107 Wash. 442 | Wash. | 1919
This action was brought by a minority of the stockholders of the Standard Investment Company, a corporation, for the appointment of a receiver, for an accounting by the trustees, and to wind up the affairs of the corporation and distribute the property among the stockholders.
Generally and briefly stated, the complaint charged that the board of trustees was dominated by James Campbell; the president of the corporation; that Lee
The appellants make three contentions in this court:
First, that the court erred in appointing a receiver, because all the stockholders were not made parties to the action; second, that the court arbitrarily refused to receive certain evidence offered by the appellants; and third, that there was no cause for the appointment of a receiver.
There is merit in all three of these contentions, but, in view of our conclusion that there was no real cause for the appointment of a receiver, the first two points will not be considered.
It appears that, several years prior to the time of the institution of this suit, the Standard Investment Company was organized as a corporation, with a capital stock of $10,000, divided into 1,000 shares of $10 each. The principal property owned by the corporation is a dairy farm located near Thomas, in King county. This farm consists of about 500 acres of land. It is stocked with a herd of dairy cattle and
At the conclusion of the trial, the court made no findings of fact, but filed a written opinion, in which he found that the manager in charge of the farm, on account of his youth, was not qualified to manage the farm and that he had not kept proper accounts; that the minority stockholders had not been treated fairly, and that a division of the farm and the property belonging thereto was necessary to secure ample justice to all the parties; and, apparently for that reason, appointed a receiver. The evidence is very voluminous. The abstract of the record alone comprises more than four hundred pages. The writer of this opinion has carefully examined the abstract of the evidence and the court is satisfied therefrom that whatever evidence the respondents offered in support of their general allegations was entirely overcome by the testimony on behalf of the appellants. The manager of the farm selected by the majority stockholders
Much evidence was introduced upon the trial to the effect that the fences were not properly kept up and that a drainage system should be installed; but we think, when the appellants’ testimony was considered, it is plain that no criticism should be made against the trustees or the manager on account of the fences. It was shown that a drainage system upon this farm would be expensive. Some of the witnesses testified that it would cost about $30 per acre, and the evidence on the part of the appellants shows that an effort had been made to establish a drainage district in that section of the country so as to include other farms beside this; and this being so, it was a question of policy with the trustees whether they should put in an independent expensive drainage system or not. The evidence shows that it was the desire of the governing trustees, who were all stockholders, that the debt should be paid, rather than that dividends be declared or extensive improvements made upon the farm. This was a question of policy which was within the discretion of the governing trustees, and we are satisfied no serious criticism could be offered because an expensive drainage system was not installed. There was some evidence on the part of the respondents to the effect that the ditches and drains on the place were allowed to become stopped up and clogged. The evidence on the part of the appellants shows that these ditches and drains were cared for each year properly, and we are
The respondents argue that, under Rem. Code, § 741, relating to the appointment of receivers, the court is authorized to appoint a receiver, “when, in the discretion of the court, it may be necessary to secure ample justice to the parties: . . .” This section gives to the court wide discretion in matters of that kind, but it was clearly never intended that, where a corporation is a solvent, going concern, a minority of the stockholders may have the corporation dissolved and its affairs wound np simply because they are not satisfied with the way the majority is conducting the corporation, especially when the majority is. acting in good faith and exercising their best judgment. No contention is made in this case that the corporation is insolvent. It is plain from the evidence that, when the corporation was formed, the value of the property was $10,000, the par value of the stock. It is now worth at least, according to the testimony, $200,000, encumbered by a mortgage of $50,000. So it is apparent that the stock, which a few years ago was worth but $10 a share, is now—if the figures given upon the trial are correct—worth $100 or $150 a share. The net profits of the corporation for the last year were more than $19,000; so there can be no reasonable claim that the corporation is insolvent or liable to become so. We said, in Secord v. Wheeler Gold Min. Co., 53 Wash. 620, 102 Pac. 654, at page 625:
“The policy of the corporation, if honestly conducted, must be controlled by the majority of the stockholders. Mistakes, inadvertence, or bad policy, if honestly pursued, will not warrant the appointment of a receiver.”
That must rule this case. The respondents rely upon the case of Boothe v. Summit Coal Min. Co., 55
From every angle of the case, we are satisfied that the trial court was not authorized under the facts to appoint a receiver or to wind up the affairs of this solvent, going company.
The judgment appealed from is therefore reversed and the cause ordered dismissed.
Holcomb, C. J., Fullerton, and Parker, JJ., concur.