128 P. 612 | Wyo. | 1912
This action was brought by John Smith, who alleges in the petition that it is brought on behalf of the Bear River Land & Stock Company, a corporation, and on his own behalf as a stockholder of said corporation, and on the behalf of all other stockholders who may desire to come in and be made parties to the cause and bear the expenses incurred therein. The defendants named in the petition are Charles Stone, John H. Ward, George E. Pexton, John R. Arnold, Otto Arnold, A. E. Bradbury, James Smith, J. C. Riley, Crawford Land Company, a corporation, Bear River Land & Stock Company, a corporation, and Bear River Development Company, a corporation. The petition alleges as a reason for joining James Smith and J. C. Riley as defendants that the plaintiff has been unable to procure their consent to be made plaintiffs in the cause. Each of the defendants, except James Smith and J. C. Riley, filed a separate general demurrer to the petition, and said demurrers
The object of the action, stated generally, is to avoid a sale of the property and assets of the Bear River Land & Stock Company which may have been made and which the petition seems to assume was made to the Crawford Land Company, a corporation, pursuant to a resolution adopted at the annual meeting of the stockholders of the Bear River Land & Stock Company held on the 2nd day of October, 1906, and a like resolution adopted on the same day at a meeting of the trustees of said corporation, and' also a sub1 sequent sale of said property and assets alleged to have been made by the Crawford Land Company to the Bear River Development Company, and to require an accounting by the defendants and each of them, except James Smith and J. C. Riley, of the money received by them or either of them from the 'sale of the assets of the said Bear River Land & Stock Company and the amounts expended, and the payment of alleged debts of said corporation.
, The petition alleges that'at all the times mentioned therein each of the companies above named was a corporation 'existing and doing business under the laws of the State of Wyoming; that The plaintiff is a stockholder in the 'Bear River Land & Stock Company, owning 98 shares of its capital stock; that said capital stock consists of $150,000, divided into 1,500 shares of the par value of $100 each,, of which 765' shares have been issued and were outstanding oil the 2nd day of October, 1906, the-,defendant Charles Stone holding 228 shares, the defendant Otto Arnold 1 share, the defendant John R. Arnold 1 share,- the defendant George E. Pexton 56 shares, the defendant John H. Ward 57 shares, the defendant A.‘ E. Bradbury 115 shares, the de
That on the 2nd day of October, 1906, the said Bear River Rand & Stock Company, as plaintiff is informed and believes, and therefore alleges the fact to be, was the owner of certain real estate described in the petition, “most of which said property was highly improved, and that the value of said property so belonging to said corporation was in excess of the sum of $70,000.00 and that at said time said corporation owned and possessed horses, cattle, hay, grain and other personal property of a value in excess of $55,000.00.” And in another place in the petition it is alleged that the property of said corporation on said date was the reasonable and market value of $i25;OOO.oo, “which said fact was known to each of said trustees at said time.”' The petition further alleges upon information and belief that the defendants Stone, Ward, Pexton, Bradbury and Otto Arnold were at the time aforesaid, associated together in the banking business in Evanston, Wyoming, under the firm name of North & Stone, “and at all the time the said John R. Arnold and Otto Arnold, brothers-in-law of said Charles Stone, and all of the said parties were the particular owners, holders and controllers of the Crawford Land Company; that the said John R. Arnold was a mere nominal stockholder in the Bear River Land & Stock Company, and as a request of, and as an accommodation to the said' Charles Stone, owning but one share of stock therein, and fire said Otto Arnold was but a mere nominal stockholder in the said corporation at the request of, and as an accom
It is further alleged in the petition that on the 12th day of April, 1907, the plaintiff caused to be served upon each of the trustees of the Bear River Land & Stock Company' a notice “in words and figures as set forth in exhibit'' ‘A’ attached hereto and made a part of this complaint; but notwithstanding said notice no endeavor or effort has been made by the officers or trustees of said corporation to investigate the facts set forth in said notice, or institute any proceedings of any description to preserve and protect the interests of said company or the stockholders thereof.” That the plaintiff, together with James Smith and J. C. Riley, instituted a suit in said District Court on behalf of themselves and all other stockholders of the Bear River Land & Stock Company that might choose to come in and be made parties to said action “upon the same cause of action set forth herein against all the defendants, except the Bear River Development Company, and prosecuted said suit until the 16th day of September, 1908, at which time said action was dismissed without prejudice.”
The prayer of the petition is, (1) That the attempted conveyance of the Bear River Land & Stock Company to the Crawford Land Company be decreed to be void. (2) That the conveyance from the Crawford Land Company to the Bear River Development Company be set aside and held for naught. (3) That the defendants and each of them, except James Smith and J. C. Riley, be required to account to the plaintiff and all others interested who may join in
The petition is indefinite and uncertain in several important particulars. A defect of that kind is ordinarily to be corrected by motion to render the pleading more definite and certain by amendment, and is not ground for demurrer. We recognize the distinction in the rules of code pleading between an entire failure to state a cause of action and the statement of one in an imperfect and defective manner. But in the case of this petition the defect relates 'to so many material facts respecting which the averments in this kind of action ought to be reasonably definite and certain that it might properly be held, we think, to amount to a failure to state a cause of action rendering the petition demurrable. (Wheeler v. Pullman I. & S. Co., 143 Ill. 197, 32 N. E. 420, 17 L. R. A. 818.) As said in-a recent similar case, “a bill founded upon fraud or misconduct which does not allege with certainty and definiteness tangible facts to sustain its general averments of such fraud and misconduct is insufficient, and cannot be sustained.” (Smith v. Chase & Baker Piano Mfg. Co. (D. C.), 197 Fed. 466.) The indefinite character of many of the averments will be referred to as we discuss the propositions involved. It is sought by the petition to avoid and vacate a supposed sale of the assets and property of the Bear River Land & Stock Company, and to require an accounting by several of the defendants of the money received by them as the result of such sale. It is contended as one ground for avoiding the sale and setting it aside that the meeting of the stockholders at which
A remarkable thing about the petition is that it fails to ’definitely allege the fact of a sale of the property and assets •of the company to the Crawford Land Company. Clearly, 'it is not directly alleged that such a sale was made, or that the conveyances or instruments for the purpose of conveying the title to such assets and property authorized by the resolutions referred to were ever executed or delivered. That such a sale or transfer was in fact made is only inferentially alleged, if at all, by the statement in the petition,' ’’“that upon the transfer to it of the entire assets, the said Crawford Land Company conveyed all the assets of the Bear River Land.& Stock Company to the defendant, the 'Bear River Development Company, without consideration of any kind,” and the further statement that “plaintiff is 'informed and believes that the said Bear River Development Company has disposed of all the assets to (of) the said Bear River Lan<l & Stock Company for a sum much tgreater than the said alleged debt due to the said North &
Disregarding for the purpose of further discussion ■ the indefinite* character of the averments. respecting the sale of the property, and assuming it to be alleged that the property was sold and transferred to the Crawford Land Company for $76,500 to satisfy the debt due to North & Stone, we find that the only allegation of fact furnishing any basis for the general charges of fraud connected with such sale is ■that the reasonable and market value of the property was $125,000, and that such fact was known at the time “to each of said trustees.” It is not alleged as a fact that a greater price could have been obtained for the property either at private or public sale, although it is alleged that the objecting stockholders informed the majority stockholders and the trustees at the meetings referred to that a much greater price could be obtained if an endeavor was made to do so'. That allegation goes no further than to show that such a statement was made by the objecting stockholders at the meeting of the stockholders and also at the meeting of the trustees. It does not amount to an allegation that a greater price could in fact have been obtained. There is no averment that any greater offer was made for the property or that anyone was ready, able and willing at the time to pay a greater price for it. Nor is it alleged that any of the defendants received any money or benefit as a result of the sale other than the benefit which resulted to the cor
In the absence of fraud the fact that a difference of opinion may have existed between the majority and minority stockholders would not justify interference by a court of equity. In Cook on Corporations, Sec. 684, it is said: “The-
There are general allegations of fraud in this petition, based upon information and belief, referring to the purpose for which the transfer was made to the Crawford’ Band Company at the price named in the resolutions authorizing the same, and also the purpose of the transfer by the Crawford Land Company to the Bear River Development Company. The allegations are that the purpose was to obtain the property worth at least $125,000 in satisfaction of the debt of $76,500, and to defraud the plaintiff and the defendants Smith and Riley out of their interest in the cor
It is not necessary to determine whether the facts alleged in this petition with reference to the terms and conditions of the sale to'the Crawford Land Company, the resolutions authorizing the same, the purpose thereof, and the value of the property, would render the petition sufficient to enjoin the'sale had an action been timely brought for that purpose; nor whether such facts would be sufficient, without an offer to refund the purchase price, to entitle the plaintiff to a decree setting the sale aside, if the property remained in the possession or under the control of either the Crawford Land Company or the Bear River Development Company. But if it be conceded that upon the facts alleged the plaintiff would have been entitled to equitable relief avoiding the sale, if he had brought an action therefor while the property remained in the possession of either of the companies named, or could be restored to the selling company, any right to such relief has been lost through the laches of the plaintiff appearing upon the face of the petition. For such acts on the part, of the stockholders and trustees as those complained of the corporation itself is primarily the party entitled to bring an equitable suit for relief, and a stockholder can sue only on behalf of the corporation when the latter either actually or virtually refuses to prosecute. In
It appears by the allegations of the petition that the plaintiff was aware of the proposed sale and the circumstances and conditions thereof at the time of the annual meeting and the meeting of the trustees when the respective resolutions referred to in the petition were proposed • and adopted, namely, on the second day of October, 1906, and that he took no steps to prevent the sale until the 12th day of April, 1907, when, it is alleged, he served upon each of the ^ trustees a notice as set forth in an exhibit attached to and made- a part of the petition. Without deciding whether that notice is properly a part of the petiition or not, it ap*-pears by reference to it that prior to the notice the plaintiff had been informed that certain instruments had been executed by the president and secretary of the company pretending to convey to the Crawford Land Company the title to all of the assets of the Bear River Land & Stock Company, and that the possession of all of said property had been transferred to said grantee. And this suit was.not
Upon the allegations of the petition the prayer for an accounting would seem to have been inserted as incidental to the relief prayed respecting a decree avoiding the sales. But treating the prayer for an accounting as separate and distinct, we think that sufficient facts are not stated to entitle the plaintiff as representing the corporation to an accounting from either of the defendants. It has already been stated that there is no averment that any individual defendant received any profit out of the transaction or transactions complained of, and that the only allegation in this respect 'is that'the property was disposed of by the Bear River Development Company for a sum much greater than the debt due to North & Stone. But that does not necessarily imply an unfair or an unreasonable profit or advantage, and is not sufficient in our opinion to require an accounting by that company. The theory of the petition as to the situation and liability of the Bear River Development Company respecting the transactions, complained of seems to be that that company occupied the same relation to the transaction as the Crawford Land Company, it being alleged that the stockholders and trustees of the Bear River Land & Stock Company, whose acts are complained of, own and control the Bear River Development Company, and that the property' was transferred to that company by the Crawford Land Company without consideration. But as sufficient facts are not shown to justify a decree setting aside the sales -or declaring them void, the mere general