44 N.Y.S. 883 | N.Y. App. Div. | 1897
This action was begun May 12, 1896, to restrain the individual defendants from further impairing the rights of the
The defendants in this action are divisible into four classes: (1) The corporation the Greigsville Salt & Mining Company; (2) Chauncey H. Strickland, H. N. Wadham, John H. Fellows, Henry F. Simpson, Arthur H. Christy, A. F. Lane, and Charles E. Wade, the directors of the corporation; (3) Edward L. Fuller, Milo M. Belding, James B. Colgate, and Joseph N. Smith, alleged to be fraudulent judgment creditors of the corporation and fraudulent holders of $100,000 of its bonds acquired by a sale under their aforesaid judgments; (4) Platt V. Bryan, a trustee in the mortgage executed February 14, 1895, to secure the payment of $100,000 of the bonds of the corporation. The question arises whether these classes of defendants are so united in interest or so connected with the facts and transactions set out in the complaint that those facts and transactions constitute a cause of action against all of the defendants.
The following facts are alleged in the complaint as the ground for the relief prayed for: (1) That in 1890 the- Greigsville Salt & Mining Company began mining and selling salt, and carried on the business successfully until about May 6, 1895, when Edward L. Fuller and other persons acting with him, for the purpose of securing the control of the corporation, purchased all of its stock except that owned by the plaintiff; and that on that date four of the directors of the corporation resigned, and their places were filled by a brother of Edward L. Fuller, by an employé of Edward L. Fuller, by Chauncey H. Strickland, and H. N. Wadham, two of the defendants herein. (2) That February 14, 1895, the corporation executed and delivered to Platt V. Bryan, as trustee, a mortgage upon all of its property, to secure the payment of 100 bonds of $1,000 each, payable on the 1st day of February, 1905, with semiannual interest, which bonds were worth their par value; and that about November 7, 1895, the directors suffered judgments to be recovered against the corporation by Edward L. Fuller, Milo M. Belding, James B. Colgate, and Joseph N. Smith in amounts aggregating $21,790, and suffered said judgment creditors to sell the $100,-000 of bonds so issued for the payment of their judgments for 9 cents on the dollar, which sale was suffered by the directors of the corporation for the purpose of bankrupting it and destroying the value of its shares; and that said persons now hold said bonds, and assert that they have the right to foreclose the mortgage, and apply the avails of the sale in payment of said bonds. (3) That, prior to the incorporation of the Greigsville Salt & Mining Company, the Retsof Mining Company was incorporated, and began mining and selling salt on property adjacent to that subsequently acquired
As to the other individual defendants, the directors (class 2), and the fraudulent creditors and purchasers of the bonds (class 3), it is in effect alleged that all the illegal acts set forth in the complaint were steps taken by the concurrence of all the individual defendants to sell and acquire the property of the corporation for their own use, and to defraud the plaintiff of his interest therein. The word “conspiracy” is not found in the complaint, but it is alleged that the individual defendants, except Platt V. Bryan, combined to deprive the plaintiff of his interest in the corporation, and did the various acts complained of, in pursuance of the scheme set forth in the complaint, which, in effect, amounts to a conspiracy; and it is not necessary that the scheme be characterized as a conspiracy. It is well settled that in case the directors of a corporation combine with others to defraud a shareholder of his interest in the corporation, by acts of spoliation, such conduct is actionable, and all persons so combining may be made parties defendant in an equitable action brought by a shareholder to restrain the consummation of the wrong, and recover the damages occasioned by the acts. Cook, Stock, Stockh. & Corp. Law (3d Ed.) §§ 645, 663; 4 Thomp. Corp. §§ 4585, 4586; Barr v. Railroad Co., 96 N. Y. 444; Pondir v. Railroad Co., 72 Hun, 384, 25 N. Y. Supp. 560; Farmers’ Loan & Trust Co. v. New York & N. R. Co., 150 N. Y. 410, 44 N. E. 1043, and cases there cited. The various acts complained of are set forth as parts of a single scheme, devised and carried on by all the individual defendants, except Platt V. Bryan, some of them acting separate parts, to effect a single purpose; that is, to depreciate the value of the property of the corporation, and then, by means of a foreclosure, to acquire such as had not already been disposed of for their own benefit and the benefit of the rival corporation, and thereby destroy the value of the plaintiff’s shares. Several independent causes of action in favor of this plaintiff are not united in this complaint, but a single cause of action is set forth. Had the corporation so elected, it could have maintained an action to recover the bonds acquired by Fuller, Belding, Colgate, and Smith, and also an action to recover of the Retsof Mining Company the property fraudulently transferred to it, and also an action against the directors to recover damages for their devastavit; but the fact that such independent actions could have been maintained by the corporation does not deprive the plaintiff of the right to allege all.of these acts as grounds of a single cause of action against all of the actors. Acts of directors and of third persons, though constituting several independent causes of action, in
A complaint is not demurrable because the facts are informally and imperfectly alleged, or because it lacks definiteness and precision, or because material facts are argumentatively stated, for, as against a demurrer, it will be deemed to contain all that can by a reasonable and fair intendment be implied from the allegations. Marie v. Garrison, 83 N. Y. 14; Lorillard v. Clyde, 86 N. Y. 384. O’Brien v. Fitzgerald, 143 N. Y. 377, 38 N. E. 371, and 6 App. Div. 509, 39 N. Y. Supp. 707, and 150 N. Y. 572, 44 N. E. 1126, was an action by a receiver of a corporation, not by a stockholder; and that ease does not hold that a shareholder may not maintain an equitable action against directors and third persons for wasting the property of the corporation. Mason v. Henry, 83 Hun, 546, 31 N. Y. Supp. 1068. In an equitable action a demurrer will not be sustained because the facts alleged do not entitle the plaintiff to all the relief demanded in the prayer for judgment. Swart v. Boughton, 35 Hun, 281; Porous Plaster Co. of Sing Sing v. Seabury, 43 Hun, 611; Wetmore v. Porter, 92 N. Y. 76. In legal actions all the causes of action must affect all the defendants, but in equitable ones the causes of action are not required to affect all the defendants to the same extent or in the same way. for it is within the power of a court of equity so to mold its judgments as to do equity between all the parties to an action, which a court of law cannot do, and the rules of pleading are not the same in suits in equity as in actions at law. I am of the opinion that facts sufficient to constitute a, cause of action against all the defendants are stated in the complaint, and that only a single cause of action in favor of the plaintiff is stated therein.
The second ground of demurrer is not discussed on the briefs, nor was it at the bar of this court; and it cannot be sustained, for in case a foreign corporation is engaged in business in this state, where all its property is situated, it becomes amenable to the laws of this state to the same extent as a domestic corporation. 6 Thomp. Oorp. § 7886, and cases there cited.
It follows that the interlocutory judgment should be affirmed, Avith costs, with leave to the demurrant to withdraw his demurrer and ansAver on the payment of the costs in the court below and of This appeal. All concur.