Teele v. Rockport Granite Co., 224 Mass. 20

Teele v. Rockport Granite Co.

224 Mass. 20 | Mass. | 1916

Rugg, C. J.

These two proceedings, one a suit in equity and the other a petition for a writ of mandamus, are brought by the plaintiff as a stockholder in the defendant corporation to compel compliance by it with the provisions of St. 1903, c. 437, § 44, on the ground that the defendant corporation has voted “to change the nature of its business.”

The purposes for which the defendant was incorporated in 1864 were “The quarrying and preparing for the market of stone in the towns of Rockport and Gloucester in the county of Essex and Commonwealth of Massachusetts, and for selling the same.” On November 6,1914, in accordance with St. 1903, c. 437, § 44, its stockholders duly adopted the amendment to its corporate purposes.

The principles of law by which to determine whether acts and conduct are within or without the bounds of the power of a corporation have been the subject of adjudication and are not unfamiliar. A corporation has power to do only such business as it is authorized to do by its charter and no other. A corporation *25cannot usurp functions not granted to it, nor stretch its lawful franchises beyond the limits of their reasonable intendment. It cannot engage in matters foreign to the objects for which it was incorporated. Its main business must be confined to those operations which appertain to the general purposes for which it was organized and which are defined in its charter. It is not clothed with all the capacities of a natural person or of an ordinary partnership. It is restricted to such as are conferred by its grant of the right to exist. Its lawful business may not vary materially from the objects for which it was created. It may, however, enter into contracts and engage in operations which, although not expressly nominated in its charter, are reasonably incident to its objects and subsidiary to its chief purpose. Whatever transactions are fairly incidental or auxiliary to the main business of the corporation and necessary or expedient in the protection, care and management of its property, may be undertaken by the corporation and be within the scope of its corporate powers. Brown v. Winnisimmet Co. 11 Allen, 326. Davis v. Old Colony Railroad, 131 Mass. 258. Hotchkin v. Third National Bank of Syracuse, 219 Mass. 234. Jacksonville, Mayport, Pablo Railway & Navigation Co. v. Hooper, 160 U. S. 514, 524, 526. Meredith v. New Jersey Zinc & Iron Co. 14 Dick. 257; affirmed in 15 Dick. 445. Woods Motor Vehicle Co. v. Brady, 181 N. Y. 145, 153.

In the light of these principles a comparison may be made of the original powers of the defendant with those described in the amendment to them. The initial power of “quarrying and preparing for the market of stone” is enlarged to include buying, selling and dealing in the same, and to acquiring, owning or leasing lands containing stone or other lands. While doubtless it would be within the original power in case of emergency, or under exceptional or unusual circumstances, to purchase finished or other stone in order to fill its orders, Lyndeborough Glass Co. v. Massachusetts Glass Co. 111 Mass. 315, there would be great difficulty in holding that it might regularly and as a part of its recognized everyday business conduct a buying and selling of stone quarried or finished by others. That is plainly within the purview of the amendment. The general contracting for the construction, alteration and repair of all kinds of structures, including buildings, docks, sea walls, breakwaters and canals, is a comprehensive *26statement of powers respecting a department of industry which hardly could be described rightly as merely ancillary to the main business of quarrying and finishing stone for market. The circumstance that such contracts can be entered into only so far as “may be necessary or advantageous for placing in such structures stone quarried or prepared by the Company” is at most an exceedingly elastic limitation upon the broad power previously stated. It well may be that the nature of present conditions of trade is such that the contracting business may be profitably joined with that of quarrying and finishing stone. But that factor does not embrace the one as simply subsidiary to the other, or prevent the combination of the two from being a change from one. The construction of railroad, telephone and telegraph lines on its own estates, if necessary for the conduct of the principal business of quarrying and finishing, doubtless might be found to be incidental to it. But the same can scarcely be said respecting the power “to construct, equip, purchase, sell, own or lease vessels of every nature and description” so far as necessary for the purposes of the company. Navigation upon the high seas with every kind of craft, for the purpose of delivering its product, cannot with any due weighing of words and ideas be considered as incidental to the business of quarrying stone any more than it can be similarly regarded as to any other kind of manufacture or trade. The right to buy and sell shares of capital stock, bonds and securities of other corporations, and to carry on the business of dealing in general merchandise, seems to extend outside the ambit of quarrying. Williams v. Johnson, 208 Mass. 544. Gloucester Water Supply Co. v. Gloucester, 179 Mass. 365, 379. The power to conduct its business in places outside this Commonwealth, where it would not be under the protection of our laws, tends to disclose a purpose to alter the kind as well as to expand the amount of the business to be carried on.

Whatever may be said as to some of these new elements introduced into the chartered functions of the defendant by the amendment, if they stood alone, the collective effect of all of them is to work a "change in the nature of its business” within the meaning of those words as used in our statute.

The plaintiff is not barred by estoppel or loches. The present proceeding does not seek relief from acts to which the plaintiff has *27given express or implied assent, but which are now averred to have been ultra vires the corporation. It rests wholly upon the privilege afforded by the statute. The plaintiff did not directly or indirectly assent to the vote of which complaint is now made. On the contrary, she opposed in the stockholders’ meeting the vote amending the statement of corporate purposes and since has consistently asserted her rights under the statute. Because she may have profited by some of the acts of the defendant, now included in the amendment, before the vote was passed, does not bar her from enforcing the rights conferred by the statute growing out of that vote.

The bill in equity is the appropriate remedy. While relief by mandamus has been carried rather far in this Commonwealth, Longyear v. Hardman, 219 Mass. 405, 406, it is not adapted to the situation here presented. It is conceivable that in some instances injunction might be necessary. The flexibility of equity is better adapted to the wrong of which complaint is made and to effectuate the kind of relief which it is the purpose of the statute to confer upon the objecting stockholder, although perhaps no case exactly like this may be found among our decisions. See New England Mutual Life Ins. Co. v. Phillips, 141 Mass. 535; Haupt v. Rogers, 170 Mass. 71; Gould’s Case, 215 Mass. 480.

An interlocutory decree may be entered for the plaintiff in the bill in equity according to the second prayer, directing the appointment of an appraiser by the defendant. Upon the finding of the appraisers being made, final decree may be entered for the amount by them ascertained, with costs. The petition for the writ of mandamus may be dismissed.

So ordered.