91 Neb. 735 | Neb. | 1912
This action was commenced in the district court for Lancaster county by plaintiff, a stockholder, against the Nebraska Hardware Company and the officers and other stockholders thereof, the object and purpose being the appointment of a receiver, the closing up of the-business of the corporation, and the cancelation of an alleged fraudulent sale by the corporation to Leon Baker and the Baker Hardware Company. The pleadings and record are very voluminous, and it seems necessary that the issues be stated in some detail. It is alleged in the petition that plaintiff is the owner of 90 shares of the capital stock of the Nebraska Hardware Company, of the par value of $9,000; that the defendant Leon Baker is the owner of stock of said company to the extent of $16,000 par value, and was a member of the board of directors and the treasurer of said company. It is alleged, in substance, that the officers and members of the Nebraska Hardware Company entered into a conspiracy to depress the value of the stock of the company owned by plaintiff, and, in pursuance of their plans and purposes, caused to be entered upon the records an alleged increase of compensation of the stockholders, except plaintiff, of 6 per cent, of the amount held by each, the same to be paid by the
The defendant James Fawthrop answered, and by cross-petition joined with plaintiff in seeking the relief asked, and setting up at length the wrongs, misstatements and mismanagement of the other defendants in the control of the business of the corporation, as well as the wrongful appropriation of the funds thereof to their own use. An answer and cross-petition was also filed by defendant Salisbury, containing substantially the same averments and prayer for relief as that of Fawthrop. Answers were filed by the remaining defendants, in which the corporate character of the Nebraska Hardware Company is admitted, as well as the relations which the defendants Jakway, James Fawthrop, Crosby and Leach as the board of directors sustain to said company. The averments of the petition as to the fraudulent acts of the members of the board .or the stockholders are denied, as well as the averments charging the fraudulent issue of stock. All acts of mal
A trial was had, which resulted in findings and decrees which will be noticed in the order in which they occur, and upon each branch of which we devote such attention as the case may seem to demand, without extending this opinion to greater length than may be necessary. The findings are generally in favor of plaintiff and the cross-petitioners Fawthrop and Salisbury, as against the defendants, except the Baker Hardware Company. The finding is in favor of that company, and the sale to and purchase by it of the retail portion of the stock of goods is confirined. The decision of the district court upon this part of the case furnishes the principal contention on this appeal by plaintiff and cross-petitioners.
At and prior to the time of the exchange of the capital stock for the goods, Leon Baker was a member of the board of directors and the treasurer of the Nebraska Hardware Company. To say the least, his relation to that corporation and its stockholders would demand the utmost good faith in dealing with the property of the company. The original transaction, it is said, grew out of a desire on the part of the management to discontinue the retail trade and devote the wb ole of the funds and energies of the company to the wholesale business. With this in view, notices were published in the newspapers announcing the desire to sell, and that the property was for sale. No buyers were produced, and on the 15th day of March, 1909, Leon Baker submitted the following proposition to the board of directors, and of which he was then one: “Nebraska Hardware Company, Wholesale Hardware, Corner 9th and O streets. Lincoln, Nebr., Mch. 15, ’09. To the Directors of the Neb. Hdw. Co. Gentlemen: As you desire to sell the retail business dept, of the Neb. Hdw. Co., I hereby submit to you the following offer: Will give you sixteen thousand dollars ($16,000) worth of the Neb. Hdw. capital stock for twenty thousand dollars worth of mdse, and fixtures, invoiced at your regular wholesale
The court found, as the evidence clearly shows, that defendant Jakway was insolvent and was indebted to the Nebraska Hardware Company for funds withdrawn therefrom. He was the vice-president of the company, and. owing to the decease of the president, was and had been its active manager. But the finding does not disclose the exact extent of his indebtedness. It is also found that defendant Crosby was indebted to the company, but there is no finding as to the amount nor as to his insolvency; that plaintiff: and cross-petitioners are entitled to an injunction against those two, restraining them from increasing their indebtedness; that plaintiff and the cross-petitioners are entitled to a bond with good and sufficient surety indemnifying them against the unlawful acts theretofore done or that may thereafter be done by the defendants Jakway, Crosby and John Therkelson, the latter having been at a later date entrusted to some extent with the management of the business affairs of the Nebraska Hardware Company; that plaintiff and cross-petitioners were entitled to have a receiver for the company appointed, unless the defendant Jakway and Crosby repay into the funds of the company the amounts owing by them, and the bond given within 40 days from the rendition of' the decree; that, upon failure so to do, a receiver would be appointed ■ upon motion of plaintiff and cross-petitioners, with power to close up the business of the company. A general injunction was allowed as against William E. Jakway, Allen Crosby, George D. Leach, John Therkelson, J. H. Bracken and A. H. Holcomb, enjoining
We have been impressed by a perusal of this record that the business of the company has been recklessly handled by those in charge, and cannot avoid the conclusion that the district court was fully justified in seeking to promote the honest administration of its affairs. We are also persuaded that much of the mismanagement has been, to some extent at least, for the purpose of depressing the value of plaintiff’s investment in the stock of the company, causing him to either surrender it or sell it at a sacrifice. He, at one time, was active in the management of the business of the company. He removed to another state, his son being left in the employment of the company. Later the son joined his father. Subsequently to (hat time another employee was suspected of purloining the goods and money of the company. It is said that the alleged guilty party made a confession in writing in which he implicated plaintiff’s son, but the written statement is not to be found in this record. On August 19, 1908, a telegram was sent to plaintiff requiring his immediate presence in Lincoln. This was followed the same day by a letter explaining that the son was charged with a participation in the embezzlement. The father left his home at once, and before the receipt of the letter which fell into the hands of the son. The son thereupon telegraphed his father at Lincoln that he was coming, and did so. Soon after his arrival in Lincoln he was arrested without a warrant and placed in jail, notwithstanding his voluntary return and assertion of innocence. He was held in the jail for a short time, but long enough for the proposition to be made to the father that the matter could be settled with
On the 30th day of January, 1909, a meeting of the board of directors was held, when a motion was made by W. E. Jakway and adopted by the board “to allow the following emplies (employees) as salary and additional salary’’ the sums stated in the resolution, “to be paid to them during the year 1909.” The list comprised every stockholder, except plaintiff, whose name was omitted. The amount thus voted totaled $4,572, and of which Jakway and his wife were to receive $1,536, Baker $960, Crosby $576, and others in smaller amounts; each allowance being.equal to 6 per cent, upon the stock held. Many of the persons voted this bounty were not employees of the company. It is true that it is said that this resolution was subsequently rescinded and none of the money was paid, yet the fact of such action is at least suggestive of a dishonest purpose and discrimination in its inception. At another time, the company being indebted to Jalnvay, he applied to the person in charge of the records and books for the issuance of a certificate of stock, dating it hack one year in order that he might receive a dividend thereon, hut which was refused and not issued. These and other facts which might be mentioned clearly justified the district court in requiring unquestioned indemnity against further acts of the kind sought to’ be guarded against. Indeed, it is doubtful if the interests of plaintiff will be thus effectually protected.
From the length of time intervening since the trial, with no record before us of any subsequent move made by plaintiff, we are led believe that the money wrong
It is shown that the indebtedness of Jakway to the company is in the neighborhood of $2,000 to $2,600, and that of Crosby is some $600. However, these amounts are not exact. This action on the part of plaintiff secures the. payment to the company of the amounts due, and security for correct management of the company’s affairs in the future, or, in case of failure of either, the appointment of a receiver. The result of the suit inures to the benefit of the stockholders generally, as well as promoting the best interests of the corporation. That there was a necessity for such an action is quite apparent from this record. An application was made to the district court for the allowance to plaintiff of his expenses in the way of counsel fees, but it was refused, and the same is renewed here. We are persuaded that, under the peculiar circumstances as shown by the whole record, an allowance ought to have been made. It is therefore ordered that the sum of $400 be allowed plaintiff for his said expenses, and that the same be taxed as costs, together with costs of this court, against the defendant the Nebraska Hardware Company. Stone v. Omaha Fire Ins. Co., 61 Neb. 834.
Subject to the conditions named, the decree of the district court is affirmed, but the cause is remanded to that court for the entry of such supplemental orders as may be necessary to carry into effect the terms of this opinion.
Affirmed.