73 N.Y.S. 403 | N.Y. App. Div. | 1901
Lead Opinion
The defendant the Cobre Grande Company, which for brevity we will refer to as the Cobre Company, is a corporation organized under the laws of the Territory of Arizona, as is also the defendant the Phcenix National Bank. The defendant the Greene Consolidated Copper Company, which may be referred to as the Greece Company, is a West Virginia corporation. The defendant the Cananea Copper-Company, which we will designate the Cananea. Company, is a corporation organized under the laws of Mexico. All of the individual defendants, except Mitchell, are directors of the Cobre Company, the defendant Greene being also president of
The plaintiff is a resident of the.State and county of New York and owns upwards of 8,000 shares of the capital stock of the Cobre Company, of the par value of $2.50 per share. He is also a general creditor of that company on promissory notes and other claims aggregating $40,000. The. summons and complaint were personally served within this State upon all of the appellants.
The plaintiff’s theory of his action is that it is brought by him as a stockholder in behalf of the Cobre Company, and in the complaint facts are alleged tending to show that the officers and directors of that company are acting fraudulently in their own interests and in hostility to the interests of the corporation, in the matters concerning which redress is sought in this action, and that consequently an application to them to. bring this action would be useless and unavailing. These allegations lay a sufficient foundation for the direct intervention of a stockholder in behalf of the company. (Barr v. N. Y., L. E. & W. R. R.Co., 96 N. Y. 444, 450; Gamble v. Queens Co. Water Co., 123 id. 91, 98, 99; Hawes v. Oakland, 104 U. S. 450.) It is alleged in the complaint that the Cobre Company owns certain valuable mining properties in the Republic of Mexico of the value of $5,000,000, which, together with the products thereof, constitute its sólo assets, and that it acquired said mining properties under and by virtue of the assignment by Mitchell to it of a contract Avhicli had been' made by and between him and Greene, avIio at that time OAvned said property; that the defendants Greene and Mitchell and their confederates formed a scheme to deprive the Cobre Company of said properties and to- acquire the same for themselves, and that by trickery, fraud and force they wrongfully took possession thereof, and that thereafter the defendant Greene and his attorney, one Chase, organized
The material allegations of the complaint are sustained by the affidavits presented by the plaintiff on his application for the injunction order and for the order appointing a receiver. The affidavits; presented in opposition thereto have been omitted from the record on appeal by stipulation. ' Prior to the commencement .of this suit, the plaintiff brought a suit in equity in Arizona against the same-parties for the same relief and upon the same grounds, and obtained a similar injunction order therein. He also: in that action applied for the appointment of a receiver, for,the Cobre Company, winch application is still pending undetermined. It further appears that the said judgment dismissing the complaint in the suit in Arizona by the Cobre Company was entered after the granting and service of the injunction order last mentioned, but the title deeds-apparently have not been delivered and the other litigations have-not. been settled. The proceeds of the matte for which said replevin action is pending. in the courts of this State amount to $28,000, and are held by a trust company within the State. There are also averments in the Complaint of fraudulent and illegal meetings qf the board of' directors of the Cobre Company, at which officers were illegally removed and elected,-prior to obtaining possession of the property in Mexico by Greene and his confederates,, but no special relief seems to be demanded because of the same.
The relief demanded in this action is that the further consufnmation of said fraudulent conspiracy to settle and discontinue the said litigations be permanently enjoined, and that the enforcement-of the judgment in the Arizona suit dismissing the complaint and.
The only question raised by the appellants on this appeal, as Stated in their points,'is whether the order appointing a receiver and granting an injunction was valid- and regular. Their claim is two-fold : (1) That the order is irregular on its face and unauthorized upon such a complaint as this, either under the Code or upon general principles of equity; and (2) that in any event the order must be limited to the property of the Cobre Company found within the jurisdiction of the court, and should be so modified.
According to the complaint and affidavits the Cobre Company was not only a solvent corporation, but its assets were exceedingly valuable; and through coñspiracy, fraud and bribery the defendants Greene and Mitchell have obtained the management and control thereof to further their own schemes, in hostility to the interests of the other stockholders, and have actually obtained a contract from the Cobre Company to transfer to these rival companies controlled and managed by Greene and Mitchell all its property and property rights, without even a nominal consideration. This fraudulent contract was being consummated with dispatch at the time of the commencement of this action and the granting of the injunction herein. These allegations must be taken as true for the purposes of this appeal, and it is evident that the inevitable consequence will be, not only that the stock of the Cobre Company, of which the plaintiff is a
It needs no refinement of the decisions to show that the cause thus presented is one for equitable cognizance. Within all of the authorities, a court of equity in the proper jurisdiction should intervene under such circumstances for the protection of the stockholders and creditors, both by injunction and by the appointment of a receiver to represent the company, since the directors, by thus grossly abusing their trust, have become disqualified to act. (Tread-well v. United Verde Copper Co., 47 App. Div. 618; Pondir v. N.' Y, L. E. & W. R. R. Co., 72 Hun, 384; Fennessy v. Ross, 90 Hun, 298; 5 App. Div. 342; Farmers' Loan & Trust Co. v. N. Y. & N. Ry. Co.., 150 N. Y. 410, 425, 430; Saranac & Lake Placid R. R. Co., v. Arnold, 167 id. 368, 374; Pearson v. Concord R. R. Corporation, 62 N. H. 537; Wayne Pike Co. v. Hammons, 129 Ind. 368; .Haywood v. Lincoln Lumber Co., 64 Wis. 639 ; Miner v. Belle Isle Ice Co., 93 Mich. 97; Menier v. Hooper's Telegraph Works, L. R. [9 Ch. App.] 350; Beach Rec. [2d ed.] § 86; 2 Cook Corp. §§ 650, 662; 7 Thomp. Corp, § 8269; PerrTrusts, § 427.)
It by no means follows, however, that a court of equity in this State is the proper, forum for the exercise of this general jurisdiction and the granting of complete relief. The Cobre Company, as has been seen, is a foreign corporation, called into existence under the laws of the Territory of Arizona, which prescribe its powers and regulate the manner and agencies by which they are to be exercised and under which the corporation must be ultimately dissolved. The Cobre Company does not transact business here and has no office, place of business or property within this State, except the fund of $28,000, to which reference has been made. When the plaintiff became a stockholder in this foreign corporation, he is presumed to have purchased with knowledge of these facts. Although he is a resident of' our State and sues as a stockholder, he does not and could not sue in his own right, but in the right of the-corporation, and to redress wrongs not personal or peculiar to himself, but to the corporation and alike to all its stockholders. (Alexander v. Dono
It is unnecessary in this case, and it would be unwise, to attempt to define the extent of the jurisdiction of our courts over corporations organized in other States for the purpose of doing business here. The orders and decrees of a court have no extraterritorial effect or force. They can only be enforced directly against property within the State, of in personam against individuals or officers of corporations found within the jurisdiction of the court, and thereby affect property without the State. When a judgment against a foreign corporation would not be effectual without the aid of the courts of a foreign country or of a sister State, and it may contravene the public policy of the foreign jurisdiction or rest upon the construction of a foreign statute, the interpretation of which is not free from doubt —■ as where the subject-matter of the litigation and the judgment would relate strictly to the internal..affairs and-management of the foreign corporation — the court should decline jurisdiction because such questions are of local administration, and should be relegated to the courts of the State or country under the laws of which the corporation was organized. (Ives v. Smith, 19 N. Y. St. Repr. 563, 568; affd., 28 id. 917; D., L. & W. R. R. Co. v. N. Y., S. & W. R. R. Co., 12 Misc. Rep. 230 ; Vanderpoel v. Gorman, 140 N. Y. 563, 572; Mabon v. Ongley Electric Co., 156 id. 196; Massie v. Watts, 6 Cranch, 148; Kimball v. St. Louis, etc., R. Co., 157 Mass. 7; Madden v. Penn Elec. Light Co., 181 Penn. St. 617; North State Copper & Gold Mining Co. v. Field, 64 Md. 154;. Gregory v. N. Y., L. E. & W. R. R. Co., 40 N. J. Eq. 44; 2 Cook Stock & Stockh. [1st ed.] § 688.)
The order in the case at bar, among other things, enjoins the Cobre, Company from collecting any ddbts or paying out or disposing of any of its property or effects, and appoints a receiver of all its property of every name, nature and description, wherever situated, and authorizes the receiver to take possession of, sue for and recover such property and all debts, demands and claims belonging to said company, and in effect to assume and take general charge and management of the business and affairs of the company. This order is altogether too broad and is in conflict with the general rule already stated, which, we think, should be applied in this case.
There was no jurisdiction to grant the injunction against the Phoenix Bank, it not having been served with the summons arid not having appeared in the action, and that part of the injunction, therefore, which purports to operate against said bank must- be vacated. The defendants Greene, the Cobre Company, the Cananea Company and the Greene Company are all properly before the court. The trial court will, therefore, have jurisdiction of the parties, and may, we think, without infringing upon any rule of comity, or upon this rule forbidding interference with the internal affairs of a foreign' corporation, try the issue as to this, conspiracy and fraudulent agreement, under which it is proposed on the part of the appellants to divest the Cobre Company of all its property without consideration, and may, if the facts shown and circumstances then existing seem to warrant that course, perpetually enjoin the consummation of such fraudulent contract and transfers of the property of the Cobre Company, and require an accounting and compel the restoration of any of its property appropriated by the defendants, even though such decree will operate upon property beyond the jurisdiction of the court. (Code Civ. Proc. § 1780; Ives v. Smith, 19 N. Y. St. Repr. 556; 28 id. 917; Ernst v. Rutherford & B. S. Gas Co., 38 App. Div. 388; Chase v. Knickerbocker Phosphate Co., 32 id. 400; Prouty v. Mich. So. & N. I. R. R. Co., 1 Hun, 655; Babcock v. Schuylkill & L. V. Ry. Co., 9 N. Y. Supp. 845.)
So far, therefore, as the temporary injunction restrains the further consummation of the fraudulent contract and transfer of the mining properties in. Mexico, and the delivery of the deeds and title papers thereto and the settlement of the actions pending in Mexico, Texas and New York, or the transfer or delivery of the property involved in those actions or the proceeds thereof, it was properly granted and should be continued until the trial and' decision of the action on the merits, and in all other respects, and as
If the court in Arizona should appoint a receiver, its order would not operate upon the fund belonging to the Cobre Company now in this State. On the case as presented, that fund is now in jeopardy and liable to be lost to the creditors and stockholders of the Cobre Company through collusion, fraud and mismanagement on the part -of its directors. In such a case a court of equity has inherent power, at the suit of a stockholder, to appoint a receiver of the fund to preserve it until the final judgment, which shall direct what disposition shall be made thereof in accordance with the rules and practice in courts of equity and the rights of all the parties interested as they shall then appear. (Woerishoffer v. North River Construction Company, 6 Civ. Proc. Rep. 113; Redmond v. Hoge, 3 Hun, 171; Popper v. Supreme Council, 61 App. Div. 405; Glines v. Supreme Sitting of Order of Iron Hall, 21 N. Y. Supp. 543; Mabon v. Ongley Electric Co., 156 N. Y. 196; Graham v. Railroad Co., 102 U. S. 148, 161; Piza v. Butler, 90 Hun, 254; Halpin v. Mutual Brewing Co., 91 id. 220; Beach Rec. [2d ed.] § 86; Gluck & B. Rec. § 9.)
The order appealed from should be modified as indicated, and as thus modified affirmed, with ten dollars costs and disbursements to ■appellants.
Patterson, Ing-raham and Hatch. ¿TJ., concurred; Van Brunt, P. J., dissented.
Dissenting Opinion
I do not think we can reach anything but the fund here. I, therefore, dissent.
Order modified as directed in opinion, and as modified affirmed, with ten dollars costs and disbursements to appellants.
