108 N.Y.S. 986 | N.Y. App. Div. | 1908
This is an appeal from an order granting an injunction pendente lite in- an action in equity brought to enjoin and restrain the Equi. table Life Assurance Society of the United States, its directors, officers, agents and employees from voting at any meeting of the stockholders' of the defendant, The Equitable' Trust Company of New York, or of the defendant, The Mercantile Trust Company, in favor of approving an agreement of merger, dated June 13, 1907, between said trust companies; from exchanging the capital stock of the Equitable Trust Company held by the insurance company for shares of stock of the Mercantile Trust Coiupany; and restraining the said trust companies and their and each of their directors, officers, agents and employees from carrying out the aforesaid agreement of merger. The said merger agreement and the questions arising thereunder have been considered in Colby v. Equitable Trust Co. (124 App. Div. —.)handed down herewith, and no further consideration of the questions there passed upon is necessary in this opin. ion. We, therefore, consider solely the questions peculiar to this case.
The capital stock of the Equitable Life Assurance Society is $100,000, divided into 1,000 shares of the par value of $100 each, the annual dividends thereon being limited by law to seven per cent. The plaintiff owns 15 shares of said capital stock. The charter of the society provides that the earnings and receipts over and above the dividends, losses and expenses, shall be accumulated, and that the insurance business of the company shall be conducted upon the mutual plan. The assets of the company in excess of its capital stock, according to its last report, amount to upwards of $434,000,000, of which $68,720,333 is surplus. A majority of its
The insurance company has now a considerable amount of money invested in certain -shares- of the capital stock of the Equitable Trust Company and the Mercantile Trust Company. It is provided by the terms of the proposed merger that the holders of the capital stock of the Equitable Trust Company shall surrender their stock by delivering the certificates therefor, duly indorsed in blank for transfer, to the merged company, and each stockholder shall be entitled to receive at his option either one share of the capital stock of the merged company for each two shares of the stock of the Equitable Trust Company so surrendered, or ,$435 in cash for each share so surrendered; that the holders of the present outstanding capital stock'of the Mercantile Trust Company shall be entitled to retain one share in the merged company for each share of such present stock and to receive new certificates therefor upon surrender to the merged company of the present certificates for cancellation.
If the insurance company surrenders its shares -of the Equitable Trust Company stock at the ratio of two to one, and receives shares of the merged company therefor, and surrenders its shares in the Mercantile Trust Company and receives share for share therefor of the merged company, will that transaction violate the provision of the statute cited supra, that “ no domestic life insurance corporation * * * shall * * * invest in * * any shares of stock of any corporation, other than a municipal corporation ? ”
It is, of course, conceded if this were an original. transaction ; if the-insurance company should agree to buy and pay for out of its funds shares óf stock in the merged corporation to be formed by this agreement, that it woulci yi,oíate the provisions of the statute
In 23 Cyclopedia of Law and Procedure, 348, “invest” is defined, 'as follows : “As. used in connection with money or capital, to give money for some other property;, to lay out money for some other kind of property, usually of a permanent nature; literally, to clothe money in some thing; to lay out money in some permanent form so as to produce an income ; to lay out (money or capital) in business with the view of obtaining an jqcmpq 9F profit) to plape money so that it will yi@I4 a profit,” . '
If seems to me clear that the proposed transaction, so far as it affects the Equitable Life Assurance Society does not offend against the provisions of section 100 of. the Insurance Law, added by chapter 326 of the Laws of 1906. If I am right, the proposed action of the directors in- voting the shares owned by the insurance company is not ultra vires, and as the learned court at Special Term in the Colby case distinctly held that the scheme of merger was not fraudulent, this case falls within the doctrine that a stockholder cannot enjoin the execution of a.contract intra vires unless, fraud or oppression or unfairness is shown. .As laid down in Leslie v. Lorillard (110 N. Y. 532): “ In actions by stockholders, which assail the acts of their directors or trustees, courts will not interfere unless
For these reasons, in addition to those expressed in the opinion in the Colby case, thb order appealed from should he reversed and the injunction vacated, with costs and disbursements to the appellants.
Patterson, P. J., McLaughlin, Laughlin and Scott, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.