37 How. Pr. 110 | N.Y. Sup. Ct. | 1869
—This action is "brought (by James W. Blatchford against Elmore P. Ross and others) to restrain the defendants, who are officers of the Merchants’ Union Express Company, and that company, from carrying out a proposed union and merger of the company with the American Express Company in the American Merchants’ Union Express Company, and for the appointment of a receiver. An injunction was granted restraining them from making, carrying into effect, or completing any merger or consolidation of the Merchants’ Union Express Company with any other company, restraining them from transferring any property to the new company or to any other company, and the new company from receiving any moneys or property from the other corporation, and from enforcing and collecting an assessment on the stock of the Merchants’ Union Express Company, which was alleged to be for the purpose of carrying out such con-, solidation. The injunction also contained some other provisions, which were afterwards modified so as not to interfere with the business of the new company during the litigation. A motion is now made to make such injunction permanent during the pendency of this action. The main question as to the validity of the proposed consolidation depends upon the construction of the articles of association and the power of executive committee in altering the same.. ■ '
I have not been furnished with a copy of the original articles of association, but I gather from the pleadings that the original articles of association did not allow the union or consolidation of the company with any other, without the consent of a majority of the stockholders. That these articles contain a clause providing for an amendment of the original articles by a concurrent vote of two-thirds of the executive committee and a majority of the trustees. That by a concurrent vote of the committee and of the trustees, the articles of association were amended so as to provide that the Merchants’ Union Express Company might be-merged into or consolidated with any other Express Company, on obtaining the written
The authority to amend the articles of association gave ’ no power to take away from the stockholders the power to prohibit the merger of the company with any other company, which they had expressly reserved for their own protection. Such authority to amend must be construed as intended for such amendments as were'pertinent to the business and objects for which the association was organized. As well might the executive committee, under the power of amendment, assume to change the business of the corporation to one entirely different from that for which it has been organized, as to terminate the existence of the association and merge it into another. Such was not the object of the original articles. Ho such provision was contemplated ; and to guard against it the stockholders had expressly provided that them consent should be necessary before any such change could be effected. At any rate, such were the views entertained by the executive committee when the consolidation was first thought of, and in the first amendment the consent of a majority of the stockholders was deemed necessary, but no amendment was contemplated inconsistent with, contrary to, or destructive of the main objects of the association, and when the exécutive committee so extended theii power they exceeded their authority. They had no authority by such a consolidation to bring the stockholders under the increased liability for the debts of another company, and expose them to “loss’? which might not have existed before, or which might follow from the introduction of a new company or association, and a surrender
It is objected, however, to a continuance of this injunction, that the American Express Company, and the stockholders severally, are not made parties. That company is not in any way interfered with by these proceedings. Their stockholders are free to become members, and that company is not enjoined from any disposition of its property that may be desired by its managers. The interest of the company, if any, is so remote that it affords no grounds for relief to the plaintiff. Nor is the want of making all the stockholders defendants a good objection. Where they are as numerous as they are in this case, it is not necessary. It is enough if some of the class are parties, who, on behalf of all, may either prosecute or defend. The plaintiff here represents one class, and sues for himself and others who choose to come in, and who have not become stockholders in the new company. The defendants represent the executive committee and directors, who are in favor of the union of the companies, and can litigate for the benefit of the other class. Even if it' were otherwise, the means provided for bringing in other parties are such that relief by a temporary injunction should not - on that account be denied.
The other branch of this case relates .to the appoint-
A receiver was appointed some time since in regard to the property of the company, not involved in the consolidation of the company with the new express company, and the plaintiff has an order allowing him to be made a party to this suit. The order restraining him from parting with any of the funds received by him will protect the plaintiff as fully as if a new receiver were now appointed ; and it is but proper that he should be heard after he is brought in as defendant, before any order for a new receiver is made. For this reason, therefore, I reserve any order on this branch of the case until after the receiver has appeared and answered ;' the plaintiff may then renew such application in such way as he. may be advised.
Objections have been made to the right of the plaintiff to take these proceedings, because he is the holder of stock purchased from one who had assented to the consolidation, and because he had delayed in bringing this action until after the consolidation was partially effected.
If this action was solely for the purpose of preventing the consolidation, there would be force in these objections, but this action is for other purposes. Under the excep
Nor is the want of parties as to the American Express Company, or the other stockholders, any ground of objection.
That company is only interested in carrying out the consolidation, and the same is not interfered with by the injunction, and the other stockholders are not necessarily parties, when they are so numerous, and when they are represented by sufficient óf their class to defend the action on their behalf.
The injunction therefore is retained as originally modified, with the further modification in permitting such of the stockholders as so claim to exchange their stock for that of the new company, and to pay the assessment thereon, and reserving any decision as to receiver, until after the present receiver shall be made a party, and shall file an answer in this action.