89 N.J. Eq. 177 | N.J. | 1918
The opinion of the court was delivered by
This is an appeal from a decree advised by Vice-Chancellor Lane denying the application of the defendants for an order dismissing the bill of complaint for want of equity, and granting a preliminary injunction restraining the defendants from completing statutory proceedings taken by them for the dissolution of the defendant the Distilling Company of America until the further order of the court.
It appears by the bill that the complainant is the owner of three hundred and fifty shares of the preferred capital stock of the Cuba Distilling Company; that in the year 1907 the Distilling Company of America entered into an agreement with the Cuba company and a corporation known as the Matanzas Railway and Warehouse Company, which, after reciting that the Cuba company had an authorized preferred capital stock of twenty-five thousand shares of the par value of $100 each, of which ten thousand shares had been actually issued, and fifteen thousand shares were about to be issued, agreed that it, the Distilling Company of America, would guarantee to the then present and all future holders of all or any part of said twenty-five thousand shares of Cuba preferred, so- long as the same should be issued and outstanding, not exceeding the period of
The order appealed from is attacked upon several grounds. First, it is contended that the bill should have been dismissed for want of equity, because there appears to be no authority vested in the defendant company to guarantee the payment of dividends on Cuba preferred stock. It appeal’s in the defendant’s certificate of incorporation that there had been conferred upon it the right to guarantee and secure the payment or satisfaction of dividends on shares of stock of other corporations, providing it does so for the purposes of its own business, or any part thereof. The argument upon this point submitted on behalf of the appellants is that the hill fails to disclose that the guarantee in the present case was for the purposes of the business of the distilling company, or any part thereof. This argument seems to us to be unsound. Where a power is conferred upon a corporation to be exercised under certain conditions, and it exercises that power, the presumption is that it exercises it legally, and not in violation of law. For to hold the act illegal, in the absence of any affirmative allegation, would be to declare that the corporation had perpetrated a fraud upon the statute, as well as upon the other contracting party. Moreover, the contract of guarantee expressly declares that it is made “for good and valuable consideration the receipt of which is hereby acknowledged ;” and even if it be conceded that this guarantee was ultra vires, the distilling company cannot now take advantage
It is further argued that the bill should have been dismissed because it does not appear that tire stockholders of the distilling company approved the contract of guarantee. The bill itself shows, we think, by necessary inference, that this contract received the approval of at least ninety per cent, of the stockholders at the annual meeting held next after the making of the contract. But whether it did receive such approval or not seems immaterial. The contract was a valid one, so far as the bill shows, made for a good and valuable consideration, and within the power of the directors to make. It, consequently, required no ratification by the stockholders. Moreover, if such ratification was necessary, the only parties who can now raise the question are the stockholders who did not approve the contract, and they are none of them here challenging its legality.
Next, it is said that it does not appear on the face of the bill that this contract of guarantee was for a valuable consideration. This assertion, however, is contrary to the fact. The contract itself is set out at length in the bill; it expressly recites that the distilling company received a good and valuable consideration for the guarantee, and that admission on its part justified the court of chancery in so declaring.
The principal ground of attack, however, made upon, the complainant’s bill is that, by the provision in the contract that no voluntary or involuntary dissolution or merger or consolidation of the distilling company should release, discharge, modify or affect the guarantee in any way, the distilling company stripped itself of a power conferred upon it by the statute (that is, the power to voluntarily dissolve), and that the public policy of the state makes such an agreement void. It. may be conceded that a corporation organized under our laws cannot bargain away any of the franchises or powers conferred upon, it by the legislature for its own selfish purposes, and in derogation of the sovereign
We conclude, therefore, that the motion to dismiss the bill was properly denied, and that the restraining order appealed from (it being in force only until the court shall otherwise order) should be affirmed.
For affirmance — The Chief-Justice, Swayze, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, White, Heppenheimer, Williams, Taylor, Gardner — 13.
For reversal — Hone.