17 Del. Ch. 325 | New York Court of Chancery | 1931
First, as to the motion to dismiss. No answer has yet been filed by the intervenors. They have filed a paper in the form of an answer. But by the terms of the order allowing its filing, it is to be taken as an affidavit only in considering the motion to dismiss, and as an answer in case the motion to dismiss is denied. The motion to dismiss therefore stands in the technical position of having been filed before answer.
In Holschumaker, et al., v. Etchells, et al., 9 Del. Ch. 33, 74 A. 644, a motion to dismiss after answer filed because of a want of equity appearing on the face of the bill was made after answer filed. The Chancellor permitted the motion to stand and dismissed the bill. He observed, however, that inasmuch as in the case before him a motion to dismiss the bill was in the nature of a demurrer, the better and more orderly practice would be to require that a demurrer be filed instead of a motion to dismiss. There were precedents for motions to dismiss for want of equity after answer filed, and so the Chancellor in the cited case, notwithstanding he regarded the practice as undesirable, proceeded to pass on the motion then pending before him. In the Federal courts motions to dismiss have supplanted demurrers.
The instant case is distinguishable from the one found in 9 Del. Ch. 33, 74 A. 644, supra, because the ground upon which it rests is not apparent on the face of the bill. The only facts shown by the bill which can in any wise bear upon the charge of collusion, on which the motion rests, are that the president and vice-president of the complaining corporation are the president and vice-president respectively of the defendant corporation. These facts are too meager to justify the conclusion that the complainant and defendant are not genuinely adversary parties. The identity of other officers of the two corporations is not shown by the bill; neither does it disclose the personnel of the two directorates, or that they are dominated by the same individuals. Information upon these points is revealed solely by the intervenors’ affidavits.
When the motion to dismiss was filed no order was either asked for or entered directing how the motion should be heard. Affidavits were permitted to be filed by the intervenors; but no order on the complainant was made directing it how and when
Thus the motion which if granted would terminate the suit in this court is presented in a fashion that the mover has assumed to be satisfactory.
. This is the first occasion when a motion to dismiss based on matters dehors the record has been presented in this State. Before venturing to appear to endorse the practice which has been followed in this case and thereby establishing it as grounds for a precedent, I prefer to have the benefit of the views of the solicitors in the cause upon the question of procedure. There seems to be no doubt upon the general proposition that a person who is not a party to a cause but who may be affected by its determination, is entitled to an opportunity to present to the court a motion to dismiss on the ground that the formal parties to it are not in fact adversary litigants, and that they are acting in concert to secure a result injurious to him. Lord v. Veazie, 8 How. 251, 12 L. Ed. 1067; Cleveland v. Chamberlain, 66 U. S. (1 Black) 419, 17 L. Ed. 93; Livingston v. D’Orgenoy, (D. C.) 108 F. 469; American Wood Paper Co. v. Heft, 75 U. S. (8 Wall.) 333, 19 L. Ed. 379; Judson v. Flushing Jockey Club, 14 Misc. Rep. 562, 36 N. Y. S. 128; 1 C. J. 974; 15 C. J. 784.
I am not satisfied, however, to proceed to pass upon the motion in this case until the question of procedure has been considered with the assistance of the solicitors in the cause. If I were to pass upon the motion, keeping only the bill before me, I should deny it. But if the facts were as the intervenors’ affidavits disclose, the matter would require serious consideration. Not being satisfied that it would be proper to consider these affidavits now before the court as controlling on the motion to dismiss, the motion will stand over for later disposition if the intervenors choose further to press it.
The next and final question to be considered is whether a
I do not think that such a situation constitutes ground for equitable relief. If it be true that Levinson and his associates have had as full information as they are entitled to, or that their motives in seeldng the examination are improper ones, the defendant would be entirely justified in refusing the inspection. State ex rel. Theile v. Cities Service Co., 31 Del. (1 W. W. Harr.) 514, 115 A. 773, 22 A. L. R. 8; and in the mandamus suit which has been filed in Illinois, the defendant would be permitted to show those facts by way of an effective defense. Rodger Ballast Car Co. v. Perrin, 88 Ill. App. 323.
If the defendant corporation is being harassed by the so-called nuisance demands of Levinson and his associates, as is claimed, it is but undergoing an annoyance and vexation that is not at all uncommon to corporations. If in the judgment of its directors it appears wise for prudential reasons to succumb to the annoying demands, I think the matter lies so appropriately in the field of management, that a stockholder has no right to the aid of a court of equity to assist him in overcoming the judgment of the directors. A presumption exists that corporate action whether by stockholders or directors in the sale of assets is in the best interests of the corporation. Robinson v. Pittsburgh Oil Refining Corp., 14 Del. Ch. 193, 126 A. 46; Finch v. Warrior Cement Corp., 16 Del. Ch. 44, 141 A. 54; and in Davis v. Louisville Gas & Electric Co., 16 Del. Ch. 157, 142 A. 654, it was said generally that courts will not upset the decisions of either directors or stockholders as to questions of policy and business management. An abundance of authority in other jurisdictions might be cited to the same effect. Fraud, actual or presumed, or illegal or ultra vires misconduct must be shown to • justify an interference by
The rule for preliminary injunction will be discharged. The motion to dismiss will stand over for subsequent disposal.