135 Iowa 240 | Iowa | 1907
The case is overburdened with abstracts, amended abstracts, and three large volumes of a typewritten transcript; each and all containing a great deal of immaterial and irrelevant matter. Primarily, the entire controversy is over the control of a corporation known as the Le Febure Ledger Company; most of the stockholders being divided into two hostile camps. It has been with great difficulty that we have extracted what seems to be the material and controlling facts, and, if any mistake be made in the statement of these, it is due to the confused state of the record. The case was argued orally, but from that we received no help whatever, and in turning to the printed briefs we find quite as much to confuse as to assist in untying the legal knots involved.
The Le Febure Ledger Company ivas incorporated October 28, 1897, with an authorized capital of $20,000, divided into shares of $25 each, and the articles provided that each share should be entitled to vote at all stockholders’ meetings, whether special or annual. Emil Le Febure was the promoter of the company, and he exchanged a patent which he held for $10,000 worth of stock. But $7,500 more of the stock was issued prior to March 10, 1905, and on or about that date it Avas voted to issue the remainder of the stock to the amount of $2,500, to be sold for cash or given
Pursuant to the action of the board; plaintiff in the first case, who held certain shares of stock in his own name, applied for his pro rata of the $10,000, being one and one-half shares, and for twenty-eight shares ón account of stock issued to Mrs. Le Febure and one Tamblyn, and by them transferred to Emil Le Febure, Jr., and by him transferred to plaintiff Schmidt; and W. B. Beid applied for twenty shares on account of stock issued to Mrs. Le Febure and by her transferred to Emil Le Febure, Jr., and by him transferred to Beid. These applications were all made prior to
It is conceded, however, that the board of directors did not immediately insist upon the closing up of the contracts for these pro rata issues of stock, and, resting in the belief that he had made timely application for his stock, plaintiff on May 27, 1905, went to the secretary of the company and delivered him a check for $1,700, receiving from the secretary a receipt which, so far as material, shows that the check was to cover the purchase price of the following stock, to-wit: “ Twenty-eight shares on account of Mrs. Bertha T. Le Febure and W. FI. Tamblyn and transferred by them to Emil Le Febure, Jr., and retransferred by him to Geo. R. Schmidt, applied for by 10 o’clock a. m. 3-20-05. Twenty shares on account of Mrs. Bertha T. Le Febure transferred by her to W. B, Reid, applied for by 10 o’clock a. m. 3-20-05. Twenty shares on account of Mrs. Bertha T. Le Febure transferred by her to Emil Le Febure, Jr., and re-
The check was returned to Schmidt by the secretary May 31, 1905, by registered letter; the secretary insisting that he had no authority to receive it, and that plaintiff was not entitled to any shares subscribed for after March 20, 1905, at ten o’clock a. m. There were issued to plaintiff forty shares of stock of the par value of $1,000, for which he paid; but twenty-eight shares of the value of $700 were withheld from him, because it is claimed his application therefor came too late, and that these twenty-eight shares were sold on the open market going into the hands of the defendants, or some of them. It is these twenty-eight shares which are the subject of controversy herein. If we get the facts from the record, defendants were mistaken in withholding twenty-eight shares, for at most plaintiff had applied for but twenty shares on March 21st. His application on March 20th, including the one put in by Reid, which he now claims to hold, amounting, excluding his own personal stock which has already been issued and settled for, to forty-eight shares. In this connection, it may be noted that one Hume made application for all unsold stock March 20, 1905 and being advised, or claiming to have been advised, of an extension of the time to March 21st, he renewed his application for all unsold stock at that time. Under any version of the record, plaintiff did not get all the stock to which he was entitled, for he had applied for all save twenty shares of the value pf $500. before ten o’clock a. m. March 20, 1905.
There can be no doubt under the record that defendants were endeavoring to prevent both plaintiff and Einil Le Febure from getting their just proportion of the $10,000 increase in the capital stock in order to keep the control of the corporation in their own hands,- and they so manipulated the ‘ affairs of the corporation that if unsuccessful they could withdraw $2,500 subscribed by them to that amount, to
And here we may digress for a moment to say that, when the annual meeting of the stockholders came about in June of the year 1905, an injunction having been obtained against Achter and his associates from voting the twenty-eight shares of stock in controversy, the meeting was adjourned against the protest of Grünewald and Le Febure upon 'viva voce vote, until the final determination of the case in court; thus apparently perpetuating the defendant faction in office until the conclusion of that case.
• Tf the remedy of specific performance will lie in such cases as this, it is manifest that plaintiff is entitled to. have some of the shares applied for by him decreed to be issued, 'for defendants have not delivered all that he seasonably applied for. Whether or not he is entitled to the entire twenty-'eight shares depends primarily upon whether or not his application made March 21, 1905, was timely. This is a question of fact affirmed on the one side, and denied upon the other. We have carefully examined the record on this point,
Again, it is said that plaintiff did not object to the so-called sales on the open market, but this is distinctly negatived by the record.
Almost immediately Grünewald, who was vice president, and who represented the Le Pebure faction, made a motion to .reconsider; but the president refused to recognize his motion, declaring that the meeting was adjourned. Grünewald then asked the president if he refused to recall the adjournment, to which the president responded that he did. Grünewald, who was vice president, then recalled the adjournment, because it was not declared by a stock vote, and called the meeting to order as vice president, and Schmidt was elected as temporary secretary. . It was then discovered that there were five hundred and ninety-four and one-half shares present and participating in this meeting, presided over- by Grünewald, not counting the twenty-eight shares in dispute. These stockholders then proceeded by stock vote to elect defendants in the second case as the board of directors for the year commencing in June, 1905. After the election of the board, it (the board) proceeded to elect Le Pebure as president, Grünewald as vice president, Buckman as treasurer,
It is provided in the articles of incorporation and bylaws of the Le Febure Ledger Company that each share of stock shall be entitled to vote at all stockholders’ meetings, whether annual or special, and that a quorum of stockholders for the transaction of business shall eonsist of the presence of representatives of a majority of the stock subscribed. That a vote should be cast by the stockholder, if present; or by a representative holding a proxy, if not present. It was also shown that it was customary to vote on adjournments and other matters, except the election of directors, by viva voce vote. From this statement it will be observed that plaintiffs claim to be entitled to the management of the corporation as “ holdover ” officials by reason of the adjournment mentioned, while defendants claim to be entitled to the management of the business because of their election at the regular annual stockholders’ meeting in June, 1905. The record of the proceedings of the stockholders as kept by Schmidt reads as follows:
Minutes of Stockholders’ Meeting of Le Febure Ledger Company, at the Time and Place Fixed by the Articles of Incorporation, the Office of the Le Febure Ledger Company, No. 224 First Avenue. There were present the following stockholders: Achter, Fuhrmeister, Irving, Pritchard, Grünewald, Emil Le Febure, Leo Le Febure, Bertha T. Le Febure, B. II. Buekman, Fred IIluss, and George R. Schmidt. That all the stock of said corporation was represented in person or by proxy. Thereupon E.'S. Pritchard, president, and II. J. Acliter, manager,- attempted to adjourn
After this election, and before the service of the temporary writ of injunction in the second case, each faction claimed to be in control of and directing the business of the company. Grünewald and Le Eebure remained in the building over night and assumed to direct the employes, while Euhrmeister had possession of the office and books and of the combination to the safe in which the books were kept Achter and his faction had a policeman present to protect the property and to prevent the other faction from getting into the safe. The trial court held that the order for adjournment upon viva voce vote was illegal, decreed the election of the defendants as officers to be valid, and ordered plaintiffs to turn over the books and paper and business of the corporation to the defendants as officers and' directors. The appeal challenges these rulings.
It is the general, if not universal, rule that a court of equity has no power or jurisdiction to entertain a bill for the purpose of reviewing a corporation election, much less to oust
The result of the whole matter is that the first case must be affirmed, and the second reversed. Appellants will pay two-thirds, and appellees one-third, of the costs of this appeal.— Affirmed on first appeal. Reversed on second appeal.