Dupee v. Boston Water Power Co.

114 Mass. 37 | Mass. | 1873

Colt, J.

This case is heard upon bill and answers. No issue is joined upon the truth-of the defendants’ allegations, and the only questions of law are those which arise upon the facts ..thus presented.

At an annual meeting of the defendant corporation it was Voted that the directors be authorized, “ if in their judgment the interest of the company will be thereby promoted, to receive in part payment for the land of the company hereafter to be sold, the stock of the company, at such price for the land and the stock as may be deemed for the interest of the stockholders.” Under this authority the directors advertised a number of lots belonging to the corporation to be sold at public auction, and paid for, at the option of the purchaser, one half in cash, and one half in the stock of the corporation at a price named. There is no other action of the corporation or its directors, past or contemplated, relied on to support the bill. The prayer is that the defendants be enjoined and restrained from selling the company’s lands by auction, or otherwise, in the mode proposed.

There is nothing in this vote of the corporation, or in the action of the directors, which amounts to a reduction of capital, or will amount to it, if the proposed sales take place. That must depend on future corporate action. The answer denies that the sale proposed would be an improper and illegal reduction of capital, and the allegation in the bill that tüe plaintiffs are otherwise advised, as well as the further statement in the answer, that it has always been the policy of the company to reduce its capital in proportion to its sales, becomes immaterial. It is unnecessary, therefore, to consider the question somewhat discussed, whether, under St. 1870, c. 224, § 24, this corporation could reduce its capital at any meeting not specially called for that purpose. The only questions left upon the pleadings are, whether sales may be lawfully made of the company lands under the vote of the stockholders, at the annual meeting, to be paid for in its own stock at a price agreed, which price does not exceed its intrinsic value as based upon a reasonable estimate of its corporate property ; and whether the agreement to fill the lots sold to the usual grade can be lawfully entered into.

The corporation was chartered by the St. of 1824, c. 26, with power to purchase and hold any quantity of water power created by the establishment of the dams between Roxbury and Boston, to make canals and raceways, erect buildings and fixtures, and to hold real estate not exceeding $300,000 at the time of its purchase, and personal property not exceeding $100,000. There are no limitations upon the amount of its capital stock, but the corporation had the right to make unlimited expenditures in the construction of its works necessary for the appropriation and use of the water power required under its charter, and the power to determine the amount of capital stock required to meet these expenses is left to the corporation itself. Additional acts, subsequently passed, authorize the company to hold additional rea? estate, but the terms of the original incorporation are not materially changed in other respects,-

It is contended that a sale of the lands of the corporation in the mode proposed would be a breach of trust. This depends upon the question whether a sale on such terms is by reasonable implication within the chartered powers of such a corporation. It is not enough that the proposed action may be shown to be prejudicial to the general corporate interests, if it is not illegal, and if it equally affects all the corporators. Regard must be had to the peculiar situation of the property. The increase of population since the original act of incorporation has given greatly increased value to the lands acquired by the company. The business of the company can no longer be profitably confined to the development and use of its. water privileges. It has, by contract with the Commonwealth, the city, and other owners of lands, extinguished its water power, and now owns instead thereof extensive and valuable tracts of lands, over which it had originally only the right to flow. This change in its business has made it necessary to fill in and improve the land that it might be made available as assets of the company, and this necessity has been recognized by a resolve of the legislature authorizing an increase of capital for that purpose. Res. 1856, c. 76.

There is nothing in the general laws of the Commonwealth, or in the company’s charter, which forbids the sale proposed. The power to purchase and hold implies the power to sell, and to sell upon such terms as to secure the highest price. The whole capital is now represented by these lands, from the sale, and not from the income or use, of which the shareholders must derive their return. In the absence of legislative provision to the contrary, a corporation may hold and sell its own stock, and may receive it in pledge or in payment in the lawful exercise of its corporate powers. Leland v. Hayden, 102 Mass. 542. American Railway-Frog Co. v. Haven, 101 Mass. 398. Nesmith v. Washington Bank, 6 Pick. 324, 329. Coleman v. Columbia Oil Co. 51 Penn. State, 74. City Bank of Columbus v. Bruce, 17 N. Y. 507. Hx parte Holmes, 5 Cowen, 426.

We cannot see that the rights of any of the stockholders will be illegally prejudiced by the proposed receipt of the shares in payment for its land. Nor is there anything unreasonable in an agreement of the corporation to fill np lands so sold to the usual grade, made at the time of the sale as an inducement to their purchase, and as one way to make the most profitable dis-' position of its property. The power to make such an agreement is implied in the power to sell.

Bill dismissed with costs.