Pacific R. Co. v. Cutting

27 F. 638 | U.S. Circuit Court for the District of Southern New York | 1886

Wallace, J.

A fund is in court for distribution among the stockholders of the complainant according to their respective interests. One class of participants insists that participants of another class should not share equally in the distribution, because the latter have appropriated to themselves exclusively another fund belonging to the corporation, tlie proceeds of which should be distributed equally among all tlie stockholders. If the suit under which the fund is brought hero for distribution were one to settle all accounts between the corporation and its stockholders, and to distribute all its assets according to the respective rights of the stockholders, then it might well be urged that the court must ascertain what moneys or property belong to the corporation, whether actually brought into court or not,—and if it should appear that moneys belonging to it have been appropriated by one class of stockholders to the exclusion of another class, a decree would be made proceeding upon that basis. If the fund actually brought in would be sufficient to satisfy the just claims of the stockholders who did not share in the fund which has been appropriated by the others, the decree would provide for a distribution by which the claims of the former would bo satisfied in full, and the claims of the latter reduced by deducting what they had already received. But this suit is brought to distribute a specified fund, which the corporation is unable to distribute by its own instrumentalities. By reason of different relations sustained towards this fund by different classes of stockholders, the corporation is equitably required to discriminate between them, and to recognize the right of one class, by reason of the expenditures they have incurred to produce the fund, to have an additional allowance made to them which will reimburse them. The claim of this class for reimbursement is one against the corporation, and is an equitable lion upon the fund which they have realized for the corporation. Further than this the corporation does not seek to adjust the rights of stockholders to share in its property.

Upon the facts alleged by Mr. Kerens, and those who unite with him, the moneys received by the stockholders of the Cowdrey committee belong to the corporation if they do not belong tp those stockholders personally. An action to recover these moneys must be brought by the corporation, unless it refuses to suo, and a case can be made authorizing a stockholder to sue in behalf of the corporation. A decree in such a suit would conclude all the stockholders as well as the parties defendant. The determination of an issue in this suit between stockholders of one class and those of another, concerning the respective rights of each in a fund not sought by the bill to be brought into court for distribution, might conclude the immediate parties to the issue, but certainly would not adjudicate the rights of others. The stockholders of the Cowdrey committee could not invoke the adjudication as an estoppel if they should succeed, when other stockholders, not parties to the issue, might seek to retry the questions' involved. If any stockholders are entitled to require the corporation to make a general distribution of all the property among the stockholders, they must seek relief by an original bill, or an original bill in the nature of a cross-bill.

Tho master is therefore directed to proceed in conformity with these views.