35 App. D.C. 372 | D.C. | 1910
delivered the opinion of the Court:
We will first consider the errors assigned by the defendants, Davis and Phillips. Their first contention is that the bill should have been dismissed because the suit was not properly authorized. This contention was urged upon the trial court. The record shows that when the resolution authorizing the bringing of the suit was passed, the president of the company and all the members of the board of directors save two, Davis being one, were present, and all save Davis had notice of the meeting. It is urged that, this being a special meeting of the board, Davis should have had notice. Davis, who resided in Cuba, and who was there when this meeting was held, had, before leaving Washington, given Reid a power of attorney to vote for him at meetings of the board of directors, saying that notice of special meetings need not be sent him as he could not come here to attend them. While a director may not legally delegate his powers, we see no reason, especially where he is without the jurisdiction, why he may not waive notice; and having waived notice, as in this case, he is estopped subsequently to allege lack of notice.
The second ground for the dismissal of the bill is the defect of parties, the contention being that Herbert and Micou should have been joined as parties defendant. This contention is without merit. When the suit was instituted, the complainant was without knowledge that Mr. Micou had received anything more than his share of the promoters’ stock, and the answer of the defendants did not disclose that he had received anything inore. It is nowhere intimated in the record that Mr. Herbert knew, or had reason to know, of his partner’s participation in secret profits. Herbert and Micou were not indispensable parties. Stockton v. Anderson, 40 N. J. Eq. 486, 4 Atl. 642. Except in the case of indispensable parties, the rule is well established that objection for want of parties, to be available, must be made early. Landram v. Jordan, 25 App. D. C. 299, 300. Moreover, Micou, on the institution of this suit, had parted with his stock, and, since the decree appealed from does
The last ground for the dismissal of the bill is that the petitioner was not competent to maintain suit for the relief sought. The defendants base this contention upon the opinion in Old Dominion Copper Min. & Smelting Co. v. Lewisohn, 210 U. S. 206, 52 L. ed. 1025, 28 Sup. Ct. Rep. 634. In that case members of a syndicate acquired properties for the purpose of conveying them, at an excessive valuation, to a corporation they were-to organize. The new company, composed entirely of themselves, was formed, every incorporator having full knowledge of all the facts.. Thirteen fifteenths of the stock of the company was held by the original incorporators, and two fifteenths subsequently passed into the hands of innocent holders. Thereupon a bill was brought by the corporation against the estate' of one of the deceased promoters, who had acted nominally as a vendor to the company of part of the property, but who was really acting for the benefit of all the proposed incorporators, to rescind the sale of that portion of the property, or to recover damages. A demurrer was interposed and sustained by the trial court. The Supreme Court sustained the decree on the ground that, the company having “assented to the transaction with the full knowledge of the facts,” its action remained binding on itself after changes in its members and an increase in its capital stock, such changes and increase not affecting its identity. The court said: “The difficulty that meets the petitioner at the outset is that it has assented to the transaction with the full knowledge of the facts. If there had been innocent members at the time of the sale, the fact that there were also guilty ones would not prevent a recovery. Here thirteen fifteenths of the stock had been taken by the syndicate, the corporation was in full life, and had assented to the sale with knowledge of the facts before an outsider joined.” From our reading of the decision we think the defendants have misconceived its purport. As we read it, it is a reaffirmation of the doctrine that members of a syndicate to purchase property
We will here consider complainant’s assignment of error relating to that part of the decree below allowing the defendant Davis to retain the twenty-two shares of promoters’ stock now held by him. In entering upon the consideration of this question, it must be remembered that this is a proceeding in equity, and addressed to the conscience of the court. One of the last things which a court of equity should do is to reward duplicity, or make it possible for those guilty of a.fraud to reap substantial benefit therefrom.
The members of this syndicate engaged therein for the purpose of acquiring and developing land in Cuba. The defendants represented, and Eeid supposed, that they were acting in good faith, and advancing their pro rata share of the money necessary for the preliminary work of investigation, and later towards their pro rata share of the amount of the purchase money of the property acquired. Instead of acting in good
The decree will therefore be reversed in part, with costs to the appellant in No. 2030, and the cause remanded with directions to enter a decree in conformity with this opinion.
Reversed in part.