102 Neb. 93 | Neb. | 1918
In May, 1910, the Woodmen Fire Insurance Company was organized, uiider our statutes, as a joint stock company, having 1,000 shares of stock of the par value of $100 each. Each shareholder paid in $125 a share, giving the company a paid-up capital stock of $100,000 and a surplus of $25,000. The six defendants were duly elected directors of the corporation. In June, 1911, the defendants, as directors of the Woodmen Fire Insurance Company, attempted to purchase the Union Fire Insurance Company, Mutual, and paid to the directors of that company $26,000 as the purchase price. It was agreed between the directors of. the two companies that the directors of the Union Fire Insurance Company, Mutual, should resign and the directors of the Woodmen Fire Insurance Company should be elected in their places, which was accordingly done. A stockholder of the Union Fire Insurance Company objected to this transaction and prevented it by injunction. Thereupon the $26,000 was returned by the Union Fire Insurance Company. On the 8th day of January, 1912, the defendants, as directors of the Woodmen Fire Insurance Company, entered into a contract with the Fidelity Phoenix Insurance Company of New York, by which' they agreed to turn over the business of, their company to the New York Company, and agreed that the Woodmen Fire Insurance Company should solicit no more loans and do no further business for a period of five years. They instructed the agents of their company to transact no further business, and the Woodmen Fire Insurance Company ceased to exist as a going concern. At the annual meeting of the stockholders of the Woodmen Fire Insurance Company on the 20th day of January, 1912, this contract with the Fidelity Phoenix Insurance
The first question presented is as to. the form of the action. It is contended that the corporation is a necessary party to this action, and that these plaintiffs, as stockholders, cannot maintain the action. The plaintiffs- alleged in their petition that they brought this' action in their own behalf and for all others similarly situated that might become parties to the action. The court tried the case as an action in equity and without the intervention of a jury, but made no special finding’s of fact. In the prascipe for appeal the parties are designated as Frank P. Sheldon et al. v. C. J. Bills et al., and the prascipe designates “the above-named plaintiffs as appellants, and the. above named defendants as appellees.” This, of course, is irregular. Rule 18, Supreme Court Rules (94 Neb. XV), requires that the praecipe shall state “the names of all parties and their relations to the case as they appeared in the court below. The prascipe shall also specify the party or parties appealing, and designate all others made parties to the appeal as appellees.” There was no motion to dismiss the appeal, but the appellees in their brief object that the defendant Woodmen Fire Insurance Company is not made a party to the appeal, and asks that the appeal be now dismissed for that reason. The petition contained in the transcript contains the names of all of the. defendants, and all of the defendants, including the Woodmen Fire Insurance Company, joined in the answer. It is not made to appear that these defendants were not duly notified of the appeal, and the objection now made to the appeal is too late.
It is next contended by the plaintiffs that the action of the defendants in their attempted purchase of the Union Fire Insurance Company was beyond their
“Directors of an insurance company, who use its funds to purchase the interest of the incorporators of another company, the latter having no interest that the purchasing company could buy, and the thing accomplished being the resignation of' the officers of the second company and the substitution of the directors of the first, are joint tort-feasors, and liable for wasting the corporate funds.” (93 Am. St. Rep. 623) The remarks of the court in that case as to the conduct of the defendants in entering into the contract are, we think, especially applicable in this case, and we quote them, as follows:
“It is not our purpose to question the character or the motive of the defendants in carrying out the transaction. We may readily concede that they thought they were acting for the best interests of the company which they represented. They doubtless thought that by getting control of the Maine company and getting themselves installed as officers they could get the policyholders in that company to transfer' their in*98 surance into the Commercial Alliance Company; but good motives and good intentions do not render the transaction valid or’ relieve them from liability for the wrong which they have committed.”
The analogy between the two cases is apparent from the following language of the opinion:
“The Maine incorporation was not a stock company. Its officers had no stock in the company which they could sell or transfer, and consequently there was nothing that the Commercial Alliance Company could purchase. The thing accomplished by the transaction was the resignation of the officers of the Maine company and the substitution of the defendants or their representatives.”
The greater part of the $26,000 so taken by these defendants from the assets -of the company was returned within about eight months thereafter. The evidence shows that this transaction directly cost the company attorney fees and other items of expense. There is also evidence tending to show that the company received from the Union Fire Insurance Company some money in the settlement with that company, and also was put to some additional expense on account of their attempt to handle some of the business of the company. These defendants would be liable in this case for such part of the $26,000 as was lost to the company and such sums as the company expended in the transaction, and in adjusting their affairs with the Union Fire Insurance Company. Against these should be offset such sums of money, if any, as were received by this company from the Union Fire Insurance Company, or on account of their transaction with that company. The plaintiff George L. Sheldon was one of the seven directors of the company, but he was absent from the state during the transactions complained of, and did not participate in, or have any. knowledge of, those transactions, so that the fact that he was one of the directors has no bearing upon the
The judgment of the district court is reversed and the cause remanded, with instructions to allow the parties, if so advised, to amend their pleadings and furnish additional evidence.
Beverseb.