Doyle v. Peerless Petroleum Co., 44 Barb. 239

Doyle v. Peerless Petroleum Co.

44 Barb. 239 | N.Y. Sup. Ct. | 1865

By the Court, E. Dae win Smith, J.

The questions presented for our decision in this case are in a narrow compass. When Joseph H. Suggett conveyed to the plaintiff and the defendant Whalin, an undivided one eighth part of one fifth of the farm mentioned in the pleadings and case he had no legal title to such farm. He had merely an equitable title or interest therein, and could convey no higher title than he possessed. When afterwards he acquired title and upon the *242partition of said farm "became seised of twenty-eight acres thereof, he took and held such title, in equity, in trust for the plaintiffs and the other parties to whom he had previously executed like conveyances. The legal title which he acquired and held at the time of his conveyance of the said twenty-eight acres to the defendants, the Peerless Petroleum Company, clearly passed to that company by the conveyance for that purpose, executed on the 24th of January, 1864. If such conveyance to said company was without the authority and consent of the plaintiffs, so far as their interest therein is concerned, the Peerless Petroleum Company must be deemed substituted in the place of the said Joseph H. Suggett as the trustee of such title for the plaintiff, and should be compelled to reconvey to them, respectively, their proportionate interests in said land. The company knew of the trust of Suggett, and in what right, and for what purpose he acquired such title, and taking such title with a full knowledge on their part of all the equities of the parties interested therein, they are clearly bound in equity to execute the trust, unless the same had been executed by Suggett and been legally extinguished with the consent of the cestui que trust.

This presents the chief question in the case. The referee finds, as matter of fact, that after Suggett had obtained title to the said twenty-eight acres he called together all his grantees, and it appears that there were quite a number having similar deeds to those given the plaintiff, and the defendant Whalin, and fully and fairly stated to them what he had done, and claimed that they should pay the expenses of a litigation he had had in securing said title, and proposed that he would convey for their benefit to the extent of their several interests in the said twenty-eight acres. That thereupon a discussion arose as to the safest and best way to take such land, which resulted in an agreement on the part of the shareholders of the farm under deeds from the said Suggett, to form a corporation under the laws of this state as preferable to a partnership or other mode of taking title. That ac*243cordingly a suitable person was employed to draw the requisite papers for the organization of a corporation; that a large meeting of such grantees was afterwards held, at which said corporation was formed and the requisite papers duly executed by the plaintiff with the others of the said grantees, organizing ■themselves into a corporation by the name of the Peerless Petroleum Company. That at this meeting it was unanimously resolved “that the said Joseph Suggett convey the whole of the said twenty-eight acres of, said land to the said corporation, and that the members should be entitled to subscribe for shares of stock in the company in proportion to their several interests in said farm, or in said twenty-eight acres, in satisfaction thereof.”

The referee reports that this resolution was passed at such meeting as above stated, but says the plaintiff did not hear said resolution; but he finds that it was distinctly understood and agreed by parol on that occasion that- Suggett should convey the said land to the corporation, and that his grantees, including the plaintiff," should surrender their deeds or otherwise cancel them, and that the transfer of the twenty-eight acres should be in lieu thereof; that on the faith of this agreement all who were present at that meeting executed the articles of association, copies of which are set forth in or annexed to the defendant’s answer in this cause. • That the •amount of the several shares was ascertained and apportioned on the basis of the relative interests in the said farm which Suggett had undertaken to convey to them (his said grantees.) Upon this finding Mr. Suggett was clearly authorized and requested to execute his trust in respect to said land, by a conveyance thereof to the said petroleum company, and said Company received it free from all trusts attaching to it on his part. It appears that the plaintiffs changed their minds in respect to such corporation, and that the plaintiff Doyle informed some of the parties connected therewith, and in the presence of Mr. Suggett, that he was dissatisfied with the election of the officers of said company, and expressed a de*244sire to withdraw from the company. But the referee finds, as matter of fact, that Doyle did not, in any way, intimate to Suggett that he desired him not to execute a conveyance to the company; and the referee - also finds “that there was no revocation in fact hy either plaintiff in the transactions at the meeting of the 23d of January, or any or either of them.” Upon these and the other findings of the referee upon the facts I do not see how we can disturb the judgment rendered hy him, or why his conclusions of law were not warranted hy the facts which he held to be established. The points made hy the plaintiffs’ counsel in respect to the organization of the defendant’s corporation and the purposes of such organization I have not discussed, because it seems to me quite clear that the corporation was apparently legally organized, and upon its face for a lawful object, and the plaintiff being a member ' of such corporation could not question the lawfulness or regularity of the .proceedings for its organization. The courts of equity do not take cognizance of such questions, in respect to corporations. If there is any defect in the proceedings for ' the organization of a corporation, or any abuse of its powers, or of the statute authorizing the formation of corporations under general or special laws, the question is one of law, and it is for the state alone to take steps to dissolve such corporation or forbid the exercise by it of corporate rights and franchises. (The Buffalo and Allegany R. R. Co. v. Cary, 26 N. Y. Rep. 75.) The judgment should therefore he affirmed with costs.

[Monroe General Term, September 5, 1865.

Johnson, James C. Smith and J¡. Darwin Smith, Justices.]