6 Colo. App. 323 | Colo. Ct. App. | 1895
delivered the opinion of the court.
In the statement of what is requisite to an apprehension of the suit and to an application of the law which we conclude
In 1887, The Cincinnati-Colorado Coal, Coke and Iron Company, which is designated in the evidence and will be hereafter referred to as the Four C Company, was the owner of some lands in Las Animas county. They were coal lands, and apparently had been somewhat developed by that corporation. The company had not reached a paying basis and was without sufficient capital to proceed with the satisfactory development of the mines. At this time, the appellant, Beshoar, with some other persons, was the owner of the capital stock of the Four C Company. On behalf of his company he entered into negotiations with Chappell which looked to the organization of a new corporation on a basis which would permit funds to be raised to open up the property. The parties concluded the thing was feasible, and Chappell organized a new company called The Grey Creek Coal and Coking Company. The capital stock of this latter corporation was two thousand shares of one hundred dollars each. This new company was organized by the election of officers and a board
The transaction concerning this stock is not creditable to the appellee, Chappell, and we cannot close our mental vision to what is so evident from the record that the scheme was one cunningly devised for the appropriation without cost to.him of one half of the capital stock of the Grey Creek Company. This in no wise militates against what we said at the outset concerning the force of the court’s conclusion on matters of fact, because our.opinion in no wise affects the legal result which we have reached. We have simply given expression to our doubts respecting this matter, for, if the thing be possible, we desire to so far leave the matter open that the Grey Creek Company may ultimately be able to establish and enforce its rights. We have stated enough to show the alleged basis for the suits which Beshoar afterwards brought. Beshoar claims that for a long time he was ignorant of the situation, and without knowledge of what Chappell had done with reference to the disposition of the Grey Creek Company’s stock, and was uninformed concerning this contract between The C. C. & I. Co. and Chappell. There was a change in the management of The C. C. & I. Co., and in the investigations which followed it, this agreement between Chappell and the company came to the surface, and Beshoar learned of it. How little or how much he knew before of the transaction is not easily ascertained from the testimony. The record shows the lease to The C. C. & I. Co. was made in February, 1.888, and shortly thereafter that company went into possession of the property, and engaged in its development. Beshoar knew of the lease, and had frequent conferences with Chappell concerning its terms. Whether he had any other information which should have advised him concerning the exact nature of the transaction is not apparent.
What has been stated suggests the only two propositions which we deem it essential to discuss or decide. The first respects the interest in which the litigation is being prosecuted, and the second is the failure of the plaintiff to either plead or prove a cause of action on his behalf as a stockholder. If this litigation had been honestly instituted by a stockholder for the protection of his and other stockholders’ rights, and was not so evidently a suit instigated by a rival company for its own interests, we should strive to be astute to discover some remedy for a very evident wrong. The far reaching and flexible nature of equitable powers might, with proper proof and under other circumstances, enable us to do justice as between the stockholders of the Grey Creek Company and Chappell, its officer and director. But we have no inclination to struggle for this result, because it is a well settled principle that whenever it is made to appear that the suit was .not begun in good faith by a shareholder for the protection of his rights, but was in reality originated and prosecuted by another corporation for its own benefit, the court will consider what led the plaintiff to institute his suit, and, finding some other reason than a desire to protect stockholders’ rights, will refuse to entertain the bill. Forrest v. Manchester, etc., R'way Co., 4 De G., F. & J. 19 (65 Eng. Chan., 125); Filder v. London, etc., R'way Co., 1 H. & M. 489; Belmont v. Erie R'way Co. et al., 52 Barb. 637; Waterbury v. The Merchants’ Union Express Co., 50 Barb. 157; Camblos v. The P. & R. R. R. Co., 4 Brewster, 563.
Naturally, the cases respecting this proposition are limited, since the question could not often arise. It seldom happens that shareholders, otherwise than for the protection of their own interests, come into courts of equity to seek redress for wrongs done the corporation of which they are
The other consideration is equally fatal. The plaintiff was without capacity to maintain the suit. It is too late now to insist that a stockholder as such is never without the right
Tested by this rale, none of the suits brought by Beshoar can be maintained. His pleadings are totally wanting in all averments, either of request or of excuse, and, being bills on behalf of a stockholder to redress a corporate injury, they do not state a cause of action. We might be inclined to disregard this defect if the case as he made it contained the elements of an excuse for his failure. None was proven and none exists. The court very properly found that none of the other directors or officers of the Grey Creek Company were concerned in the contract which Chappell made with the C. C. & I. corporation, or had anything whatever to do with reference to those acts which Beshoar charges were a
The suit was,not honestly instituted by Beshoar for his own benefit, and he was without capacity to maintain it. The judgment as to him must be affirmed. We desire, however, to state that this affirmance shall not be operative to conclude the Grey Creek Company, or any stockholder of that corporation, from instituting and maintaining such suit as they may be advised concerning this matter, providing otherwise the legal right still remains with them.
Affirmed.