Court Opinion

ID: 5182560
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:44:04.721475+00
Date Added: 2024-06-11T08:26:37.549400
License: Public Domain

Follett, J. (dissenting):
It is alleged in the complaint, and is admitted in the answer, that the defendant has assumed to forfeit the shares of the plaintiffs for non-payment of dues, and it is now argued that, by reason thereof, they have no interest in the corporation and no right to maintain this action. Whether the action of the defendant in declaring their shares forfeited was justified, was an important issue in the case. It stands confessed that a gross fraud was attempted to be perpetrated by this defendant in the purchase of the real estate as against the class of shareholders to which the plaintiffs belong. By a suit in equity the perfect consummation of this fraud wras frustrated. This naturally created a feeling of distrust on the part of thé so-called long-share holders towards the defendant’s managers and the so-called syndicate shareholders, and it seems to nie that it was not unreason*560able for the long-share holders to insist on their right to examine the books and papers of the defendant before making further payments on. their shares; and that. it was inequitable for the defendant to assume to forfeit the interests of these plaintiffs in the corporation for the non-payment of their dues without first affording them an opportunity to examine into its affairs. .
Section 8 of article 1 of the constitution provides: “The books, accounts, securities and other properties in the charge of the secretary and treasurer, and each of them, shall be at all times subject to the examination of the association and board of directors, or any member thereof.”
It was offered to be shown upon the trial that while Buker was a member of. the hoard of directors, and before his shares- were forfeited, he called upon the secretary and asked to examine the books, accounts and documents of the defendant. This was objected'to and was excluded.
It was also offered to be shown that several of the plaintiffs other than Buker, before their shares were forfeited and while they were members of the association, asked to examine its books and accounts, and that this right was denied them, and afterwards their shares were forfeited. By, the judgment the action of the defendant in forfeiting the • shares of these plaintiffs, who have paid considerable sums into the corporation, is sanctioned. .The plaintiffs were not bound to assume that the confession, after discovery, of a fraud, and a partial restitution, under compulsion, was an absolute guaranty of the integrity of the subsequent management of the affairs of the corporation. Forfeitures are not'favored by the courts, and they are easily excused if the conduct of the person or corporation attempting to enforce them has been inequitable. If these plaintiffs had been able to establish that this defendant had refused to allow them to examine into the affairs of this company, and for that reason they refused to make further payments, it would have afforded a sufficient ground for setting aside the resolution declaring their shares forfeited It was error to exclude this class of evidence.
The judgment should be reversed and a new trial granted, with costs to abide the event.
Greeít, J., concurred.
Judgment' affirmed, with costs.