000, to be paid $750,000 in the stock and $750,000 in the bonds of the Pittsburgh Plate Glass Company, the bonds running three, four, and five years, with interest. A special stockholders’ meeting was called
The proofs do not sustain the averment of the hill that the defendants here sought to bo charged entered into a combination and conspiracy to erect the Ford City works, and then force them upon the Pittsburgh Plate Glass Company; and, upon the whole evidence, bad faith is not attributable to any of these defendants. For do I discover any basis for the plaintiff’s theory that, with respect to the Ford City enterprise, a trust relation existed between the Pittsburgh Plato Glass Company and the other defendants. Capt. Ford owned the one third of the Ford City ..works, and all that has been said respecting him in connection with his purchase at Tarentum and the erection of those works applies here. Then, as to the other defendants, so long as they acted with good faith to their associates in the Pittsburgh Plate Glass Company, I am not prepared to say that the fact that they were directors and officers in that company debarred them from engaging in the independent, manufacture of plate glass, especially in a place where that couqamy was not
The contract here in question seems to have been freely and fairly entered into. The defendants, holding the controlling interest in the stock of the company, in the first instance, permitted the minority stockholders to determine by their votes whether the offer of sale should be accepted. The bargain does not appear to be unconscionable. The Ford City works cost very nearly $1,200,000, and the proofs show that $300,-000 would not be ah excessive profit for a contractor who had incurred the risks involved in such an undertaking. The works are first-class, and probably could have been disposed of to others upon terms as favorable to J. B. Ford & Co. as those here agreed on. The suggestion that J. B. Ford & Co. realized an undue gain by reason of the market rate of the stock they received does not strike me as having any. special force. The new assets they brought into the concern had very great value, and not only kept up the market value of the stock, but, without any doubt, contributed largely to the further advance which soon followed. The truth is, the acquisition of those works has been highly advantageous to the Pittsburgh Plate Glass Company. Hence no one is now seeking to set aside the transaction. The relief prayed for is not rescission, but a reduction of the profits which accrued to J. B. Ford & Co. Virtually the court is asked to make a new contract between these parties. Upon the most patient investigation of all the facts, I am unable to see that there is here presented a case which rightfully calls for any equitable relief. Let a decree be drawn dismissing the bill, with costs.