The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1900-04-29
DECIDES
AGAINST GUTHRIE
Continued on Tenth Page.)

NOT unCn the business conduct of the
comnany. nor as to the mode of conduct
ing it's operations but as to its future
avie+ence. that single stakeholder, and
no possessing but one share, has declared
bie fixed purpose to seek at the hands
of the Legislature a repeal of its char
fer. termination of it's existence, the
winding up of it's affairs by trustees, sug-
eested in whole or in part by himself, one
of whom bears his own name, presumably
his kinsman. Not only so but he has
avowed his intention, if he fail in this
application, to bring the question before
the people of North Carolina, the agitate
it on the stump, and to make it a ques-
ton in politics. Whether he may sue,
coed or whether he may fail, the same re-
suit will follow so far as the interests
of the corporation are concerned. With
the we'll known timidity of capital its
business must be injured. disorganized
and ruined. The good will of these man
ufacturing corporations, the brand which
they use, are valuable portions of their
assets. The threat of the dissolution
and destruction of the company in itself
will destroy the value of this good will.
So the case presents itself thus The
company is seriously threatened with
certain disaster in the near future. The
interests of 80 per cent of the stockhold-
ers are greatly in peril from the threat
ened action of one stakeholder This
stakeholder has declared that he Will not
part with his stock, that he holds it for
one purpose only, and that is the destruc-
ton of the company and embarking it on
the sea of politics. This stakeholder is
not an obscure individual without in1u-
ence or ability. He is leader among
his people, a man of character and
high order of ability, with great and
deserved influence in a strong political
party. His threat means and guarantees
action.
Whilst the general rule as to the juriS-
diction of court of equity over solvent
going corporations is as stated supra, yet
it is equally true that a court of chan
Gerry will always grant equitable relief
against such corporation whenever
sufficient case for relief is shown UPON
the ordinary principles of equity juris-
prudence Republican Mountain Silver
Mines VS. Brown, - L. S. Reports above).
A recognized ground of relief in equity
is, when the affairs Of the corporation
are not satisfactory, when it is in the
midst Of or is threatened with disaster,
when further prosecution of its business
will lead to loss and insolvency. QIayden
VS.. Official Hotel etc. AZ Fed. Rep. S14.
Treadwell VS.. Mfg. Co. Gray 1881.
Private trading corporations like this at
bar are created for the purposes of gain,
the production of income and when they
cease to be profitable or are exposed to
danger of insolvency, the stockholders
who have large interests at stake are
not obliged to continue the business. As
is well said in Treadwell VS.. Mfg Co.,
supra. by accepting a charter they do
not undertake to carry on the business
for which they are incorporated indeti-
nftely. and without any regard to the
condition of their corporate property.
Public policy does not require them to go
on at a loss. On the contrary it would
seem very clearly for the public welfare.
as we'll as for the interest of stockholders.
that they should cease to transact busi-
ness as soon as in the exercise of sound
judgment it is found that it cannot be
prudently continued. If this be not so.
we do not see that any limit could be
put to the business of trading corpora
ton short of the entire loss or destruc-
tion of it's property
To the same effect is Conner VS.. Hotel
Co. SO Tenn, ne
The text writer's deduce the same con,
Sclusion from their examination of the
cases. Beach in his work on Private
Corporations vol. 2. sec. ISL, says: When
a minority of stockholders oppose a sur
render it cannot be forced upon them
by the majority, unless it be case where
it is plain that a continuation of the bust
ness to the expiration of the time fixed
by the act of incorporation for corporate
existence, would result only in financial
catastrophe or in the failure of the object
for which the corporation was created.
In that event a majority only of the
stockholders may surrender the charter
and take steps to have the business wound
up. See also section 7S3.
Spelling in his work on Corporations,
vol. /, sec. 373 after stating the general
rule, adds this qualification: But if the
corporation is an Improbable or failing
enterprise, then it seems it may make a
sale of all the corporate property, with
view to dissolution.
Mr. Thompson in his exhaustive work
on Corporations, vol. 4, sec. 4,443, quot
ing the remark of an eminent lawyer sit
ting as a master in chancery that 1.-The
contract between the parties in corpora,
ton is that so long as the affairs of
company are prosperous it shall go on,
unless all consent to the contrary" adds
But it is believed that this dictum is
unsound when applied to a case where a
majority of the stockholders elect to wind
UP the affairs of the corporation and dis
tribute it's assets; because, although the
affairs of the corporation may at the par
ticular time be prosperous, yet circum-
stances may exist rendering it probable
that this prosperity will not continue and
whether such circumstances do exist or
are likely to supervene, is a question
committed exclusively to the judgment of
the majority. 1t is believed that no case
can be found in which a court of equity
has granted an injunction, at the suit
of a minority stakeholder against the ma
jority, to prevent them from discontin-
uing the business of the corporation and
winding up it's affairs. The exercise of
such power would be most extraordi-
nary. 1t would be tantamount to compell-
ing the specific performance of an agree
ment 10 form and carry on a corporation.
extending over an indefinite period of
time, and when, in the judgment of the
majority. on a question of mere economy
and propriety, on which their Judgment
ha