28 W. Va. 623 | W. Va. | 1886
Suit in equity instituted, .December rules, 1882, in the circuit court of Jefferson county by the administrator of II. H. Crumlish, deceased, suing on behalf of himself and all the other stockholders of the Central Improvement Company, against the Shenandoah Valley Railroad Company, and the said Central Improvement Company, to restrain the said railroad company from disposing of, and to compel it to account for, certain assets of said Improvement Company, and to have the court by its receiver or otherwise take possession of these assets and administer the same among the creditors and stockholders of said Central Improvement Company.
On December 18, 1884, the court made an order sustaining the demurrer of the said railroad company to the plaintiff’s bill and granted him leave to file an amended bill which was accordingly done at April rules, 1885. The railroad company also demurred to this bill, aud on March 1, 1886, the court entered a decree sustaining the demurrer and dismissing both the original and amended bills, but without prejudice to a new suit. From this decree J. Garland Hursh, sheriff of Jefferson county, and as such administrator of H. II. Crumlish, deceased, appealed to this Court.
Pie only questions to be d¡etprmiqed by this Court are?
Omitting details and such allegations as have no bearing-on the questions to be decided, as well as some other averments which will be hereafter specially stated and considered, the case made by the bill is as follows :
The Shenandoah Valley Railroad Company is a corporation chartered by the laws of both the State of Virginia and this State, authorized by its charters to construct a railroad from the Potomac river at or near Shepherdstown, through the county of Jefferson in this State and through Clarke, 'Warren, Page and other counties in Virginia. The said railroad has been constructed and equipped and is now in full operation. The Central Improvement Company was chartered and organized under the laws of the State of Pennsylvania with authority to construct and equip works of internal improvement. Its paid up capital stock is about $150,-000.00, of which the plaintiffs intestate was the owner and the plaintiff as administrator is now the holder of two certificates for 100 shares each of the par value of $50.00 per share. In the winter of 1873, or the spring of 1874, upon a final settlement then had between the said railroad company and said Central Improvement Company, it was agreed that the latter should receive from the former in settlement for work done by the Central Improvement Company, in the construction of said railroad, certain bonds of the counties of Clarke and Jefferson, certificates of paid up stock in the said railroad company to the amount of $500,000.00, and first mortgage bonds of the railroad company to the amount of $781,000.00. The mortgage to secure these bonds was executed about, the year 1870, by the railroad company on its track and other property in the counties aforesaid to J. Edgar Thompson, the then president of the Pennsylvania Railroad Company, and was duly recorded in Jefferson and other counties along the line of its road. In the fall of 1873, the Central Improvement Company transferred fQtfte Pennsylvania R^ilyoqc] Cfirpparry
In addition to the foregoing facts the bill avers, that since the suspension of work in 1873, upon the Shenandoah Valley Railroad, the C. I. Co. has done no other work and ceased to do any business under its charter or otherwise; that all its chartered rights and franchises in the State of Pennsylvania wore sold in 1874 under execution at the suit of two of its creditors in the city of Philadelphia; that prior to August 1874, R. D. Barclay was president and John P.
The “Griffith suit,” the record of which is made a part of the plaintiff’s bill as therein stated, was a suit brought in the circuit court of Warren county, Virginia, Deember 1876, and afterwards removed to Clarke county in said State, by H. H. Crumlish for the use of J. T. Griffith against the Central Improvement Company and the Shenandoah Eail-road Company, to attach and subject to the plaintiff’s debt of $8,826.93, due to him from the said Central Improvement Company, ■any'' debts due to the latter company from the said railroad company. This suit was fiually decided in favor of the plaintiff in May, 1880, and was taken to the Court of Appeals of Virginia by the said railroad company where the decree of the circuit court was affirmed, November 16, 1882 The facts and questions adjudicated in this suit appear .in the report thereof under the title, Shenandoah Valley Railroad Company v. Griffith, 76 Va. R. 913.
In the. amended bill these further averments, among others, are made: that at the time of the filing of the original bill the said Central Improvement Company was in such a disorganized condition that neither its president nor board of directors would institute suit or take any steps for the recovery of the mortgage-bonds in the original bill mentioned ; that at that time there was no officer having authority to institute suit or willing to assume the responsibility of
It is further averred, that since the filing of the original bill, the plaintiff has learned that the Shenandoah Yalley Railroad Company claims to be entitled to the $781,000.00 first mortgage bonds, issued to the Central Improvement Company, by virtue of an alleged agreement had between the two companies on April 29, 1878, which agreement, the plaintiff avers, was not made by any one having the authority to act for the Central Improvement Company, that it was procured by the false and fraudulent representations of the Shenandoah Valley Railroad Company and its officers, and is therefore void, and prays that the said agreement and all acts done under it may be held of no effect, that the said railroad company may be required to re-issue to the Central Improvement Company the $531,000.00 first mortgage bonds to which it is entitled, &e.
If the matters introduced in the amended bill are proper subjects of amendment, then, it will be unnecessary to decide whether or not the demurrer was rightly sustained to the original bill, because in that event our determination of the sufficiency or insufficiency of the bill as amended will dispose of the merits ol the eontrovesy before this Court. We will therefore first consider whether the matters so introduced were proper subjects of amendment?
The appellee, the Shenandoah Yalley Railroad Company, insists that amendments have reference to the time of filing the original bill, and that the defendants can not, by any amendment, be called upon to answer anything which has occurred since that time. I Bart. Ch’y Pr. 329. It is there
It is true that technically such matters should be introduced by supplemental bill, and in the English courts such was formerly the practice, though now it is doubtful whether this rule obtains even in those courts. 1 Dan. Ch’y *407. But under the practice in Virginia and in this State, where the tendency is to disregard the mere names of things, and to consider and apply their substance, when it is consistent with the ends of justice, there may be said to bo scarcely any distinction between an amended and a supplemental bill, but each will be treated as the other, where to do so will substantially advance the rights of the parties. 1 Bart. Ch’y Pr. 330; Laidiey v. Merifield, 7 Leigh 346; Sturm v. Fleming, 22 W. Va. 404.
Even under the strict rules of chancery pleading, the plaintiff will in some cases be permitted to introduce, by amendment, matters which have occurred since the date of the filing of the original bill; thus when the plaintiff, at the time of preparing his original bill, has an in choate right, which merely requires some formal act to render his title perfect, and such formal act is not completed until after-wards. The case of an executor filing a bill before probate, and afterwards obtaining probate, is an instance of this kind. Humphreys v. Humphreys, 3 P. Wms. 348; Bradford v. Felder, 2 McCord, ch. 180; Butler v. Butler, 4 Litt. 201.
It seems to me plain, that the aforesaid matters, under these authorities, must be considered as proper amendments to the plaintiff’s bill, notwithstanding they may be regarded as having occun’ed after the filing ot his original bill. It is equally plain, that the plaintiff could properly and legitimately introduce by his amended bill the matter contained in the averment, that he has learned, since the filing of his original bill, that the Shenandoah Valley Railroad Co. claims title to said $531,000:00 first mortgage bonds under
The amendments being thus held proper, the original and amended bills together must be considered as forming but a single bill; and the question then to be decided is, whether or not this bill is sufficient to entitle the plaintiff to relief to any extent ?
The appellee, the Shenandoah Valley Eailroad Company, insists that the bill is multifarious; that it has two objects, perfectly separate and distinct from each other' — the one to compel the appellee to account for and pay over to the Central Improvement Company bonds or debts which it owes; and the other to convene the creditors of the Central Improvement Company, to pay them oft, wind up the affairs of the company by dissolving it and distributing its assets among its stockholders.
I am not prepared to say, that even if this were a correct statement of the objects of the bill, it -would necesarily be multifarious. But the object is not correctly stated. The principal and substantive object of the bill is to restrain the appellee from disposing of and to compel it to account for certain mortgage-bonds belonging to the Central Improvement Compauy, which are in imminent danger of being lost to it; aud as subsidiary or incident to this primary object the bill asks that said bonds, when brought within the control of the Court, may be duly administered because the corporation to which they belong has been dissolved and passed out of existence. It does not seem to me, therefore, according to any rule of law or equity practice, that this bill can be regarded as multifarious. Segar v. Parrish, 20 Gratt. 672; Gaines v. Chew, 2 How. 619; Shields v. Thomas, 18 How. 259.
It is further contended by the appellee, that the bill is demurrable, because it does not show by its averments that the plaintiff was entitled to sue. It is well settled, that courts of law can only recognize the holder of the legal title to the property aud franchises of the corporations, the trustee, the management, the president and board of direct
It is a general rule founded on convenience that, in case a trustee represents numerous beneficiaries, no portion of these beneficiaries can apply to a court of equity for the protection of the trust, until the trustee has refused or neglected to take the necessary steps to protect it on their behalf. This rule applies with much force to the trust between a corporation and its stockholders. It is therefore ordinarily necessary', before a court of equity' can interfere with the management of a corporation at the suit of a stockholder, to show that the directors or managing officers having control of it have refused to act in its behalf. “But a demand upon the proper agents of a corporation, and their refusal to act are material only because they' show that the corporation itself is unable to protect the rights of its members; for a corporation has no means of acting except by its agents. And therefore, if it be made to appear in any manner that a corporation can not safely be left to obtain relief through the action of its agents, equity will interfere at the suit of a stockholder, without proof of a demand upon the managing agents and their wrongful refusal or neglect to proceed on behalf of the company.” Morawetz on Corp. § § 383, 385, 386.
The foregoing authorities have reference more especially to corporations which are in the active exercise of their corporate powers, or such as have become insolvent but still exist and continue under the management of officers and agents who are exercising control over their affairs. When, however, it is shown that the corporation has ceased to exist either in law or in fact, or that it has abandoned its corporate business and neglected to maintain its corporate existence by the election of directors or the appointment of officers or agents to manage its affairs, it is clear both upon principle and reason, that nothing more can be required of a stockholder, in order to entitle him to sue for the protection of his rights in such corporation, than that he should show the condition of such corporation and its management. This rule was applied in Finney v. Bennett, 27 Gratt. 365. The special grounds on which the bill was maintained in that suit were, that the corporation — a bank — had been broken up and destroyed by the war, since which time it had not been engaged in business, nor had there been any election of officers, nor any meeting of the board of directors since 1865 ; that by the mutual consent and general understanding of all parties interested, the corporation had been abandoned, and, in fact, ceased to exist. Upon these facts the court held, that it was a proper case for a creditors’ suit; that it showed a trust-fund without a trustee; that it was a case which called loudly for equitable relief — “the institution of a suit by some one on behalf of himself and all other
In the light of these principles and authorities, I think the facts alleged in the bill show that the plaintiff had a clear right to bring this suit. The bill alleges that the Central Improvement Company had suspended work in September, 1873 ; that no meeting of the stockholders had taken place since August, 1874, and that no meeting of the directors had beenheld since January, 1877; that application had been made to the last acting president for authority to sue and he declined to sue or give such authority, because the franchises of the company had been forfeited; that at the time the suit was commenced the corporation was in such a disorganized condition that neither its president nor its board of directors would institute suit or take steps for the recovery of its property; that since the suit was .commenced and before the filing of the amended bill the corporation had been dissolved-under the laws of Pennsylvania; and that there were then no officers or directors of the corporation to bring or authorize a suit.. I think these as well as other facts stated in the bill show a plain right, under the strictest application of the rules in such cases, for the institution of this suit. They also show that this suit was proper and authorized by our statute, which provides: “When a corporation expires or is dissolved, or before its expiration or dissolution, such court as is mentioned in the preceding section may, on application of
The next ground on which the appellee insists that the hill is demurrable is, that its object being to wind up and administer the assets of a foreign corporation, and it appearing that the court is not able to make an effective decree, the bill was properly dismissed. This as we have seen does not rightly state the object of the bill; consequently the elaborate argument of the appellee’s counsel based on this erroneous assumption of the object of the bill and the many authorities cited in support of it, have very inconsiderable bearing upon the question actually presented. The real object of the bill, as before stated, is to prevent the Shenandoah Valley Railroad Company, a domestic corporation having property in the county of Jefferson in this State, from disposing of and to compel it to account for the assets — the only assets — belonging to the Central Improvement Company, a foreign corporation which has not only ceased long since to carry on its corporate business, but which has been actually dissolved and its charter declared forfeited under the laws of the State of Pennsylvania from which it derived its existence. The taking charge of and administering said assets when thus brought under the control of the court, which the appellee has assumed to be the object of the bill, is simply a consequence or legitimate result of the real object of the suit. It is apparent therefore' that the decision of this Court in Nimick v. Iron Works, 25 W. Va. 184, so much relied on by the appellee, has but ltttle application. In that case a suit was brought by a creditor of an insolvent Ohio corporation against a part of its stockholders in this State to make them personally responsible for the debts of the corporation toan amount not exceeding the stock held by them. This Court held that this liability was not a primary resource for the payment of the debts of the corporation, but collateral and conditional, and to be resorted to by the creditors onlyin the event and to the extent that the assets of the corporation, when first applied, should prove inadequate to pay the debts;
It is not denied that a corporation, like an individual, can not be bound personally, unless it appears or is by proper summons within its jurisdiction, brought before the court; but it cannot be questioned, that a court may, without personal service, take jurisdiction of the property ot a non-res-
In the case before us the property or assets sought to be recovered and administered are in the hands of the ap--pelle, a domestic corporation, which has been duly served with process within the jurisdiction of the court, and it has likewise appeared and is therefore under the complete control and jurisdiction of the court. It is the only party against which any relief is sought; and as that relief is not dependent in any manner upon any condition, or relation involving parties not pefore the court, I am of opinion that the facts alleged in the bill, if true, entitle the plaintiff to the relief prayed.
It is furthe insisted that the demurrer was rightly sus-toined, because the averments of the bill show that the laches and acquiescence of theplainliff and all the other stockholders of the Central Improvement Company has been such as to estop them from asserting the claim alleged in the bill. It is a well settled rule of equity practice, that the statute of limitations, or objections analagous to it, upon the ground of laches, may be taken advantage of by way of demurrer. 1 Dan. Ch’y Pr. 559 § 9; Jackson v. Hull, 21 W. Va. 601. It is therefore clear, that this defence, if it exists, may be taken advantage of by demurrer.
In Cranmer v. McSwords, 24 W. Va. 595, this Court held, that in defences, founded on laches and lapse of time, the important considerations generally are: First, The death of the parties to the transactions to be investigated, or the intervention ot the rights of third parties ; second, The loss of evidence where the transactions are complicated; and, third, the character of the evidence by which it is sought to establish the plaintiffs demand — if imdortaut/ucis are to be proved by parol testimony, this would be a consideration of great weight, but if by documentary proofs, of very little weight.
Applying these rules to the case at bar, it is plain this ground of demurrer is not well taken. According to the al
Upon the whole cause, I am for the reasons stated, of opinion, that the decree of the circuit court of March 1,1886, sustaining the demurrer and dismissing the plaintiff’s bill, was erroneous ond must therefore bo reversed; and that the demurrer be overruled and the cause remanded to said court in order that a rule may be given the defendant to answer, and for further proceedings there to be had.
ReVERRKX). RtSMAifDED,