93 N.Y.S. 776 | N.Y. App. Div. | 1905
Lead Opinion
This appellant interposed a demurrer to the complaint upon the ground that it appears upon the face thereof that the court had not jurisdiction of the subject-matter of the action. That demurrer was, overruled, and the defendant appeals.
The action is brought by the plaintiffs as stockholders of the Mexican Sugar Company, and the plaintiffs demand judgment on behalf of themselves and all other stockholders of the Mexican Sugar Company that an agreement, by which a lease made by the refining company to the Mexican Sugar Company is canceled, be declared null and void and of no effect. It is thus sought to enforce a causé of action in favor of the Mexican Sugar Company to cancel an agreement between that company and the refining company by which the rights of the Mexican Sugar Company and plaintiffs as stockholders therein would be impaired or injured. The complaint alleges that the Mexican Sugar Refining Company, Limited, is a. corporation organized under the laws of the State of Louisiana, and that said company was and now is the owner of a large sugar plantation in the State of Vera Cruz, in the Republic of Mexico, known as the Santa Fe plantation, and of the buildings thereon erected, and that said plantation and its appurtenances constitute the only asset of said refining company; that at the end of 1901 it was found- by the directors and stockholders of the refining company that a large .amount of money would be required for working capital, which the said refining company was unable to raise, and it was, therefore, deemed advisable that it should lease its plantation to persons able to operate it; that thereafter Braker, Craven and Dowler and the plaintiffs formed a syndicate for the purpose of taking such a lease from the refining company and operating said plantation; that on or about February 21, 1902, the refining company executed a lease to Max J. Mayer ancj Samuel S. Lees, who represented said syndicate, for a term of two years from. May 1, 1902, with an option of renewal for three additional years, at ■ a rental of fifty cents per ton, gold, for each and every ton of cane gro.und in the mill or refinery to be erected upon the premises, it being provided that, in no event, the revenues for such tonnage were to fall below the sum required to pay the interest on the bonds issued by the refining company and the taxes, insurance and all
The demurrer being upon the ground that the court had no jurisdiction of the subject-matter of the action, whether or not a cause of action is alleged is not presented, this analysis of the complaint being merely for the purpose of ascertaining just what cause of action is sought to be enforced. Nor is the question as to a defect of parties, in that the directors whose acts are complained of are not parties to the action, presented, the only question being whether or not the Supreme Court of the State of New York has jurisdiction of the cause of action here sought to be énforced.
This action cannot be maintained under • section 1781 of the Code of Civil Procedure, as that section provides for an action against the officers or directors of a corporation, and as neither the officers nor directors of either corporation áre parties defendant, the action is not against them, and, therefore, is not such an action as is authorized by that' section of the Code of Civil Procedure. T think, however, that at common law an action can be maintained by the stockholders of a corporation to have declared void a contract with another corporation when the two corporations are controlled by common directors where the acts of the two corporations are based upon a fraudulent combination by which , a majority of the directors of the two companies seeks to defraud one corporation for the benefit of the other. Here it is alleged, ■and the demurrer admits, that Braker and Craven controlled a majority of the stock of both corporations and also controlled the board of directors of both corporations; that they have a much larger interest in the stock of the refining company than in the sugar company, and thus would be benefited by acquiring for the refining company all the property of the sugar company, and to advance that interest, in violation of their duty as the directors and the. majority stockholders of the sugar company, they have can
Section 1779 of the Code of Civil Procedure provides that an action may be maintained by a foreign corporation in like manner and subject to the same regulations as where the action is brought by a domestic corporation, except as otherwise specially prescribed by law; and section 1780 provides that an action against a foreign corporation may be maintained by a resident of the State, or by a domestic corporation, for any cause-of-action; that an action against a foreign corporation may be maintained by anotliér foreign corporation, or by a non-resident, “ where the cause of action arose within the
I think' the judgment appealed from should be affirmed, with costs, with leave to defendant tó withdraw demurrer and to answer on payment of costs in this court and in: the court below.
O’Bríén and Hatch, JJ., concurred;' Yah Brunt, P. J., and McLaughlin, J., dissented. '■ . ■ .
Dissenting Opinion
It seems'to be conceded'in the prevailing opinion that: this court would not have, jurisdiction of the subject-matter of the action had it been brought by one corporation against the' other, but it is suggested that inasmuch as the action is brought by a stockholder of the corporation, /it can be maintained.
I do not understand that a stockholder of a-corporation cando . for the corporation what it could not do for itself, and if I am right in. this, then the court hás no jurisdiction to enforce the cause of action alleged in the complaint, and for that reason the judgment appealed from should be reversed and the demurrer sustained.
Yan Brunt, P. J./ concurred.
Judgment affirmed, with costs, with leave to -defendant to withdraw demurrer: and to answer on payment of costs in this court and in the court below. ' , ' '