124 F. 808 | U.S. Circuit Court for the District of Western New York | 1903
This is a-suit in equity by a leaseholder of Chautauqua Institution, a nonstock corporation, originally organized as Chautauqua Assembly, pursuant to the New York statute passed April 12, 1848 (Laws 1848, p. 447, c. 319), against that corporation, now called Chautauqua Institution, the Chautauqua University, and the Chautauqua School of Theology. All of the corporations named are or were nonstock corporations, organized under the laws of the state of New York, and managed by boards of trustees. The suit is between citizens of different states, and is brought by complainant, in behalf of himself and other leaseholding members of Chautauqua Assembly, not residents of the state of New York, who are similarly situated, and who may wish to intervene or join the com
The special demurrer to the jurisdiction, upon which stress is laid, will be first considered. The argument of counsel for demurrant proceeded upon the theory that the bill fails to disclose an amount in dispute exceeding the sum of $2,000, exclusive of interest1 and costs. The bill as originally filed did not allege specifically the amount involved, but an amendment to the bill, filed since the demurrer and pleas were interposed, asserts that the matter in dispute between the Chautauqua Assembly and the individual complainants exceeds in value the prescribed jurisdictional amount. It is contended, nevertheless, upon the authority of Fishbeck v. Western Union Telegraph Company, 161 U. S. 96, 16 Sup. Ct. 506, 40 L. Ed. 630, that the amended bill is not conclusive, but merely declaratory, and that the facts therein alleged, and admitted by the demurrer, establish the absence of any pecuniary value whatever in the subject-matter for which suit is brought. A brief narration of the salient averments of the bill is necessary to a better understanding of the questions in controversy. Chautauqua Assembly was organized, as heretofore stated, pursuant to the provisions of the general act of the Legislature passed in 1848, for the formation of nonstock corporations; and its object and purpose were to promote Sunday school interests at Fairpoint, in the county of Chautauqua, state of New York, and to promote the moral and religious welfare of its members. At the time of incorporation, it acquired a tract of land, subject to the leasehold interests of the members of another nonstock corporation, named the Chautauqua Lake Camp-Meeting Association. Subsequently Chautauqua Assembly acquired other lands and properties, situated at Point Chautauqua. Members of Chautauqua Assembly, by complying with its rules and by-laws, might obtain a perpetual leasehold interest in certain lots or parcels of land described in the lease. It was the custom for leaseholding members of Chautauqua Assembly to erect upon the lots cottages for temporary summer homes. Other rights and privileges were vested in the members by the rules and by-laws, among which was the right to vote for trustees annually.
Is this court without jurisdiction because of the failure of the bill to set forth sufficient facts showing that a sum in excess of $2,000
I come now to a consideration of the question presented by the general ground of demurrer: Is complainant entitled to relief from a court of adequate jurisdiction? This involves a consideration of the merits as presented by the bill. The grievances here complained of appear to be analogous to those which justify a stockholder in seeking redress because of improper acts by the board of directors of a stock corporation, where the directors wrongfully govern and control the affairs of the corporation. If the facts as shown by the bill disclose ultra vires acts by the trustees, causing the affairs of the corporation to be mismanaged, or furthering the individual interests of the trustees, this, manifestly, would be such a breach of the trust obligation as would give to the member suing in behalf of the corporation a right to invoke the aid of a court of equity. Such a proceeding would be properly commenced by a stockholder against the trustees of the corporation for which they presume to act, provided, however, the corporation expressly refused to proceed, or the directors by some overt act showed a disinclination to avail themselves of the remedy open to the corporation. Davenport v. Dows, 18 Wall. 626, 21 L. Ed. 938; Dodge v. Woolsey, 18 How. 331, 15 L. Ed. 401; Hawes v. Oakland, 104 U. S. 450, 26 L. Ed. 827; Greenwood v. Freight Co., 105 U. S. 13, 26 L. Ed. 961; Pomeroy on Eq. Juris, vol. 3, §§ 1094-1095. Furthermore, the allegation of bad faith set forth in the bill must be tested to some extent, at least, by the legislative repeal of the charters of Chautauqua University and the Chautauqua School of Theology, by their merger by the act of con
From the examination given to the questions argued and the authorities cited by counsel, I conclude, first, that the ground of demurrer that the court is without jurisdiction, is not well taken; second, that the bill lacks equity, in that it does not appear that any contract or property rights are invaded or destroyed by reason of any of the acts of omission or commission charged in the bill. The court having come to this conclusion; it is unnecessary to pass upon the questions raised by the plea. The bill must be dismissed.