95 N.J. Eq. 215 | N.J. | 1923
The opinion of the court was delivered by
The present appeal is the culmination of an acrimonious controversy between various stockholding interests in the New Jersey Refrigerating Company, a corporation of this state. That company acquired the plant and other property of a large brewing concern in Hudson county, which had ceased operations on account of the prohibition laws, and conducted the plant as a cold storage plant. The brewing concern had owned a large number of scattered pieces of real estate in New Jersey and elsewhere, utilized by it for saloon purposes, but naturally useless to its successor. Dissensions as to management of the business arose among the stockholders, whose respective interests were, for the most part, considerable, the corporation being a close one and the stock held almost entirely in two families. There was a contested election of directors in May, 1922, which, was reviewed under the statute (Comp. Stat p. 1624 § 4®)
I. That the court of chancery had no jurisdiction under section 56 of the Corporation act (Go'mp. Siat ¶. 1636), because the corporation, at the time of making the order, had not been “dissolved” in the sense intended in the act. i. e., its proceeding for voluntary dissolution was not complete.
II. That a case had not been made out, either giving the court of chancery jurisdiction to deal with the matter under its general equity powers, or, if jurisdiction existed, warranting the exercise of those powers in the manner adopted by the court.
We conclude that the appointment of receivers should be affirmed on both- grounds.
I. As to the statute. Mention has been made of an alternative procedure for voluntary dissolution. Where there is a two-thirds interest favorable to dissolution, but not unanimity, the successive steps in the procedure under section 31 are—(1) resolution of the directors, upon notice, recommending dissolution and calling a stockholders’ meeting; (2) notice of adoption of the resolution and of the proposed meeting, to be advertised four weeks and mailed to stockholders; (3) holding of the stockholders’ meeting and a consent in writing thereat of two-thirds in interest of all the stockholders, to be filed with the secretary of state, together with a list of officers and directors; (4) certificate by the secretary of state “that such consent has been filed;” (5) publication of such certificate for four weeks successively in a
But the voluntary dissolution by a unanimous consent is a very different matter. In that aspect the language of the act is broad and general, and, as we think, free from, ambiguity. Section 31, immediately following the extract just quoted, proceeds thus: “Whenever all the stockholders shall consent in writing to a dissolution no meeting or notice thereof shall be necessary; but on filing said consent in the office of the secretary of state he shall forthwith issue a certificate of dissolution, which shall be published as above provided.” The form of such certificate is not prescribed in the act, but a “certificate of dissolution” must necessarily be a certificate that the corporation has been dissolved; and the plain intendment of the act seems to be that dissolution occurs either on the filing of the unanimous consent or, at latest, upon tire making of the certificate by the secretary of state. To the argument that the certificate of1 dissolution must be published as above provided and that an intent to postpone dissolution until its last publication should be deemed to exist, we answer that no such intent is indicated in the language of the act, and that suitable public notice of the fact of dissolution being eminently proper for the benefit of creditors and others having dealings with the corporation, the provision is naturally referable to that consideration. There is no requirement, as in the two-thirds procedure, that the final advertising and affidavit thereof
II. As to the other phase of the matter: Cases in which a court of equity has appointed a receiver of a corporation because of internal dissensions are comparatively rare, but the jurisdiction appears to be well settled. Several decisions in our own states affirm the jurisdiction and are illustrative of the situations in which a receiver should, or should not, be appointed, as the case may be.
In Einstein v. Rosenfeld, 38 N. J. Eq. 309, Chancellor Runyon refused a receiver in a case of dissension between stock interests because the business of the company was being carried on in the usual course, under full control of one of the contending parties.
In Archer v. American Water Works Co., 50 N. J. Eq. 33 (at p. 52), Chancellor McGill said, after awarding an injunction :
“If the present directors of the company, and they are all parties to this suit, continue their dissensions, so that the affairs of the company are not speedily attended to, upon a proper application, I will care for the property, pending determination of the suit, through the instrumentality of a receiver. Such action will be supported by precedents and authority.” . (Citing cases.)
In Edison v. Edison United Phonograph Co., 52 N. J. Eq. 620 (at p. 625), Vice-Chancellor Van Fleet said:
“The power of this court to appoint a receiver of a corporation, either because it has no properly constituted governing body or because there are such dissensions in its governing body as to make it impossible for the corporation to carry on its business with advantage to its stockholders, I think must be regarded as settled,” and went on to say that it should be exercised with caution and only so long as necessary to preserve the property of the corporation and protect the interests of the stockholders.
In the case at bar, most if not all the elements are present which were held ip the cited decisions to be absent. The president refused to carry out the resolutions of the board; that body was unable, without a physical contest, to exclude from its meeting an unauthorized person who was officially notified to depart. The business of the corporation was halting and almost at a standstill. Perishable property deposited with it for storage was in danger. Opportunities for favorable sale of outlying properties were being ignored; and, as we have said, four or five law suits were in progress. Affairs had reached an impasse. In addition to all this, the stockholders had unanimously consented to dissolve the corporation, and such dissolution, if not perfected -(as we have just held it was), was imminent, so that the carrying on of ordinary business must necessarily cease in a few days. The pleadings indicate that on this application the original dispute was rather about the personality of the receivers than a receivership at large. A plainer case for the interposition of the court of chancery could not well be imagined. The action taken was in line with that sustained by us in Morse v. Metropolitan S. S. Co., 88 N. J. Eq. 325, so far as that case deals with general equity power.