Weitze v. Burrage

190 Mass. 267 | Mass. | 1906

Sheldon, J.

We are of opinion that the demurrers of the respective defendants must be sustained.

Ho relief is sought against the defendant Burrage except that he be held for the payment of costs. The object of the bill is to set aside the agreement for a sale of the stock or voting trust certificates of John P. Squire and Company, a corporation, which has been made by the five last named defendants, called the protective committee, with the defendant Ballou, on the ground that the committee had no authority to make that agreement, and that it secured the assent of the owners of the certificates to the agreement by withholding from them information to which they were entitled and through the lack of which they were induced to give an assent which otherwise they would not have given. Burrage is not a party to this agreement. The bill charges that he, being a director and the active manager of the finances of the corporation, with the intent to secure the control of the business and the capital stock for the defendant Swift, mismanaged and crippled its business so as to reduce the market value of the certificates and induce the protective committee to make the agreement in question with Ballou, who was really acting for Swift, as the bill alleges.

Plainly, if these averments of the bill are true, the company, or, if the defendant Burrage was able by his control to prevent action by the company, then the individual stockholders, would have a remedy against him for these wrongful acts. Warren v. Para Rubber Shoe Co. 166 Mass. 97. Brewer v. Boston Theatre, 104 Mass. 378. But this bill is not brought to obtain such a remedy against him; it has neither the necessary pai'ties nor the necessary averments for that purpose; and no contention is made in argument that it can be supported upon that ground. See Doherty v. Mercantile Trust Co. 184 Mass. 590; Dunphy v. Traveller Newspaper Association, 146 Mass. 495. Nor is it alleged or contended that Burrage and the protective committee were acting in collusion to sell the stock below its value or for any other unlawful purpose, or that there was any concert of action between him and either Ballou or Swift, or that he had any interest in the purchase by either of them. His alleged frauds are in no way connected with the action of the protective committee which is complained of. The only charge against him is that he was guilty of a breach of trust not connected in any way with the relief which is prayed for. It is clear that the bill cannot be maintained against him.

As to the other defendants, the main question is whether on the averments of the bill the agreement made by the protective committee for the sale to Ballou of the pooled stock was within the powers conferred upon the committee by the agreement of February 5,1903; and it seems plain to us that it was. That agreement by its fourth clause expressly authorized the committee “ to negotiate in behalf of the owners for the sale of the pooled stock,” and this is not cut down by the further authority given to sell not less than two thirds of such stock at such prices as might be approved in writing by the owners. The agreement with Ballou is especially limited to such stock as the committee may be authorized to sell. Nor does the notice sent to the owners of the pooled stock in any respect misstate the terms of the bargain made. It does not state the whole of such terms y but it does not purport so to do, and there is no averment or contention that the members of the committee were not ready to give or did not give full information as to the terms of the proposed sale to any stockholder who desired it. Nor is there any averment in the bill that the price was inadequate, or that it was below either the market value or the intrinsic value of the stock at the time when the bargain was made or ever since, or that a higher price could have been obtained from any other purchaser, or that the bargain was not an advantageous one for the stockholders. Nor can it be said that the terms of the agreement made with Ballou are so onerous upon the stockholders as to warrant the court in interfering. Their principal effect is to liquidate the damages to be paid by Ballou in case of default by him after the contract should have become binding; and we see nothing in this stipulation which is either unreasonable upon its face or liable to result injuriously to the stockholders. An agreement which secured 125,000 at once and a payment of one fourth of the whole price within twenty-four hours, upon pain of forfeiture, cannot be said to have been unreasonable, from the standpoint of the vendor. Even if the agreement be so construed as to give for a time an option to Ballou, it is not so given as to be beyond the authority given to the committee by the fourth article of the protective agreement; and at any rate it appears by the bill that if there was originally any option the parties thereto proposed to execute it fully and complete the bargain when the bill was filed. Nor do we see that it was material that Ballou was in fact acting for Swift in making his purchase. This is not averred to have been known to the members of the protective committee; and according to the averment of the tenth paragraph of the bill, it was not any purchase by Swift, but only one at an inadequate price that was to be guarded against; and, as we have already pointed out, this price does not appear to have been inadequate.

The bill fails to show a case entitling the plaintiff to the relief sought.

According to the terms of the report, the order must be

Demurrer sustained ; bill dismissed.