196 A.D. 107 | N.Y. App. Div. | 1921
In October, 1919, the plaintiff was the lessee of a tract of coal land in the county of Lackawanna, comprising about 2,300 acres of land more or less. One Newton had organized the Archbald Coal Company, which was the operating company which had conducted the operations under this lease which was transferred in October, 1909, to the said company. The Archbald Consolidated Coal Company was organized by the said Newton as a holding company, owning all the stock of the Archbald Coal Company. The plaintiff transferred this lease to the Archbald Coal Company for the’ purchase price of $100,000. He was paid thereupon the sum of $25,000 and the remaining $75,000 was paid by the notes of the said-Newton secured by shares of stock of the Archbald Consolidated Coal Company of the par value of $72,500. The authorized capital stock of the Archbald Consolidated Coal Company was $150,000. Forty thousand dollars was retained in the treasury of the company and there was issued only $110,000 of the stock. The notes of Newton, together with the transfer of
In People v. Ballard (134 N. Y. 269, 270) it is held that a business corporation cannot sell all of its property to a foreign corporation, organized through its procurement, with a majority of non-resident trustees, for the purpose of taking its place and its assets and carrying on its business; as this is a practical dissolution of the corporation. Such an act is neither within the express nor within the implied powers of the directors or officers of a corporation. In effect it works a dissolution of the corporation which is in derogation of the rights of the owners of the minority stock. If this power be given the corporation, however, by any statute, one becoming a holder of the stock even though he be in the minority, takes that stock. subject to the power of the corporation and of its directors to exercise any rights given by the statute. So in New York State, by section 16 of the Stock Corporation Law (as amd. by Laws of 1920, chap. 396), a corporation, with the consent of two-thirds of its stock, may sell and convey its property,
This sale of the stock of the Archbald Consolidated Coal Company to the Archbald Coal Corporation was not a sale for cash but was a sale which involved as a consideration the exchange of stock between the stockholders of the two companies, and as the plaintiff did not consent to the organization of the new corporation and to the exchange of this stock, the plaintiff is not bound thereby and the sale as to him was an illegal sale and he can ask the court to revoke the same and restore to the old company its assets, at least, unless the new company pays to him a fair value for his stock in the old corporation.
It is urged, however, that at the time of the organization of the new corporation and of the sale of the assets of the old corporation, the plaintiff was not the owner of this stock, that he was merely the pledgee thereof, and that Newton, as the owner of the stock, voted for the transfer. But the plaintiff is not the privy of Newton. He did not obtain his title to the stock from Newton by contract made after the act of Newton in consenting to this exchange. Having the title to the stock as the pledgee thereof, no act of Newton could divest him of his rights obtained thereby and with his rights therein as pledgee, he alone, could consent to the transfer of that stock for the stock of the new corporation. If we assume the rights of Newton to vote the stock and to vote for the transfer of the assets of the old corporation to the new corporation, we are still left with the plaintiff as a non-consenting stockholder, whose rights to the stock that was held and pledged with him cannot be impaired by Newton and with the full right, either as the owner of the stock when the pledge should be forfeited or to a fair compensation for its value which he has not been offered. Of his rights as pledgee Blodget & Co. at all times had full knowledge. The offers of the defendants to give to him certain control of the
The order appealed from was properly granted and should be affirmed, with ten dollars costs and disbursements.
Dowling, Laughlin, Merrell and Greenbaum, JJ., concur.
Order affirmed, with ten dollars costs and disbursements.