69 Conn. 521 | Conn. | 1897
The plaintiffs are a minority of the stockholders of the Derby Rubber Company. They ask that a certain contract called a lease, between the said company and the other defendants, be set aside and declared to be void. The record shows that this contract was made by the directors of the company; that it was, before delivery, submitted to. a meeting of the stockholders duly called for that purpose, and that by a unanimous vote of the stockholders present at that meeting and holding a majority of all the stock, it was affirmed and ratified. The plaintiffs, although duly notified of said meeting and the purposes for which it was to be held, voluntarily remained away.
If the contract was really ultra vires of the corporation, the plaintiffs may claim that it should be set aside. The contract contains an option to the lessee to become the purchaser of the property at a price to be fixed by a sort of
We are inclined to think the lease was not void. The lessee is to continue the same business which the corporation was organized to carry on. The lease, therefore, is not a change in the business, but only a change in the management of the business. The financial condition of the corporation is now depressed, and its business cannot be made profitable under its own management, for want of capital. Additional capital is not available. But neither the directors nor the majority stockholders have so far lost confidence in the concern as to be willing peremptorily to wind up its affairs. The lease was entered into as the best, perhaps the only, means of carrying the corporation over this period of depression, and in the meantime obtaining some income for the stockholders. If a sale takes place it is certain that the property will be worth more in operation than if left idle. Such leases have repeatedly been sustained b3r the courts of equity.
The case of Featherstonhaugh v. Lee Moor Porcelain Clay Co., L. R. 1 Eq. 318, 326, was like the one in hand, in this: Minority stockholders asked to have a lease of the entire property of the corporation set aside. That company was incorporated for “ the working, preparation, and sale of porcelain cla3r,” with power to combine “mining operations” with the original business. After a period of unsuccessful
In Simpson v. Westminster Palace Hotel Co., 8 H. L. Cas. 712, 718, a company was established “ for the erection, finishing, and maintenance of a hotel, . . . and the doing all such things as are incidental or otherwise conducive to the attainment of ” that object. The directors of the company let, for a stipulated period of five years, to the head of a gov-
In Temple Grove Seminary v. Cramer, 98 N. Y. 121, a company incorporated as an academy, or seminary of learning, was held not to have exceeded its powers by leasing one of its buildings during the vacations for a boarding-house. See also Lafond v. Deems, 81 N. Y. 507. In Brown v. Winnisimmet Co., 11 Allen, 326, a company chartered as a ferry company let one of its vessels not needed in its ferry business to be used in another business. This was held not to be an ultra vires contract. See also City Hotel v. Dickinson, 6 Gray, 586; French v. Quincy, 3 Allen, 9; Lyndeborough Glass Co. v. Mass. Glass Co., 111 Mass. 315; Calloway Mining, etc., Co., v. Clark, 32 Mo. 305; Watts’s Appeal, 78 Pa. St. 370; Dupee v. Boston Water Power Co., 114 Mass. 37.
We have considered this case on the assumption that the action of the directors and the majority stockholders was done in good faith and in the honest belief that they served the best interests of all concerned. If fraud had been charged
The Superior Court is advised that the complaint is insufficient, and to sustain the demurrer.
In this opinion the other judges concurred.