40 N.H. 548 | N.H. | 1860
As we are not to decide this case upon the bill and answei’, as between any of the parties, but all the questions raised thereon are still open and to be considered and settled upon their merits hereafter, it is not material to consider the answer of those parties who have made one, in order to settle the questions now before us. This answer has, therefore, been omitted in stating the case, except so far as it objects to the jurisdiction of this court; and this portion of the answer was stated only because it contains, substantially, most of the positions relied upon by the Eastern Railroad Company to sustain their demurrer, though some other positions are taken in argument, such as that there are not proper parties to the bill, &e. So, also, the provisions of the lease are omitted in the statement of the case, except such portions as are stated in the bill, which appear to be substantially correct. In considering the questions now before us, which are only those raised by the demurrer of the Eastern Railroad Company, we are to take the facts as stated in the bill to be admitted. The questions raised by this demurrer seem to relate solely to the jurisdiction of the court, and though some of the positions relied upon are taken under the first cause assigned in the demurrer, others are evidently taken under the second cause, as there stated.
It is claimed by the Eastern Railroad Company:
1. That this court has not jurisdiction over the Eastern
2. That the contract set forth in the bill was to be performed in Massachusetts, and therefore the court has not jurisdiction of the subject matter :
3. That the jurisdiction of the court is ousted by the agreement to refer or arbitrate, contained in the indentures:
4. That the Eastern Railroad Company is not answerable to the stockholders of the Eastern Railroad in NewITampshire, but only to the corporation :
5. That the plaintiffs have a full and perfect remedy at law, by mandamus, and therefore this court has no jurisdiction:
6. That there are no proper parties to the bill, so as to give this court jurisdiction.
In considering these questions it may be convenient to transpose their order, and begin with the last.
I. Are these plaintiffs proper parties to commence and prosecute these proceedings ? It is suggested in the argument that the bill should be dismissed because the other stockholders are not made parties. But it is well settled that when the parties interested are numerous, and the suit is for an object common to them all, some of the body may maintain a bill in behalf of themselves and others having a like interest, but in all cases where one or a few individuals of a large number institute a suit on behalf of themselves and others, they must so describe themselves in the bill. This rule applies to shareholders in a corporation as well as a private company or partnership. Dan. Ch. Pr. 290, 291; Story Eq. Pl. 107, 109, 110, 111, 113, 115; Walworth v. Holt, 4 Mylne & Craig 635; Brightly’s Eq. Jur. 529; Adams’ Eq. 319, 320. Nor is this in contravention to the general rule, that in equity all persons must be made parties who have an interest in the result; but when the parties are very numerous,., as a matter of convenience, and to prevent abatements by
A shareholder in an incorporated company may file a bill in the behalf of himself and all the other stockholders, to restrain the directors from committing a breach of trust, as by making a contract of guarantee in behalf of the corporation which they were not empowered by the charter to make, or committing other clear excess of chartered powers. Coleman v. Eastern Counties Railway, 10 Beav. 1; Ang. &. Am. on Corp., sec. 312.
It is now no longer doubted, either in England or the United States, that courts of equity in both have a jurisdiction over corporations, at the instance of one or more of their members, to apply preventive remedies by injunction to restrain those who administer them from doing acts which would amount to a violation of charters, or to prevent any misapplication of their capital or profits which might result in lessening the dividends of stockholders or the value of their shares, as either may be protected by the franchises of a corporation — if the acts intended to be done create what in law is denominated a breach of trust. And the jurisdiction extends to inquire into and to enjoin, as the case may require that to .be done, any proceedings by individuals in whatever character they may profess to act, if the subject of complaint is an implied violation of a corporate franchise, or the denial of a right growing out of it, for which there is not an adequate remedy at law. Dodge v. Woolsey, 18 Howard 341, and cases cited. "
In Robinson v. Smith, 3 Paige Ch. 233, a principle is laid down that seems applicable to this case as here stated by these complainants. If the directors of a corporation refuse to prosecute, by collusion with those who had
The effect of this proceeding in this way is to avoid the very multiplicity of suits complained of; for every stockholder, no matter in what jurisdiction he resides, may, if he please, in some way become a party to this proceeding, without commencing a new suit either in his own or any other jurisdiction ; nor are any of the stockholders left out and not made parties to this proceeding, as the defendants complain, because not only the directors, as individuals, but the Eastern Eailroad in New-Hampshire, are made parties, as defendants, and those stockholders in this last mentioned road who do not desire to come in as plaintiffs here, are of course represented by and in the corporation, as defendants. All the stockholders in this road, who are satisfied with the proceedings of the directors, either from the fact that they have a greater interest in the Eastezm Eailroad Company than in the New-Hampshire corporation, or from any other cause, are represented here as member’s of the corporation, and under the corporation which is made a party ;, but all those whose interests are adverse to those of the corpoi’ation, as now managed and controlled, and who do not wish to be defendants as members of the corporation, can, in this mode of proceeding, become plaintiffs, if they wish. If
II. The position that a mandamus would be an adequate remedy at law, and that therefore these proceedings are unauthorized, does not. seem to be relied on by the defendants’ counsel, as it has not been alluded to in their argument. How would a mandamus meet the difficulty here complained of ?
The plaintiffs complain that they do not get their dividends, but they admit that the Eastern Railroad in New-Hampshire has nothing to divide, and can divide nothing. The complaint is, that the dues of the company are not collected, and they seek a remedy for that difficulty, yet how can this court compel, by mandamus, the Eastern Railroad Company to pay over, if the court has no jurisdiction over said company in the present proceeding ?
But suppose they have jurisdiction, and issue the mandamus to that company, they have nothing in their hands, as they say, to pay over, and the Eastern Railroad in New-Hampshire and their directors say the same. How could the court, as a court of law, order one corporation to pay over any money to another, when the corporation ordered to pay denied the indebtedness, and the other, to whom the money was to be paid, admitted there was nothing due, and made no claim ? The complaint and fear of these plaintiffs is that the business will be so managed between these corporations, which are both alleged to be managed and controlled by the same interest, that their .remedy will be forever defeated. We see no reason, if the facts shall prove as stated in the bill, why the ease is not a
HI. The next objection, that the Eastern Railroad Company is not answerable to the stockholders of the Eastern Railroad in New-IIampshire, but only to the corporation, is not urged in the argument, and we are unable to see any ground upon which it can rest; for it is difficult to see why, if the court have jurisdiction over that corporation as well as the one in New-Hampshire, that company as well as the other should not be held to answer to these plaintiffs, since the charge is that the Eastern Railroad Company, together with the Eastern Railroad in New-Hampshire, representing a majority of its stockholders, who are also alleged to be in the interest of the Eastern Railroad Company, and the directors of the New-Hampshire road, are all together, and, by common consent, and with one common design and purpose, under color of a contract between the two roads, illegally, and in law fraudulently misapplying the funds belonging to both corporations in such a way as not only to lessen but absolutely destroy all profits of the Eastern Railroad in New-Hampshire, and swallow up all its income, to the injury of these plaintiffs, when, but for such illegal misapplication, there would be large amounts due from said Eastern Railroad Company to the Eastern Railroad in New-Hampshire, to which they would be entitled proportionably with other stockholders, as dividends, according to the true intent and meaning of the indentures between them. Why, then, are they not both answerable alike to these plaintiffs, if either is so answerable ? And there would seem to be something strange in the position that these plaintiffs have no claim on this rent except through the Eastern Railroad in New-Hampshire. The plaintiffs’ position is, that these two roads are combining to cheat them, by an arrangement between themselves, of a fund which they hold in trust for the benefit of the plaintiffs and
IV. Is the jurisdiction of this court ousted by the agreement to arbitrate contained in the indentures ? An agreement to refer any matter of dispute that may hereafter arise between the parties, is not unusual in contracts of insurance, of partnership, or for the construction of buildings or other works. But such agreements do not bar the parties of their remedies, either by action at law or by suit in equity upon such contracts, neither will such agreements be specifically enforced in equity; Smith v. B. C. & M. Railroad, 36 N. H. 487; so that this objection would be without weight if this were a proceeding between the parties to the indenture.
Either party might commence and maintain an action at law or a suit in equity upon the indenture, against the other party thereto, notwithstanding this agreement to refer; much less can these plaintiffs be barred from maintaining this suit, by an agreement to which they were not parties, but which has been made between the two defendants. We have seen that these plaintiffs are proper parties, bringing this bill in behalf of themselves and all others, stockholders in the New-Hampshire road, who may wish to join them, against both these railroad corporations. The agreement to refer is between two co-defendants. And can agreements between two adverse parties bind these plaintiffs, or preclude them from resorting to their equitable remedies for redress ? It therefore becomes immaterial to inquire whether these
It is insisted that this agreement to refer is of the essence of the contract, an ingredient and consideration of it, and that it amounts to a waiver of the right to sue either at law or in equity. It is not to be denied that this agreement was an ingredient and consideration of the lease; and it may have been an important ingredient and consideration of it, but it can hardly be correctly said to be of the essence of the contract. It is merely incidental and collateral. It may be struck out, and the contract in all its essential parts and features would not be affected. By law such an agreement does not amount to a waiver of the right to sue upon the contract, even as between the parties to it. But suppose it were otherwise, and that all the defendants’ positions in regard to this agreement to refer were correct, what consequence would result in this case ? Neither of the parties to the indenture have commenced suits at law or in equity, nor have they any desire to do so. One cause of complaint is, that they are too willing to refer, and that they are combining, by means of such a reference, to cheat the plaintiffs of their shares of a fund which the one corporation holds, but which, in justice and equity, belongs to them, and which they cannot reach in law without the aid of the other. And if the Eastern Railroad in New-Hampshire were barred to sue at law or in equity, it would not follow that the plaintiffs may not seek their redress in court.
1. Let us suppose that this contract was made in Massachusetts, and by its terms was to be performed there. Does it follow that no action could be maintained upon it in any other jurisdiction, if both the parties are properly there ? That cannot be claimed, for it is well settled that actions founded upon contracts are transitory, though made and even stipulated to be performed out of the kingdom. To be sure, the general rule is to be applied in such cases that the lex loci contractus is to govern in the interpretation of the contract; but an action or bill in equity may be brought upon the contract any where, where the parties are, or can be made subject to the jurisdiction of the court. Debitum et contractus sunt nullius loci. Broom Leg. Max. 414, note 3; 1 Smith’s L. C. 340; Story Conf. Laws, sec. 362, p. 299.
2. But it is said that the property on which the decree
3. But suppose that all the positions of the defendants were correct, as to the contract being made and to be performed in Massachusetts, and that, therefore, the court had not jurisdiction to enforce the contract; and that the property or fund to be affected by the decree of the court was without the jurisdiction, and that therefore the court could not act to enforce the contract as between the parties to it, yet these plaintiffs still might stand well enough here, as the foundation of their claim is not upon the contract entered into between the two defendant companies, as these plaintiffs were no parties to that contract; but they are seeking redress of these defendants because they have misapplied the funds in their hands, and appropriated them for illegal purposes, contrary to equity and good conscience, and contrary to the terms of the agreements, even between the defendants themselves, whereby the plaintiffs are deprived of their share of the rents and income which equitably belong to the New-IIampshire road, but which the Eastern Bailroad Company have either fraudulently expended, or else now hold in trust for the benefit of these plaintiffs, and others interested ; so that these plaintiffs do not stand in the position of a party to a contract, trying to enforce that contract in court, but in vindicating their own rights they ask that the defendants may be held liable, at least to the extent that
4. It is contended by the defendants’ counsel, in argument, that courts of equity decline to act unless the entire thing — the whole subject matter upon which they are to act — or the persons or the organizations which control the thing in litigation — are within the reach and under the control of the court: that the actual and available power of a court of equity must be commensurate with the subject matter in litigation, and the rights of all the parties in interest, before it will act at all: that it acts for all or none; that it will dispose of the whole matter, or do nothing. No authority is cited for this position. We apprehend that the court do not inquire how far it would be in their power to render complete justice to the parties by their final process. If the parties and the subject matter of the controversy are within their jurisdiction, they will not decline to act, because the amount in controversy is large, and the amount of property within reach of the execution is small; the residue of the property of the defendants being in another government. The question as to how his judgment shall be satisfied when he gets it, is for the party who obtains it, and not for the court.
VI. Has the court jurisdiction over the Eastern Railroad Company, a foreign corporation ? This is the question upon which more stress is laid, perhaps, than upon any other position taken ; and in practice it is no doubt a question of much importance.
It belongs to evei’y government to regulate the rights, the status, and condition of its own subjects. Courts of other jurisdictions are not bound, except by what is called comity, to regard the laws elsewhere established ; but justice cannot be administered without some regard to those
Corporations exist every where. They are artificial persons constituted by the law, consisting of one or many persons, who are vested with the power of holding property, transacting business, maintaining suits in a corporate name, without mention of the names of the individuals of which it is composed, and without their rights or their remedies being affected by changes of the persons who are from time to time the members of the corporation.
No necessity exists for the recognition by one State of these artificial persons created by the government of another. But as corporations are but companies of individuals acting under a corporate name, the only effect of a refusal to recognize foreign corporations as such, would be to drive them to hold their property and maintain their rights in the names of the individuals of which the corporation was composed. The corporation would be compelled to allege that they were partners, doing business in a common name or firm, and they must be treated as a firm or partnership. Over such a firm, composed of members residing in another jurisdiction, it is clear that our courts would have jurisdiction, as they have of the individuals who compose it, whenever they come into our courts for redress of their own grievances ; or where they or any of them come here so that they may be served with our process, or where they have property here which, by our laws, may be made amenable to the decisions of our courts, to the extent at least of that property, and of any
It would not, of course, be presumed, that in recognizing the personal and corporate character of a company established in another jurisdiction, any court would do so at the expense of holding that thereby such a company of individuals would be exempted from the jurisdiction of our courts as defendants, while they had the rights of persons as plaintiffs. If such bodies are recognized here as persons, with the rights of persons, it is clear that it must be so, subject to the liabilities of persons. If they can sue in our courts, they must be liable to be sued by others, and they must, in this respect, stand on the same ground as the distinct individuals who compose the corporation. If they come within reach of our process, they may have suits against them, and all their property found in this jurisdiction will be made to respond to the judgment that may be recovered against them.
A foreign corporation is permitted to sue in the courts of England. Henricus v. Dutch W. I. Co., 2 Ld. Raym. 1582. So a foreign corporation may sue in the federal courts of this country. Society v. Wheeler, 2 Gall. 105. The same has been held in most of the States of this Union, though not in all. 2 Kent Com. 285, and cases cited; Ang. & Am. on Corp., secs. 372-373; Bank of Augusta v. Earle, 13 Pet. 519. Such is the law in this State.
And as a foreign corporation can sue in our courts, there would seem to be no reason why it should not be liable to be sued here, in the same way that a domestic corporation could be. It was said to be the rule of the common law that process against a corporation must be served upon its head or principal officer, within the jurisdiction of the sovereignty where this ai'tificial body exists ; but there would seem to be no satisfactory or substantial reason why the technical rules of the common law respect
“ There seems to be nothing in the character of a corporation to prevent its suing or being sued, like a natural person. It is, in legal contemplation, a person having existence, invested with rights and subjected to liabilities, and very properly a party to proceedings in courts of law or equity, whenever their rights or liabilities are drawn in controversy.”
So in Vermont it has been held that an action can be sustained against a foreign banking or other private corporation. Day v. Essex Co. Bank, 13 Vt. 97. In that case Redfield, J., says: “We can see no very good reason why artificial persons shall not be liable to suit in the courts of another State, as well as natural persons. It is not necessary to inquire how far public or municipal corporations could be held to answer suits in a foreign juris
Although a corporation existing by the laws of one State cannot be deemed to pass personally beyond the limits of that State, and though service upon a foreign corporation might not be good, if only made upon some one of its officers passing through, or casually in this State, yet if they can appoint and have agents and attorneys who can legally appear for them and in their behalf to prosecute in our courts a claim to final judgment, it would be strange, if, when they are called to defend a suit against them, and service has been made upon such agent according to law, and he or the attorney appears, that a judgment against them should not be as valid as the one returned in their favor.
Suppose a foreign corporation should sue in our courts by attorney, and, after a protracted litigation, should fail in their suit, no one could doubt the authority of the court to render a judgment against them for costs. And suppose the suit is brought against the corporation, and the same attorney appears, could there be any more doubt of the authority of the court to render judgment against the compauy as defendant ? And suppose service to be legally made upon the agents of the corporation, and they should not appear, would not a judgment rendered against them upon default be equally valid and binding ? “ The inquiry is, not whether the defendant was personally within the State, but whether he or some one authorized to act for him in refei-ence to the suit, had notice, and appeared; or, if he did not appeal’, whether he was bound to appear or suiter a judgment by default.” Lafayette Ins. Co. v. French, 18 How. 404.
In many of the States there have been legislative enactments requiring foreign corporations to appoint resident agents, on whom service of process may be made, in order to entitle them to transact business within the State.
In the present case the defendant corporation appears, and an appearance of the party has always been held to confer jurisdiction; Downer v. Shaw, 22 N. H. 281; except when the party appears for the sole purpose of making objection to the authority of the court to proceed. Wright v. Boynton, 37 N. H. 9. Here the appearance is clearly not made for this sole purpose, since the second ground of demurrer is in terms, “ that the said complainants have not, by their said bill, made such a case as entitles them in a court of equity to any discovery from these defendants, or to any relief against them as to the matters contained in said bill, or any of such matters.” So that it would seem that the court have jurisdiction, from this circumstance that here is a general appearance for all purposes; the objection to the jurisdiction of the court over the party defendant filing the demurrer, being only taken in connection with others going to the merits of the bill.
It will also be observed that the demurrer is not in the nature of a plea in abatement. It is not alleged that the Eastern Eailroad Company have not been properly notified ; that they have not been served with proper process, and in a proper way; and that thereby they are not properly
The demurrer is, therefore, overruled, and said company is ordered to file an answer to the plaintiffs’ bill, in ninety days.