Evening journal., 1917-06-12


so far as no is a stockholder) he has
a right to reg ster It by his vote II a
majority OF tho disinterested shares
are voted with him, the question Is
thereby settled. The minority have
no right whatever TO compel the dlsin-
terested majority TO avail themselves
today Of a right which they honestly
believe they would not have exercised
when Il first accrued.
The complainant appears 10 be-
lleve that there are authorities for the
extraordinary position which no
takes. Certainly he has not citod
them II they exist. His main reliance
Is upon the well-known case OF Gam
BILE vs.. Queens County Water Com
pany, 12S New York, 81 (1S9O) In
this case a corporate director owned
property and sold II 70 the corporation
at what was alleged TO be an excessive
price. The crestion of ahirmance OF
disaffirmance came before a stOckhold-
ers' meeting. Excluding the shares
owned by the interested vendor, there
was a clear majority In favor OF af-
nrming the sale. On this point It was
held (the case being sent back for fur
ther proceedings on other grounds)
that the action OF the dlsinterested
majority was an answer to the plain
/ tits complaint So far as the case IS
in point az all. Il Is a decision favor
able 10 tho contention Of the defend
ants.
There are, OF course, plenty Of de-
cisions to the effect that a majority
cannot put the property Of the minor
/ ity into their own pockets. There are
also decisions that acts inherently H.
legal or ultra wires can be onjoined
by q single shareholder But when
the question involved is whether the
corporation will or will not exercise
the equitable right to compel a cor
porete officer to surrender stock Of
the corporation which he has bought
for himself. there is no case in the
books, so far as we can find. which
even hints al the right OF a minority
stockholder TO force the hand Of the
disinterested majority.
As has been pointed out many
times, trading in It's own stock while
under certain condit 'ons. within the
power Of the corporation) IS not one
or the ways in which the corporation
was in fact making It's money. STOCK
.acQu sition was not a normal function
of the company. To acquire limited
amount OF stock for free distribution
to employees gives rise TO one sort o:
questions To acquire stock for resal
TO employees. but without profit to the
company. involves another set To
buy a huge block OF stock without ans
! compelling or even definite plan re
spect'ng its disposition when bought
Is a course subject TO still other con
81 alterations That. even under exist
ing conditions. there may be homes
doubt respecting the wisdom OF ac
, QUESTION is proved by. the desperat
J reluctance OF the complainant to hav
a vote OF the shares other than thos
u in controversy. No suggestion ca
successfully be made that the electo
held BY the special master will no
be entirely fair OF that the result o
Il will not accurately register tn
real wishes OF the disin,erested stock
holders. Bound up with the question
y of any acquisit on OF the stock Is th
problem of what the corporation shal
do with 70 n and when acquired.
disintcresed sockholder who might b
! in favor OF the acquisition. II all th
! stock acquired was 20 pass into th
hands of employees without profit 4
the corporation. might have an en-
tirelv different opinion respecting IN
: wisdom Of acquiring stock for re
: sale at a profit TO persons as yet I'm
. ascertained and with al the risks III
I cident to the transit OF stock IN sueh
!, corporation into unknown hands o.,
, "If the complainants are right
$ +heir contention that the deere
should pace no limitation upon "a
use Of the stock If and when a
quired then the question OF llmiu
ton OF use necessarily becomes
vital question of corporate policy an
one which cannot properly be 90
Z sidercd or decided apart from N
!, question of acquisition II the stoc
holders we're 10 resolve that the sto'
should be acquired and Wnen
l. ouired. should be resOld to employ'
r. without profit and in accordance WI
the original plan, which lunder u
& findings OF the courO II was Pierre
l. duty to effectuate. the element or J
4 cunisry gain % the corporation wou
m be thereby eliminated and the co
~ tention of the minority that ea'
n shareholder has a vested right
D. make a profit out of the transactl
e. would be seen to be entirely grour
* less. In other words, the contenti
"a of the complainsnts that there Is
IS huge pecuniary profit which the c.
d. poration need only stretch out
OF hand and take, must necessarily
IN based upon the assumption that {
'm dislnterested majority stocs;holde
be are not going to carry out the origir
C. pian and turn the stock over 10 g
ployes without profit to the compa
10 or 10 themselves. There Is no ba
Of for such an assumption. II the sto'
ny holders are not bound 10 use the sto
m in a particular way they must be II
n To use Il as they please, and one
ay the WAYS in which they are free
a use IL Is a way which eliminates
he element OF profit altogether. Nobo
can doubt that such a disposition
IS the stock would, under the circu
las stances OF this case. be a use VIII
OF the msiority has the right 10 ma
al even against the protest Of the &C
re plainants.
on "Ipon the whole, therefore, Il
'es respectfully submitted that neitl
-o- under the facts as they exist tod
Dr. nor under the facts as they existed
iat March. 1915. can the court prope
IT'S take K upon itself to decide for
INT stockholders the important questi'
he OF management and policy TO 'wh
is the proposal TO acquire the Colen
dupont stock gives rise. A dec
ra- which failed TO make provision TO